As filed with the Securities and Exchange Commission on
September 13, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Sears, Roebuck and Co.
(Exact name of registrant as specified in its charter)
New York 36-1750680
(State of incorporation) (I.R.S. Employer
Identification No.)
3333 Beverly Road,
Hoffman Estates, Illinois 60179
(Address of principal executive offices) (Zip Code)
The Savings and Profit Sharing Fund of
Sears Employees
(Full title of the plan)
Michael D. Levin, Esq.
Senior Vice President, General Counsel
and Secretary
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
847/286-2500
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of Amount Proposed Proposed Amount of
Securities to to be maximum maximum registration
be Registered Registered offering
price per
share
Common Shares, par 3,000,000
value $0.75 per share.. shares * $132,187,500 $45,581.90
</TABLE>
In addition, pursuant to Rule 416(c) under the Securities Act of
1933, this Registration Statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
*The 3,000,000 common shares being registered represent the maximum
number of shares which, it is anticipated, may be acquired by the
Fund during the approximate 12 month period following the initial
offering date under this Registration Statement and the filing fee
has been calculated pursuant to Rule 457(h) based on the average of
the high and low prices for Sears common shares on September 11,
1996 of $44.0625.
Pursuant to General Instruction E of Form S-8, the contents of
Registration Statement No. 33-57205 (filed January 9, 1995) are
incorporated by reference.
<PAGE>
PART II
Information Required in the Registration
Statement
Item 3. Incorporation of Documents by Reference.
Not applicable.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article V of the By-Laws of Sears, relating to
indemnification of directors and officers, is incorporated by
reference to Exhibit 4(E) hereto.
Judgments or decrees rendered against the Fund, the
Trustees, the Investment Committee or other fiduciaries which are
not based upon a breach of fiduciary responsibility are to be
satisfied from Fund assets and not from assets of the Trustees, the
Members of the Investment Committee or other named fiduciaries.
The Trust Agreement between Sears and the Trustee provides
that the Trustee shall be indemnified, held harmless and promptly
reimbursed by Sears against all claims, liabilities, fines and
penalties and all expenses (including, but not limited to, attorney
fees) reasonably incurred by or imposed upon it which arise as a
result of the Trustee's actions or failures to act by reason of
serving as Trustee, to the extent lawfully allowable; provided
that, notwithstanding the foregoing, (a) the Trustee shall not be
indemnified for its negligence, for willful breach of
responsibility, for actions or failures to act taken in bad faith,
or for any breach of ERISA and (b) the Company shall not indemnify
the Trustee for any such amount incurred through any settlement or
compromise of any action unless the Company consents in writing to
such settlement or compromise. The Trust Agreement also provides
that to the maximum extent permitted by law, none of the Plan
Administrator, any present or former Investment Committee member,
nor any person who is or was a director, officer, or employee of an
Employer, shall be personally liable for any act done or omitted to
be done in the administration of the Plan or the Trust Agreement,
or the investment of the Trust Fund, unless such person acted
dishonestly. Any employee to whom the Investment Committee, the
Plan Administrator, or the Company has delegated any portion of its
responsibilities under the Plan, any person who is or was a
director or officer of an Employer, the Plan Administrator, members
and former members of the Investment Committee, and each of them,
shall, to the maximum extent permitted by law, be indemnified and
saved harmless by the Employers (to the extent not indemnified and
saved harmless under any liability insurance or other
indemnification arrangement with respect to the Fund or the Trust
Agreement) from and against any and all liability or claim of
liability to which they may be subjected by reason of any act done
or to be done in connection with the administration of the Plan or
the Trust or the investment of the Trust Fund, including all
expenses reasonably incurred in their defense if the Employers fail
to provide such defense, unless such person acted dishonestly.
The Trust Agreement between Sears and the ESOP Trustee of
the Fund provides for indemnification of the ESOP Trustee similar
to that provided to the Trustee.
The New York Business Corporation Law ("BCL") and the By-
Laws of Sears generally provide for the indemnification of any
director or officer of Sears who is or is threatened to be made a
party to any action because such person is or was a director or
officer of Sears, or because such person served another enterprise
(including SIMCO and the Fund) at the request of Sears, against
judgments, fines, amounts paid in settlement and expenses
(including attorneys' fees) in connection with such action, as
limited by the BCL and the By-Laws in certain circumstances
depending upon the type of conduct involved and the nature of the
action. As authorized by the Delaware General Corporation Law
("GCL"), the by-laws of SIMCO, also provide for indemnification of
directors, officers, employees and agents of SIMCO in a manner
generally similar to that described above.
As authorized by the banking laws of the State of New York,
the by-laws of the Trustees generally provide indemnification to
their officers and directors that is substantially similar to the
indemnification provisions of Sears described above.
The BCL authorizes Sears and the Trustees, and the GCL
authorizes SIMCO, to purchase indemnification insurance.
Sears has in effect insurance policies with total coverage
of $100,000,000 (subject to a deductible) which insure directors
and officers of Sears and of certain other entities (including
SIMCO and the Fund) against certain claims which are not
indemnifiable by Sears, SIMCO or the Fund.
Sears also has in effect insurance policies with total
coverage of $75,000,000 (subject to a deductible) which provide for
the payment by the insurer of amounts, excluding certain fines and
penalties which are legally uninsurable and certain other matters,
which Sears, certain other entities (including SIMCO and the Fund),
or their officers, directors or employees become obligated to pay
by reason of any claim based upon an act or omission in the
management or administration of certain employee benefit plans
(including the Fund) sponsored by Sears and certain subsidiaries of
Sears.
The Trustee has insurance in effect with total coverage of
$60,000,000 (subject to a deductible) which insures directors and
officers of the Trustee against certain claims which are not
indemnifiable by the Trustee. The Trustee also has its own bankers
blanket bond of $150,000,000 (subject to a deductible) insuring it
against robbery, theft, fidelity and mysterious disappearance. An
additional $50,000,000 policy (subject to a deductible) acts as
excess coverage over the blanket bond to provide protection for the
loss of customer securities in its custody. In addition, a
professional liability policy of $50,000,000 (subject to a
deductible) is carried which protects against legal liability for
an act, error or omission committed in the performance of
professional services in connection with trust operations.
The ESOP Trustee has in effect insurance policies with
total coverage of $50,000,000 (subject to a deductible) which
insure the officers and directors of the ESOP Trustee and of
certain other entities affiliated with the ESOP Trustee, against
liabilities which are not indemnifiable by the ESOP Trustee. This
coverage provides insurance to officers and directors for any
"wrongful act" committed in their capacities as officers and
directors. "Wrongful act" is defined as any actual or alleged
error or misstatement or misleading statement or act or omission or
neglect or breach of duty of officers and directors while acting in
their individual or collective capacities, subject to standard
insurance policy exclusions. The ESOP Trustee has its own bankers
blanket bond of $100,000,000, insuring it against robbery, theft,
embezzlement, forgery, computer crime and mysterious disappearance.
An additional $75,000,000 policy acts as excess coverage to the
blanket bond to provide protection against the loss of customer
securities in its custody or in transit. The ESOP Trustee has in
effect a professional liability policy of $40,000,000, which
protects it against legal liability from any act, error or omission
committed in the performance of professional services in its
corporate trust operations.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibits to this Registration Statement are listed in
the Exhibit Index beginning on page E-1 of this Registration
Statement, which Index is incorporated herein by reference.
The Registrant will submit the Fund document as amended and
restated as appears in Exhibit 4(A), to the Internal Revenue
Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Fund.
Item 9. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Hoffman Estates, State of Illinois, on the 13th
day of September, 1996.
SEARS, ROEBUCK AND CO.
By: /S/ Alan J. Lacy*
Alan J. Lacy
Executive Vice President,
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the date indicated:
Signature Title Date
ARTHUR C. MARTINEZ*.............Director, Chairman of
the Board of Directors,
President and
Chief Executive Officer
(Principal Executive
Officer)
ALAN J. LACY*...................Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
JAMES A. BLANDA*................Vice President and Controller
(Principal Accounting Officer)
9/13/96
HALL ADAMS, JR.*.................Director
WARREN L. BATTS ................ Director
JAMES W. COZAD ................. Director
MICHAEL A. MILES*.................Director
NANCY C. REYNOLDS* .............. Director
CLARENCE B. ROGERS, JR*.......... Director
DONALD H. RUMSFELD* ............. Director
*By: /S/ ALAN J. LACY Individually and as Attorney-in-Fact
Alan J. Lacy
<PAGE>
The Plan. Pursuant to the requirements of the Securities
Act of 1933, the administrators of The Savings and Profit Sharing
Fund of Sears Employees have duly caused this Registration
Statement to be signed on the Fund's behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and the State of
Illinois, on the 13th day of September 1996.
THE SAVINGS AND PROFIT SHARING
FUND OF SEARS EMPLOYEES
By: /S/Barry H. Pike
Profit Sharing Plan
Administrator
<PAGE>
EXHIBIT INDEX
Exhibit
Number
4(A) Text of the Fund as amended and restated effective as of
August 14, 1996*
4(B) The Savings and Profit Sharing Fund of Sears Employees
Trust Agreement as amended and restated effective as of
June 30, 1995 [Incorporated by reference to Exhibit 99(b)
to the Quarterly Report on Form 10-Q of Sears, Roebuck
and Co. for the quarter ended July 1, 1995 (SEC File No.
1-416)]
4(C) Sears, Roebuck and Co. Employee Stock Ownership Trust, as
amended and restated effective as of June 30, 1995
[Incorporated by reference to Exhibit 99(c) to the
Quarterly Report on Form 10-Q of Sears, Roebuck and Co.
for the quarter ended July 1, 1995 (SEC File No. 1-
416)]
4(D) Restated Certificate of Incorporation of Sears, Roebuck
and Co. as amended and restated to May 13, 1996
[Incorporated by reference to Exhibit 3(a) to
Registration Statement No. 333-8141]
4(E) By-Laws of Sears, Roebuck and Co. as amended to August
14, 1996
15 Acknowledgement of Deloitte & Touche LLP regarding
unaudited interim information*
23 Consent of Deloitte & Touche LLP*
24(a) Power of Attorney of certain directors and officers of
Sears, Roebuck and Co.*
24(b) Power of Attorney of principal financial officer of
Sears, Roebuck and Co.*
* Filed herewith
E-1
Exhibit 4(a)
THE SAVINGS AND PROFIT SHARING FUND
OF
SEARS EMPLOYEES
In Effect Since July 1, 1916
Restated Effective as of August 14, 1996
SECTION 1
Introduction
1.1 Purposes. The Savings and Profit Sharing Fund of Sears Employees
(the "Plan") was established by Sears, Roebuck and Co. (the "Company") for
the following purposes:
(i) To permit eligible employees of the employers to share in the
profits of, and to acquire a proprietary interest in, the Company; and
(ii) To encourage the habit of saving; and
(iii)To provide a plan through which each eligible employee may
accumulate his own savings, his portion of the Employers' Contribution and
the earnings on his accumulations as a means of providing additional income
for himself at the close of his active business years.
It is intended that the Plan will furnish to those participants who remain
in the employ of the employers until they reach the age when they retire
from active service, a sum to provide for them in part thereafter; and that
even those who do not remain until retirement may accumulate a sum to
provide for their future security. The Plan is amended and restated herein
effective as of August 14, 1996. On December 20, 1989, an employee stock
ownership plan feature (the "ESOP") was added to the Plan. The Plan was
amended and restated effective as of June 30, 1995 (the "Effective Date"),
and consists of a profit sharing and stock bonus plan which is intended to
qualify under sections 401(a) and 401(k) of the Internal Revenue Code, and
an employee stock ownership plan which is intended to qualify as a stock
bonus plan under section 401(a) of the Internal Revenue Code and as an
employee stock ownership plan under section 4975(e)(7) of the Internal
Revenue Code. The assets of the ESOP shall consist of the Supplement C
Shares Fund, the Supplement C Cash Equivalents Fund and all other amounts
attributable to Employers' Contributions and participants' after-tax
deposits, including Employers' Contributions and participants' after-tax
deposits made with respect to plan years beginning before January 1, 1990.
The assets of the ESOP shall be invested primarily in common shares of the
Company ("Company Shares") which qualify as "employer securities" within
the meaning of section 409(l) of the Internal Revenue Code.
(a) Split Up of Plan. Prior to the Effective Date, the Plan
included assets attributable to a profit sharing and stock bonus plan
feature, a leveraged employee stock ownership plan feature ("ESOP") and a
tax credit employee stock ownership feature ("ESOF"). As of the Effective
Date the Plan was split into two separate plans: (1) a profit sharing and
stock bonus plan and leveraged employee stock ownership plan providing
benefits to eligible employees of the Company and its affiliates (exclusive
of The Allstate Corporation and its subsidiaries (the "Allstate Group")),
which continued to hold the assets attributable to the profit sharing and
stock bonus plan, ESOF and ESOP features of the Plan which were allocable
to employees and former employees of the Company and its affiliates other
than the Allstate Group and certain of the assets held in the ESOP suspense
account, and which continued to be known as The Savings and Profit Sharing
Fund of Sears Employees; and (2) a profit sharing and stock bonus plan and
leveraged employee stock ownership plan providing benefits to eligible
employees of the Allstate Group, to which were transferred the assets
attributable to the profit sharing and stock bonus plan, ESOF and ESOP
features of the Plan which were allocable to employees and former employees
of the Allstate Group and certain of the assets held in the ESOP suspense
account, and which is known as The Savings and Profit Sharing Fund of
Allstate Employees (the "Allstate Plan").
(b) Spinoff of Dean Witter, Discover & Co. Prior to June 30,
1993, Dean Witter, Discover & Co. ("DWDC") and its affiliates were members
of the controlled group of corporations (within the meaning of section
414(b) of the Internal Revenue Code) that includes the Company. On June
30, 1993, all of the shares of DWDC held by the Company were distributed to
the shareholders of the Company as a spinoff dividend and DWDC thereby
ceased to be a member of the controlled group of corporations that includes
the Company. Effective as of June 29, 1993, participants in the Plan who
were employed by DWDC or an affiliate of DWDC following the DWDC spinoff
(the "Transferred DWDC Participants") ceased to actively participate in the
Plan. As a result of the spinoff of DWDC from the Company, Company Shares
which had been held in participants' accounts under the Plan were converted
into Company Shares and shares of DWDC that were received as dividends with
respect to such Company Shares. The Company Shares and the dividended DWDC
shares each represent a portion of the value of pre-spinoff investments of
participants' accounts in Company Shares. Accordingly, the Company
determined that in order to provide participants with the opportunity to
continue to hold the same economic investment following the DWDC spinoff as
before and enhanced investment flexibility following the spinoff, the Plan
shall provide for not only a Company Shares Fund and a Supplement C Shares
Fund, but also a DWDC Shares Fund. As provided in subsection 5.3(a), and
subject to the provisions thereof, participants may elect to continue
holding shares of DWDC in their accounts under the Plan, or may elect to
sell all or a portion of such shares and reinvest the proceeds in the
Company Shares Fund. The DWDC Shares Fund is provided solely to permit the
continued holding of shares of DWDC allocated to participants' accounts as
a result of the spinoff of DWDC. Accordingly, no future contributions or
investment transfers may be made to the DWDC Shares Fund.
(c) Spinoff of The Allstate Corporation. Prior to the Effective
Date, The Allstate Corporation ("Allstate") and its subsidiaries were
members of the controlled group of corporations (within the meaning of
section 414(b) of the Internal Revenue Code) that includes the Company. As
of the Effective Date all of the shares of Allstate held by the Company
will be distributed to the shareholders of the Company as a spinoff
dividend and Allstate will thereby cease to be a member of the controlled
group of corporations that includes the Company. As a result of the
spinoff of Allstate from the Company on the Effective Date, Company Shares
held in participants' accounts under the Plan will be converted into
Company Shares and shares of Allstate that will be received as dividends
with respect to such Company Shares. The Company Shares and the dividended
Allstate shares will each represent a portion of the value of pre-spinoff
investments of participants' accounts in Company Shares. Accordingly, the
Company has determined that in order to provide participants with the
opportunity to continue to hold the same economic investment following the
Allstate spinoff as before and enhanced investment flexibility following
the spinoff, the Plan shall provide for not only a Company Shares Fund, a
Supplement C Shares Fund and a DWDC Shares Fund, but also an Allstate
Shares Fund. As provided in subsection 5.3(b), and subject to the
provisions thereof, participants may elect to continue holding shares of
Allstate in their accounts under the Plan, or may elect to sell such shares
and reinvest the proceeds in Company Shares. The Allstate Shares Fund is
provided solely to permit the continued holding of shares of Allstate
allocated to participants' accounts as a result of the spinoff of Allstate.
Accordingly, no future contributions or investment transfers may be made to
the Allstate Shares Fund.
1.2 The Employers. The term "employers" shall mean the Company and
those affiliates of the Company whose employees are eligible to participate
in the Plan, as designated by the Company.
1.3 Administration. Title to all assets of the Plan is held by one or
more Trustees appointed by the Company. The Plan is administered by a
Profit Sharing Plan Administrator (the "Plan Administrator") appointed by
the Company, as described in subsection 8.5. Subject to the provisions of
section 8, the assets of the Plan are managed and controlled by an
Investment Committee appointed by the Company, consisting of one or more
individuals, none of whom is a Trustee. Each participant in the Plan shall
be a "named fiduciary" within the meaning of section 402 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to the extent
that Company Shares or shares of DWDC or Allstate, whether or not allocated
to his accounts, are voted or tendered according to the participant's
directions. The Investment Committee and the Company are "named
fiduciaries," but solely to the extent that they have any fiduciary
responsibilities under the Plan and the related trusts, including any
responsibilities with respect to the acquisition, retention and disposition
of Plan assets.
1.4 Plan Year. The fiscal year of the Plan will commence on January 1
of each year and end on December 31 of the same year. The fiscal year of
the Plan shall be the "plan year" for purposes of ERISA.
1.5 Gender, Number and Terms. The masculine pronoun wherever used,
shall include the feminine pronoun, and where the context admits, singular
words shall include the plural thereof. The term "employees" means all
individuals who are employees of the employers, including those designated
as "associates" by their employer.
1.6 Supplements. From time to time the Company may adopt supplements
to the Plan. Each supplement will be attached to and will form a part of
the Plan and will supersede the provisions of the Plan to the extent
necessary to eliminate any inconsistencies between the Plan and such
supplement.
SECTION 2
Eligibility and Participation
2.1 Participation Voluntary. Participation in the Plan on the part of
eligible employees is voluntary. Employees who become eligible to make
deposits to the Plan will be notified by their employer of the date as of
which they are first eligible to do so, but thereafter neither the
employers, the Plan Administrator nor the Trustee shall have any duty to
remind eligible employees of their continuing eligibility. An employee
who, although eligible to make deposits, chooses not to make deposits when
first eligible to do so may elect to make deposits to the Plan and become a
participant as of the first day of any plan year thereafter so long as such
eligible employee remains in the employ of the employers. The Plan
Administrator may, from time to time, permit an open enrollment period
during which employees who were eligible to make deposits but previously
chose not to do so or who suspended deposits in a prior plan year may elect
to make or resume deposits to the Plan and become participants in the Plan
as of the date specified by the Plan Administrator. Notwithstanding the
preceding sentence, any such open enrollment period shall not apply (i) to
participants who have suspended deposits during the plan year in which the
open enrollment period occurs, and (ii) at the discretion of the Plan
Administrator, to highly-compensated employees as defined in subparagraph
(f) of subsection 3.3.
2.2 Regular Employees. Each regular employee who was employed by an
employer prior to January 1, 1989 is eligible to become a participant upon
completion of one year of continuous service. Each other regular employee
of an employer will be eligible to make deposits to the Plan and become a
participant upon both attainment of age 21 years and completion of one year
of continuous service. A "regular employee" shall mean any employee of an
employer who regularly is scheduled to work the full work week in the unit
to which he is assigned, including any individual who is treated, under the
provisions of sections 406 and 407 of the Internal Revenue Code, as
amended, as an employee of a domestic corporation which is an employer, or
a domestic parent corporation which is an employer.
2.3 Part-Time Regular Employees. Each part-time regular employee who
was employed by an employer prior to January 1, 1989 is eligible to make
deposits to the Plan and become a participant upon completion of the 1,000
hours of service requirement. Each other part-time regular employee of an
employer will be eligible to make deposits to the Plan and become a
participant upon both attainment of age 21 years and completion of the
1,000 hours of service requirement. A "part-time regular employee" shall
mean any employee of an employer who has completed the 1,000 hours of
service requirement and who regularly is scheduled to work less than the
full work week in the unit to which he is assigned. The "1,000 hours of
service requirement" means that an employee must complete 1,000 hours of
service within the 12-month period commencing with the employee's
employment commencement date and, if the employee shall not have completed
1,000 hours of service within such 12-month period, then the employee must
complete 1,000 hours of service within any subsequent 12-month period,
measured from any anniversary of his employment commencement date. An
"hour of service" means each hour for which an employee is directly or
indirectly paid or entitled to payment by an employer or a controlled group
member (as described in subsection 2.4 below) for the performance of duties
or for reasons other than the performance of duties, including each hour
for which backpay, irrespective of mitigation of damages, has either been
awarded or agreed to by an employer or a controlled group member,
determined and credited in accordance with Department of Labor Regulations
section 2530.200b-2, or under any other section or sections of such
regulations which may amend, supplement or supersede said section of such
regulations.
2.4 Continuous Service. An employee's "continuous service" shall be
the continuous period of service with an employer (including as an employer
for purposes of this subsection Sears Canada, Inc. and any affiliate of the
Company which qualifies as a member of a controlled group of corporations
within the meaning of section 1563(a) of the Internal Revenue Code for
purposes of section 414(b) of said Code) commencing with the employment
commencement date and ending with the date of severance from service with
all employers and all controlled group members. Such severance shall occur
when the employee resigns, retires, is discharged or dies, or when any
approved leave of absence expires without the employee returning to
employment, but not earlier than the later of the first date of absence
from active service for any reason and the expiration of an employee's
leave of absence without returning to employment, as the case may be, where
there is no severance from service by reason of resignation, retirement or
discharge occurring during such absence. Continuous service shall include
any period subsequent to the date of severance from service if the employee
is reemployed by an employer within 12 months following the date of
severance from service due to resignation, retirement or discharge. With
respect to each employee of a member of the Allstate Group on the Effective
Date who transfers employment to the Company or an affiliate of the Company
(other than a member of the Allstate Group) within twelve months following
the Effective Date, continuous service shall also include, to the extent
not otherwise included in the above definition, any continuous service
credited to such employee under the Allstate Plan as of the date of such
employment transfer.
2.5 Participant and Restricted Participant. The term "participant"
means an eligible employee who has an account under the Plan or who is
making deposits to the Plan, and, to the extent provided in subsection 2.6,
also includes the beneficiary of a deceased participant. The term
"restricted participant" means a participant who has separated from service
with all of the employers and controlled group members, but who has not yet
received a complete distribution of his account balances. Except to the
extent permitted under subsection 7.1, a restricted participant may not
elect a withdrawal from his accounts pursuant to subsection 3.6. For
purposes of this subsection 2.5 and 3.6, a participant to whom distribution
is permitted under the disposition exception set forth in subsection 7.3
shall be considered a restricted participant when he terminates employment
with the employers and controlled group members regardless of whether such
termination also constitutes a separation from service.
2.6 Period of Participation. When distribution of the interest of a
participant is deferred beyond or cannot be made until after the date of
severance from service, the participant (or, in the case of his death, his
beneficiary) will be considered and treated as a participant in the Plan
with respect to the undistributed interest of such participant for all
purposes, except as follows:
(a) The participant and his beneficiary will not share in the
Employers' Contribution after severance from service, except as provided in
subsection 6.5.
(b) The beneficiary of a participant cannot designate a beneficiary of
such undistributed interest under subsection 7.4.
(c) The beneficiary of a participant may not make investment elections
or transfers under subsections 5.3, 5.11 and 5.12.
(d) All amounts allocated to a participant's accounts shall
automatically be transferred to the Money Market Fund upon the
participant's death, except for amounts allocated to the participant's
Company Shares account, the participant's Supplement C Shares account, the
participant's DWDC Shares account, the participant's Allstate Shares
account, and Cash Equivalents accounts maintained for the participant.
2.7 Reemployment. A participant (or a regular employee or part-time
employee who on the date of severance was eligible to become a participant)
who severs from service with the employers due to resignation, retirement
or discharge, and who is reemployed by an employer shall be eligible to
make deposits to the Plan immediately upon such reemployment subject to the
following:
(a) In the case of an employee or participant who is reemployed during
the same plan year in which his severance from service occurred, the
percentage rates of his deposits under subsection 3.2 and the participant's
investment elections under subsection 5.11 which applied prior to his
severance also will apply following his reemployment; and in the case of a
participant who is reemployed subsequent to such plan year, the percentage
rates and the investment elections selected by him when he rejoins the Plan
shall be applicable until changed in accordance with subsections 3.4 and
5.11;
(b) Any amount allocable to him under subsection 6.5 for the plan year
during which his reemployment date occurs will be calculated on the basis
of the aggregate of his basic pre-tax deposits during such plan year after
rejoining the Plan plus any basic pre-tax deposits previously made by him
for such plan year, but, in the case of a participant who was reemployed
during the same plan year in which his severance from service occurred, any
such amount as so calculated then will be reduced by any amounts which
previously shall have been credited and distributed to him during such plan
year in accordance with clause (v) of subparagraph 6.5(a); and
(c) For the plan year during which his reemployment date occurs, he
will be permitted to make deposits following reemployment only with respect
to that part of his compensation received in such plan year following such
reemployment.
2.8 Leased Employees. If a person satisfies the requirements of
section 414(n) of the Code and applicable Treasury regulations for
treatment as a "leased employee," such leased employee shall not be
eligible to participate in this Plan or in any other plan maintained by an
employer or a related company which is qualified under section 401(a) of
the Code, but, to the extent required by section 414(n) of the Code and
applicable Treasury regulations, such person shall be treated as if the
services performed by him in such capacity were performed by him as an
employee of a related company which has not adopted the Plan; provided,
however, that no such service shall be credited:
(a) for any period during which not more than 20% of the non-highly
compensated workforce of the employers and the related companies consists
of leased employees and the leased employee is a participant in a money
purchase pension plan maintained by the leasing organization which (i)
provides for a nonintegrated employer contribution of at least 10 percent
of compensation, (ii) provides for full and immediate vesting, and (iii)
covers all employees of the leasing organization (beginning with the date
they become employees), other than those employees excluded under section
414(n)(5) of the Code; or
(b) for any other period unless the leased employee provides
satisfactory evidence to the employer or related company that he meets all
of the conditions of this subsection 2.8 and applicable law required for
treatment as a leased employee.
For purposes of paragraph (a) above, "highly-compensated" shall have the
meaning set forth in paragraph 3.3(f).
SECTION 3
Employee Deposits and Withdrawals
3.1 Definition of Compensation. "Compensation" of an employee for any
plan year shall mean total cash compensation not in excess of the maximum
limitation described in section 401(a)(17) of the Internal Revenue Code, as
that limitation is adjusted from time to time by the Secretary of Treasury
to reflect cost of living increases, paid to such employee for personal
services rendered to an employer, including salary, wages, pre-tax employee
deposits under this or any other qualified profit sharing or stock bonus
plan maintained by an employer, bonuses, incentive payments, commissions,
overwrites, vacation pay, unit closing allowances (except to the extent
such allowances are paid in a lump sum), employer payments for temporary
military service and short-term illness allowances, but excluding any
awards under any long-term executive compensation plan, service allowances,
retirement or profit sharing benefits, employer contributions on behalf of
the employee to a cafeteria plan of an employer pursuant to section 125 of
the Internal Revenue Code (except for applying the deferral percentage
under section 401(k)(3) and the contribution percentage under section
401(m)(2) of the Internal Revenue Code), long-term disability benefit
payments, prizes or awards, retainers, living expense allowances, moving
allowances, payments or reimbursements in connection with moving expenses,
special geographic differentials, medical expense reimbursements, lump sum
payments for vacations earned but not taken, overseas compensation
adjustments (as determined under the employer's personnel policy),
dividends paid with respect to shares of restricted stock, cash payments
received pursuant to stock options, other special compensation of any kind
and compensation paid to an insurance agent for writing involuntary
insurance business (i.e., business which is placed through or reinsured
with a plan, association or organization established pursuant to a statute
or regulation or a cooperative plan of the insurance industry, to afford
coverage for risks not generally acceptable for insurance).
3.2 Amount and Types of Deposits. References in this section 3 and
elsewhere in the Plan to participants' deposits made on a "pre-tax" or
"after-tax" basis mean deposits made by them from their compensation either
before or after the imposition of federal income taxes, irrespective of
whether the deposits made from such compensation are either before or after
the imposition of state, local or other taxes. Subject to the conditions
and limitations of this subsection and subsections 2.7 and 6.6,
participants may elect to make deposits under the Plan as follows:
(a) Basic Pre-Tax Deposits. Subject to the limitations of
subparagraph (e) below, a participant may elect to make "basic pre-tax
deposits" under the Plan from one percent through 5 percent, in whole
percentages, of the participant's compensation in order to share in the
Employers' Contribution; provided, however, to the extent that the amount
of a participant's basic pre-tax deposits for a plan year are limited by
the requirements of subparagraph (e) below, such deposits will be reduced
in order to comply with such requirements. Pursuant to the participant's
salary deferral authorization, such pre-tax deposits shall be made by a
reduction of the participant's compensation in the percentage specified by
the participant, and a contribution by the employers under the Plan of the
amount of such reduction.
(b) Additional Pre-Tax Deposits. Subject to the limitation in
subparagraph (e) below, a participant who is making basic pre-tax deposits
of 5 percent may elect to make "additional pre-tax deposits" of a whole
percentage, not exceeding 12 percent of the participant's compensation;
provided, however, to the extent that the amount of a participant's
additional pre-tax deposits for a plan year are limited by the requirements
of subparagraph (e) below, such deposits will be reduced in order to comply
with such requirements. Pursuant to the participant's salary deferral
authorization, such additional pre-tax deposits shall be made by a
reduction of the participant's compensation in the appropriate percentage
and a contribution by the employers of the amount of such reduction. No
Employers' Contribution will be allocated under the Plan with respect to
the participants' additional pre-tax deposits.
(c) After-Tax Deposits. A participant may elect to make after-tax
deposits of a whole percentage not exceeding 10% of the participant's
"adjusted compensation," regardless of whether the participant is making
any basic pre-tax deposits. However, in no event shall a participant's
after-tax deposits for a plan year exceed $15,000. A participant's
"adjusted compensation" shall be in the amount of his compensation, as
defined in subsection 3.1, reduced by the amount of pre-tax deposits made
by such participant under the Plan. Deposits will be withheld from the
adjusted compensation payable to participants by the employers from time to
time, and each participant must execute a payroll deduction authorization
for such withholding. No Employers' Contribution will be allocated with
respect to participants' after-tax deposits, except as provided in
subparagraph 3.3(c).
(d) Maximum Deposits. The amount of a participant's pre-tax deposits
and after-tax deposits for a plan year may not in the aggregate exceed 17
percent of such participant's compensation for such year.
(e) Maximum Pre-Tax Deposits. The amount of a participant's pre-tax
deposits made under this plan and the amount of contributions made on a
pre-tax basis by such participant under all other cash or deferred
arrangements of the employers (as defined in subsection 2.4) intended to
meet the requirements of section 401(k) of the Internal Revenue Code during
a calendar year may not in the aggregate exceed the maximum limitation
described in section 402(g) of the Internal Revenue Code, as that
limitation is adjusted from time to time by the Secretary of Treasury to
reflect cost of living increases. Accordingly, to the extent that a
participant's deposits made pursuant to subparagraph (a) or (b) above for
any calendar year exceed the limitation described above, such excess (and
any earnings allocable thereto) shall be distributed to him in cash as soon
as is practicable after such excess is discovered, but in no event later
than the April 15 following the close of the plan year in which such excess
deposit was made. Distribution of such excess shall be made first by
reducing a participant's additional pre-tax deposits made pursuant to
subparagraph (b) above, if any, and then by reducing a participant's pre-
tax deposits made pursuant to subparagraph (a) above. Upon a participant's
written notification and direction received by the Plan Administrator that
such participant's pre-tax deposits under this plan and contributions made
on a pre-tax basis under any other cash or deferred arrangement that is not
sponsored by the employers in which he is a participant exceed the
limitations described above for a calendar year, such portion of the pre-
tax deposits (and any earnings allocable thereto) for such calendar year,
as the participant shall specify in such notification, shall be distributed
to such participant. Distributions to be made in accordance with the
preceding sentence shall be made as soon as is practicable following
receipt by the Plan Administrator of such written notification; provided,
however, if such written notification is received on or before the March 1
of the year following the calendar year in which such excess occurred, such
distribution shall be made by not later than the next April 15.
3.3 Conditions and Limitations for Deposits. The making of deposits
under subsection 3.2 shall be subject to the following:
(a) Deposits made pursuant to a participant's salary deferral
authorization or payroll deduction authorization will be paid to the
Trustee as soon as practicable.
(b) Deposits may not be made by, or withheld from, the compensation of
any individual whose place of employment with an employer is outside of the
United States of America and who is neither a citizen nor a resident of the
United States of America.
(c) Participants who are residents of Puerto Rico may not make
deposits on a pre-tax basis. Therefore, such participants may make only
after-tax deposits from one percent through 10 percent, in whole
percentages of the participant's compensation. However, in no event shall
a participant's deposits for a plan year exceed $22,000. Such a
participant's basic after-tax deposits of up to the lesser of 5 percent of
compensation or an amount equal to the maximum amount of pre-tax deposits
permitted in accordance with subparagraph 3.2(e) will be treated in the
same manner as basic pre-tax deposits under the Plan, except that for
withdrawal purposes these deposits will be treated as after-tax deposits.
Any after-tax deposits in excess of the preceding limitations shall be
treated as after-tax deposits for all purposes of the Plan. Accounting for
such participants, and other limitations of the Plan, shall be adjusted to
reflect this fact.
(d) Participants' pre-tax deposits are intended to qualify as a cash
or deferred arrangement under section 401(k) of the Internal Revenue Code.
Accordingly, pre-tax deposits shall be monitored from time to time during
each plan year and to the extent, as of the end of the plan year, the pre-
tax deposits of highly-compensated employees (as defined in subparagraph
(f) below) would be in excess ("excess deposits") of the limitations
imposed on such deposits under the nondiscrimination standards set forth in
section 401(k)(3) of the Internal Revenue Code, such deposits will be
reduced first by reducing additional pre-tax deposits and then basic pre-
tax deposits on the basis of the respective portions of the excess deposits
attributable to each of such highly-compensated employees. If a
participant's pre-tax deposits are required to be reduced for any plan
year, such reduction shall be made by first reducing the rate of such
participant's pre-tax deposits for the remainder of such year and then, to
the extent any excess deposits remain after such reduction, such remaining
excess deposits and any earnings thereon shall be distributed to him in
cash.
(e) Participants' after-tax deposits and prospective Employers'
Contributions are intended to meet the contribution percentage requirements
of section 401(m) of the Internal Revenue Code. Accordingly, to the extent
the after-tax deposits of highly-compensated employees or the Employers'
Contributions to be allocated to highly-compensated employees or both would
be in excess ("excess deposits" and "excess Employers' Contributions") of
the limitations imposed on such deposits and Employers' Contributions under
the nondiscrimination standards set forth in section 401(m), such deposits
by highly-compensated employees or the Employers' Contribution to be
allocated to such employees, or both, will be reduced on the basis of the
respective portions of the excess deposits or excess Employers'
Contributions, or both, attributable or allocable to each of such highly-
compensated employees. If a participant's after-tax deposits are required
to be reduced for any plan year, such reduction shall be made first by
reducing the rate of such participant's after-tax deposits for the
remainder of such year and then, to the extent any excess deposits remain
after such reduction, such remaining excess deposits and any earnings
thereon shall be distributed to him in cash. Excess Employers'
Contributions otherwise allocable to highly-compensated employees shall be
reallocated among the accounts of all non-highly-compensated employees
otherwise entitled to share in the Employers' Contributions in accordance
with subsection 6.5.
(f) A "highly-compensated employee" is an employee who, at any time
during the preceding plan year or during the current year, if during the
current year such employee is one of the 100 employees earning the greatest
compensation from the employers:
(i) received compensation from the employers for the year in
excess of $75,000 (or such greater amount as may be determined by the
Commissioner of Internal Revenue),
(ii) received compensation from the employers for the year in
excess of $50,000 (or such greater amount as may be determined by the
Commissioner of Internal Revenue) and was among the top 20 percent of
employees of the employers when ranked on the basis of compensation paid
during the plan year, or
(iii)was an officer of an employer and received compensation from
the employers for the year in excess of $45,000 (or 50 percent of the
limitation in effect under section 415(b)(1)(A) for the plan year),
provided that no more than 50 employees of the employers shall be treated
as officers.
"Employees" for the purposes of this subsection means all
employees meeting the requirements of subsections 2.2 and 2.3, irrespective
of whether or not they have elected to make basic pre-tax deposits for the
year.
(g) At the election of the Plan Administrator, the discrimination
testing and correction under paragraphs (d) and (e) of this subsection 3.3
may be performed separately with respect to different groups of eligible
employees and participants under the Plan, provided that each such group
meets the requirements of applicable regulations under section 401(a)(4) of
the Internal Revenue Code.
3.4 Variation of Rate or Type of Deposits. On or before November 15
of each plan year (or such other dates as may be specified by the Plan
Administrator or an employer), a participant may elect to change the rate
of his deposits and the designation (i.e., pre-tax or after-tax) of his
deposits, which change will be effective with respect to compensation
received on and after the beginning of the next succeeding plan year. Any
election to make deposits at a specified rate or of a designated type will
continue in effect until changed by the participant through an election
made in accordance with this subsection.
3.5 Suspension of Deposits. At any time during a plan year a
participant may elect to suspend his pre-tax deposits, his after-tax
deposits or all deposits of both types. If a participant elects to suspend
deposits during any plan year, such suspension shall be effective with
respect to the first payroll period for which such suspension can be made
effective under his employer's payroll procedures and shall continue until
such participant elects to resume the type or types of deposits suspended
in accordance with subsection 3.2 and this subsection 3.5 and such
resumption becomes effective. A participant who has suspended deposits
under this subsection may elect to resume such deposits on or before
November 15 of each plan year (or such other dates as may be specified by
the Plan Administrator or an employer), which resumption will be effective
with respect to compensation received on and after the beginning of the
next succeeding plan year; provided, however, that if such participant
elects to resume deposits after November 15 (or a later date specified by
the Plan Administrator or an employer) in a plan year but before the end of
the plan year, such resumption will be effective with respect to
compensation received on and after the beginning of the second next
succeeding plan year, unless the participant becomes eligible to resume
deposits earlier during an open enrollment period as described in
subsection 2.1. Any election to resume deposits will continue in effect
until changed by the participant through an election made in accordance
with subsection 3.4 or a suspension made in accordance with this
subsection.
3.6 Partial Withdrawals from the Plan Without Terminating Employment.
Upon giving prior written notice, a participant other than a restricted
participant, may elect to withdraw from the Plan, without terminating
employment, an amount specified by him, which amount shall not exceed the
participant's entire "interest in the Plan," as defined in subsection 6.1,
reduced by an amount equal to the sum of the following:
(a) Unless the participant has participated in the Plan for at least 5
years, an amount equal to the participant's portion of the last two
Employers' Contributions credited to his account under subsection 6.5
preceding the date on which the withdrawal payment is made; plus
(b) An amount equal to the sum of the aggregate amount of any after-
tax deposits made by him since the end of the last preceding calendar year;
plus
(c) All pre-tax deposits and any earnings attributable thereto.
Notwithstanding the foregoing, a participant who has, except as provided in
subparagraph (e) below, withdrawn the maximum amount permitted in
accordance with the preceding provisions of this subsection and:
(d) Who has attained age 59-1/2 years may withdraw his pre-tax
deposits and the earnings thereon, except any pre-tax deposits made during
the plan year in which the withdrawal request is signed by the participant
may not be withdrawn. A participant described in this subparagraph is
permitted to make a withdrawal of pre-tax deposits even though he has not
withdrawn any part of his Company Shares account.
(e) Who (i) has not attained age 59-1/2; and (ii) is confronted by a
hardship (as defined below) may withdraw his pre-tax deposits (but not in
excess of the amount required by such financial emergency), but not the
earnings thereon, except any pre-tax deposits made during the plan year in
which the withdrawal request is made may not be withdrawn.
For purposes of subparagraph (e) above, a withdrawal will not be considered
to be made on account of hardship unless the withdrawal is requested
because of an immediate and heavy financial need of the participant caused
by one of the following:
(f) medical expenses described in section 213(d) of the Internal
Revenue Code incurred by the participant, the spouse, or any dependents of
the participant (as defined in section 152 of the Internal Revenue Code) or
necessary for such persons to obtain such medical care;
(g) purchase (excluding mortgage payments) of a principal residence
for the participant;
(h) payment of tuition for the next 12 months of postsecondary
education for the participant, his or her spouse, children or dependents;
(i) the need to prevent the eviction of the participant from his
principal residence or foreclosure on the mortgage of the participant's
principal residence;
(j) expenses directly related to serious damage to the principal
residence of the participant caused by a catastrophic event such as fire,
flood, hurricane or earthquake;
(k) funeral expenses;
(l) or such other deemed immediate and heavy financial need
established from time to time by the Commissioner of Internal Revenue.
To be considered a hardship withdrawal under subparagraph (e), the
withdrawal must also be necessary to satisfy the immediate and heavy
financial need of the participant, and will be so deemed if the participant
represents in writing to the Plan Administrator that the need cannot be
relieved:
(m) through reimbursement or compensation by insurance or otherwise;
(n) by reasonable liquidation of the participant's assets, to the
extent such liquidation would not itself give rise to an immediate and
heavy financial need;
(o) by ceasing to make deposits to the Plan (or any other deferred
compensation plan); or
(p) by borrowing on reasonable commercial terms.
Notwithstanding the foregoing provisions of this subsection 3.6, a
participant may withdraw his interest in the ESOP portion of the Plan in
accordance with subsection C-9.
3.7 Sources of Withdrawals. Any partial withdrawal will be made from,
and will be charged to, the withdrawing participant's subaccounts, subject
to the limits on amounts available for partial withdrawals set forth in
subsection 3.6: first, from the portion of the participant's subaccounts
reflecting his after-tax deposits made prior to January 1, 1987; next, from
the portions of the participant's subaccounts reflecting his after-tax
deposits made after December 31, 1986 and reflecting the earnings on such
after-tax deposits; next, from the portion of the participant's subaccounts
reflecting the earnings on his after-tax deposits made prior to January 1,
1987 and from the portion of the participant's subaccounts reflecting
Employers' Contributions; and, finally, from the participant's subaccounts
reflecting his pre-tax deposits. Unless otherwise requested by the
participant, his various investment accounts will be charged in the order
and in such proportions as the Plan Administrator may specify, provided
that a participant electing withdrawal in the form of Company Shares as
provided below shall first have his withdrawal charged against his Company
Shares account and his Supplement C Shares account and then from his
accounts under the other investment funds in the following order: Money
Market account, Fixed Income account, General Investments account, Equity
account, DWDC Shares account and Allstate Shares account. A participant
who makes a withdrawal may elect to have any specified amounts which would
otherwise be paid to him in cash or in shares of DWDC or Allstate (other
than amounts attributable to his pre-tax subaccount) used by the Trustee to
purchase and distribute whole shares of Company Shares to the participant
at a price determined in accordance with subsection 7.2.
3.8 Method of Making Elections, Revocations, etc. Except as provided
in the following sentence, all actions required of, or permitted to be
taken by, participants under this section 3 must be in writing on a form
prescribed by the Plan Administrator, or the Company, as the case may be,
must be dated and signed by the participant taking the action, and, in
order to be effective, must be given to the person entitled thereto within
any applicable time limit. In addition, to the extent procedures therefore
are established by the Plan Administrator, any action permitted or required
to be taken by a participant in this section 3 or any other provision of
this Plan (other than the election described in the proviso to the second
sentence of subsection 5.3(b)) may be made by telephonic or electronic
communication, as long as the participant has signed and submitted to the
Company an authorization form which substitutes as a signature for all
subsequent telephonic and electronic actions taken by the participant.
SECTION 4
Employers' Contribution
4.1 Amount of Employers' Contribution. Subject to the terms and
conditions of the Plan, including Supplement C hereof, for each fiscal year
of the Company, the "Employers' Contribution" to the Plan for the plan year
which ends with or within each such fiscal year shall be an amount equal to
the lesser of (a) 70 percent of the basic pre-tax deposits made on behalf
of participants for such plan year, or (b) the amount determined in
accordance with subsection 4.2 for such fiscal year; provided, however,
that the Employers' Contribution otherwise required under this subsection
4.1 for any plan year shall be reduced by the fair market value (determined
as of December 31 of that plan year) of the Company Shares allocated to the
accounts of participants in accordance with paragraph C-8(b) of Supplement
C. The Employers' Contribution shall be allocated to participants'
accounts (as described in subsection 6.1) in accordance with the provisions
of subsection 6.5.
4.2 Limitations on Amount of Contribution. Subject to the following
provisions of this subsection 4.2, in no event shall the sum of the
Employers' Contribution for any plan year ending within a fiscal year
exceed an amount equal to (a) 6 percent of the sum of (i) the Net Income of
the Company for such fiscal year and (ii) an amount designated by the
Company in its sole discretion, which amount shall be no greater than the
amount determined by the Company to be the total direct and indirect
expenses of the Company and the employers for such fiscal year attributable
in whole or in part to the maintenance of the Plan, less (b) the amount
determined under clause (ii) above.
4.3 Definition of Net Income of the Company. The term "Net Income of
the Company" for any fiscal year of the Company shall mean net income of
the Company (excluding all equity in net income of partially-owned domestic
companies accounted for under the equity method of accounting and all
equity in net income of foreign companies, whether or not they are
consolidated, except for those foreign companies primarily engaged in
financing activities of the Company and its domestic subsidiaries, whether
or not received as dividends, and excluding gains or losses on the
disposition of investments in such companies whose net income is excluded
hereby) and its wholly-owned domestic subsidiaries for such fiscal year
(excluding those directly and indirectly owned subsidiaries described in
Appendix A) before deduction of dividends to shareholders, before
provisions for Federal income taxes and profit sharing contributions,
before deduction for the expense related to the immediate recognition of
the transition obligation under Statement of Financial Accounting Standards
No. 106 and before deduction for that portion of the administrative
expenses and financing costs, as determined by the Company, which are
properly allocable to the group commonly referred to as Sears Specialty
Merchandising, but after deduction for all pension plan expenses.
4.4 Medium of Employers' Contribution. The Employers' Contribution
will be made either in cash or in Company Shares, or partially in each.
Any Company Shares comprising a portion of the Employers' Contribution
shall be valued at the fair-market value thereof at the date or dates on
which any contribution in that form is made.
4.5 Time of Employers' Contribution. The Employers' Contribution will
be made annually as soon after the end of each fiscal year as an audit of
that year's operations will permit, but an employer, to comply with the
provisions of subsection 6.5 or at its option, may at any time or times
before the end of its fiscal year or prior to the completion of such audit,
make advancements to the Plan, either in cash or in Company Shares, or
partially in each, in anticipation of such employer's share of the
Employers' Contribution for such fiscal year. If the total of any such
advancements exceeds such employer's share of the Employers' Contribution
for such fiscal year, as determined under subsection 4.6, such excess may
be repaid by the Plan to the employer making such excess advancements. Any
Employers' Contribution that is made to the Plan after the last day of a
plan year (the "prior plan year"), but on or before the due date (including
extensions thereof) for the filing of the federal income tax return of the
Company for the tax year in which the last day of such prior plan year
occurs, may be designated by the employers as an Employers's Contribution
with respect to such prior plan year. 4.6 Allocation of Employers'
Contribution Among Employers. The share of each employer in the Employers'
Contribution for any fiscal year shall equal the total sum credited out of
such contributions to the accounts of all Plan participants who are
employees of said employer.
4.7 Determination of Net Income of the Company. The determination of
Net Income of the Company shall be made, except as otherwise expressly
provided, in conformity with generally accepted accounting principles
effective at the close of each fiscal year. The firm of independent
certified public accountants selected by the Company to make the annual
examination of the Company's financial statements shall certify the amount
of Net Income of the Company for purposes of the Plan, and such
certification shall be conclusive on all persons.
SECTION 5
Investments
5.1 In General. The interests of participants will be invested in
Company Shares and other Investment Funds in accordance with the following
provisions of this section 5.
5.2 Company Shares Fund and Supplement C Shares Fund. (a)
Company Shares Fund. Consistent with the stated purposes of the Plan, the
Trustee shall invest that portion of the assets of the Plan consisting of
the Employers' Contribution in Company Shares to the end that, in the
largest measure possible, participants may share in the earnings of the
Company and acquire a proprietary interest in the Company; provided,
however, that all Employers' Contributions made with respect to plan years
beginning on and after January 1, 1990 shall be used to make payments on
ESOP Loans (as described in Supplement C) to the extent provided in such
Supplement C. The Trustee will also invest assets attributable to
participants' after-tax deposits and amounts allocated to participants'
DWDC Shares accounts and Allstate Shares accounts in Company Shares in
accordance with participants' elections under subsection 5.3 or subsection
5.11. Any Company Shares acquired and held in accordance with this
subsection 5.2 will be known and referred to as the "Company Shares Fund."
Any portion of each participant's credits to his accounts which is invested
in the Company Shares Fund will be allocated to such participant's "Company
Shares account" for the beneficial ownership of such participant.
(b) Supplement C Shares Fund. Supplement C to the Plan provides
that amounts attributable to ESOP Loans will be invested in Company Shares.
Such Company Shares shall be held and invested in the "Supplement C Shares
Fund." Any portion of each participant's credits to his accounts which is
invested in the Supplement C Shares Fund will be allocated to such
participant's "Supplement C Shares account," for the beneficial ownership
of such participant.
5.3 DWDC Shares Fund and Allstate Shares Fund.
(a) DWDC Shares Fund. Shares of common stock of DWDC received as
a dividend with respect to Company Shares held in the Company Shares Fund
and with respect to Company Shares allocated to participants' Supplement C
Shares accounts held in the Supplement C Shares Fund in connection with the
spinoff of DWDC shall initially be invested in the "DWDC Shares Fund" and
shall be allocated to participants' "DWDC Shares accounts." At such time
and in such manner as the Plan Administrator may specify, a participant may
elect to transfer amounts allocated to his DWDC Shares account to the
Company Shares Fund to be allocated to the participant's Company Shares
account in such amounts as are allowed under rules established by the Plan
Administrator, subject to the following determination of the Trustee.
Notwithstanding the foregoing provisions of this subsection 5.3(a), the
rights of participants either to continue to hold shares of DWDC for
investment in their DWDC Shares accounts or to direct that such shares be
sold and the sale proceeds reinvested in Company Shares shall be subject to
a determination by the Trustee that the continued holding or the sale of
shares of DWDC, as the case may be, is appropriate in light of prudent
investment standards including considerations of diversification, and the
Trustee shall have absolute discretion at any time to require either the
sale or the continued holding of all or any portion of the shares of DWDC
allocated to participants' DWDC Shares accounts without regard to any
election or the failure to elect by a participant with respect to such sale
or continued holding. In considering any sales of shares of DWDC in
connection with the foregoing determinations (whether such sales are to be
made at the election of participants or upon the determination of the
Trustee without regard to any election or failure to elect by participants)
the Trustee shall act in accordance with the best interests of participants
to protect the value of Plan assets. Shares of common stock of DWDC
received as a dividend with respect to Company Shares credited to the
Suspense Account of the Supplement C Shares Fund in connection with the
spinoff of DWDC were initially invested in the DWDC Shares Fund and were
credited to a Suspense Account of the DWDC Shares Fund. Shares of DWDC
which were credited to the Suspense Account of the DWDC Shares Fund were
sold (or exchanged for Company Shares) by the former Institutional Trustee
consistent with prudent investment standards, and the proceeds of such
sales were applied to the purchase of Company Shares and invested in the
Supplement C Shares Fund and credited to the Suspense Account thereof until
released in accordance with subsection C-7.
(b) Allstate Shares Fund. Shares of common stock of Allstate
received as a dividend with respect to Company Shares held in the Company
Shares Fund (including Company Shares that were formerly held in the
Supplement A Shares Fund) and with respect to Company Shares allocated to
participants' Supplement C Shares accounts held in the Supplement C Shares
Fund in connection with the spinoff of Allstate shall initially be invested
in the "Allstate Shares Fund" and shall be allocated to participants'
"Allstate Shares accounts" or in the Supplement C Shares Fund and allocated
to participants' Supplement C Shares accounts, as applicable. Subject to
the following proviso, shares of Allstate held in the Allstate Shares Fund
or the Supplement C Shares Fund and allocated to participants' accounts
shall, as soon as possible following the Effective Date as is consistent
with prudent investment standards as determined by the Trustee, be sold (or
exchanged for Company Shares) and the proceeds of such sales shall be
applied to the purchase of Company Shares which shall be held in the
Company Shares Fund and allocated to participants' Company Shares accounts
or in the Supplement C Shares Fund and allocated to participants'
Supplement C Shares accounts, as applicable; provided, however, that, at
such time and in such manner as the Plan Administrator may specify, a
participant may elect to have the Plan continue to hold all of the shares
of Allstate which are allocated to such participant's accounts, in which
event all such shares of Allstate held in the Supplement C Shares Fund
shall be transferred to the Allstate Shares Fund. A participant who,
pursuant to the proviso set forth in the preceding sentence, has elected to
have the Plan continue to hold all of the shares of Allstate allocated to
such participant's accounts, may, at such time and in such manner as the
Plan Administrator may specify, elect to transfer all or any portion of
such Allstate shares to the Company Shares Fund to be allocated to the
participant's Company Shares account in such amounts as are allowed under
rules established by the Plan Administrator, subject to the following
determination of the Trustee. Notwithstanding the foregoing provisions of
this subsection 5.3(b), the rights of participants either to continue to
hold shares of Allstate for investment in their accounts or to direct that
such shares be sold and the sale proceeds reinvested in Company Shares
shall be subject to a determination by the Trustee that the continued
holding or the sale of shares of Allstate, as the case may be, is
appropriate in light of prudent investment standards including
considerations of diversification, and the Trustee shall have absolute
discretion at any time to require either the sale or the continued holding
of all or any portion of the shares of Allstate allocated to participants'
accounts without regard to any election or the failure to elect by a
participant with respect to such sale or continued holding. In considering
any sales of shares of Allstate in connection with the foregoing
determinations (whether such sales are to be made at the election of
participants or upon the determination of the Trustee without regard to any
election or failure to elect by participants) the Trustee shall act in
accordance with the best interests of participants to protect the value of
Plan assets. Shares of common stock of Allstate received as a dividend
with respect to Company Shares credited to the Suspense Account of the
Supplement C Shares Fund in connection with the spinoff of Allstate shall
initially be credited to the Suspense Account of the Supplement C Shares
Fund. Shares of Allstate credited to the Suspense Account of the
Supplement C Shares Fund shall, as soon as possible following the Effective
Date as is consistent with prudent investment standards as determined by
the Trustee, be sold (or exchanged for Company Shares) and the proceeds of
such sales shall be applied to the purchase of Company Shares which shall
be invested in the Supplement C Shares Fund and credited to the Suspense
Account thereof until released in accordance with subsection C-7.
5.4 General Investments Fund. All cash, stocks, bonds, notes and
other securities and investments of any kind reflecting that portion of the
assets of the Plan which consists of participants' pre-tax or after-tax
deposits held as a part of the Plan, exclusive of (i) the Company Shares
Fund, (ii) the Supplement C Shares Fund, (iii) the Allstate Shares Fund,
(iv) the DWDC Shares Fund, (v) the Money Market Fund, (vi) the Fixed Income
Fund, (vii) the Equity Fund, (viii) any Cash Equivalents Fund, and (ix) any
other investment fund established under the Plan, will be known and
referred to as the "General Investments Fund." The General Investments
Fund shall consist primarily of a domestic equities component comprising
approximately 50% of the market value of the Fund assets, a domestic fixed
income component comprising approximately 50% of the market value of the
Fund assets, and a cash equivalents component. The domestic equity
component shall be primarily invested in a manner which is intended to
provide a rate of return over any ten-year period which, to the extent
possible, is consistent with the performance of a capitalization-weighted
index consisting of all listed securities in the Standard & Poor's 500
Composite Stock Price Index, exclusive of stock of the Company. The
domestic fixed income component shall be primarily invested in a manner
which is intended to provide a rate of return over any ten-year period
which, to the extent possible, is consistent with the performance of a
value-weighted index consisting of all listed securities in the Lehman
Brothers Aggregate Bond Index, exclusive of any debt securities issued by
the Company. Any portion of each participant's credits to his accounts
which is invested in the General Investments Fund will be allocated to such
participant's "General Investments account" for the beneficial ownership of
such participant.
5.5 Money Market Fund. Commercial paper, certificates of deposit,
short-term United States government and government agencies securities, and
similar short-term cash equivalents reflecting that portion of the assets
of the Plan which consists of participants' pre-tax or after-tax deposits
held as part of the Plan, exclusive of (i) the Company Shares Fund, (ii)
the Supplement C Shares Fund, (iii) the Allstate Shares Fund, (iv) the DWDC
Shares Fund, (v) the General Investments Fund, (vi) the Fixed Income Fund,
(vii) the Equity Fund, (viii) any Cash Equivalents Fund, and (ix) any other
investment fund established under the Plan, will be known and referred to
as the "Money Market Fund." Any portion of each participant's credits to
his accounts which is invested in the Money Market Fund will be allocated
to such participant's "Money Market account" for the beneficial ownership
of such participant.
5.6 Equity Fund. Equity securities reflecting that portion of the
assets of the Plan which consists of participants' pre-tax or after-tax
deposits held as part of the Plan, exclusive of (i) the Company Shares
Fund, (ii) the Supplement C Shares Fund, (iii) the Allstate Shares Fund,
(iv) the DWDC Shares Fund, (v) the General Investments Fund, (vi) the Money
Market Fund, (vii) the Fixed Income Fund, (viii) any Cash Equivalents Fund,
and (ix) any other investment fund established under the Plan, will be
known and referred to as the "Equity Fund." The Equity Fund shall be
primarily invested in a manner which is intended to provide a rate of
return over any ten-year period which, to the extent possible, is
consistent with the performance of a capitalization-weighted index
consisting of all listed securities in the Standard & Poor's 500 Composite
Stock Price Index, exclusive of stock of the Company. Any portion of each
participant's credits to his accounts which is invested in the Equity Fund
will be allocated to such participant's "Equity account" for the beneficial
ownership of such participant.
5.7 Fixed Income Fund. Debt securities reflecting that portion of the
assets of the Plan which consists of participants' pre-tax or after-tax
deposits held as part of the Plan, exclusive of (i) the Company Shares
Fund, (ii) the Supplement C Shares Fund, (iii) the Allstate Shares Fund,
(iv) the DWDC Shares Fund, (v) the General Investments Fund, (vi) the Money
Market Fund, (vii) the Equity Fund, (viii) any Cash Equivalents Fund, and
(ix) any other investment fund established under the Plan, will be known
and referred to as the "Fixed Income Fund." The Fixed Income Fund shall be
primarily invested in a manner which is intended to provide a rate of
return over any ten-year period which, to the extent possible, is
consistent with the performance of a value-weighted index consisting of all
listed securities in the Lehman Brothers Aggregate Bond Index, exclusive of
any debt securities issued by the Company. Any portion of each
participant's credits to his accounts which is invested in the Fixed Income
Fund will be allocated to such participant's "Fixed Income account" for the
beneficial ownership of such participant.
5.8 Company Shares Cash Equivalents Fund. Commercial paper,
certificates of deposit, short-term United States government and government
agencies securities, and similar short-term cash equivalents reflecting
that portion of the assets of the Plan which consists of the Employers'
Contributions, dividends on Company Shares allocated to participants'
Company Shares accounts, dividends on shares of Allstate allocated to
participants' Allstate Shares accounts, dividends on shares of DWDC
allocated to participants' DWDC Shares accounts, dividends on Company
Shares allocated to participants' Supplement C Shares accounts that are
directed by the Investment Committee to be credited to participants'
Company Shares Cash Equivalents accounts and after-tax deposits not yet
invested in Company Shares, exclusive of (i) the Company Shares Fund, (ii)
the Supplement C Shares Fund, (iii) the Allstate Shares Fund, (iv) the DWDC
Shares Fund, (v) the General Investments Fund, (vi) the Fixed Income Fund,
(vii) the Equity Fund, (viii) the Money Market Fund, and (ix) any other
investment fund established under the Plan, will be known and referred to
as the "Company Shares Cash Equivalents Fund." Any portion of each
participant's credits to his accounts which is invested in the Company
Shares Cash Equivalents Fund will be allocated to such participant's
"Company Shares Cash Equivalents account" for the beneficial ownership of
such participant.
5.9 Supplement C Cash Equivalents Fund. Commercial paper,
certificates of deposit, short-term United States government and government
agencies securities, and similar short-term cash equivalents reflecting
that portion of the assets of the Plan which consists of Employers'
Contributions and dividends on Company Shares and the income allocated
thereto which are to be used to make payments on an ESOP Loan (as described
in Supplement C) will be known and referred to as the "Supplement C Cash
Equivalents Fund." Amounts invested in the Supplement C Cash Equivalents
Fund shall be used solely for the purpose of making payments of principal
and interest on ESOP Loans, except as otherwise provided by the Investment
Committee.
5.10 Additional Investment Funds. One or more additional investment
funds may be established at the direction of the Investment Committee.
Participation in such fund or funds shall be subject to rules established
by the Plan Administrator and the Investment Committee. An account
reflecting each participant's interest in each such additional investment
fund shall be established by the Plan Administrator.
5.11 Investment Elections by Participants. Once each plan year, at
such time and in such manner as the Plan Administrator may specify, a
participant may elect in writing to invest his pre-tax and after-tax
deposits in the General Investments Fund, the Money Market Fund, the Fixed
Income Fund, the Equity Fund, an additional investment fund or funds, or
any combination of funds, in such proportions as are allowed under rules
established by the Plan Administrator. A participant may also elect once
each plan year to invest his after-tax deposits in the Company Shares Fund
at such time as the Investment Committee or Investment Manager may specify,
in such manner as the Plan Administrator may specify and in such proportion
as is allowed under rules established by the Plan Administrator.
5.12 Investment Transfers by Participants. At such time and in such
manner as the Plan Administrator may specify, a participant may elect in
writing to transfer amounts allocated to his pre-tax subaccounts in the
General Investments Fund, the Money Market Fund, the Fixed Income Fund, the
Equity Fund, or an additional investment fund to or from any of these
funds, in such proportions as are allowed under rules established by the
Plan Administrator, subject to approval of the Investment Committee or the
Investment Manager. A participant may also elect at such time and in such
manner as the Plan Administrator may specify, to transfer amounts allocated
to his after-tax subaccounts in the General Investments Fund, the Money
Market Fund, the Fixed Income Fund, the Equity Fund, or an additional
investment fund to or from any of these funds, in such proportions as are
allowed under rules established by the Plan Administrator, subject to
approval of the Investment Committee or the Investment Manager. Except for
transfers from a participant's DWDC Shares account or Allstate Shares
account to his Company Shares account (or for conversion of Allstate shares
to Company Shares within a participant's Supplement C Shares account)
pursuant to subsection 5.3(a) or 5.3(b), transfers may not be made to or
from a participant's Company Shares account, Supplement C Shares account or
Company Shares Cash Equivalents account. Each plan year, a participant may
make one election per calendar month to transfer amounts attributable to
pre-tax deposits and one election per calendar month to transfer amounts
attributable to after-tax deposits. Any transfer under this subsection
shall be made in accordance with procedures established by the Plan
Administrator. Participants will be notified in writing of the amounts and
effective dates of transfers.
SECTION 6
Accounting
6.1 Participants' Accounts and Subaccounts. The Plan Administrator
will maintain an account or accounts for each participant reflecting his
interest in each investment fund described in section 5. Each such account
other than the Company Shares account, the Company Shares Cash Equivalents
account, the Supplement C Shares account, the Allstate Shares account, and
the DWDC Shares account shall be divided into subaccounts reflecting the
source of the deposits invested in the account. After-tax subaccounts will
reflect a participant's after-tax deposits and earnings thereon and pre-tax
subaccounts will reflect a participant's pre-tax deposits and earnings
thereon. A participant's "interest in the Plan" at any date will consist
of the total amount credited to all such subaccounts plus the total amount
credited to the participant's Company Shares account, Company Shares Cash
Equivalents account, Supplement C Shares account, Allstate Shares account,
and DWDC Shares account, after adjustments of all such accounts and
subaccounts required as of that date shall have been made.
6.2 Credits to Participants' Accounts. As of the last day of each
plan year, or as of the end of any monthly or quarterly period specified by
the Plan Administrator, each participant's accounts in any investment fund
(other than the Supplement C Shares account) will be credited with the sum
of the following:
(a) The total deposits made by such participant to such fund during
such period and not withdrawn before the end of such period;
(b) Dividends received by the Trustee (and dividends payable but not
received) with respect to (i) Company Shares credited to such participant's
Company Shares account or Supplement C Shares account, (ii) shares of
Allstate credited to such participant's Allstate Shares account or
Supplement C Shares account and (iii) shares of DWDC credited to such
participant's DWDC Shares account, as of the applicable record date or
dates for the payment of such dividends, shall be allocated to a
participant's Company Shares Cash Equivalents account, except to the extent
that such dividends are used to make payments of principal or interest on
an ESOP Loan in accordance with Supplement C; and
(c) Such participant's portion of the net earnings of each investment
fund in which his accounts are invested for that period.
Each participant's portion of the net earnings of an investment fund for
any period will be the same proportion thereof as the ratio of the net
credit balance in such participant's investment fund account as of the
beginning of such period, as adjusted in accordance with subsections 6.3
and 6.9, bears to the total of the net credit balances in that investment
fund of the accounts of all participants as of the beginning of such
period, as adjusted in accordance with subsections 6.3 and 6.9. The "net
earnings" of each investment fund for any period means the net earnings
accrued as dividends, interest, rents or other income with respect to
assets held as a part of that investment fund determined in accordance with
generally accepted accounting principles.
6.3 Allocation of Company Shares. As of the end of each plan year,
and as of the end of any monthly or quarterly period designated by the Plan
Administrator, Company Shares then held by the Trustee, other than in the
Supplement C Shares Fund, which shall not previously have been allocated to
the Company Shares accounts of participants shall be allocated to the
Company Shares accounts of all participants, pro rata, according to the
respective balances in their Company Shares Cash Equivalents accounts at
the beginning of such period, but after the credits to participants'
investment fund accounts in accordance with subparagraphs 6.2(a) and (c)
and adjustments to such accounts for partial withdrawals since the
beginning of such period shall have been made in accordance with subsection
3.6. Following such allocation and crediting of Company Shares to each
participant's Company Shares account at the end of each period, each
participant's Company Shares Cash Equivalents account shall be charged with
an amount representing the Company Shares (or any fraction thereof) so
allocated and credited to his Company Shares account on the basis of the
average cost per share of the Company Shares acquired by the Trustee (other
than Company Shares held in the Suspense Account or Supplement C Shares
accounts) for the period for which the allocation is made. Company Shares
held by the Trustee in the Suspense Account under Supplement C shall be
allocated to the Supplement C Shares accounts of participants as provided
in Supplement C.
6.4 Adjustment for Appreciation or Depreciation of Investment Funds.
As of the end of each plan year, or as of the end of any quarterly or
monthly period specified by the Plan Administrator, after adding the
credits to each participant's investment fund accounts in accordance with
subsection 6.2, and after allocation of Company Shares and charges in
accordance with subsection 6.3, the Plan Administrator shall further credit
(or charge) each participant's investment fund accounts (other than his
Company Shares account, Supplement C Shares account, Allstate Shares
account, and DWDC Shares account) with the net appreciation (or net
depreciation) in the market value of the assets of each investment fund for
that period, pro rata, according to the respective amounts in their
respective investment fund accounts at the beginning of such period. For
purposes of this subsection, the "net appreciation" in an investment fund
for any period shall be the excess, if any, of:
(a) the total market value of an investment fund as of the end of such
period reduced by the amount then to be allocated under subsection 6.2,
over
(b) the total market value of an investment fund as of the beginning
of such period.
The "net depreciation" in an investment fund for any period will be the
excess, if any, of (b) above for such period, over (a) above for such
period.
6.3 Allocation of Employers' Contribution. Subject to the provisions
of subsections 2.7 and 4.1 and the limitations of subsection 6.6,
(a) An amount equal to the Employers' Contribution for a plan year
will be allocated among and credited to the Company Shares Cash Equivalents
accounts of participants who made basic pre-tax deposits during such plan
year and who either
(i) Continued in the employ of the employers on or after December
31 of such plan year; or
(ii) Terminated employment with all employers, became employed by
a controlled group member, were employed by such controlled group member on
December 31 of such plan year, and still maintained their accounts under
the Plan on December 31 of such plan year; or
(iii) Transferred employment from an employer to a controlled group
member and were employed by the controlled group member on December 31 of
such plan year; or
(iv) Either (A) terminated employment with all employers or died
on or after attainment of age 55 years and completion of 10 or more years
of continuous service; or (B) terminated employment with all employers on
or after attainment of age 50 years and completion of 10 or more years of
continuous service either because of health problems or as a direct result
(as determined by the Company) of the closing or reorganization of a unit
(as hereinafter defined);
pro rata, according to the amount of each such participant's basic
pre-tax deposits for that year, not in excess of the lesser of (A) the
maximum amount permitted in accordance with section 402(g) of the Internal
Revenue Code, as such amount is adjusted from time to time by the Secretary
of Treasury to reflect cost of living increases, or (B) five percent of
compensation, except that for this purpose:
(v) In order to facilitate prompt distribution to participants
described in (iv) above, the Plan Administrator will calculate in the
manner described below the amount of the allocation to be made for any plan
year to any participant who is entitled to share in the allocation of the
Employers' Contribution for such plan year, but whose severance from
service with all employers occurs prior to the date on which the exact
amount of the Employers' Contribution for such plan year shall have been
ascertained, which amount
(A) in the case of any such participant whose severance
occurs prior to December 31 of such plan year, will be credited to such
participant's Company Shares account and Company Shares Cash Equivalents
account after any adjustments of such accounts required under subsection
6.9 shall have been made; and
(B) in the case of any such participant whose severance
occurs on or after December 31 of such plan year, will be allocated,
credited and charged to such participant's Company Shares account and
Company Shares Cash Equivalents account in the proportions in which such
calculated amount would have been allocated, credited and charged to such
accounts pursuant to subsection 6.3 if the adjustments required by such
subsections had been made as of the date of severance.
In making the calculation described in (v) above, the Plan
Administrator first will determine the amount which would be the Employers'
Contribution based upon the results of operations covering the latest 12-
month period most recently furnished to him by the Company. Next, the
amount so determined will be multiplied by a fraction, the numerator of
which will be the number of full months of the current plan year which
shall have elapsed as of the date the calculation is being made, and the
denominator of which will be 12. Next, the ratio of (I) the amount
determined in accordance with the preceding sentence, reduced by an amount
equal to the aggregate of the allocations theretofore made under
subparagraph (v) above for the current plan year to (II) the amount of
basic pre-tax deposits made by all current participants in the current plan
year up to the date of calculation (i.e., the "current matching rate") will
be determined, not exceeding 70 percent of basic pre-tax deposits.
Finally, the current matching rate will be applied to the amount of basic
pre-tax deposits made by any such participant in the year of severance, and
the resultant amount will be such participant's share of the Employers'
Contribution for the year in which severance occurs. The Plan
Administrator shall be fully protected in acting and relying upon the
results of operations for any 12-month period as most recently furnished to
him by the Company. For purposes of subparagraph (iv) above:
(vi) a "unit" is defined as any operation or function or any
service provided by an employer which has its own identifying employer unit
number (but not including individual departments or divisions), and which
(A) is an administratively separate entity; or
(B) is under its own management; or
(C) reports or accounts for its profit-and-loss
performance separately from any other facilities.
(b) The "normal retirement age" for purposes of the Plan is age 65.
The "normal retirement date" for a participant will be the first day of the
month following the date he attains normal retirement age. A participant's
rights under this subsection are subject to the provisions of subsection
2.6. Subject to subsection 2.7, and subject to the foregoing provisions of
this subsection 6.5, participants who made basic pre-tax deposits during
any plan year but who terminated employment for any reason before December
31 of that plan year will not share in the Employers' Contribution for that
plan year.
6.6 Limitations Imposed by Internal Revenue Code. Notwithstanding the
provisions of subsection 6.5:
(a) For each plan year, the "annual addition" (as defined below) to a
participant's accounts under the Plan shall not exceed the lesser of (i)
$30,000 (or, if greater, 1/4 of the dollar limitation in effect for such
plan year under section 415(b)(1)(A) of the Internal Revenue Code), or (ii)
25 percent of the participant's compensation during that plan year.
(b) For purposes of this subsection 6.6 (as well as paragraphs B-3 and
B-4 of Supplement B) a participant's compensation means, with respect to
any plan year, the compensation (as defined in Treasury Regulation section
1.415-2(d) or any successor regulation) paid to him during that year for
services rendered to an employer or any other controlled group member as an
employee.
(c) Subject to the provisions of paragraph (d) below, the term "annual
addition" for any plan year beginning after December 31, 1986 means the sum
of the following amounts credited to a participant's accounts for that
year, excluding any amounts rolled over to a participant's accounts for
that year:
(i) Employers' Contribution;
(ii) after-tax deposits;
(iii) pre-tax deposits; and
(iv) employee contributions, employer contributions and
forfeitures with respect to the participant under any other defined
contribution plan (as defined in section 415(k) of the Internal Revenue
Code) maintained by the employers or a controlled group member.
(d) A participant's annual additions with respect to the Supplement C
Shares Fund shall be determined solely on the basis of contributions
thereto without regard to the value of Company Shares released from the
Suspense Account and, if no more than one third of the Employers'
Contributions to the Supplement C Shares Fund which are deductible under
section 404(a)(9) of the Code by reason of their application to make
payments on an ESOP Loan are allocated to highly compensated participants,
a participant's annual additions shall not include employer contributions
which are deductible under section 404(a)(9)(B) of the Internal Revenue
Code by reason of their applications to the payment of interest on an ESOP
Loan.
(e) Any participant's after-tax deposits which cannot be allocated to
the participant because of the foregoing limitations shall be returned to
him. Any Employers' Contribution which cannot be allocated to a
participant because of the foregoing limitations shall be reallocated to
the accounts of other participants to the extent permitted under this
subsection.
(f) In any case where a participant also participates in a defined
benefit pension plan maintained by an employer, the sum of the Defined
Contribution Fraction and the Defined Benefit Fraction for the participant
shall not exceed 1.0, and for this purpose:
(i) the "Defined Contribution Fraction" shall be a fraction (A)
the numerator of which is the sum of the annual additions to a
participant's account as of the close of the plan year and (B) the
denominator of which is the sum of the "maximum annual additions" (as
defined below) for such plan year and all prior years of service with the
employers. A participant's "maximum annual addition" for any plan year or
year of service means the lesser of: (C) 1.25 multiplied by the dollar
limitation in effect for such year determined under section 415(c)(1)(A) of
the Internal Revenue Code without regard to subsection (c)(6) thereof; and
(D) 1.4 multiplied by the amount which may be taken into account under the
percentage limitation set forth under section 415(c)(1)(B) of the Internal
Revenue Code for such year. In determining the Defined Contribution
Fraction, the sum of a participant's maximum annual addition for any years
of service ending prior to January 1, 1983 shall not be less than an amount
equal to the product of the maximum annual addition in effect on January 1,
1982 multiplied by the "transition fraction." The term "transition
fraction" means a fraction, the numerator of which is the lesser of $51,875
or 1.4 multiplied by 25% of the participant's compensation for the year
ended December 31, 1981 and the denominator of which is the lesser of
$41,500 or 25% of the participant's compensation for the year ended
December 31, 1981. The Plan Administrator shall apply such transitional
rule in accordance with the requirements of section 415(e)(6) of the
Internal Revenue Code and regulations thereunder; and
(ii) the "Defined Benefit Fraction" for any plan year shall be a
fraction (A) the numerator of which is the participant's "projected annual
benefit" (as defined below) and (B) the denominator of which is his
"maximum projected annual benefit." A participant's "projected annual
benefit" is his noncontributory projected annual benefit under the defined
benefit pension plan in which he participates, and which is actuarially
equivalent to an annual benefit payable for life only as of the close of
the plan year. A participant's "maximum projected annual benefit" is the
lesser of: (C) 1.25 multiplied by the dollar limitation in effect under
section 415(b)(1)(A) of the Internal Revenue Code for such plan year, and
(D) 1.4 multiplied by the amount that may be taken into account under the
percentage limitation set forth under section 415(b)(1)(B) of the Internal
Revenue Code for such plan year. If an individual was a participant in the
defined benefit plan on or before December 31, 1986, the maximum projected
annual benefit shall not be less than 1.25 multiplied by the individual's
accrued benefit as of December 31, 1986.
Effective on January 1, 1988 and each January 1 thereafter,
the dollar limitation referred to in subparagraph (b)(ii) above shall
automatically be adjusted to a new dollar limitation determined by the
Commissioner of Internal Revenue for that calendar year. For purposes of
the foregoing limitations, all defined contribution plans maintained by the
employers shall be treated as one plan and all defined benefit plans
maintained by the employers also shall be treated as one plan. If, by
applying the foregoing provisions of this subsection 6.6, the sum of the
Defined Contribution Fraction and the Defined Benefit Fraction for a
participant would have exceeded 1.0 as of December 31, 1986, the numerator
of the Defined Contribution Fraction shall thereafter be permanently
reduced by an amount equal to the product of (1) the amount by which the
sum of such fractions would have exceeded 1.0, times (2) the denominator of
the Defined Contribution Fraction as of December 31, 1986. If, but for the
foregoing limitations the sum of a participant's Defined Benefit Fraction
and Defined Contribution Fraction would exceed 1.0, the benefits that
otherwise would have been payable to the participant under the defined
benefit plans of the employers in which he participates will be adjusted to
the extent necessary so that the sum of all such fractions does not exceed
1.0.
6.7 Employers' Contribution Considered Made on Last Day of Plan Year.
The Employers' Contribution for any plan year will be considered to have
been made on the last day of the plan year for which made, regardless of
whether received by the Trustee at a later or an earlier date.
6.8 Dividends, Stock Dividends, Stock Splits, etc., with Respect to
Company Shares, Allstate Shares and DWDC Shares. Except as otherwise
provided below, any cash dividends received on Company Shares (exclusive of
Supplement C shares) or on shares of Allstate or DWDC which are held for a
participant's benefit will be credited to his Company Shares Cash
Equivalents account in accordance with subsection 6.2. In the event a
participant makes a partial withdrawal in accordance with subsection 3.6,
any dividends on Company Shares (exclusive of Supplement C shares) or on
shares of Allstate or DWDC held for such participant as of the date the
withdrawal is made will be credited to such participant's Company Shares
Cash Equivalents account. Any additional Company Shares received by the
Trustee with respect to Company Shares allocated to a participant's Company
Shares account and any additional shares of Allstate or DWDC received by
the Trustee with respect to shares of Allstate or DWDC allocated to a
participant's Allstate Shares account or DWDC Shares account and held for
his benefit as a result of any stock dividends or stock splits shall be
credited to the Company Shares account, Allstate Shares account and DWDC
Shares account, respectively, of such participant. Cash dividends, stock
dividends and stock splits with respect to Supplement C shares shall be
allocated and credited as provided in Supplement C.
6.9 Adjustment of Investment Fund Accounts of Participants. Whenever
a distribution is made to, or a withdrawal is made by, or a transfer is
elected by, a participant from an investment fund account, the balance in
such account as of the beginning of the period in which the applicable
valuation date occurs shall be adjusted by the adjustment and earnings
factors for such valuation date. The "adjustment factor" for any valuation
date shall be a percentage factor which reflects the amount by which the
market value of all investment fund assets as of the applicable valuation
date exceeds, or is less than, the market value of all investment fund
assets as of the beginning of the period in which the applicable valuation
date occurs. The market value of investment fund assets may be determined
for each business day of the plan year, or at such other time or for such
other periods as the Trustee deems that circumstances warrant or make it
advisable or desirable to do so, but shall be determined at least annually.
The "earnings factor" for any valuation date shall be a percentage factor
which reflects net earnings on investment fund assets and accrued
dividends. Whenever the estimated amount of any participant's share of the
Employers' Contribution for any plan year is determined in accordance with
subparagraph 6.5(a), such estimated amount will be added to such
participant's investment fund accounts after making the adjustments of such
accounts otherwise required by the foregoing provisions of this subsection
6.9.
6.10 Applicable Valuation Dates. For purposes of subsection 6.9, the
"applicable valuation date" means the applicable one of the following:
(a) In the case of a participant to whom a lump sum distribution is
being made because of severance of employment with all employers for any
reason or a partial withdrawal from his accounts made by a participant in
accordance with section 3, the latest valuation date for which investment
fund account market adjustments and earnings factors have been provided to
the Plan Administrator preceding the date on which payment is made, except
for converted Company Shares, converted shares of Allstate and converted
shares of DWDC, which will be valued at the mean between the high and low
prices as of the distribution date.
(b) In the case of transfers from one investment fund to another, the
date determined by the Plan Administrator.
6.11 Rounding. In making allocations and adjustments under this
section 6, the Plan Administrator may allocate or adjust by rounding to the
nearest whole figure.
SECTION 7
Distributions
7.1 Normal Form of Distribution. Except as requested in writing by an
eligible participant, distribution of a participant's interest in the Plan
shall commence as soon as practicable after his termination of employment
with all employers and controlled group members, retirement on or after his
normal retirement age, or retirement on an early retirement date at or
after attainment of age 55, but not later than the 60th day after the close
of the calendar year in which occurs the later of (i) the participant's
termination of employment; and (ii) the date on which he attains age 65;
provided, in any event, if a participant attains age 70-1/2 on or after
January 1, 1988, distribution shall commence not later than April 1 of the
calendar year following the calendar year in which the participant attains
age 70-1/2. If a participant's total account balances are $3,500 or less,
he shall receive his distribution as soon as practicable after his
termination of employment regardless of whether he consents. A participant
whose account balances exceed $3,500 may elect to have his account balances
distributed in a lump sum payment as of any valuation date coinciding with
or following his termination of employment that precedes or coincides with
his attainment of age 70. A restricted participant whose employment
terminates (for reasons other than his death) after (i) attainment of age
55 years and completion of 20 or more years of continuous service, (ii)
attainment of age 60 years and completion of 10 or more years of continuous
service, or (iii) attainment of age 50 years and completion of 10 or more
years of continuous service for a reason specified in subparagraph
6.5(a)(iv)(B) shall remain eligible for withdrawals pursuant to subsection
3.6 for a period not to exceed 15 months following the date of his
termination of employment. All restricted participants shall be eligible
to make investment elections in accordance with subsection 5.12. Any
distribution made to a participant who terminates employment will be made
not earlier than the day following the date of such termination and, except
as otherwise expressly provided in subsection 7.2, will consist of the
number of whole Company Shares then distributable from his Company Shares
account and his Supplement C Shares account and the number of whole shares
of Allstate and DWDC then distributable from his Allstate Shares account
(or Supplement C Shares account, if applicable) and DWDC Shares account,
plus cash representing the sum of:
(a) The amount of his investment fund accounts, after all adjustments
thereof required under section 6 shall have been made; plus
(b) Any unwithdrawn deposits made by him since the last preceding
valuation date; plus
(c) The value of any fractional Company Shares distributable from his
Company Shares account and his Supplement C Shares account and the value of
any fractional shares of Allstate or DWDC distributable from his Allstate
Shares account (or Supplement C Shares account, if applicable) or DWDC
Shares account; plus
(d) Any dividends received by the Trustee, or payable but not received
by the Trustee, on Company Shares held in his Company Shares account and
his Supplement C Shares account and on shares of Allstate or DWDC held in
his Allstate Shares account (or Supplement C Shares account, if applicable)
or DWDC Shares account, but only to the extent that such dividends shall
not already have been allocated to the Company Shares account or Company
Shares Cash Equivalents account, applied to the payment of principal or
interest on an ESOP Loan and replaced with Company Shares released from the
Suspense Account under Supplement C, or paid to such participant or his
beneficiary prior to the applicable valuation date.
Any partial withdrawal to an eligible restricted participant in accordance
with this subsection 7.1 and subsection 3.6 will be charged to his accounts
in the order specified in subsection 3.7. Any participant who has received
a distribution of his accounts and who continues employment with any of the
employers beyond the April 1 of the calendar year following the calendar
year in which he attains age 70-1/2 shall continue to receive distributions
by no later than each subsequent April 1 of all amounts credited to his
accounts during the preceding year.
7.2 Acquisition of Company Shares, Allstate Shares and DWDC Shares
from or on behalf of Participants. Since fractional Company Shares and
fractional shares of Allstate or DWDC cannot be issued, any fractional
Company Share held in a participant's Company Shares account or his
Supplement C Shares account and any fractional share of Allstate or DWDC
held in a participant's Allstate Shares account (or Supplement C Shares
account, if applicable) or DWDC Shares account as a part of his
distributable, withdrawable or transferable interest will be purchased by
the Trustee. Except as otherwise expressly provided in subsection 6.10,
any such purchases of fractional shares (referred to in the Plan as
"converted Company Shares," "converted shares of Allstate" or "converted
shares of DWDC") shall be made at the mean between the high and low prices
per share for such shares on the applicable valuation dates, as reported by
any recognized reporting system as may be selected by the Investment
Committee or a duly authorized Investment Manager. Notwithstanding the
provisions of subsection 7.1, a participant who terminates employment after
December 31, 1989 may elect to have any specified dollar amount which would
otherwise be paid to him in cash (other than amounts attributable to his
pre-tax subaccount) used by the Trustee to purchase and distribute whole
shares of Company Shares to the participant. The price of any Company
Shares so purchased shall be equal to (i) the mean between the high and low
prices for Company Shares on the date of processing of the participant's
distribution request, as reported by any recognized reporting system
selected by the Investment Committee or a duly authorized Investment
Manager (or, if no Company Shares are reported on such reporting system for
that date, on the next preceding date on which shares are reported), plus
(ii) a fee equal to the commission rate charged to the Plan as of that date
for purchases of Company Shares on the open market. Any participant who
receives a lump sum distribution of his entire interest in the Plan
pursuant to subsection 7.1 and who at the applicable valuation date as
described in subsection 6.10(a) has a total of fifty or fewer whole Company
Shares in his Company Shares account and Supplement C Shares account, may
elect to have the Trustee purchase such total shares at the mean between
the high and low price per share for such shares on the applicable
valuation date, as reported by any recognized reporting system as may be
selected by the Investment Committee or a duly authorized Investment
Manager. Notwithstanding the preceding sentence, the right to request the
Trustee to purchase fifty or fewer whole Company Shares may be suspended at
any time if a duly authorized Investment Manager advises the Investment
Committee that sources of cash for the purchase of Company Shares are
insufficient to comply with the Investment Committee's Investment
Objectives, Policy and Guidelines, as amended from time to time, which
govern the purchase of Company Shares on a dollar averaging method, and
such suspension shall continue until the duly authorized Investment Manager
advises the Investment Committee that the available cash sources have been
restored to sufficient levels to maintain the dollar averaging method.
7.3 Distribution Only Upon Separation From Service. Notwithstanding
any other provision of the Plan to the contrary, a participant may not
commence distribution of his account pursuant to this section 7, even
though his employment with the employers and controlled group members has
been terminated, unless or until he also has a "separation from service"
within the meaning of section 401(k)(2)(B) of the Internal Revenue Code.
The foregoing restriction shall not apply, however, if the participant's
termination of employment occurs in connection with the disposition by an
employer or controlled group member to an unrelated corporation of at least
85 percent of the assets of a trade or business, or the disposition of its
interest in a subsidiary to an unrelated entity or person, provided (a) the
participant remains employed in such trade or business or by such
subsidiary after the disposition, (b) the employers continue to maintain
the Plan after the disposition, and (c) the participant requests
distribution of his account under the Plan by the end of the second
calendar year after the year in which the disposition occurs.
7.4 Designation of Beneficiary. Each participant from time to time,
by signing a form furnished by the Plan Administrator, may designate any
person or persons (who may be designated concurrently or contingently) to
whom his interest in the Plan is to be paid if he dies before he receives
all of such interest. A beneficiary designation form will be effective and
valid and will cancel all beneficiary designation forms previously filed
with the Plan Administrator or the employer only (i) when the form is filed
with the Plan Administrator or the employer while the participant is alive;
and (ii) if the participant is married at the date of his death and has
designated a person or persons other than, or in addition to, his surviving
spouse as his primary beneficiary or beneficiaries, if the participant's
surviving spouse has consented in writing to such election and acknowledged
the effect of such consent and such consent has been witnessed by a notary
public; provided, however, that any beneficiary designation form signed by
a participant before October 1, 1991, that has not been re-signed by the
participant on or after October 1, 1991, shall be invalid and shall not be
given effect. If a deceased participant failed to designate a beneficiary
as provided above, if the beneficiary designated by a deceased participant
dies before him and no other designated beneficiary exists or if a
beneficiary designation is invalid, the Trustee, at the direction of the
Plan Administrator, shall pay the participant's interest in the Plan to:
(a) His surviving spouse, if any; or
(b) If there is no surviving spouse, the estate of the last to die of
the deceased participant and his designated beneficiary.
The term "designated beneficiary" as used herein means the person or
persons designated by a participant as his beneficiary in the last
effective beneficiary designation form filed with the Plan Administrator or
the employer under this subsection. The term "beneficiary" as used herein
means the person or persons to whom a deceased participant's interest in
the Plan is payable under this subsection.
7.5 Missing Participants or Beneficiaries. Each participant and each
designated beneficiary must file with the Plan Administrator from time to
time, in writing, his post office address and each change of post office
address. Any communication, statement or notice addressed to such a
participant or beneficiary at his last post office address so filed will be
binding on the participant and his beneficiary for all purposes of the
Plan. Neither the Plan Administrator nor any employer shall be required to
search for or locate such a participant or beneficiary. If the Plan
Administrator notifies a participant or beneficiary that he is entitled to
a distribution and also notifies him of the provisions of this subsection,
and the participant or beneficiary fails to make his whereabouts known to
the Plan Administrator within three years after due notification, the
benefits of the participant or beneficiary will be disposed of, to the
extent permitted by applicable law, as follows:
(a) If the whereabouts of the participant then are unknown to the Plan
Administrator, but the whereabouts of the participant's designated
beneficiary are known to the Plan Administrator, payment will be made to
the designated beneficiary.
(b) If the whereabouts of the participant and the participant's
designated beneficiary (who is a person other than the participant's
spouse) then are unknown to the Plan Administrator, payment will be made to
the participant's spouse.
(c) If the whereabouts of the participant, his designated beneficiary
(if other than his spouse) and his spouse then are unknown to the Plan
Administrator, the benefits of such participant or beneficiary will be
disposed of in an equitable manner permitted by law under rules adopted by
the Plan Administrator.
7.6 Non-Alienation of Benefits. Except as otherwise expressly
provided herein, no participant or beneficiary shall be entitled to
withdraw, transfer, assign or hypothecate the money and securities, or any
part thereof, credited to the participant's accounts in the Plan. No
interest in the Plan shall be anticipated, charged or encumbered by any
participant or beneficiary. Except as may be required by the tax
withholding provisions of any statute or by a domestic relations order,
judgment or decree which the Plan Administrator determines to be a
"qualified domestic relations order" (as defined in section 414(p)(1)(A) of
the Internal Revenue Code and the regulations thereunder), the interest or
interests of each and every participant or beneficiary in the Plan shall
not be subject to, or reached by, any legal process in satisfaction of any
debt, claim, liability or obligation, prior to the receipt thereof by the
participant or beneficiary. Notwithstanding any other provision of the
Plan to the contrary, such domestic relations order may permit distribution
of the entire portion of the account balance of a participant awarded to
his alternate payee, in a lump sum payment as soon as practicable after the
Plan Administrator determines that such order is qualified, without regard
to whether the participant would himself be entitled under the terms of the
Plan to withdraw or receive a distribution of such amount at that time.
7.7 Facility of Payment. When a person entitled to distributions from
the Plan is under legal disability or, in the opinion of the Plan
Administrator, is in any way incapacitated so as to be unable to manage his
financial affairs, the Trustee, at the direction of the Plan Administrator,
may make such distributions to such person's legal representative or to a
relative or friend of such person for such person's benefit or apply such
distribution for the benefit of such person. Any distribution made in
accordance with the preceding sentence shall be a full and complete
discharge of any liability for such distribution under the Plan.
7.8 Direct Rollover Option. In accordance with uniform rules
established by the Plan Administrator, each participant, surviving spouse
of a participant or alternate payee under a qualified domestic relations
order within the meaning of section 414(p) of the Code who is due to
receive an eligible rollover distribution from the Plan may direct the Plan
Administrator to transfer all or a portion of such distribution directly to
another eligible retirement plan. For purposes of this subsection, the
terms "eligible rollover distribution" and "eligible retirement plan" as
applied to any such individual shall have the meanings accorded such terms
under section 401(a)(31) of the Code (or any successor provision thereto)
and applicable regulations thereunder.
SECTION 8
Administration
8.1 The Trustees. Title to all assets of the Plan will be held in
trust by one or more Trustees appointed by the Company for the uses and
purposes set forth herein. The powers, duties and responsibilities of the
Trustees are set forth more fully in one or more trust agreements between
the Company and the Trustees.
8.2 General Powers, Rights and Duties of the Trustee. The powers,
rights and duties of the Trustee shall be set forth in the applicable Trust
Agreement.
8.3 Secretary, Controller and Treasurer. The Company shall appoint a
Secretary, Treasurer and Controller of the Plan, who may but need not be
employees of the Company.
8.4 Voting and Tendering of Company Shares and Shares of Allstate and
DWDC. Notwithstanding any other provisions of this Plan:
(a) Company Shares held by the Trustee shall be voted as follows:
(i) Before each meeting of the Company's shareholders, each
participant shall be furnished with a proxy statement for the meeting,
together with an appropriate form on which the participant may provide
voting instructions (including instructions on matters not specified in the
proxy statement which may come before the meeting) for the Company Shares
allocated to the participant's account under the Plan on the latest
valuation date preceding the record date for such meeting for which the
number of such shares has been provided to the Plan Administrator, less any
partial withdrawal since that valuation date. Upon timely receipt of such
instructions, such shares shall be voted as instructed.
(ii) If the Trustee receives timely voting instructions with
regard to at least fifty percent of the total outstanding Company Shares
allocated to participants' accounts according to subsection 8.4(a)(i), then
Company Shares of any class for which the Trustee does not receive timely
voting directions, including those shares which are not allocated to
participants' accounts, shall be voted in the same proportion as all
Company Shares of that class held under the Plan (including shares held in
a separate trust fund) with respect to which directions are received by the
Trustee or by any other trustee acting under the Plan. If the Trustee
receives timely voting instructions with regard to less than fifty percent
of the total outstanding Company Shares allocated to participants'
accounts, then the Trustee shall vote unallocated and undirected allocated
shares in its sole discretion.
(b) Tender and exchange rights with respect to Company Shares held by the
Trustee shall be exercised as follows:
(i)Each participant shall be furnished with a notice of any tender
or exchange offer for, or a request or invitation for tender of, Company
Shares, together with an appropriate form on which such participant may
instruct the Trustee with respect to the tender or exchange of Company
Shares allocated to his account. Company Shares as to which the Trustee
has received timely instructions shall be tendered or exchanged in
accordance with such instructions. (ii) Company Shares allocated
to participants' accounts for which instructions are not timely received
shall not be tendered or exchanged.
(iii)Company Shares which are not allocated to participants'
accounts shall be tendered or exchanged by the Trustee in its sole
discretion.
(c) The Company and the Trustee shall take all reasonable steps
necessary to assure that participants' individual directions shall remain
confidential. Notwithstanding the foregoing, the Trustee shall provide
such information with respect to the tender or exchange of Company Shares
as an independent record keeper may require for operation of the Plan if
such record keeper agrees to keep such information confidential.
(d) The Trustee shall execute such ballots, proxies or other
instruments as may be necessary or desirable in order to effectuate the
provisions of this subsection 8.4.
(e) Voting, tender and exchange rights with respect to shares of
Allstate and DWDC held by the Trustee shall be exercised in the same manner
as such rights are exercised with respect to Company Shares as described in
this subsection 8.4.
8.5 General Powers, Rights and Duties of Plan Administrator. Except
as otherwise expressly provided herein or in the trust agreements, and in
addition to the powers, rights and duties specifically given to the Plan
Administrator elsewhere herein and in the trust agreements, the Plan
Administrator shall be the plan administrator for all purposes of ERISA,
and shall have the following discretionary authority, powers, rights and
duties, and any decision made by the Plan Administrator pursuant to this
subsection 8.5 (or any other provision of the Plan or trust agreements
granting him such authority) shall be final:
(a) To adopt such rules of procedure and regulations as, in his
opinion, may be necessary for the proper and efficient administration of
the Plan and as are consistent with the provisions of the Plan;
(b) To enforce the Plan in accordance with its terms and with such
applicable rules and regulations as may be adopted by him;
(c) To determine conclusively all questions arising under the Plan,
including the power to determine the eligibility of employees and the
rights of participants and other persons entitled to benefits under the
Plan and their respective benefits, and to remedy any ambiguities,
inconsistencies or omissions of whatever kind;
(d) To maintain and keep adequate records concerning the Plan in such
form and detail as he may decide;
(e) To direct all payments of benefits under the Plan;
(f) To perform the functions of "plan administrator" as defined in
section 414(g) of the Internal Revenue Code for purposes of section 6 and
for purposes of establishing and implementing procedures to determine the
qualified status of domestic relations orders (in accordance with section
414(p) of the Internal Revenue Code) and to administer distributions under
such qualified orders; and
(g) To employ agents, attorneys, accountants and other persons (who
also may be employed by or represent the Company) for such purposes as he
considers necessary or desirable to discharge his duties.
The Company and the other employers and their affiliates may provide
administrative and asset management services, including the provision of
office space, to the Plan and shall be reimbursed for the direct expenses
thereof in accordance with subsection 8.3 and the terms of the trust
agreement or agreements between the Company and the Trustee; provided,
however, that such services (other than services as an Investment Manager)
shall be rendered in accordance with policies and procedures approved by
the Company's Vice President of Human Resources, acting as a named
fiduciary of the Plan. Services rendered as an Investment Manager shall be
subject to the terms of the trust agreement or trust agreements regarding
the appointment, retention and removal of Investment Managers.
8.6 The Investment Committee. Except as otherwise provided in the
trust agreement between the Company and the Trustee, all of the assets of
the Plan shall be managed and controlled by an Investment Committee
consisting of one or more individuals, none of whom shall be a Trustee.
The members of the Investment Committee shall be appointed by the Company
and shall serve at the pleasure of the Company. The powers, duties and
responsibilities of the Investment Committee are set forth more fully in
the trust agreement between the Company and the Trustee.
8.7 General Powers, Rights and Duties of the Investment Committee.
Except as otherwise specifically provided and in addition to the powers,
rights and duties specifically given to the Investment Committee elsewhere
herein and in the trust agreement, the Investment Committee shall have the
following rights, powers and duties:
(a) To direct the Trustee to the extent required under the terms of
any trust agreement with respect to the acquisition, retention and
disposition of Plan assets and with respect to the exercise of investment
powers, authorities and discretions relating to such assets, provided,
however, that subject to the provisions of subsection 5.3 and Supplement C,
the Trustee shall invest that portion of the assets of the Plan consisting
of Employers' Contributions and earnings thereon in Company Shares to the
end that, in the largest measure possible, participants may share in the
earnings of the Company and acquire a proprietary interest therein;
(b) To furnish the Trustee and the Company with such information as
may be required by them for any purpose related to the Plan;
(c) To adopt such rules of procedure and regulations as in the
Investment Committee's opinion may be necessary for the proper and
efficient performance of the Committee's duties and responsibilities;
(d) To appoint an Executive Director--Investments, and a Secretary,
who may, but need not, be members of the Investment Committee, and to
employ such other agents, attorneys, accountants, investment advisors and
other persons and to delegate to them and allocate among them, in writing,
such powers, rights and duties as the Investment Committee may consider
necessary or advisable properly to carry out the Investment Committee's
responsibilities, and in the same manner to revoke such delegation and
allocation; the acceptance of such written allocation or delegation shall
also be in writing; any action of the delegate or person to whom
responsibilities have been allocated shall have the same force and effect
for all purposes hereunder as if such action had been taken by the
Investment Committee; neither the Investment Committee nor any of its
members shall be liable for the acts or omissions of such delegates or
persons to whom responsibilities have been allocated except as required by
law; and
(e) Without limiting the generality of (d) above, to appoint an
investment manager as defined in section 3(38) of ERISA ("Investment
Manager") to manage (with power to acquire and dispose of) the assets of
the Plan, which Investment Manager may or may not be a subsidiary of the
Company, and to delegate to any such Investment Manager all of the powers,
authorities and discretions granted to the Investment Committee hereunder
or under the trust agreement (including the power to delegate and, in the
case of Sears Investment Management Co., the power, with prior notice to
the Investment Committee, to appoint an Investment Manager), in which event
any direction to the Trustee from any duly appointed Investment Manager
with respect to the acquisition, retention or disposition of Plan assets
shall have the same force and effect as if such direction had been given by
the Investment Committee, and to remove any Investment Manager; provided,
however, that the power and authority to manage, acquire, or dispose of any
asset of the Plan shall not be delegated except to an Investment Manager,
and provided further that the acceptance by any Investment Manager of such
appointment and delegation shall be in writing, and the Investment
Committee shall give notice to the Trustee, in writing, of any appointment
of, delegation to or removal of an Investment Manager.
8.8 Manner of Action by Investment Committee. In the performance of
the Investment Committee's duties, the following provisions shall apply
where the context admits:
(a) An Investment Committee member, by written instrument, may
delegate any or all of his rights, powers, duties or discretions to any
other Committee member, with the consent of the latter.
(b) The Investment Committee may act by meeting or by a written
instrument signed without meeting and may execute any document by signing
one document or concurrent documents. Actions of the Investment Committee
may be communicated by telephone by the Secretary of the Investment
Committee, a majority of the members of the Investment Committee or any
member of the Investment Committee designated by a majority of the members
of the Investment Committee.
(c) An action or decision of a majority of the members of the
Investment Committee as to a matter shall be as effective as if taken or
made by all members of the Investment Committee, but, except to the extent
otherwise expressly provided by law, no member of the Investment Committee
who dissents from any action or decision of the majority of the Investment
Committee shall be liable or responsible for such action.
(d) If, because of the number qualified to act, there is an even
division of opinion among the members of the Investment Committee as to any
matter, a disinterested party selected by the Investment Committee shall
decide the matter and his decision shall control.
(e) The certificate of the Secretary of the Investment Committee or of
a majority of the members of the Investment Committee that the Investment
Committee has taken or authorized any action shall be conclusive in favor
of any person relying on the certificate.
8.9 Compensation and Expenses. All fees, expenses, taxes and charges
incurred by or with respect to the Plan (including, to the extent permitted
by law, all direct expenses incurred by the Company or any employer in
providing administrative and asset management services and office space to
the Plan or otherwise incurred by them in connection with the Plan) shall
be expenses of the Plan and shall be paid or reimbursed from Plan assets in
accordance with the terms of the trust agreement or agreements between the
Company and the Trustees.
8.10 Liabilities and Responsibilities of the Trustee, Investment
Committee and Employers. Any final judgment or decree which may be
rendered against the Plan, the Trustee, the Investment Committee or any
other fiduciary with respect to the Plan which is not predicated upon a
breach of fiduciary responsibility shall be satisfied from the Plan assets,
and not from the individual assets of the Trustee, the members of the
Investment Committee or other fiduciaries. No employer shall have any
responsibility or liability whatsoever with reference to the management or
conduct of the business of the Plan, or for any act or failure to act on
the part of the Trustee, any member of the Investment Committee, any
Investment Manager or any other fiduciary or their agents and employees.
SECTION 9
General Provisions
9.1 Action by Company. Any action required or permitted to be taken
by the Company under the provisions hereof shall be by resolution of its
Board of Directors, resolution of a duly authorized committee of its Board
of Directors, or by a person or persons authorized by its Board of
Directors or any such committee.
9.2 Waiver of Notice. Any notice required hereunder may be waived by
the person entitled to such notice.
9.3 Controlling Law. Except to the extent superseded by laws of the
United States, the laws of Illinois shall be controlling in all matters
relating to the Plan.
9.4 Employment Rights. The provisions of the Plan do not constitute a
contract of employment and participation in the Plan will not give any
employee the right to be retained in the employ of the employers or any
right or claim to any benefit under the Plan unless such right or claim is
specifically accrued under the provisions of the Plan.
9.5 Litigation by Participants. If a legal action begun against the
Trustee, the Plan Administrator, any employers, the Investment Committee or
any member or members thereof, or their agents, or an Investment Manager,
by or on behalf of any person results adversely to such person, or if a
legal action arises because of conflicting claims to the benefits of a
participant or beneficiary, the cost to the Trustee, the Plan
Administrator, the employers, the Investment Committee or any member or
members thereof or their agents, or any Investment Manager of defending
such action shall be charged, to the extent permitted by law, to the sums,
if any, which were involved in the action or were payable to the
participant or beneficiary concerned.
9.6 Absence of Guarantee. Neither the Trustee nor the Investment
Committee nor any members thereof, nor any Investment Manager, nor any
employer in any way guarantees the assets of the Plan from loss or
depreciation. Unless otherwise required by law, the liability of the
Trustee, the Plan Administrator, the Investment Committee, any Investment
Manager or any other person to make any payment under the Plan will be
limited to the assets held by the Trustee which are available for that
purpose.
9.7 Evidence. Evidence required of anyone under the provisions of the
Plan may be by certificate, affidavit, document or other information which
the person acting in reliance thereon considers pertinent and reliable and
to have been signed, made or presented by the proper party or parties.
9.8 Information to be Furnished by Participants and Employers. Each
participant and beneficiary entitled to benefits under the Plan shall
furnish the Trustee and the Plan Administrator with such documents,
evidence, data or information as the Trustee and the Plan Administrator
consider necessary or desirable for purposes of administering the Plan.
The employers shall furnish the Trustee and the Plan Administrator with
such data and information within their possession as the Trustee and the
Plan Administrator may deem necessary or desirable in order to administer
the Plan. The records of the employers as to an employee's period of
employment, termination of employment and the reason therefor, leave of
absence, reemployment and compensation will be conclusive on all persons.
9.9 Uniform Rules. The plan shall be administered on a reasonable and
nondiscriminatory basis and uniform rules shall be applied to all persons
similarly situated.
9.10 Claims Review. The Plan Administrator shall establish a claims
review procedure which:
(a) Gives notice in writing to any participant or beneficiary whose
request for benefits had been wholly or partially denied;
(b) States the specific reason for such denial; and
(c) Affords a reasonable opportunity to such participant and
beneficiary for a full and fair review of any decision.
The Plan Administrator or any person or persons as he may designate shall
review and make decisions on claim denials.
9.11 Inspection of Plan Records. No participant in the Plan, other
than one who may be utilized by the Trustee or the Plan Administrator in
order to perform their respective duties under the Plan, shall have any
right to inspect the records of the Plan relating to the accounts of any
other participant.
SECTION 10
Amendment and Termination
10.1 Amendment, Termination and Discontinuance of the Employers'
Contribution by Company. The Company by action of its Board of Directors,
or by an administrative committee duly authorized and appointed by the
Board of Directors, may amend the provisions hereof (including any
Supplement) from time to time. The Company, by action of its Board of
Directors, may terminate the Plan, as applied to all employers, at any
time, and may permanently discontinue the Employers' Contribution at any
time. No amendment, termination or discontinuance of the Employers'
Contribution shall vest in any employer any right, title or interest in or
to the assets of the Plan, or allow any part of the assets of the Plan to
be used for, or diverted to, purposes other than for the exclusive benefit
of participants and their beneficiaries; and except that the Plan
provisions contained in section 4 and subsections 6.5, 6.7, C-6, C-7 and
C-8 shall not be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code, ERISA, or the rules
thereunder.
10.2 Withdrawal from Plan. An employer (other than the Company) or a
division of the Company or of another employer shall be deemed to have
withdrawn from the Plan:
(a) On the date such employer is judicially declared bankrupt or
insolvent; or
(b) On the date such employer ceases to be a member of the controlled
group of corporations (within the meaning of section 414(b) of the Internal
Revenue Code) that includes the Company; or
(c) On the date such employer or division is sold, merged into,
consolidated with, liquidated into, or otherwise transferred to a firm,
person or corporation (other than the Company or another employer
hereunder) any such employer or division so sold, merged, consolidated,
liquidated or transferred being referred to below as a "withdrawing
employer" or "withdrawing division."
10.3 Effect of Withdrawal. If any employer other than the Company or
any division withdraws from the Plan (or is deemed to have withdrawn from
the Plan pursuant to subsection 10.2), and if subsection 10.4 does not
apply, then, to the extent permitted by law, the assets of the Plan
representing the interests therein of participants who do not concurrently
enter into the employ of one of the other employers shall be distributed to
them as soon as practicable. The interests in the Plan of all participants
formerly employed by a withdrawing employer or withdrawing division who,
concurrent with such withdrawal, enter into the employ of one of the other
employers shall be retained in the Plan for distribution in accordance with
its terms and such participants shall be eligible to continue to
participate in the Plan.
10.4 Transfer to Other Qualified Trust. If any employer or division
withdraws from the Plan (or is deemed to have withdrawn from the Plan
pursuant to subsection 10.2) and at the time of withdrawal, or within six
months thereafter (or within such longer period as the Trustee may deem
appropriate under the circumstances) such withdrawing employer or the
transferee of the assets of any withdrawing employer or withdrawing
division either is maintaining, or has established, another "qualified
trust" within the meaning of section 401(a) of the Internal Revenue Code,
as amended, to which assets representing the interest in the Plan of
participants who are continuing in the employ of such withdrawing employer
or transferee may be transferred for their benefit, then subject to the
provisions of subsection 10.5, the assets of the Plan representing the
interest of such participants shall be transferred to such other qualified
trust.
10.5 Fund Merger, Consolidation, etc. In the case of any merger or
consolidation with, or transfer of assets or liabilities to, any other plan
or trust which is a qualified plan or trust within the meaning of the
Internal Revenue Code, as amended, each participant's benefits under such
transferee plan, if such transferee plan were terminated immediately
following such merger, consolidation or transfer shall be equal to or
greater than the benefits he would have been entitled to receive if the
Plan had terminated immediately before the merger, consolidation or
transfer.
10.6 Termination of Plan. If the Plan, as applied to all employers, is
terminated by the Company, and if subsection 10.4 does not apply, then no
other employees of the employers shall be eligible to become participants
in the Plan and, to the extent permitted by law, the assets of the Plan
shall be distributed as soon as practicable to all participants and
beneficiaries of participants on the basis of their respective interests
therein.
SUPPLEMENT A
TO
THE SAVINGS AND PROFIT SHARING FUND
OF SEARS EMPLOYEES
(Effective January 1, 1983)
Tax Credit Employee Stock Ownership Feature
Effective as of January 1, 1983 a tax credit employee stock ownership
feature (the "ESOF") was added to the Plan in the form of Supplement A
thereto. ESOF "Stock Ownership Contributions" were made in accordance with
such Supplement A for plan years ending after December 31, 1982 and before
January 1, 1987. The ESOF was terminated as of December 20, 1989 and the
Supplement A Shares Fund, to which Company stock held under the ESOF was
credited, was merged into and made part of the Company Shares Fund.
As a result of the spinoff of DWDC from the Company on June 30, 1993,
the Company Shares which had been credited to the Supplement A Shares Fund
were converted into Company Shares and shares of DWDC ("ESOF DWDC Shares")
that were received as dividends with respect to such Company Shares. Each
participant's ESOF DWDC Shares were, as soon as possible following June 30,
1993 as was consistent with prudent investment standards as determined by
the former Institutional Trustee, sold and the proceeds of such sales were
applied to the purchase of Company Shares.
SUPPLEMENT B
TO
THE SAVINGS AND PROFIT SHARING FUND
OF SEARS EMPLOYEES
(Effective January 1, 1984)
Special Rules for Top-Heavy Plans
B-1. Purpose and Effect. The purpose of this Supplement B is to comply
with the requirements of section 416 of the Internal Revenue Code of 1986.
The provisions of this Supplement B shall be effective for each plan year
beginning after December 31, 1983 in which the Plan is a "top-heavy plan"
within the meaning of section 416(g) of the Internal Revenue Code.
B-2. Top-Heavy Plan. In general, the Plan will be a top-heavy plan for
any year if, as of the last day of the preceding plan year (the
"determination date"), the aggregate account balances of participants who
are key employees (as defined in section 416(i)(l) of the Internal Revenue
Code) exceed 60 percent of the aggregate account balances of all
participants. In making the foregoing determination, the following special
rules shall apply:
(a) A participant's account balances shall be increased by the
aggregate distributions, if any, made with respect to the participant
during the 5-year period ending on the determination date.
(b) The account balances of a participant who was previously a key
employee, but who is no longer a key employee, shall be disregarded.
(c) The accounts of a beneficiary of a participant shall be considered
accounts of the participant.
B-3. Key Employee. In general, a "key employee" is a participant who,
at any time during the 5-year period ending on the determination date, is:
(a) an officer of an employer (provided that only the 50 highest-
paid participants shall be considered officers);
(b) one of the ten participants owning the largest interests in
the employers;
(c) a 5-percent owner of an employer; or
(d) a 1 percent owner of an employer receiving annual
compensation from an employer of more than $150,000.
B-4. Minimum Employers' Contribution. For any plan year in which the
Plan is a top-heavy plan, the Employers' Contribution credited to each
participant who is not a key employee shall not be less than 3 percent of
such participant's compensation for that year. In no event, however, shall
the Employer's Contribution be credited in any year to a participant who is
not a key employee (expressed as a percentage of such participant's
compensation) exceed the maximum Employers' Contribution credited in that
year to a key employee (expressed as a percentage of such key employee's
compensation up to $200,000).
B-5. Maximum Earnings. For any plan year in which the Plan is a top-
heavy plan, a participant's earnings in excess of $200,000 (or such greater
amount as may be determined by the Commissioner of Internal Revenue for
that plan year) shall be disregarded for purposes of subsection 6.5 of the
Plan.
B-6. Commencement of Distributions. Payment of a key employee's
benefits must be made (or installment payments must commence) no later than
the first December 31 on which both of the following have occurred:
(a) The Plan is then a top-heavy plan; and (b) the key
employee has attained age 70-1/2.
B-7. Aggregation of Plans. In accordance with section 416(g)(2) of the
Internal Revenue Code, other plans maintained by the employers may be
required or permitted to be aggregated with the Plan for purposes of
determining whether the Plan is a top-heavy plan.
B-8. No Duplication of Benefits. If the employer maintains more than
one plan, the minimum Employers' Contribution otherwise required under
paragraph B-4 above may be reduced in accordance with regulations of the
Secretary of the Treasury to prevent inappropriate duplication of minimum
contributions or benefits.
B-9. Adjustment of Combined Benefit Limitations. For any plan year in
which the Plan is a top-heavy plan, the determination of the Defined
Contribution Fraction and Defined Benefit Fraction under subsection 6.6 of
the Plan shall be adjusted in accordance with the provisions of section
416(h) of the Internal Revenue Code.
B-10.Use of Terms. All terms and provisions of the Plan shall apply to
this Supplement B, except that where the terms and provisions of the Plan
and this Supplement B conflict, the terms and provisions of this Supplement
B shall govern.
SUPPLEMENT C
TO
THE SAVINGS AND PROFIT SHARING FUND
OF SEARS EMPLOYEES
(Effective December 20, 1989)
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
C-1 Purpose. The purpose of this Supplement C to the Plan is to set
forth the terms of the Plan as applied to the portion of the ESOP
attributable to ESOP Loans as described in subsection C-4.
C-2 Effective Date. The effective date of this Supplement C is
December 20, 1989.
C-3 Participation. Each participant in the Plan on the Effective Date
of this Supplement C shall immediately become a participant in this
Supplement C. Every other person who thereafter becomes a participant in
the Plan shall at the same time become a participant in this Supplement C.
C-4 ESOP Loans. The Trustee is authorized to incur debt (an "ESOP
Loan") for the purpose of acquiring Company Shares or for the purpose of
repaying all or any portion of any outstanding ESOP Loan. The terms of any
ESOP Loan shall be subject to the conditions and restrictions set forth in
the applicable provisions of the trust agreement or agreements between the
Company and the Trustee. Company Shares acquired with the proceeds of an
ESOP Loan shall be held in a Supplement C Shares Fund and shall be credited
to a "Suspense Account" until released in accordance with subsection C-7.
The Plan Administrator shall maintain or cause to be maintained a
Supplement C Shares account in the name of each participant to reflect his
interest in the Supplement C Shares Fund and the portion thereof which is
attributable to each ESOP Loan.
C-5 Supplement C Cash Equivalents Fund. All cash dividends on Company
Shares held in the Supplement C Shares Fund which are not allocated to
participants' accounts or, in the case of allocated shares, which the
Company directs are to be used to make payments on ESOP Loans and all
Employers' Contributions made under subsection C-6 with respect to plan
years beginning on or after January 1, 1990 shall be credited to the
Supplement C Cash Equivalents Fund pending their application to ESOP Loan
payments. Except as provided under paragraph 7.1(d), all such dividends
and all earnings of the Supplement C Cash Equivalents Fund shall be used to
make principal payments on outstanding ESOP Loans to the extent then due.
In the event that the amount of such dividends and earnings exceeds the
amount of principal payable on that date, the excess shall be applied until
exhausted to interest payable on that date, and principal and interest
payments due thereafter. Notwithstanding the preceding sentences of this
subsection C-5, in lieu of making payments on outstanding ESOP Loans, the
Investment Committee may direct that all or any amount of cash dividends
received with respect to Company Shares allocated to participants'
Supplement C Shares accounts shall be credited proportionately to such
participants' Company Shares Cash Equivalents accounts pending investment
in the Company Shares Fund. Any amount that is applied to make a payment
on an outstanding ESOP Loan after the last day of a plan year (the "prior
plan year"), but on or before the due date (including extensions thereof)
for the filing of the federal income tax return of the Company for the tax
year in which the last day of such prior plan year occurs, may be
designated by the employers as a payment with respect to such prior plan
year.
C-6 Employers' Contribution. For each plan year beginning on or after
January 1, 1990, employers shall make contributions under this subsection
C-6 which, after taking into account the use of dividends and earnings in
accordance with subsection C-5, are sufficient to meet all scheduled
payments of principal and interest on outstanding ESOP loans. The
Employers' Contribution otherwise required by subsection 4.1 for any plan
year shall be reduced by the fair market value (determined as of December
31 of that plan year) of the Company Shares allocated to the Supplement C
Shares accounts of participants in accordance with paragraph C-8(b). In
addition to the foregoing contributions, in any plan year, the employers
may make supplemental contributions to be used by the Trustees to prepay
any ESOP loan, to pay expenses of the Plan and any related trust and to
satisfy the dividend requirements for that year with respect to Company
Shares allocated to participants' Supplement C Shares accounts. All
Employers' Contributions for plan years beginning on or after January 1,
1990 shall be used to make payments on ESOP Loans to the extent required to
meet any scheduled payments of principal and interest after taking into
account the use of dividends and earnings in accordance with subsection
C-5.
C-7 Release of Company Shares From Suspense Account. As of the last
day of each plan year, or of each calendar quarter in the case of Company
Shares allocable for the year as dividend replacements under paragraph
C-8(a), throughout the duration of an ESOP Loan, a portion of the Company
Shares acquired with the proceeds of such ESOP Loan shall be withdrawn from
the Suspense Account and allocated to eligible participants' Supplement C
Shares accounts in accordance with the provisions of subsection C-8.
(a) Subject to the provisions of paragraph (b) below, the number of
Company Shares which shall be released from the Suspense Account for any
plan year (calculated separately with respect to each ESOP Loan) shall be
equal to the product of:
(i) the number of Company Shares acquired with the proceeds of
the ESOP Loan which are then held in the Suspense Account;
MULTIPLIED BY
(ii) a fraction, the numerator of which is the amount of principal
and interest paid on that loan for that plan year and the denominator of
which is the amount of principal and interest paid or payable on that loan
for that plan year and for all future years; provided, however, that with
respect to the 1995 plan year there shall be excluded from both the
numerator and denominator of such fraction that portion of the interest
paid for the period January 1, 1995, through June 30, 1995 ("first half
1995 interest") that is equal to a fraction the numerator of which is the
number of released shares attributable to first half 1995 interest
(determined under this subsection C-7(a) without regard to this proviso)
that are allocable to participants in the Plan who became participants in
the Allstate Plan as of June 30, 1995, and the denominator of which is the
total number of released shares attributable to first half 1995 interest
(determined under this subsection C-7(a) without regard to this proviso).
For purposes of determining the fraction in (ii), if the interest
rate under the ESOP Loan is variable, the interest rate to be paid in
future years shall be assumed to be equal to the interest rate applicable
as of the last day of the plan year.
(b) Notwithstanding the provisions of paragraph (a) above, if provided
by the terms of an ESOP Loan or directed by the Investment Committee prior
to the first payment of principal or interest on any ESOP Loan, the number
of Company Shares attributable to such ESOP Loan which are withdrawn from
the Suspense Account for any plan year shall be proportionate to principal
payments only, provided that:
(i) such withdrawal is consistent with the provisions of the ESOP
Loan with respect to the release of Company Shares as collateral, if any,
for such loan;
(ii) the ESOP Loan provides for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten years;
(iii) interest is disregarded for purposes of determining such
release only to the extent that it would be determined to be interest under
standard loan amortization tables; and
(iv) the term of the ESOP Loan, together with any renewal,
extension or refinancing thereof, does not exceed ten years.
C-8. Allocation and Crediting of Company Shares to Supplement C Shares
Fund Accounts and Application to Plan Limitations. Company Shares released
from the Suspense Account during any plan year shall be allocated and
credited as follows:
(a) To the extent that dividends on Company Shares previously
allocated to the Supplement C Shares account of a participant have been
used to make payments on an ESOP Loan, such account shall be credited with
Company Shares with a fair market value determined as of the last day of
the month preceding the month of the dividend payment date equal to the
amount of such dividend.
(b) As of each December 31, any Company Shares released from the
Suspense Account that are attributable to payments made on ESOP Loans for
the plan year ending on that date (including payments made after such
December 31 that are designated as payments with respect to the plan year
ending on such December 31 pursuant to subsection C-5) and not credited in
accordance with paragraph (a) shall be credited to the Supplement C Shares
accounts of eligible participants pursuant to subsection 6.5, except to the
extent that any such allocations would duplicate advancements credited in
accordance with subparagraph 6.5(a)(v).
(c) For purposes of subsection 6.6 of the Plan, Employers'
Contributions for any plan year which are utilized to make any payment of
principal or interest on an ESOP Loan shall be deemed to have been
allocated among participants in the same ratios as the number of Company
Shares released from the Suspense Account are credited in accordance with
paragraph (b) above, without regard to the value of the Company Shares
released from the Suspense Account.
(d) All Company Shares allocated to participants in accordance with
paragraph (b) above shall be treated as Employers' Contributions for
purposes of subsection 3.3 and as "Matching Contributions" for purposes of
section 401(m) of the Internal Revenue Code.
C-9 Withdrawal Elections by Participants. Notwithstanding any more
restrictive provision of the Plan to the contrary, a qualified participant
(as defined below) may make the elections as set forth in this subsection
C-9.
(a) A participant during each of his qualified election periods (as
defined below), may elect to withdraw not more than 25 percent (50 percent
in the case of his last qualified election period) of the sum of his entire
interest in the ESOP portion of the Plan (including his Company Shares
account, Supplement C Shares account, DWDC Shares account and Allstate
Shares account) plus his prior withdrawals under this subsection C-9;
provided, however, that the portion of a participant's ESOP interest that
is subject to election under this paragraph for any qualified election
period shall be reduced by the portion of his ESOP interest that was
previously withdrawn pursuant to this subsection C-9.
(b) Any election made in accordance with the provisions of paragraph
(a) next above with respect to any qualified election period shall be given
effect not later than 90 days after the end of that qualified election
period.
(c) Any participant election required under this subsection shall be
by writing filed with the Plan Administrator in such form as the Plan
Administrator may require.
(d) For purposes of this subsection, the term "qualified participant"
means an employee who has completed at least ten years of participation in
the ESOP, commencing on or after January 1, 1983 and has attained at least
age 55.
(e) For purposes of this subsection, "qualified election periods"
shall include the 90-day period immediately following the last day of the
first plan year in which the participant becomes a qualified participating
employee, and the 90-day period following each of the five subsequent plan
years.
(f) The provisions of this subsection C-9 shall not apply to any
participant if the value of the Company Shares, DWDC shares and Allstate
shares allocated to such participant in the ESOP portion of the Plan
(determined as of the end of the month immediately preceding the first day
on which the participant would otherwise be entitled to make an election
under this subsection) is $500 or less.
C-10 Fair Market Value. For purposes of this Supplement C, the "fair
market value" of a Company Share or a share of DWDC or Allstate as of any
date means the closing price of a share of such stock on that date as
reported in a summary of composite transactions for stocks listed on the
New York Stock Exchange, unless such date is not a trading date, in which
case it means the closing price as reported on the most recent trading
date.
APPENDIX A
The following describes the directly- or indirectly-owned subsidiaries
which are to be excluded in applying the provisions of subsection 4.3 of
the Plan in determining Net Income of the Company:
- The group of companies commonly referred to as "Sears Specialty
Merchandising" and their wholly-owned subsidiaries.
By-Laws
As Amended to
August 14, 1996
Article I
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of the
shareholders shall be held at such place within or without the
State of New York as shall be fixed by the Board of Directors from
time to time.
Section 2. Annual Meetings. The annual meeting of the
shareholders for the election of directors and for the transaction
of such other business as may properly be brought before the
meeting shall be held at such time as is specified in the notice of
the meeting on either the second Wednesday in May of each year or
on such other date as may be fixed by the Board of Directors prior
to the giving of the notice of such meeting. The Board of
Directors acting by resolution may postpone and reschedule any
previously scheduled annual meeting of shareholders.
Nominations of persons for election to the Board of Directors
of the Company and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (a)
pursuant to the Company's notice of meeting, (b) by or at the
direction of the Board of Directors or (c) by any shareholder of
the Company who was a shareholder of record at the time of giving
of notice provided for in this By-Law, who is entitled to vote at
the meeting and who complied with the notice procedures set forth
in this By-Law.
For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c) of
the foregoing paragraph of this By-Law, the shareholder must have
given timely notice thereof in writing to the Secretary of the
Company. To be timely, a shareholder's notice shall be delivered
to the Secretary at the principal executive offices of the Company
not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the shareholder to be timely must
be so delivered not earlier than the 90th day prior to such annual
meeting and not later than the close of business on the later of
the 60th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is
first made. Such shareholder's notice shall set forth (a) as to
each person whom the shareholder proposes to nominate for election
or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including such person's
written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (b) as to any other
business that the shareholder proposes to bring before the meeting,
a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the
proposal is made; (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such shareholder, as
they appear on the Company's books, and of such beneficial owner
and (ii) the class and number of shares of the Company which are
owned beneficially and of record by such shareholder and such
beneficial owner.
Notwithstanding anything in the second sentence of the preceding
paragraph to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Company is increased and there is
no public announcement naming all of the nominees for Director or
specifying the size of the increased Board of Directors made by the Company
at least 70 days prior to the first anniversary of the preceding year's
annual meeting, a shareholder's notice required by this By-Law shall also
be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Company not later than
the close of business on the 10th day following the day on which such
public announcement is first made by the Company.
Only such persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible to serve as directors and only
such business shall be conducted at an annual meeting of shareholders as
shall have been brought before the meeting in accordance with the
procedures set forth in this By-Law. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this By-Law and, if any proposed nomination or
business is not in compliance with this By-Law, to declare that such
defective proposal shall be disregarded.
For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Company with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of this By-Law, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed
to affect any rights of shareholders to request inclusion of proposals in
the Company's proxy statement pursuant to Rule 14a-8 under the Exchange
Act.
Section 3. Special Meetings. Special meetings of the shareholders
for any purpose or purposes shall be called to be held at any time upon the
request of the Chairman of the Board of Directors, the President or a
majority of the members of the Board of Directors or of the Executive
Committee then in office. Business transacted at all special meetings
shall be confined to the specific purpose or purposes of the persons
authorized to request such special meeting as set forth in this Section 3
and only such purpose or purposes shall be set forth in the notice of such
meeting. The Board of Directors acting by resolution may postpone and
reschedule any previously scheduled special meeting of shareholders.
Nominations of persons for election to the Board of Directors may be
made at a special meeting of shareholders at which directors are to be
elected (a) pursuant to the Company's notice of meeting (b) by or at the
direction of the Board of Directors or (c) by any shareholder of the
Company who is a shareholder of record at the time of giving of notice
provided for in this By-Law, who shall be entitled to vote at the meeting
and who complies with the notice procedures set forth in this By-Law.
Nominations by shareholders of persons for election to the Board of
Directors may be made at such a special meeting of shareholders if the
shareholder's notice required by the third paragraph of Section 2 of
Article I of these By-Laws shall be delivered to the Secretary at the
principal executive offices of the Company not earlier than the 90th day
prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors
to be elected at such meeting.
Only such persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible to serve as directors and only
such business shall be conducted at a special meeting of shareholders as
shall have been brought before the meeting in accordance with the
procedures set forth in this By-Law. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this By-Law and, if any proposed nomination or
business is not in compliance with this By-Law, to declare that such
defective proposal shall be disregarded.
Notwithstanding the foregoing provisions of this By-Law, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed
to affect any rights of shareholders to request inclusion of proposals in
the Company's proxy statement pursuant to Rule 14a-8 under the Exchange
Act.
Section 4. Notice of Meetings. Written notice of the time, place,
and purpose or purposes of each annual and special meeting of shareholders
shall be signed by the Secretary and served by mail upon each shareholder
of record entitled to vote at such meeting not less than ten nor more than
fifty days before the date of the meeting. Notice of an annual or special
meeting of shareholders shall be deemed to be served when deposited in the
United States mail, postage prepaid, addressed to each shareholder at his
address as it appears on the stock records of the Company or at such other
address as he may have filed with the Secretary of the Company for such
purpose.
Section 5. Quorum. At any meeting of the shareholders, the holders
of record of one-third of the total number of shares of the Company
entitled to vote, present in person or represented by proxy, shall
constitute a quorum for the purpose of transacting business.
Section 6. Organization and Adjournment. The Chairman of the Board
of Directors or in the Chairman's absence, the President, or, if both of
such officers are absent, an officer designated by the Executive Committee,
shall act as chairman of the meeting. The Secretary, or in the Secretary's
absence an Assistant Secretary, or if neither the Secretary nor any
Assistant Secretary be present, any person designated by the chairman of
the meeting, shall act as secretary of the meeting. Any annual or special
meeting of shareholders may be adjourned by the chairman of the meeting or
pursuant to resolution of the Board of Directors without notice other than
by announcement at the meeting. At any adjourned meeting at which a quorum
is present, any business may be transacted that might have been transacted
at the meeting as originally convened.
Section 7. Voting. At each meeting of the shareholders, each holder
of shares entitled to vote at such meeting shall be entitled to vote in
person or by proxy appointed by an instrument in writing signed by such
shareholder or by the shareholder's duly authorized attorney and, except as
provided in the Certificate of Incorporation of the Company with respect to
cumulative voting, shall have one vote for each share standing in the
shareholder's name on the books of the Company upon each matter submitted
to a vote at the meeting. The vote upon the election of directors shall be
by ballot. If a quorum is present at any meeting of shareholders, the vote
of the holders of a majority of the shares cast by the holders of shares
entitled to vote on the matter shall be sufficient for the transaction of
any business, except that directors shall be elected by a plurality of
shares cast by the holders of shares entitled to vote in the election,
unless, in either case, otherwise provided by law or by the Certificate of
Incorporation.
Section 8. Inspectors of Election. Prior to each meeting of
shareholders, the Board of Directors shall appoint three Inspectors, who
shall not be directors or officers of the Company or candidates for the
office of director. Such Inspectors shall count and report to the meeting
the votes cast on all matters submitted to a vote at such meeting. In the
case of failure of the Board of Directors to make such appointments, or in
the case of failure of any Inspector so appointed to act, the chairman of
the meeting shall make such appointments or fill such vacancies; provided,
however, that if any shareholder shall demand an election, such Inspector
or Inspectors shall be elected by the votes cast in person or by proxy of
the holders of record of a plurality of the shares voted at the meeting and
the chairman of the meeting shall conduct such an election. Each Inspector
shall be entitled to a reasonable compensation from the Company for his
services. The Inspectors appointed to act at any meeting of the
shareholders, before entering upon the discharge of their duties, shall be
sworn faithfully to execute the duties of Inspectors at such meeting with
strict impartiality and according to the best of their ability, and the
oath so taken shall be subscribed by them.
Article II
BOARD OF DIRECTORS
Section 1. Number, Qualification and Term of Office. The business
of the Company shall be managed under the direction of a Board of
Directors, each of whom shall be at least 18 years of age. The number of
directors of the Company shall be fixed and may from time to time be
increased or decreased by the Board of Directors, but in no event shall the
number of directors be less than 9 or more than 30.
Section 2. Vacancies. Any vacancies on the Board of Directors may
be filled by the affirmative vote of a majority of the remaining directors
then in office, even though less than a quorum of the Board of Directors.
No decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
Section 3. Resignations. Any director may resign at any time by
giving written notice to the Chairman of the Board of Directors, or to the
President, or to the Secretary of the Company. Such resignation shall take
effect on the date of receipt of such notice unless a later effective date
is specified therein. The acceptance of such resignation by the Board of
Directors shall not be necessary to make it effective.
Section 4. Place of Meetings. The Board of Directors may hold its
meetings at such place or places, within or without the State of New York,
as the Board of Directors may from time to time determine or as may be
specified in the notice of any meeting.
Section 5. Annual Meetings. A meeting of the Board of Directors to
be known as the annual meeting of the Board of Directors shall be held
following the meeting of the shareholders at which such Board of Directors
is elected, at such place as shall be fixed by the Board of Directors, for
the purpose of electing the officers of the Company and the committees of
the Board of Directors, and of transacting such other business as may
properly come before the meeting. It shall not be necessary to give notice
of this meeting.
Section 6. Other Meetings. Meetings of the Board of Directors shall
be held on such dates as from time to time may be determined by the Board
of Directors or whenever called upon the direction of the Chairman of the
Board of Directors or of the President or by the Secretary upon the written
request of one-third of the directors in office, which request shall state
the date, place and purpose of such meeting.
Section 7. Notice of Meetings. Written, telephonic, telegraphic or
facsimile transmission notice of each meeting except the annual meeting
shall be given by the Secretary to each director, by personal delivery, by
telephone, or by regular or express mail, or telegram or facsimile
transmission addressed to the director at his or her usual business
address, or to the address where the director is known to be, at least
three days (excluding Saturdays, Sundays, and holidays) prior to the
meeting in case of notice by regular mail and at least three hours prior to
the meeting in case of notice by personal delivery, express mail,
telephone, telegram, or facsimile transmission. All notices which are
given by regular mail shall be deemed to have been given when deposited in
the United States mail, postage prepaid. Any director may waive notice of
any meeting, and the attendance of a director at any meeting shall
constitute a waiver of notice of such meeting. Any and all business may be
transacted at any meeting and the purpose thereof need not be specified in
the notice or waiver of notice of such meeting.
Section 8. Organization, Quorum, Written Consents and Meetings by
Telephone or Similar Equipment. Unless the Board of Directors shall by
resolution otherwise provide, the Chairman of the Board of Directors, or in
the Chairman's absence, the President, or, if both of such officers are
absent, a director chosen by a majority of the directors present, shall act
as chairman at meetings of the Board of Directors; and the Secretary, or in
the Secretary's absence an Assistant Secretary, or in the absence of an
Assistant Secretary, such person as may be designated by the chairman of
the meeting, shall act as secretary at such meetings.
A majority of the directors in office at the time (but not less than
one-third of the entire Board of Directors) shall constitute a quorum
necessary for the transaction of business, and, except as otherwise
provided in these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. If at any meeting of the Board of Directors a quorum
is not present, a majority of the directors present may adjourn the meeting
from time to time.
Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all
members of the Board of Directors or the committee consent in writing to
the adoption of a resolution authorizing the action. The resolution and
the written consent thereto by the members of the Board of Directors or
committee shall be filed with the minutes of the proceedings of the Board
of Directors or committee.
Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of such Board of Directors or
committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 9. Compensation. Each director not an officer of the
Company, or of any subsidiary or affiliated company, may receive such
compensation for his or her services as a director and as a committee
member as shall be fixed from time to time by resolution of the Board of
Directors and shall be reimbursed for expenses of attendance at meetings of
the Board of Directors and of any committee of which he or she is a member.
Article III
COMMITTEES
Section 1. Creation and Organization. The Board of Directors, at
its annual meeting, or any adjournment thereof, shall, or at any other
meeting may, elect from among its members, by the vote of a majority of its
members, an Audit Committee, a Compensation Committee, an Executive
Committee, a Nominating Committee and a Public Issues Committee, which
shall be the standing committees of the Board of Directors, and such other
committees as shall be determined by the Board of Directors. The Board of
Directors also shall designate the chairman of each such committee.
The Secretary of the Company shall act as secretary of each committee
meeting, or in the Secretary's absence, an Assistant Secretary shall act as
secretary thereof, or in the absence of an Assistant Secretary, any person
as may be designated by the chairman of the committee shall act as
secretary of the meeting and keep the minutes of such meeting.
The Board of Directors, by the vote of a majority of its members, may
remove the chairman or any member of any committee, and may fill from among
the directors vacancies in any committee caused by the death, resignation,
or removal of any person elected thereto.
Each committee may determine its own rules of procedure, consistent
with these By-Laws. Meetings of any committee may be called upon direction
of the Chairman of the Board of Directors, the President, or the chairman
of the committee. Notice of each meeting shall be given to each member of
the committee, by personal delivery, telephone, telegram, facsimile
transmission, or regular or express mail addressed to the member at his or
her usual business address, or to the address where the member is known to
be, at least three days (excluding Saturdays, Sundays, and holidays) prior
to the meeting in case of notice by regular mail, and at least three hours
prior to the meeting in case of notice by personal delivery, express mail,
telephone, telegram, or facsimile transmission. All notices which are
given by regular mail shall be deemed to have been given when deposited in
the United States mail, postage prepaid. Notice of meetings of any
committee may be waived by any member of the committee. At meetings of
each committee, the presence of a majority of such committee shall be
necessary to constitute a quorum for the transaction of business, and, if a
quorum is present at any meeting, the action taken by a majority of the
members present shall be the act of the committee. Each committee shall
keep a record of its acts and proceedings, and all action shall be reported
to the Board of Directors at the next meeting of the Board of Directors
following such action. Each committee shall annually consider whether
amendments to the section of Article III of these By-Laws relating to the
composition and function of such committee appear to be in the best
interests of the Company. Each committee shall report on such
recommendations to the Board of Directors at its first regular meeting each
year and each committee except the Nominating Committee shall report on
such recommendations to the Nominating Committee annually no later than
October.
Section 2. Executive Committee. The Executive Committee shall
consist of the Chairman of the Board of Directors and of such number of
other directors, a majority of whom shall not be officers or employees of
the Company or its affiliates, not less than four, as shall from time to
time be prescribed by the Board of Directors.
The Executive Committee, unless otherwise provided by resolution of
the Board of Directors, shall between meetings of the Board of Directors
have all the powers of the Board of Directors and may perform all of the
duties thereof, except that the Executive Committee shall have no authority
as to the following matters: (i) submission to shareholders of any action
that requires shareholders' authorization under the New York Business
Corporation Law; (ii) compensation of directors; (iii) amendment or repeal
of these By-Laws or the adoption of new By-Laws; (iv) amendment or repeal
of any resolution of the Board of Directors that by its terms may not be so
amended or repealed; (v) action in respect of dividends to shareholders;
(vi) election of officers, directors or members of committees of the Board
of Directors. Any action taken by the Executive Committee shall be subject
to revision or alteration by the Board of Directors, provided that rights
or acts of third parties vested or taken in reliance on such action prior
to their receipt of written notice of any such revision or alteration shall
not be adversely affected by such revision or alteration.
Section 3. Audit Committee. The Audit Committee shall consist of
such number of directors, who shall not be officers or employees of the
Company or any of its affiliates, not less than three, as shall from time
to time be prescribed by the Board of Directors.
The Audit Committee shall review, with management, the Company's
independent public accountants and its internal auditors, upon completion
of the audit, the annual financial statements of the Company, the
independent public accountants' report thereon, the other relevant
financial information to be included in the Company's Annual Report on Form
10-K and its annual report to shareholders. After such review, the
Committee shall report thereon to the Board of Directors.
The Audit Committee shall: (1) review recommendations made by the
Company's independent public accountants and internal auditors to the Audit
Committee or the Board of Directors with respect to the accounting methods
and the system of internal control used by the Company, and shall advise
the Board of Directors with respect thereto; (2) examine and make
recommendations to the Board of Directors with respect to the scope of
audits conducted by the Company's independent public accountants and
internal auditors; (3) review reports from the Company's independent public
accountants and internal auditors concerning compliance by management with
governmental laws and regulations and with the Company's policies relating
to ethics, conflicts of interest, perquisites and use of corporate assets.
The Audit Committee shall meet with the Company's independent public
accountants and/or internal auditors without management present whenever
the Audit Committee shall deem it appropriate. The Committee shall review
with the General Counsel of the Company the status of legal matters that
may have a material impact on the Company's financial statements.
The Audit Committee shall each year make a recommendation, based on a
review of qualifications, to the Board of Directors for the appointment of
independent public accountants to audit the financial statements of the
Company and to perform such other duties as the Board of Directors may from
time to time prescribe. As part of such review of qualifications, the
Audit Committee shall consider management's plans for engaging the
independent public accountants for management advisory services to
determine whether such services could impair the public accountants'
independence.
The Audit Committee shall have the power to conduct or authorize
special projects or investigations which the Committee considers necessary
to discharge its duties and responsibilities. It shall have the power to
retain independent outside counsel, accountants or others to assist it in
the conduct of any investigations and may utilize the Company's General
Counsel and internal auditors for such purpose.
Section 4. Compensation Committee. The Compensation Committee shall
consist of such number of directors, who shall not be officers or employees
of the Company or any of its affiliates, not less than three, as shall from
time to time be prescribed by the Board of Directors. As authorized by the
Board of Directors, the Compensation Committee shall make recommendations
to the Board of Directors with respect to the compensation of directors and
the administration of the salaries, bonuses, and other compensation to be
paid to the officers of the Company, including the terms and conditions of
their employment, shall review the compensation of the Chief Executive
Officer, and shall administer all stock option and other benefit plans
(unless otherwise specified in or pursuant to plan documents or resolutions
of the Board of Directors) affecting officers' direct and indirect
remuneration.
The Compensation Committee shall review the design, funding and
investment policies of the employee benefit plans of the Company and its
subsidiaries, as appropriate. The Committee shall, on its own initiative
or upon referral from the Board of Directors, investigate, analyze and
consider the current and future financial practices of such benefit plans
and report and make such recommendations to the Board of Directors as
deemed appropriate.
Section 5. Nominating Committee. The Nominating Committee shall
consist of such number of directors, who shall not be officers or employees
of the Company or any of its affiliates, not less than three, as shall from
time to time be prescribed by the Board of Directors.
The Nominating Committee shall review and recommend to the
Board of Directors prior to the annual shareholders' meeting each year:
(a) the appropriate size and composition of the Board of Directors; (b) a
proxy statement and form of proxy; (c) policies and practices on
shareholder voting; (d) plans for the annual shareholders' meeting; and (e)
nominees: (i) for election to the Board of Directors for whom the Company
should solicit proxies; (ii) to serve as proxies in connection with the
annual
shareholders' meeting; (iii) for election to all committees of the Board of
Directors; and (iv) for election of as executive officers of the Company.
The Nominating Committee shall annually assess the performance
of the Board, evaluate the performance of the Chairman and Chief Executive
Officer of the Company, and review the management organization of the
Company and succession plans for the Chairman and Chief Executive Officer
of the Company, including consultation with the Chairman of the Board of
Directors regarding persons considered qualified to fill any vacancy that
may occur in the position of Chairman and Chief Executive Officer. In the
event of any such vacancy, the Nominating Committee shall recommend to the
Board of Directors a nominee to fill such vacancy.
Section 6. Public Issues Committee. The Public Issues Committee
shall consist of such number of directors, not less than three, as shall
from time to time be prescribed by the Board of Directors. A majority of
the members shall not be officers or employees of the Company or any of its
affiliates.
The Public Issues Committee shall concern itself with current
problems and future trends in respect to public issues that may affect the
Company and shall review and discuss such issues with the appropriate
representatives of management of the Company and provide guidance as to the
Company's policies and positions with respect thereto.
Article IV
OFFICERS
Section 1. Officers. The Board of Directors shall, at its annual
meeting, and may at any other meeting, or any adjournment thereof, elect
from among its members a Chairman of the Board of Directors and a
President. The Board of Directors may also elect at such meeting one or
more Vice Chairmen and one or more Vice Presidents, who may have special
designations, and may elect at such meeting a Treasurer, a Controller and a
Secretary, who also may have special designations.
The Board of Directors may elect or appoint such other officers and
agents as it shall deem necessary, or as the business of the Company may
require, each of whom shall hold office for such period, have such
authority and perform such duties as the Board of Directors may prescribe
from time to time.
Any two or more offices, except the offices of Chairman of the Board
of Directors and Secretary, the offices of President and Secretary and the
offices of Treasurer and Controller, may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than
one capacity.
Section 2. Term of Office. Each officer elected by the Board of
Directors shall hold office until the next annual meeting of the Board of
Directors and until his or her successor is elected, or until such earlier
date as shall be prescribed by the Board of Directors at the time of his or
her election. Any officer may be removed at any time, with or without
cause, by the vote of a majority of the members of the Board of Directors.
Section 3. Vacancies. A vacancy in any office caused by the death,
resignation, retirement, or removal of the person elected thereto, or by
any other cause, may be filled for the unexpired portion of the term by
election of the Board of Directors at any meeting. In case of the absence
or disability, or refusal to act of any officer of the Company, or for any
other reason that the Board of Directors shall deem sufficient, the Board
of Directors may delegate, for the time being, the powers and duties, or
any of them, of such officer to any other officer or to any director,
consistent with the limitations in Section 1.
Section 4. The Chairman of the Board of Directors. The Chairman of
the Board of Directors shall be the chief executive officer of the Company
and shall have general direction over the affairs of the Company, subject
to the control and direction of the Board of Directors. The Chairman
shall, when present, preside as chairman at all meetings of the
shareholders and of the Board of Directors. The Chairman may call meetings
of the shareholders and of the Board of Directors and of the committees
whenever he or she deems it necessary. The Chairman shall, in the absence
or incapacity of the President, perform all duties and functions and
exercise all the powers of the President. The Chairman shall have such
other powers and perform such other duties as from time to time may be
prescribed by the Board of Directors.
Section 5. The President. The President shall have general
direction over the day-to-day business of the Company, subject to the
control and direction of the Chairman of the Board of Directors. The
President shall keep the Chairman of the Board of Directors fully informed
concerning the activities of the Company under his supervision. The
President shall, in the absence or incapacity of the Chairman of the Board
of Directors, perform all duties and functions and exercise all the powers
of the Chairman of the Board of Directors. In the absence of the Chairman
of the Board of Directors, the President shall preside at meetings of the
shareholders and of the Board of Directors. The President shall have such
other powers and perform such other duties as are incident to the office of
President and as from time to time may be prescribed by the Board of
Directors.
Section 6. Vice Chairmen and Vice Presidents. Each Vice Chairman
and each Vice President shall have such powers and perform such duties as
from time to time may be assigned to him or her by the Board of Directors
or be delegated to him or her by the Chairman of the Board of Directors or
by the President. The Board of Directors may assign to any Vice Chairman
or Vice President general supervision and charge over any territorial or
functional division of the business and affairs of the Company. In the
absence or incapacity of the Chairman of the Board of Directors and the
President, the powers, duties, and functions of the President shall be
temporarily performed and exercised by such one of the Vice Chairmen or
Vice Presidents as shall be designated by the Board of Directors or, if not
designated by the Board of Directors, by the Executive Committee or, if not
designated by the Executive Committee, by the President.
Section 7. Treasurer. The Treasurer shall have
responsibility for the custody and safekeeping of all funds and securities
of the Company; shall make disbursements of Company funds upon appropriate
vouchers and supervise the handling of balances and maintain proper
relationships with banks; shall keep full and accurate accounts of the
transactions of his or her office in books belonging to the Company and
render to the Board of Directors, whenever it may require, an account of
his or her transactions as Treasurer; and in general shall have such other
powers and perform such other duties as are incident to the office of
Treasurer and as from time to time may be prescribed by the Board of
Directors, the Chairman of the Board of Directors, or the President.
Section 8. Controller. The Controller shall have general charge,
control, and supervision over the accounting and auditing affairs of the
Company. The Controller or such persons as the Controller shall designate
shall have responsibility for the custody and safekeeping of all permanent
records and papers of the Company. The Controller shall have
responsibility for the preparation and maintenance of the books of account
and of the accounting records and papers of the Company; shall supervise
the preparation of all financial statements and reports on the operation
and condition of the business; shall have responsibility for the
establishment of financial procedures, records, and forms used by the
Company; shall have responsibility for the filing of all financial reports
and returns, except tax returns, required by law; shall render to the
Chairman of the Board of Directors, the President, or the Board of
Directors, whenever they may require, an account of the Controller's
transactions; and in general shall have such other powers and perform such
other duties as are incident to the office of Controller and as from time
to time may be prescribed by the Board of Directors, the Chairman of the
Board of Directors, or the President.
Section 9. Secretary. The Secretary shall attend and keep the
minutes of meetings of the shareholders, of the Board of Directors, and of
all committees of the Company in books of the Company provided for that
purpose; may sign with the Chairman of the Board of Directors, the
President, any Vice Chairman or any Vice President, or the Manager of any
Department, in the name of the Company, contracts and other instruments
authorized by the Board of Directors or by the Executive Committee, and in
proper cases shall affix the corporate seal thereto; shall see that notices
are given and corporate records and reports are properly kept and filed by
the Company as required by these By-Laws or as required by law; and in
general shall have such other powers and perform such other duties as are
incident to the office of Secretary and as from time to time may be
prescribed by the Board of Directors, the Chairman of the Board of
Directors, or the President.
Section 10. Compensation. The salaries and other compensation of all
officers elected by the Board of Directors shall be fixed from time to time
by or under the direction of the Board of Directors.
Article V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Indemnification. Any person (hereinafter called an
"Indemnitee") made, or threatened to be made, a party to, or who is
otherwise involved in, any action, suit or proceeding whether civil,
criminal, administrative or investigative, by reason of the fact that such
Indemnitee, or his or her testator or intestate, is or was a director or
officer of the Company, or, while a director or officer of the Company and
at the request of the Company, is or was serving another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, shall be indemnified by the Company to the full
extent permitted by applicable law, against judgments, fines, amounts paid
in settlement and all expenses, including attorneys' fees, actually
incurred as a result of such action, suit or proceeding, or any appeal
therein.
Without limitation of the foregoing, the Company shall be deemed to
have requested an Indemnitee to serve an employee benefit plan where the
performance by such person of his or her duties to the Company also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan. Excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable
law shall be considered fines.
Section 2. Partial Indemnity. If an Indemnitee is entitled under
any provision of this Article V to indemnification by the Company for some
or a portion of the amounts indemnified against, but not for the total
amount thereof, the Company shall nevertheless indemnify such Indemnitee
for the portion thereof to which such Indemnitee is entitled.
Section 3. Advancement of Expenses. The Company shall, from time to
time, reimburse or advance to any Indemnitee the funds necessary for
payment of expenses incurred in connection with any action, suit or
proceeding referred to in Section 1, upon receipt of a written undertaking
by or on behalf of such Indemnitee to repay such amounts if and to the
extent that such repayment is required pursuant to applicable law.
Section 4. Corporate Action; Judicial Review. Upon receipt of a
request to be indemnified, or for the reimbursement or advancement of
expenses, the Company shall promptly proceed in good faith to take all
actions necessary to a determination of whether or not the Indemnitee is
entitled to such payment pursuant to this Article V. If such a request is
not paid in full by the Company within thirty days after receipt of a
written claim therefor, the Indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim and, if
successful in whole or in part, the Indemnitee also shall be entitled to be
reimbursed by the Company for the expenses actually incurred, including
attorneys' fees, of prosecuting such claim. Neither a determination that
such payments are improper under the circumstances, nor the failure of the
Company (including its Board of Directors, Independent Counsel (as
hereinafter defined) or shareholders) to have made a determination, prior
to the commencement of such action, that such payments are proper under the
circumstances, shall be a defense to the action or shall create a
presumption that the Indemnitee is not entitled to the payment requested.
Notwithstanding any other provision of this Article V, in any action
hereunder by the Indemnitee against the Company to secure indemnification
or reimbursement or advancement of expenses, to the extent permitted by
applicable law, the Company shall bear the burden of proof that the
Indemnitee is not entitled to such payments.
Section 5. Contract Right. The right to indemnification and to the
reimbursement or advancement of expenses pursuant to this Article V (a) is
a contract right provided in consideration of services to the Company, with
respect to which an Indemnitee may bring suit as if the provisions of this
Article V were set forth in a separate written contract between the Company
and such Indemnitee, (b) is intended to be retroactive and shall, to the
extent permitted by applicable law, be available with respect to events
occurring prior to the adoption hereof, and (c) shall continue to exist
after any future rescission or restrictive modification hereof with respect
to any alleged cause of action that accrues, or any other incident or
matter that occurs, prior to such rescission or modification. It is the
intent of the Company to irrevocably establish hereby the right of
Indemnitees to all indemnification that is not prohibited by applicable
law.
Section 6. Change in Control. If there has been a Change in Control
of the Company (as hereinafter defined) within five years prior to any
request for indemnification or reimbursement or advancement of expenses
pursuant to this Article V, then with respect to all matters thereafter
arising concerning the rights of Indemnitees to payments pursuant to this
Article V or under any other agreement not inconsistent with this Article V
now or hereafter in effect, the Company shall seek legal advice as
specified below only from Independent Counsel (as hereinafter defined)
selected by the Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld). Such Independent Counsel shall
determine whether and to what extent the Indemnitee would be permitted to
be indemnified under applicable law, which determination shall include an
opinion as to whether any requisite standard of conduct under applicable
law has been met, and shall render a written opinion to the Company and the
Indemnitee to such effect. To the extent permitted by applicable law, the
Company shall be required by this Section 6 to authorize indemnification to
the extent such opinion of Independent Counsel indicates that
indemnification is permitted under applicable law; provided, however, that
nothing in this Section 6 shall be deemed to abrogate the duties of any
director of the Company to participate in any determination required to be
made under applicable law as to whether such payments shall be made. The
Company agrees to pay the reasonable fees of such Independent Counsel and
to indemnify such counsel fully against any and all expenses, claims,
liabilities and damages arising out of or relating to this Article V or the
engagement of such Independent Counsel pursuant hereto.
A "Change in Control of the Company" shall be deemed to have occurred
if (a) any "person" (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934) is or becomes the beneficial owner (as
defined in Rule 13d-3 under such Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding voting shares, or (b) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof unless the election of
each director who was not a director at the beginning of the period was
approved by a vote of a least 75% of the directors then still in office who
were directors at the beginning of the period.
"Independent Counsel" shall refer to an attorney-at-law who at the
time of his or her selection shall not have otherwise performed services
for the Company or the Indemnitee within the previous five years.
Independent Counsel shall not be any person who, under the standards of
professional conduct to which he or she is legally subject, would have a
conflict of interest in representing either the Company or the Indemnitee
in connection with the determination of the Indemnitee's rights under this
Article V; nor shall Independent Counsel be any person who has been
sanctioned or censured for ethical violations of such standards of
professional conduct.
Section 7. Period of Limitations. To the extent such limitation is
permitted by applicable law, no legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company or any
affiliate of the Company against an Indemnitee, Indemnitee's spouse, heirs,
testators, intestates, executors, administrators or personal or legal
representatives after the expiration of three years from the date of
accrual of such cause of action, and any claim or cause of action of the
Company or any affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such three year
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall
govern.
Section 8. Non-exclusivity. The rights of Indemnitees under the
foregoing provisions of this Article V shall be in addition to any other
rights such persons may have under a resolution of the shareholders of the
Company, a resolution of its directors, the Certificate of Incorporation of
the Company as amended or restated from time to time, the New York Business
Corporation Law, the common law, any insurance policy, any agreement or
otherwise. In addition to the foregoing provisions of this Article V,
indemnification and reimbursement and advancement of expenses may be
authorized pursuant to this Article V by a resolution of the shareholders
of the Company, a resolution of its directors or an agreement providing for
such indemnification. The Company shall not be liable under this Article V
to make any payment to an Indemnitee to the extent that such person has
otherwise actually received payment of the amounts otherwise indemnifiable
hereunder.
Section 9. Applicable Law. Any Indemnitee entitled to
indemnification or to the reimbursement or advancement of expenses as a
matter of right pursuant to this Article V may elect, to the extent
permitted by law, to have the right of indemnification (or reimbursement or
advancement of expenses) interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to
the action, suit or proceeding, or on the basis of the applicable law in
effect at the time indemnification (or reimbursement or advancement of
expenses) is sought.
Article VI
STOCK CERTIFICATES AND TRANSFER OF STOCK
Section 1. Certificates of Stock. Certificates representing shares
of the Company shall be in such form, consistent with law, as shall be
approved by the Board of Directors. They shall be signed by the Chairman
of the Board of Directors or President or a Vice Chairman or a Vice
President, and by the Secretary or Treasurer or by an Assistant Secretary
or Assistant Treasurer, and shall be sealed with the corporate seal of the
Company. Such seal may be an engraved or printed facsimile, and the
signature of such officers of the Company, or any of them, may be printed
facsimiles if such certificates are countersigned by a Transfer Agent or
registered by a Registrar other than the Company itself or an employee
thereof. In case any officer who shall have signed any such certificate,
or whose facsimile signature shall have been used thereon, shall cease to
be such officer before such certificate shall have been issued by the
Company, such certificate may be issued by the Company with the same effect
as if such officer had not ceased to be such at the date of the issuance of
such certificate. The signature of the Transfer Agent and Registrar on a
certificate representing shares of the Company may also be a printed
facsimile when the same entity acts in the dual capacity.
Section 2. Transfer of Certificated Stock. Certificated shares of
the Company shall be transferred on the books of the Company only upon
surrender of the certificate or certificates therefor to the Treasurer of
the Company, or to any authorized Transfer Agent, properly endorsed or
accompanied by proper assignments duly executed by the registered holder
thereof in person or by his or her attorney duly authorized in writing;
except that with respect to certificates alleged to have been lost, stolen,
or destroyed, a new certificate may be issued without cancellation of the
original certificate, but only upon production of such evidence of the
loss, theft, or destruction of the original certificate, and upon delivery
to the Company of a bond of indemnity in such amount and upon such terms as
the Board of Directors, in its discretion, may require. Until so
transferred on the books of the Company, the Company shall deem and treat
the registered holder of each certificate for shares as the owner of such
shares for all purposes.
Section 3. Transfer Agent and Registrar; Regulations. The Company
shall maintain one or more transfer offices or agencies, each under control
of a Transfer Agent, where the shares of the Company may be transferable,
and also one or more registry offices or agencies, each under control of a
Registrar, where such shares may be registered, and no certificate for
shares of the Company shall be valid unless countersigned by such Transfer
Agent and registered by such Registrar. The Board of Directors may make
such additional rules and regulations as it may deem expedient concerning
the issue, transfer, and registration of certificates for shares of the
Company.
Section 4. Record Date of Shareholders. The Board of Directors may
from time to time fix in advance a date, not more than fifty nor less than
ten days preceding the date of any meeting of shareholders, and not more
than fifty days prior to the date for the payment of any dividend, or the
date for the allotment of any rights, or the date when any change or
conversion or exchange of shares shall become effective, or the date for
any other action by the shareholders, as a record for the determination of
the shareholders entitled to notice of, and to vote at, any such meeting
and any adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion, or exchange of shares, or to take
any other action, and only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to such notice of, and to
vote at, such meeting and any adjournment thereof, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, or to take such other action, as the case may be, notwithstanding
any transfer of any shares on the books of the Company after any such
record date so fixed.
Section 5. Uncertificated Shares. The Board of Directors may in its
discretion authorize the issuance of shares which are not represented by
certificates and provide for the registration and transfer thereof on the
books and records of the Company or any Transfer Agent or Registrar so
designated.
Section 6. Shareholder Records. The names and addresses of the
persons to whom shares are issued, and the number of shares and the dates
of issue and any transfer thereof, whether in certificated or
uncertificated form, shall be entered on records kept for that purpose.
The stock transfer records and the blank stock certificates shall be kept
by the Transfer Agent, or by the Treasurer, or such other officer as shall
be designated by the Board of Directors for that purpose. Every
certificate surrendered for transfer or exchange shall be cancelled.
Article VII
FISCAL YEAR
The fiscal year of the Company shall begin on January 1 in 1994, and
thereafter shall begin on the day after the Saturday closest to December 31
in each year, and shall end on the Saturday closest to December 31 in 1994
and each year thereafter.
Article VIII
SEAL
The corporate seal of the Company shall be circular in form and shall
contain the name of the Company and the words "New York," "1906," and
"Seal." The Secretary shall have custody of the seal, and a duplicate of
the seal may be kept and used by any Assistant Secretary.
Article IX
AMENDMENTS
These By-Laws may be amended or repealed by the vote of a majority of
the directors present at any meeting at which a quorum is present or by the
vote of the holders of the shares of the Company at the time entitled to
vote in the election of directors at any meeting of the shareholders at
which a quorum is present.
Exhibit 15
Deloitte & Touche LLP Telephone: (312) 946-3000
Two Prudential Plaza Facsimile: (312) 946-2600
180 North Stetson Avenue
Chicago, Illinois 60601-6779
September 13, 1996
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, IL 60179
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of Sears, Roebuck and Co. for the three-month
periods ended March 30, 1996 and April 1, 1995 and the three and six-month
periods ended June 29, 1996 and July 1, 1995, as indicated in our reports
dated May 9, 1996 and August 13, 1996, respectively; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in
your Quarterly Reports on Form 10-Q for the quarters ended March 30, 1996
and June 29, 1996, are being used in this Registration Statement.
We are also aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
/S/Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
Deloitte & Touche LLP Telephone: (312) 946-3000
Two Prudential Plaza Facsimile: (312) 946-2600
180 North Stetson Avenue
Chicago, Illinois 60604-6779
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Sears, Roebuck and Co. and The Savings and Profit Sharing Fund of Sears
Employees on Form S-8 of our reports dated February 15, 1995 and March 22,
1996, appearing in and incorporated by reference in the Annual Report on
Form 10-K of Sears, Roebuck and Co. for the year ended December 30, 1995
and appearing in the Annual Report on Form 11-K of The Savings and Profit
Sharing Fund of Sears Employees for the year ended December 31, 1995,
respectively. We also consent to the reference to us under the heading
"Experts" in the Prospectus, which is a part of this Registration
Statement.
/S/Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
September 13, 1996
Exhibit 24(a)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being
a director or officer, or both, of SEARS, ROEBUCK AND CO., a New York
corporation (the "Company"), does hereby constitute and appoint ARTHUR C.
MARTINEZ, RUSSELL S. DAVIS, DAVID SHUTE, JAMES A. BLANDA and ALICE M.
PETERSON, with full power to each of them to act alone, as the true and
lawful attorneys and agents of the undersigned, with full power of
substitution and resubstitution to each of said attorneys, to execute, file
or deliver any and all instruments and to do any and all acts and things
which said attorneys and agents, or any of them, deem advisable to enable
the Company and THE SAVINGS AND PROFIT SHARING FUND OF SEARS EMPLOYEES (the
"Fund") to comply with the Securities Act of 1933, as amended (the
"Securities Act"), and any requirements or regulations of the Securities
and Exchange Commission in respect thereto, in connection with the
registration under said Securities Act of
(a) common shares of the Company acquired or to be acquired by
the Fund for its participants, and
(b) participations in the Fund to be offered to employees upon
becoming eligible for participation,
including specifically, but without limitation of the general authority
hereby granted, the power and authority to sign his or her name as a
director or officer, or both, of the Company, as indicated below opposite
his or her signature, to
(i) the registration statement, or any amendment, post-
effective amendment or papers supplemental thereto, to be filed in respect
of said common shares of the Company and participations in the Fund, and to
the prospectus or any amendment, supplement or revision thereof, which is a
part of said registration statement or any amendment or post-effective
amendment to said registration statement;
(ii) any amendment or post-effective amendment as shall be
necessary or appropriate to any registration statement heretofore filed
under the Securities Act with respect to common shares of the Company and
participations in the Fund; and
(iii) said prospectus or any amendment, supplement or revision
thereof which is a part of any registration statement (or any amendment or
post-effective amendment thereto) heretofore filed under said Securities
Act with respect to common shares of the Company and participations in the
Fund;
and each of the undersigned does hereby fully ratify and confirm all that
said attorneys and agents, or any of them, or the substitute of any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, this 9th day of August, 1995.
Name Title
/S/ARTHUR C. MARTINEZ
_________________________ Director, Chairman of the
Arthur C. Martinez Board of Directors and Chief
Executive Officer
(Principal Executive Officer)
/S/RUSSELL S. DAVIS
_________________________ Executive Vice President
Russell S. Davis and Chief Financial Officer
/S/JAMES A. BLANDA
_________________________ Vice President and Controller
James A. Blanda (Principal Accounting Officer)
/S/HALL ADAMS, JR.
_________________________ Director
Hall Adams, Jr.
/S/WARREN L. BATTS
_________________________ Director
Warren L. Batts
/S/JAMES W. COZAD
_________________________ Director
James W. Cozad
/S/MICHAEL A. MILES
_________________________ Director
Michael A. Miles
/S/NANCY C. REYNOLDS
_________________________ Director
Nancy C. Reynolds
/S/CLARENCE B. ROGERS, JR.
_________________________ Director
Clarence B. Rogers, Jr.
/S/DONALD H. RUMSFELD
_________________________ Director
Donald H. Rumsfeld
Exhibit 24(b)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of SEARS,
ROEBUCK AND CO., a New York corporation (the "Company"), does hereby
constitute and appoint ARTHUR C. MARTINEZ, RUSSELL S. DAVIS, DAVID SHUTE,
JAMES A. BLANDA and ALICE M. PETERSON, with full power to each of them to
act alone, as the true and lawful attorneys and agents of the undersigned,
with full power of substitution and resubstitution to each of said
attorneys, to execute, file or deliver any and all instruments and to do
any and all acts and things which said attorneys and agents, or any of
them, deem advisable to enable the Company and THE SAVINGS AND PROFIT
SHARING FUND OF SEARS EMPLOYEES (the "Fund") to comply with the Securities
Act of 1933, as amended (the "Securities Act"), and any requirements or
regulations of the Securities and Exchange Commission in respect thereto,
in connection with the registration under said Securities Act of
(a) common shares of the Company acquired or to be acquired by the Fund for
its participants, and
(b) participations in the Fund to be offered to employees upon becoming
eligible for participation,
including specifically, but without limitation of the general authority
hereby granted, the power and authority to sign his name as an officer of
the Company to
(i) the registration statement, or any amendment, post-
effective amendment or papers supplemental thereto, to be filed in respect
of said common shares of the Company and participations in the Fund, and to
the prospectus or any amendment, supplement or revision
thereof, which is a part of said registration statement or any amendment or
post-effective amendment to said registration statement;
(ii) any amendment or post-effective amendment as shall be
necessary or appropriate to any registration statement heretofore filed
under the Securities Act with respect to common shares of the Company and
participations in the Fund; and
(iii) said prospectus or any amendment, supplement or revision
thereof which is a part of any registration statement (or any amendment or
post-effective amendment thereto) heretofore filed under said Securities
Act with respect to common shares of the Company and
participations in the Fund;
and the undersigned does hereby fully ratify and confirm all that said
attorneys and agents, or any of them, or the substitute of any of them,
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents,
this 26th day of September, 1995.
/S/ALAN J. LACY
_______________________ Vice Chairman and Acting Chief
Alan J. Lacy Financial Officer
(Principal Financial Officer)
