<PAGE> 1
As filed with the Securities and Exchange Commission on July 2, 1999
[Registration No. __-_____]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------
WILLIAMS-SONOMA, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 94-2203880
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
3250 VAN NESS AVENUE, SAN FRANCISCO, CALIFORNIA 94109
(Address of Principal Executive Office) (Zip Code)
WILLIAMS-SONOMA, INC. ASSOCIATE STOCK INCENTIVE PLAN
(Full title of the "Plan")
DENNIS CHANTLAND Copy to:
Executive Vice President, Chief JOAN L. LESSER, ESQ.
Administrative Officer and Secretary Irell & Manella LLP
Williams-Sonoma, Inc. 1800 Avenue of the Stars
3250 Van Ness Avenue Suite 900
San Francisco, California 94109 Los Angeles, CA 90067
(415) 421-7900 (310) 277-1010
(Name, address including zip code and telephone number, including
area code, of registrants' agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities to be Registered Amount to be Offering Price Aggregate Amount of
Registered Per Share * Offering Price * Registration Fee*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,221,775 $33.25 $40,624,019 $11,293
- ----------------------------------------------------------------------------------------------------------
Interests in the Plan (1) Indeterminate N/A N/A $0
==========================================================================================================
</TABLE>
* The offering price is to be computed pursuant to Rule 457(h) and Rule
457(c). As such, the offering price is the average of the high and the
low price as of July 1, 1999.
(1) Pursuant to Rule 416(c) under the Securities Act of 1993, this
Registration Statement covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
<PAGE> 2
EARLIER REGISTRATION STATEMENTS INCORPORATED BY REFERENCE. In 1990,
Williams-Sonoma, Inc., filed a Registration Statement on Form S-8, registration
number 33-33693, with respect to $1,400,000 of interests in the Plan (the "1990
S-8"). In 1995, Williams-Sonoma, Inc. filed an amendment to the 1990 S-8 (the
"1995 S-8"). The present Registration Statement on Form S-8 (the "1999 S-8")
incorporates the 1990 S-8 and the 1995 S-8 by reference.
INFORMATION REQUIRED BY PART I OF FORM S-8. The document(s) updating the
information specified in Part I of Form S-8 will be sent or given to
participating employees as specified by Rule 428(b)(1) of the Securities Act of
1933, as amended (the "Securities Act"). These documents and the documents
incorporated by reference into the 1999 S-8 pursuant to Item 3 of Part II of
this Registration Statement taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (d) below are incorporated by
reference in this Registration Statement. In addition, all documents
subsequently filed by Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior
to the filing of a post-effective amendment that indicates that all securities
offered have been sold or that deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be part hereof from the date of filing of such documents:
(a) The Company's Quarterly Report on Form 10-Q for the three-month
period ended May 2, 1999;
(b) The Company's Annual Report on Form 10-K for the year ended
January 31, 1999;
(c) The Williams-Sonoma, Inc. Associate Incentive Plan Annual Report
on Form 11-K for the year ended December 31, 1998; and
(d) The description of the Company's Common Stock contained in
Registrant's Registration Statement on Form 8-A, filed with the
Securities and Exchange Commission on July 25, 1984, including
any amendment or report filed for the purpose of updating such
description.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act which also is
incorporated or deemed to be incorporated herein by reference modifies or
supersedes such prior statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 309(c) of the California General Corporations Code (the "CCL")
permits a provision in the articles of incorporation eliminating or limiting,
with certain exceptions, the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director. On June 20, 1995, Article V of the Company's Articles of Incorporation
was amended to eliminate the liability of the directors of the Company for
monetary damages to the fullest extent permissible under California law.
Section 317 of the CCL provides for the indemnification of directors,
officers and "agents" (as defined in Section 317(a) of the CCL) under certain
circumstances. Section 7.06 of the Company's Restated and Amended Bylaws
("Bylaws") grants the Company the power to indemnify its directors, officers and
"agents" under certain circumstances, to the extent permitted by California law,
against certain expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of their positions as directors, officers or "agents." Specifically,
Section 2.10 of the Plan provides for the indemnification of the members of the
Plan's administrative committee, appointed by the Board to administer the Plan
against any and all liabilities and claims arising out of their membership
thereon, other than expenses and liabilities arising out of gross negligence,
recklessness, or willful or intentional malfeasance or misfeasance. Pursuant to
California law and the Bylaws, the Company is required to indemnify directors,
officers and "agents" against expenses actually and reasonably incurred to the
extent that such party is successful on the merits in defense of certain
proceedings.
Section 317(i) of the CCL also provides that a corporation shall have
the power to purchase and maintain insurance on behalf of any agent of the
corporation against any liabilities asserted against or incurred by the agent in
such capacity. The Company maintains a director's and officer's liability
insurance policy insuring the Company's directors and officers against certain
liabilities and expenses incurred by them in their capacities as such, and
insuring the Company under certain circumstances in the event that
indemnification payments are made by the Company to such directors and officers.
Section 204(a)(11) of the CCL provides for the indemnification, subject
to certain limitations, of directors, officers and "agents" for breach of their
duty to a corporation and its shareholders in excess of that expressly permitted
by Section 317 of the CCL. On December 6, 1988, the Company's Restated Articles
of Incorporation were amended implementing Section 204(a)(11) of the CCL.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
4 Williams-Sonoma, Inc. Associate Stock Incentive Plan
5.1 Opinion of Irell & Manella LLP as to the legality of the
securities being registered being registered
5.2 Internal Revenue Service Determination Letter as to the
qualification of the Plan under Section 401 of the Internal
Revenue Code
23.1 Independent Auditors' Consent
23.2 Consent of Irell & Manella LLP (included in Exhibit 5.1)
24 Powers of Attorney (included on signature page of this
Registration Statement)
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<PAGE> 4
ITEM 9. UNDERTAKINGS.
a. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement;
(c) to include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
b. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
c. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise,
Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
director, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
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<PAGE> 5
SIGNATURES
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 this Registration Statement on Form S-8 and has
duly caused this Registration Statement on Form S-8 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of San Francisco,
State of California, on June 28, 1999.
WILLIAMS-SONOMA, INC.
By: /s/ Dennis A. Chantland
---------------------------------------
Dennis A. Chantland
Executive Vice President, Chief
Administrative Officer and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Dennis A. Chantland, his true and lawful
attorney-in-fact and agent, with full power of substitution for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including without limitation post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, lawfully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ W. Howard Lester Director and Chairman of the Board June 28, 1999
- ---------------------------------- and Chief Executive Officer (principal
W. Howard Lester executive officer)
/s/ Charles E. Williams Director and Vice Chairman of the Board June 28, 1999
- ----------------------------------
Charles E. Williams
/s/ Dennis A. Chantland Executive Vice President and Chief June 28, 1999
- ---------------------------------- Administrative Officer and Secretary
Dennis A. Chantland (principal financial and accounting
officer)
/s/ Patrick J. Connolly Director and Executive Vice President June 28, 1999
- ---------------------------------- and General Manager, Catalog Division
Patrick J. Connolly
/s/ Gary G. Friedman Director and Chief Merchandising June 28, 1999
- ---------------------------------- Officer and President, Retail Division
Gary G. Friedman
/s/ Adrian D.P. Bellamy Director June 28, 1999
- ----------------------------------
Adrian D.P. Bellamy
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James M. Berry Director June 28, 1999
- ----------------------------------
James M. Berry
/s/ Nathan Bessin Director June 28, 1999
- ----------------------------------
Nathan Bessin
/s/ James A. McMahan Director June 28, 1999
- ----------------------------------
James A. McMahan
/s/ John E. Martin Director June 28, 1999
- ----------------------------------
John E. Martin
/s/ Janet Emerson Director June 28, 1999
- ----------------------------------
Janet Emerson
</TABLE>
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<PAGE> 7
EXHIBIT INDEX
4 Williams-Sonoma, Inc. Associate Stock Incentive Plan
5.1 Opinion of Irell & Manella LLP as to the legality of the securities
being registered being registered
5.2 Internal Revenue Service Determination Letter as to the qualification of
the Plan under Section 401 of the Internal Revenue Code
23.1 Independent Auditors' Consent
23.2 Consent of Irell & Manella LLP (included in Exhibit 5.1)
24 Powers of Attorney (included on signature page of this Registration
Statement)
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<PAGE> 1
EXHIBIT 4
ILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
Williams-Sonoma, Inc., a California corporation, hereby establishes this
Employee Profit Sharing and Stock Incentive Plan, effective as of February 1,
1989, for the benefit of its employees who are eligible to be Participants, as
hereinafter defined. This Plan shall constitute a profit sharing plan within the
meaning of Code Section 401(a)(27), and is intended to invest primarily in
Common Stock of Williams-Sonoma, Inc.
Article I
DEFINITIONS
The following terms when used herein shall have the designated meaning,
unless a different meaning is plainly required by the context or a different
meaning is specifically provided. Wherever appropriate, words used in the
singular may include the plural, the plural may include the singular, and the
masculine may include the feminine.
1.01 "AFFILIATE" means (i) any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Company; (ii) any trade or business (whether or not incorporated)
which is under common control (as defined in Code Section 414(c)) with the
Company; (iii) any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in Code Section 414(m)) which
includes the Company or any other Affiliate; and (iv) any other entity required
to be aggregated with the Company pursuant to regulations under Code Section
414(o).
1.02 "ANNIVERSARY DATE" means the last day of December, 1993, and the
last day of December in each subsequent year.
1.03 "AVERAGE DEFERRAL PERCENTAGE TEST" shall mean the test for
comparing the Salary Deferral Contributions of Highly Compensated Employees and
Non-Highly Compensated Employees set forth in Code Section 401(k)(3) and Treas.
Regs. Section 1.401(k)-l(b). The Average Deferral Percentage Test shall be
satisfied for any Plan Year if (i) the average of the Deferral Percentages for
the Highly Compensated Employees is not more than the average of the Deferral
Percentages of the Non-Highly Compensated Employees multiplied by 1.25, or (ii)
the average of the Deferral Percentages for the Highly Compensated Employees
exceeds the average of the Deferral Percentages for the Non-Highly Compensated
Employees by not more than two (2) percentage points, and the average of the
Deferral Percentages for the Highly Compensated Employees is not more than the
average of the Deferral Percentages of the Non-Highly Compensated Employees
multiplied by 2. Provided, however, that the Average Deferral Percentage Test
shall not be satisfied based on the test set forth in clause (ii) of the
preceding sentence if the Average Contribution Percentage Test is satisfied
pursuant to the test set forth in clause (ii) of Section 1.04. The determination
whether to apply clause (ii) of the Average Deferral Percentage Test or clause
(ii) of the Average Contribution Percentage Test shall be made for each Plan
Year by the Committee.
1.04 "AVERAGE CONTRIBUTION PERCENTAGE TEST" shall mean the test for
comparing the Matching Contributions of Highly Compensated Employees and
Non-Highly Compensated Employees set forth in Code Section 401(m) and Treas.
Regs. Section 1.401(m)-1(b)(3). The Average Contribution Percentage Test shall
be satisfied for any Plan Year if (i) the average of the Contribution
Percentages for the Highly Compensated Employees is not more than the average of
the Contribution Percentages of the Non-Highly Compensated Employees multiplied
by 1.25, or (ii) the average of the Contribution Percentages for the Highly
Compensated Employees exceeds the average of the Contribution Percentages for
the Non-Highly Compensated Employees by not more than two (2) percentage points,
and the average of the Contribution Percentages for the Highly Compensated
Employees is not more than the average of the Contribution Percentages of the
Non-Highly Compensated Employees multiplied by two (2). Provided, however, the
Average Contribution Percentage Test shall not be satisfied based on the test
set forth in clause (ii) of the preceding sentence if the Average Deferral
Percentage Test is satisfied pursuant to the test set forth in clause (ii) of
Section 1.03. The determination
<PAGE> 2
whether to apply clause (ii) of the Average Deferral Percentage Test or clause
(ii) of the Average Contribution Percentage Test shall be made for each Plan
Year by the Committee.
1.05 "BENEFICIARY" means any person properly designated by a Participant
under Article XIV herein as the person who is entitled to receive any benefits
which may be payable from his account on or after his death.
1.06 "BREAK IN SERVICE" means a twelve consecutive month period
beginning on an Employee's Severance-Date during which a Participant has
completed no Hours of Service.
1.07 "CASH ACCOUNT" means the portion of a Participant Account in the
Trust Fund that (i) is not invested in the Company Stock Fund, or (ii) is
invested in the Company Stock Fund but has not yet been used to purchase Stock.
1.08 "CODE" means the Internal Revenue Code of 1986, as amended.
1.09 "COMMITTEE" means the Administrative Committee appointed and acting
pursuant to the terms of Article II hereof.
1.10 "COMPANY" means Williams-Sonoma, Inc., a California corporation, or
any successor corporation by merger, consolidation, purchase, or otherwise.
1.11 "COMPANY PROFIT SHARING CONTRIBUTION" means the contribution made
by the Company pursuant to Article IV.
1.12 "COMPENSATION" means the amount of regular, recurring compensation
of an Employee, including monthly salary and hourly wages, plus overtime pay and
commissions, but not including any other items of compensation, such as (i)
bonuses paid at the discretion of the Company or (ii) the value of stock options
granted to or exercised by an Employee during the Plan Year, and in no event
including car allowances or expense reimbursements; provided that (i) for
purposes of Section 7.02 and for purposes of determining which Participants are
Key Employees (as defined in Section 1.23), "Compensation" means the amount of
wages, within the meaning of Section 3401(a) of the Code, paid to an Employee,
but determined without regard to any rules that limit the amounts included in
wages based on the nature or location of employment or the nature of the
services performed; (ii) for all purposes of the Plan other than Section 8.01,
Compensation shall be determined prior to reduction for any Salary Deferral
Contributions made on behalf of a Participant and for any amounts allocated to a
cafeteria plan maintained pursuant to Code Section 125, and (iii) for all
purposes of the Plan, Compensation shall not exceed $200,000, as adjusted in
accordance with the provisions of Section 415(d) of the Code. The $200,000
limitation shall apply to all Compensation paid to the Participant, the
Participant's spouse and the Participant's lineal descendants who have not
attained age 19 by the end of the Plan Year, and shall be aggregated among such
individuals in accordance with the rules set forth in Code Section 401(a)(17)
and the Regulations thereunder. For the eleven-month period ended December 31,
1993, Clause (iii) of the preceding sentence shall be applied by substituting
$183,333 in place of $200,000, and for all years after December 31, 1993, said
Clause shall be applied by substituting $150,000 in place of $200,000.
1.13 "CONTRIBUTION PERCENTAGE" means, for each Participant, the average,
for any Plan Year, of (i) the sum of the amount of Matching Contributions,
Qualified Non-Elective Contributions (pursuant to Section 6.03(2)), and
recharacterized Salary Deferral Contributions (pursuant to Section 6.03(3)) to
(ii) the Plan Year Compensation of such Participant.
1.14 "DEFERRAL PERCENTAGE" means, for each Participant, the ratio, for
any Plan Year, of (i) the sum of the amount of Salary Deferral Contributions,
Qualified Non-Elective Contributions (pursuant to Section 5.04(2))) and
Qualified Matching Contributions (pursuant to Section 5.04(3)) to (ii) the Plan
Year Compensation of such Participant.
1.15 "DIRECTORS" means the Board of Directors of the Company.
<PAGE> 3
1.16 "EFFECTIVE DATE" means February 1, 1989.
1.17 "ELIGIBLE EMPLOYEE" means every Employee of a Participating
Company, other than an Employee who is a Participant in or covered by any other
qualified retirement benefit plan to which the Company makes contributions
pursuant to a good faith collective bargaining agreement between the Company and
a bargaining unit representing such covered Employee; provided that officers of
the Company shall not be eligible to make Salary Deferral Contributions prior to
August 1, 1990.
1.18 "EMPLOYEE" means any person who is employed by the Company and
whose compensation is subject to the withholding of income tax. "Employee" shall
also include leased employees within the meaning of Code Section 414(n)(2),
unless such leased employees constitute less than twenty percent of the
Company's nonhighly compensated work force within the meaning of Code Section
414(n)(1)(C)(ii). For purposes of this Section, "Company" shall include any
Affiliate of the Company.
1.19 "EMPLOYMENT COMMENCEMENT DATE" means the date on which an Employee
first performs an Hour of Service for the Company or an Affiliate; provided that
every Employee who was a Participant in the Plan on September 1, 1989 shall be
treated as having an Employment Commencement Date of February 1, 1988. In the
case of a former Participant who returns to the employ of the Company or an
Affiliate after a Break in Service, "Employment Commencement Date" means the
Participant's Reemployment Date.
1.20 "ENTRY DATE" means January 1 and July 1.
1.21 "HIGHLY COMPENSATED EMPLOYEE" shall mean an Employee who performs
service during a Determination Year and is described in one or more of the
following groups:
(1) An Employee who is a 5% owner of the company, as defined
in Code Section 416(i)(1)(iii), at any time during the Determination Year or the
Look-Back Year.
(2) An Employee who receives Compensation in excess of $75,000
(indexed in accordance with Code Section 415(d)) during the Look-Back Year.
(3) An employee who receives Compensation in excess of $50,000
(indexed in accordance with Section 415(d)) during the Look-Back Year and is a
member of the Top-Paid Group for the Look-Back Year.
(4) An employee who is an officer (within the meaning of Code
Section 416(1)) during the Look-Back Year and who receives Compensation during
the Look-Back Year in excess of 50% of the dollar limitation in effect under
Code Section 415(b)(1)(A) for the calendar year within which the Look-Back Year
begins, or, if no officer of the Company receives Compensation in excess of 50%
of the dollar limitation in effect under Code Section 415(b)(1)(A), the highest
paid officer.
(5) An Employee who is one of the one hundred (100) Employees
who receives the highest Compensation from the Company during the Determination
Year, and who would be described in paragraph (2), (3) or (4) above if those
paragraphs were modified to substitute the Determination Year for the Look-Back
Year.
For purposes of this Section, the following rules shall apply:
(1) The Determination Year is the Plan Year with respect to
which the determination of which Employees are Highly Compensated Employees is
being made.
(2) The Look-Back Year is the twelve month period immediately
preceding the Determination Year.
(3) The Top-Paid Group consists of the top 20% of Employees,
ranked on the basis of Compensation received during the year. For purposes of
determining the number of Employees in the Top-
<PAGE> 4
Paid Group, Employees described in Code Section 414(q)(8) and Q & A 9(b) of
Treas. Regs. 1.414(q)-1T shall not be taken into account.
(4) The number of officers shall not exceed 50 (or, if lesser,
the greater of three Employees or 10% of the number of Employees, with such 10%
calculation not taking into account any Employees who are excluded in
determining the Top-Paid Group).
(5) Compensation shall have the meaning set forth in Code
Section 415(c)(3), and shall include any elective or salary reduction
contributions made to a cafeteria plan, to a cash or deferred arrangement
(including the Plan), or to a tax-sheltered annuity.
(6) The Company and any Affiliate shall be treated as a single
employer for purposes of making the determinations required pursuant to this
Section.
(7) Highly Compensated Employees shall also include any former
Employee who separated from service of the Company prior to the Determination
Year, and who was a Highly Compensated Employee for either (1) the Plan Year
during which the Employee separated from service, or (2) any Determination Year
ending on or after the Employee's 55th birthday. An individual who separated
from service of the company prior to January 1, 1987, will be considered a
Highly Compensated Employee only if such individual was a 5% owner of the
Company or received Compensation in excess of $50,000 during (1) the Plan Year
in which the Employee separated from service (or the year preceding such Plan
Year), or (2) any Plan Year ending on or after such Employee's 55th birthday (or
the last Plan Year ending before such Employee's 55th birthday).
1.22 "HOUR OF SERVICE" means:
(1) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Company or any Affiliate.
(2) Each hour for which an Employee is paid, or entitled to
payment, on account of a period of time during which no duties are performed
(regardless of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. For this purpose Hours of Service shall
not be credited to an Employee either for a period during which no duties are
performed if payment is made or due under a plan maintained solely for the
purpose of complying with applicable workmen's compensation; unemployment
compensation or disability insurance laws, or on account of any payment made or
due an Employee solely in reimbursement of medical or medically related expenses
incurred by the Employee; and
(3) Each hour not otherwise credited under the Plan for which
back pay, irrespective of mitigation of damages, has either been awarded or
agreed to, such hours to be credited to the period or periods to which the award
or agreement pertains. If this provision results in an Employee becoming a
Participant for a Plan Year that he was not otherwise a Participant under
Article III or if it results in an increase in an Employee's vested percentage
applicable to a Participant Account with respect to which there has been a
forfeiture under Section 11.06, the Committee shall establish equitable
procedures for determining and allocating any resulting amounts to such
Participant Account. Any amounts so allocated shall be included for purposes of
Section 7.01 for the Plan Year to which the allocation pertains, but shall not
be included for purposes of Section 7.01 for the Plan Year in which the
allocation is made.
The calculation of the number of Hours of Service to be credited
under Subsections (2) and (3) above for periods during which no duties are
performed, and the crediting of such Hours of Service to periods of time for
purposes of computations under the Plan, shall be determined by the Company in
accordance with the rules set forth in paragraphs (b) and (c) of Regulation
Section 2530.200b-2 prescribed by the Department of Labor, which rules shall be
consistently applied with respect to all Employees within the same job
classifications.
<PAGE> 5
Solely for purposes of determining whether there has occurred a
Break in Service, an Employee who is absent from work, whether or not paid or
entitled to payment, (i) by reason of the pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason of the placement
of a child in connection with the adoption of the child by the Employee, or (iv)
for purposes of caring for the child during the period following such birth or
placement for adoption shall be credited with (A) the number of hours that
normally would have been credited to such Employee but for such absence, or (B)
if such normal work hours are not known, eight (8) Hours of Service for each
normal workday during such absence. The credit provided to an Employee under
this paragraph shall be reduced by each Hour of Service credited to the Employee
during such absence under Subsection (1), (2), or (3) of this Section. An
Employee may be credited under this paragraph with no more than 501 Hours of
Service for any such absence. An Employee shall be credited with Hours of
Service under this paragraph in the Plan Year during which the absence begins,
unless in such Plan Year such Employee has already completed at least Five
Hundred (500) Hours of Service, in which case the Employee shall be credited
with Hours of Service under this paragraph only in the following Plan Year. An
Employee will not be credited with Hours of Service under this paragraph unless
the absence is specifically for one or more of the reasons permitted under this
paragraph and the Employee so certifies to the Committee in writing.
1.23 "KEY EMPLOYEE" means any Participant described in Section 416(i) of
the Code.
1.24 "MATCHING CONTRIBUTION" means the contributions made pursuant to
Article IV.
1.25 "MATCHING CONTRIBUTION ACCOUNT" means the portion of a
Participant's Account consisting of Matching Contributions made on behalf of the
Participant pursuant to Article VI and earnings thereon.
1.26 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is not a
Highly Compensated Employee.
1.27 "NON-KEY EMPLOYEE" means each Participant who is not a Key
Employee.
1.28 "NORMAL RETIREMENT DATE" means a Participant's sixty-fifth (65th)
birthday.
1.29 "PARTICIPANT" means an Employee who is eligible to be and becomes a
Participant in the Plan pursuant to Article III.
1.30 "PARTICIPANT ACCOUNT" means the total amounts allocated to the
Participant's Salary Deferral Account, Matching Contribution Account and
Profit Sharing Contribution Account. Each Participant Account shall be
divided into a Stock Account and a Cash Account.
1.31 "PARTICIPATING COMPANY" means the Company and any Affiliate which
elects to become a member of this Plan, with the written consent of the
Directors.
1.32 "PERIOD OF SERVICE" means the period of time which elapses between
(i) a Participant's Employment Commencement Date (but not earlier than February
1, 1988) and (ii) the Participant's next following Severance Date, expressed in
completed years and months. A Participant's Period of Service includes a Period
of Severance if the Participant's Reemployment Date is within one year of the
last Hour of Service credited ("service spanning rule"). In the case of a
Participant who is reemployed following a Period of Severance, Period of Service
includes the Participant's prior Period of Service.
1.33 "PERIOD OF SEVERANCE" means the period of time beginning on the day
after a Participant's Severance Date and ending on the day before the
Participant's Reemployment Date.
1.34 "PLAN" means the provisions herein set forth, as they may be
amended from time to time.
1.35 "PLAN YEAR" mean the eleven-month period ending December 31, 1993,
and each calendar year thereafter.
<PAGE> 6
1.36 "PLAN YEAR COMPENSATION" shall mean the amount of the Participant's
Compensation during the Plan Year, except that, in the case of a Participant who
enters the Plan on any July 1, "Plan Year Compensation" shall not include the
amount of the Participant's Compensation paid to the Participant prior to his
Entry Date.
1.37 "PROFIT SHARING CONTRIBUTION ACCOUNT" shall mean the portion of a
Participant's Account consisting of Profit Sharing Contributions and forfeitures
allocated pursuant to Section 7.01 and earnings thereon.
1.38 "QUARTERLY VALUATION DATE" means January 31, 1990, and thereafter
each January 31, April 30, July 31, and October 1.
1.39 "REEMPLOYMENT DATE" means the date on which an Employee first
performs an Hour of Service following an Employee's Severance Date.
1.40 "SALARY DEFERRAL ACCOUNT" means the portion of a Participant's
Account consisting of Salary Deferral Contributions made on behalf of the
Participant pursuant to Article V and earnings thereon.
1.41 "SALARY DEFERRAL CONTRIBUTION" means the contributions which are
made by the Company pursuant to Article V, in consideration of a Participant's
agreement to reduce his compensation from the Company by an amount equal to such
Salary Deferral Contribution.
1.42 "SEVERANCE DATE" means the date a Participant dies, retires, quits,
or is discharged, or, if earlier, the first anniversary of the date on which an
Employee is absent from work for any reason not mentioned above. Notwithstanding
the above, severance will not occur for an Employee on military leave during the
period in which the reemployment is guaranteed by law.
1.43 "STOCK" means the Common Stock of the Company.
1.44 "STOCK ACCOUNT" means that portion of a Participant Account in the
Trust Fund which is invested in Stock.
1.45 "TOP HEAVY" shall have the meaning set forth in Article XVII.
1.46 "TRUST AGREEMENT" means the agreement described in Article IX.
1.47 "TRUST FUND" means the Williams-Sonoma, Inc. Employee Profit
Sharing and Stock Incentive Plan Trust, consisting of the total of all
contributions to the Plan, increased by the profits, income, refunds, and
recoveries received, and decreased by losses, benefits paid and any expenses in
administration of the Trust Fund not paid by the Company.
1.48 "YEAR OF SERVICE" means as follows:
(1) For purposes of the participation requirement of Article
III, "Year of Service" means the twelve (12) consecutive month period commencing
on the date an Employee first performs an Hour of Service and during which he is
credited with not less than one Thousand (1,000) Hours of Service. For purposes
of the preceding sentence, a Salaried Employee shall be credited with 45 Hours
of Service for each calendar week during which he performs at least one Hour of
Service. Subsequent twelve (12) consecutive month periods will be the Plan Year
beginning with the Plan Year that begins after the Employee's date of hire.
(2) For purposes of the vesting schedule contained in Article
XI, "Year of Service" means a Period of Service of one year.
(3) For purposes of applying this Section to individuals who
were employed by California Closets, a California corporation, on April 30,
1990, service with California Closets on or after May 1, 1989 shall be treated
as service with the Company."
<PAGE> 7
1.49 "HIGHLY COMPENSATED FAMILY AGGREGATION EMPLOYEE" means a Highly
Compensated Employee who is either (i) a 5% owner of the Company, or (ii) one of
the ten most highly compensated Employees of the Company.
1.50 "HIGHLY COMPENSATED FAMILY GROUP" shall mean a Highly Compensated
Family Aggregation Employee, the spouse of the Highly Compensated Family
Aggregation Employee, and the lineal ascendants and descendants (and spouses of
such ascendants and descendants) of the Highly Compensated Family Aggregation
Employee.
Article II
ADMINISTRATIVE COMMITTEE
2.01 In General. This Plan shall be administered by an
Administrative Committee, hereinafter referred to as the "Committee."
2.02 Appointment of Committee Members. The committee shall consist of
three (3) members. The members shall be appointed by and hold office at the
pleasure of the Directors. Committee members may be Participants but need not be
Employees of the Company and may serve on the Committee of any other employee
benefit plan maintained by the Company. The Directors shall certify the names of
the Committee members to the Trustee in writing.
2.03 Resignation or Removal of Committee Members. Any Committee member
may resign by filing written notice of his resignation with any Director, and
such resignation shall be effective immediately upon acceptance by such
Director. The Directors may remove any Committee member by filing written notice
of removal with the Committee, and such removal shall be effective immediately
upon receipt of such notice by the Committee member. Committee vacancies shall
be filled promptly by the Directors. Each time a vacancy or an appointment
occurs, the Directors shall provide the Trustee with written notice of such
change in the Committee membership.
2.04 Committee Acts by Majority Vote. The Committee shall act upon the
affirmative vote or written consent of a majority of its members, provided,
however, no member who is a Participant of this Plan shall vote on any question
relating solely to himself. In the event that the Committee vote is tied, the
question before the Committee shall be submitted to the Directors for a final
decision.
2.05 Compensation of Committee Members. Committee members shall not be
compensated for their services and shall serve without bond unless one is
required by law.
2.06 Committee Records. The Committee shall designate a Secretary, who
need not be a member of the Committee, who shall keep written minutes of the
Committee's proceedings, a record of all matters of the Committee's proceedings
and a record of all matters pertaining to the administration of the Plan. The
Secretary, or any other member duly authorized to do so, may execute any
certificate or any other written directions on behalf of the Committee. The
Committee shall from time to time designate to the Trustee the names and
signatures of the Secretary and other members so authorized to act on its
behalf.
2.07 Powers of the Committee. The Committee is the fiduciary under this
Plan which has the authority to control and manage the operation of the Plan. As
such, the Committee is the "named fiduciary" as defined in Section 402(a) of
ERISA and the "plan administrator" for purposes of Section 3(16) of ERISA and
Section 414(g) of the Code. On behalf of the Participants, their Beneficiaries,
and every other person interested in the Plan, the Committee shall enforce the
Plan in accordance with the terms hereof and, subject to the discretion of the
Directors, shall have all powers necessary for that purpose including, without
limiting the generality of the foregoing, the power:
(1) To determine all questions relating to the eligibility of
Employees to become Participants, the eligibility of Participants to receive
benefit payments under the Plan and to determine Years of Service of
Participants;
<PAGE> 8
(2) To compute and certify to the Trustee the amount and kind
of benefits payable to Participants or their Beneficiaries;
(3) To authorize disbursements by the Trustee from the Trust
Fund;
(4) To allocate from time to time to one or more of its
members and to delegate to any other persons or organizations any of its
responsibilities and powers with respect to the operation and administration of
the Plan;
(5) To employ or engage such agents and Employees, investment
counsel, legal counsel and accountants, and to procure or obtain such supplies
and services as the Committee may require in carrying out the provisions of this
Plan;
(6) To make and publish such uniform and nondiscriminatory
rules for administration of the Plan as are not inconsistent with the provisions
of the Plan; and
(7) To interpret and construe the terms of the Plan, which
interpretations shall be binding upon the Company, all Participants, their
Beneficiaries, all retired or terminated Participants, the successors, assigns,
heirs and personal representatives of all of them, and every other person
directly or indirectly interested in the Plan.
In exercising its discretion hereunder, the Committee shall act in a
uniform and nondiscriminatory manner.
2.08 Documents and Records. The Committee shall keep on file at the
offices of the Company a copy of this instrument, including any amendments
thereto, and all annual reports by the Trustee respecting the status of the
Trust Fund, for examination by Participants or their Beneficiaries during the
Company's normal business hours. The Committee shall maintain, in the name of
each Participant, such records as may, in its judgment, be necessary or
appropriate to reflect the rights hereunder of each Participant. The Company
shall supply such information as the Committee may reasonably request in
connection with the maintenance of its records in the administration of the
Plan. The Committee shall make available to Participants and their
Beneficiaries, for examination during the Company's normal business hours, such
records as pertain to the persons concerned.
2.09 Expenses. All expenses of the Committee shall be paid by the
Company.
2.10 Indemnification of Committee Members. The members of the Committee
are expected to be diligent in the performance of their duties, but no member
shall be personally liable by virtue of any contract, agreement, bond or other
instrument made or executed by him, or on his behalf as a member of the
Committee. The Company shall indemnify and hold harmless each member of the
Committee against any and all expenses and liabilities arising out of his
membership thereon, except expenses and liabilities arising out of his own gross
negligence, recklessness or willful or intentional malfeasance or misfeasance.
2.11 Voting of Stock. The Committee shall have the sole and exclusive
right to instruct the Trustee on the manner of voting the Stock held by the
Trustee.
Article III
PARTICIPATION
3.01 Eligibility to Participate. Every Eligible Employee who has
attained age twenty-one (21) and has completed one Year of Service as of the
Effective Date shall participate in the Plan as of the Effective Date. Every
other Eligible Employee shall become a Participant on the Entry Date coincident
with or next following the later of the date he completes one Year of Service or
attains age twenty-one (21).
3.02 Termination of Participation. Every Employee who becomes a
Participant shall continue to participate in the Plan until his participation is
terminated by reason of retirement, death, total disability or
<PAGE> 9
termination of employment. An Employee whose participation in the Plan
terminates and who is later reemployed shall become a Participant on the Entry
Date coincident with or next following his date of reemployment. Further, any
Employee who shall have terminated his service with the Company before becoming
a Participant hereunder, but after having completed one thousand (1,000) Hours
of Service within an Eligibility Computation Period (as hereinafter defined),
and who shall be rehired prior to the date on which he shall have incurred the
greater of (i) five (5) consecutive one-Year Breaks in Service or (ii) the
number of One-
Year Breaks in Service equal to the number of Eligibility Computation
Periods during which the Employee shall have completed any service with the
Company prior to such series of Breaks in Service shall be credited with his
pre-Break service for purposes of this Article III.
3.03 No Interruption of Participation in Certain Cases. Participation in
the Plan shall not be deemed to have been interrupted in the case of jury duty,
a leave of absence approved by the Company in accordance with rules uniformly
applied to all Employees for a period of not more than one (1) year or for
military service, provided that in the case of leave of absence for military
service, the Employee returns to the employ of the Company within ninety (90)
days of his release from military service.
Article IV
COMPANY PROFIT SHARING CONTRIBUTIONS
4.01 Company Contributions. The Company shall make Company Profit
Sharing Contributions in amounts to be fixed by resolution adopted at the
discretion of the Directors. If the Directors determine to make a contribution
for any Plan Year, such contribution shall be made in an amount equal to a
stated percentage of the Plan Year Compensation of each Participant who is a
member of the Allocation Group (as defined in Section 7.03), with such
percentage to be determined at the discretion of the Directors. For the initial
Plan Year, the amount of the contribution made on behalf of each Participant
shall be a percentage of the Participant's Compensation from the Effective Date
through January 31, 1990, to be determined as follows:
(i) With respect to each Participant whose Compensation for the
twelve-month period ending January 31, 1990 does not exceed $20,000: 4.5% of the
Participant's Compensation for the period from September 1, 1989 through January
31, 1990.
(ii) With respect to each Participant whose Compensation for the
twelve-month period ending January 31, 1990 is greater than $20,000 but not
greater than $30,000: 3.4% of the Participant's Compensation for the period from
September 1, 1989 through January 31, 1990.
(iii) With respect to each Participant whose Compensation for the
twelve-month period ending January 31, 1990 is greater than $30,000: 2.27% of
the Participant's Compensation for the period from September 1, 1989 through
January 31, 1990.
Contributions for subsequent Plan Years shall be determined by the
Directors as percentages of the Plan Year Compensation for the Plan Year of each
Participant, with separate contribution percentages for (i) Participants whose
Compensation for the Plan Year does not exceed $20,000; (ii) Participants whose
Compensation for the Plan Year is greater than $20,000 but not greater than
$30,000; and (iii) Participants whose Compensation for the Plan Year is greater
than $30,000; provided however, that in no event will the percentage used for
Participants in category (ii) exceed the percentage used for Participants in
category (i) nor will the percentage used for Participants in category (iii)
exceed the percentage used for Participants in category (ii). Nothing herein
shall preclude the Directors, in future Plan Years, from having the discretion,
at any time, to alter the Compensation amounts set forth above for purposes of
determining the amount of the contribution allocable to each Participant.
4.02 Form of Contribution. Any contributions made pursuant to this Plan
shall be made in cash or in Stock, in the discretion of the Company (but subject
to the provisions of Section 9.05). The portion of the contribution that is made
in Stock shall be allocated, in shares and fractional shares, to the
Participants' Stock Accounts, and the portion of the contribution that is made
in cash shall be allocated to the Participants' Cash Accounts.
<PAGE> 10
4.03 Time for Making Company Profit Sharing Contributions. Company
Profit Sharing Contributions shall be made for each Plan Year within such time
limits as may be prescribed under applicable state or federal laws for the
deduction thereof. The Company may, in its discretion, make advance payments of
its Company Profit Sharing Contribution at any time during the year.
4.04 Return of Company Contributions. If any contribution by the Company
is made by reason of a mistake of fact, the Company may direct the return of
such contribution to it within one year after the payment of the contribution.
Each contribution by a Participating Company is conditioned upon the initial
qualification of the Plan under Code Section 401(a) and the deductibility of
such contribution under Code Section 404. In the event the deduction for any
contribution is disallowed by the Internal Revenue Service, the Company may
direct the return to it of any contribution (to the extent disallowed) within
one year after the final determination of disallowance. In the event of a final
determination that the Plan is not initially qualified under Section 401(a) of
the Code, any contribution made conditioned on such initial qualification of the
Plan may be returned to the Company, but not later than one year after the date
of such final determination, and only if an application for qualification of the
Plan was filed with the Internal Revenue Service within the time limits
prescribed by law for filing the Company's tax return for the taxable year in
which the Plan was adopted (or such later date as may be prescribed by law).
4.05 Qualified Non-elective Contributions. In the event the Company,
within its discretion, determines that it is necessary in order to satisfy the
Average Deferral Percentage Test or the Average Contribution Percentage Test,
the Company may contribute to the Plan, pursuant to the provisions of Section
5.04(2) or 6.03(2), as the case may be, amounts ("Qualified Non-elective
Contributions") to be allocated to the accounts of Participants who are not
Highly Compensated Employees, to the extent set forth in Section 5.04(2) or
6.03(2), as the case may be. Any Qualified Non-elective Contributions shall be
contributed subject to the terms of Section 5.04 or 6.03, as the case may be.
Article V
SALARY DEFERRAL CONTRIBUTIONS
5.01 Amount of Salary Deferral Contributions. Commencing as of September
1, 1989, a Participant may elect to make Salary Deferral Contributions of an
amount not less than one percent (1%) and not greater than ten percent (10%) of
his Plan Year Compensation (provided that, for all Plan Years beginning on or
after February 1, 1990, such amount must be a whole percentage of Compensation),
provided that a Participant's Salary Deferral Contributions made in any calendar
year may not exceed $7,000, as adjusted for cost of living increases pursuant to
Code Section 402(g)(5). All Salary Deferral Contributions shall be 100% vested
and nonforfeitable at all times. A Participant shall make his initial salary
deferral percentage upon enrolling in the Plan and, subject to the foregoing,
may change his deferral election as of any January or July 1 by providing to the
Committee at least ten (10) days' advance written notice.
A Participant may elect to suspend making Salary Deferral Contributions
at any time by providing to the Committee at least ten (10) days advance written
notice. A Participant who elects to suspend making Salary Deferral Contributions
shall be ineligible to resume making Salary Deferral Contributions until the
next succeeding Entry Date.
5.02 Payment of Salary Deferral Contributions to the Trust. Salary
Deferral Contributions shall be made through Participant payroll deductions, and
the Company shall make Salary Deferral Contributions to the Trust in an amount
equal to the salary deferrals as soon as practicable following the date of
deduction, but in no event later than 30 days after the date the amount is
withheld from the Participant's Compensation. Salary Deferral Contributions
shall be credited to each Participant's Salary Deferral Account as of the date
such amounts are paid to the Trust.
5.03 Limitation on Amount of Salary Deferral Contributions. Salary
Deferral Contributions shall be limited to amounts which are deductible pursuant
to Code Section 404(a), and shall be considered Company contributions for
purposes of applying the limitations of Section 8.01.
<PAGE> 11
5.04 Plan Must Satisfy Average Deferral Percentage Test. The Company may
at any time reduce or suspend the amount of Salary Deferral Contributions that
may be made by a Participant, if the Committee determines, in its sole
discretion, that such reduction or suspension is necessary to meet any
requirement of Code Section 401(k). In addition, in the event that, in any Plan
Year, the amount of Salary Deferral Contributions made to the Plan on behalf of
Participants who are Highly Compensated Employees exceeds the amounts permitted
under the Average Deferral Percentage Test, the Committee shall, in its sole
discretion, take one or more of the following actions:
(1) Distribute to each Participant who is a Highly Compensated
Employee, not later than twelve (12) months following the end of the Plan Year
in which such Salary Deferral Contributions were made, Salary Deferral
Contributions (together with earnings thereon, determined in the manner set
forth in Treas. Regs. 1.401(k)-1(f)(4)(ii)), to the extent necessary to allow
the Plan to satisfy the Average Deferral Percentage Test;
(2) Contribute to the Plan, pursuant to Section 4.05, to be
allocated among the accounts of Participants who are not Highly Compensated
Employees, such additional amounts ("Qualified Non-elective Contributions") as
may be required to enable the Plan to satisfy the Average Deferral Percentage
Test; or
(3) Recharacterize Matching Contributions made to the Plan
pursuant to Article VI hereof as Salary Reduction Contributions ("Qualified
Matching Contributions"), in such amounts as may be required to enable the Plan
to satisfy the Average Deferral Percentage Test.
Any amounts treated as Salary Deferral Contributions pursuant to
subparagraphs (2) and (3) above shall be treated for all purposes of the Plan in
the same manner as if they had been contributed as Salary Deferral Contributions
by the Participant to whose account such contributions are allocated,
irrespective of whether such amounts are actually taken into account as Salary
Deferral Contributions for purposes of the Average Deferral Percentage Test.
The amount distributed to a Highly Compensated Employee pursuant to
subparagraph (1) above ("Excess Contributions") will be determined by first
reducing the Salary Deferral Contributions of the Highly Compensated Employee
with the highest Deferral Percentage to the extent necessary to cause the
Deferral Percentage of such Highly Compensated Employee to equal the Deferral
Percentage of the Highly Compensated Employee with the next highest Deferral
Percentage (or, if it would result in a lesser reduction, the amount necessary
to satisfy the Actual Deferral Percentage Test), and then repeating this process
to the extent required until the Average Deferral Percentage Test is satisfied.
The amount of Excess Contributions for a Highly Compensated Employee equals the
total of Salary Deferral Contributions and other contributions taken into
account with regard to such Highly Compensated Employee for purposes of the
Average Deferral Percentage Test, less the product of the Employee's Deferral
Percentage (calculated after taking into account the reductions described
above), multiplied by the Employee's Compensation. In the case of a Highly
Compensated Employee who is a member of a Highly Compensated Family Group, the
amount of Excess Contributions shall be determined by reducing the Deferral
Percentage of the entire Highly Compensated Family Group in accordance with the
foregoing procedures, and then allocating such Excess Contributions among all
members of the Highly Compensated Family Group in proportion to the Salary
Deferral Contributions made by each member of the Highly Compensated Family
Group.
Any Excess Contributions to be distributed pursuant to this Section
shall be reduced by any Excess Deferrals previously distributed for the taxable
year ending in the same Plan Year.
The Company may contribute Qualified Non-Elective Contributions pursuant
to subparagraph (2) or recharacterize Matching Contributions as Salary Deferral
Contributions pursuant to subparagraph (3) only to the extent such Qualified
Non-Elective Contributions or recharacterized Matching Contributions satisfy the
conditions set forth in Treas. Regs. 1.401(k)-1(b)(5).
5.05 Plan May Not Permit Excess Deferrals. In the event that the
Committee determines that a Participant's Salary Deferral Contributions for any
calendar year constitute "excess deferrals" (within the
<PAGE> 12
meaning of Code Section 402(g)(2)), the Company shall, in order to eliminate
such excess deferrals, distribute to the Participant not later than April 15
following the end of the calendar year in which such excess deferrals occurred,
an amount that, together with earnings thereon (determined in the amount set
forth in Treas. Regs. 1.402(g)-1(d)(5)), shall be required in order to eliminate
such excess deferrals.
5.06 Limitation on Salary Deferral Contributions if Plan is Top-Heavy.
For each Plan Year in which the Plan is Top Heavy, Salary Deferral Contributions
made on behalf of any Key Employee, when expressed as a percentage of Plan Year
Compensation, may not exceed the percentage, for any Non-Key Employee, of
Company Contributions as a percentage of Plan Year Compensation, unless the
Account of each Participant who is a Non-Key Employee in this Plan or in any
other defined contribution plan maintained by the Company is credited with
contributions (other than Salary Deferral Contributions and Matching
Contributions) and forfeitures of at least three percent (3%) of such
Participant's Plan Year Compensation. The Company may, in its sole discretion,
make contributions to the Plan, to be allocated among Participants in accordance
with the instructions of the Committee, to ensure that the amount allocated to
the account of each Non-Key Employee equals at least the lesser of (i) three
percent (3%) of such Participant's Plan Year Compensation or (ii) the highest
amount, expressed as a percentage of Plan Year Compensation, allocated to the
account of any Key Employee.
5.07 Records. The Committee shall maintain permanent records
demonstrating the application for each Plan Year of the Average Deferral
Percentage Test and the Average Contribution Percentage Test.
Article VI
MATCHING CONTRIBUTIONS
6.01 Amount of Matching Contributions. The Company shall make Matching
Contributions to the Trust. As of each Quarterly Valuation Date, the Company
shall contribute to the Matching Contribution Account of each Participant an
amount equal to fifty percent (50%) of the Salary Deferral Contribution made by
such Participant to the extent that such Salary Deferral Contribution does not
exceed 6% of such Participant's compensation; provided, however, that the
matching percentage level may be altered for any year by a resolution of the
Board of Directors adopted prior to the first date of such year, and provided,
further, that Salary Deferral Contributions shall not be taken into account to
the extent that they are not allocated to the Company Stock Account pursuant to
Section 9.01.
6.02 Forfeitures. As of each Quarterly Valuation Date, all forfeitures
occurring since the preceding Quarterly Valuation Date from the Matching
Contribution Accounts of terminated Participants shall be used to reduce the
Company's Matching Contribution.
6.03 Plan Must Satisfy Average Contribution Percentage Test. The Company
may at any time reduce or suspend the amount of Matching Contributions that may
be made on behalf of a Highly Compensated Employee, if the Committee determines,
in its sole discretion, that such reduction or suspension is necessary to meet
the Average Contribution Percentage Test. In addition, in the event that, in any
Plan Year, the amount of Matching Contributions made to the Plan on behalf of
Participants who are Highly Compensated Employees exceeds the amounts permitted
under the Average Contribution Percentage Test, the Committee shall, in its sole
discretion, take one of the following actions:
(1) Distribute to each Participant who is a Highly Compensated
Employee, not later than twelve (12) months following the end of the Plan Year
in which such Matching contributions were made, or, to the extent such amounts
are forfeitable, forfeit an amount of Matching Contributions (together with
earnings thereon, determined in the manner set forth in Treas. Regs.
1.401(m)-1(e)(3)(iii)), determined on the basis of the respective portions of
such amounts attributable to each Highly Compensated Employee, to the extent
necessary to allow the Plan to satisfy the Average Contribution Percentage Test;
(2) Contribute to the Plan, to be allocated among the accounts
of Participants who are not Highly Compensated Employees, such additional
amounts ("Qualified Non-elective Contributions") as may be required to enable
the Plan to satisfy the Average Contribution Percentage Test; or
<PAGE> 13
(3) Recharacterize Salary Deferral Contributions made to the
Plan pursuant to Article V hereof as Matching Contributions in such amounts as
may be required to enable the Plan to satisfy the Average Contribution
Percentage Test, but only to the extent that doing so does not cause the Plan to
fail to satisfy the Average Deferral Percentage Test. The amount distributed to
a Highly Compensated Employee pursuant to subparagraph (1) above ("Excess
Aggregate Contributions") will be determined by first reducing the Matching
Contributions of the Highly Compensated Employee with the highest Contribution
Percentage to the extent necessary to cause the Contribution Percentage of such
Highly Compensated Employee to equal the Contribution Percentage of the Highly
Compensated Employee with the next highest Contribution Percentage (or, if it
would result in a lesser reduction, the amount necessary to satisfy the Average
Contribution Percentage Test), and then repeating this process to the extent
required until the Average Contribution Percentage Test is satisfied. The amount
of Excess Aggregate Contributions for a Highly Compensated Employee equals the
total of Matching Contributions and other contributions taken into account with
regard to such Highly Compensated Employee for purposes of the Average
Contribution Percentage Test, less the product of the Employee's Contribution
Percentage (calculated after taking into account the reductions described
above), multiplied by the Employee's Compensation. In the case of a Highly
Compensated Employee who is a member of a Highly Compensated Family Group, the
amount of Excess Aggregate Contributions shall be determined by reducing the
Contribution Percentage of the entire Highly Compensated Family Group in
accordance with the foregoing procedures, and then allocating such Excess
Aggregate Contributions among all members of the Highly Compensated Family Group
in proportion to the Matching Contributions and other contributions taken into
account for purposes of the Average Contribution Percentage Test made by each
member of the Highly Compensated Family Group.
Any amounts treated as Matching Contributions pursuant to subparagraph
(2) above shall be treated for all purposes of the Plan as if they had been
contributed as Salary Deferral Contributions by the Participant to whose account
such contributions are allocated (including without limitation the vesting and
distribution restrictions of the Plan applicable to Salary Deferral
Contributions), irrespective of whether such amounts are actually taken into
account as Matching Contributions for purposes of the Average Contribution
Percentage Test.
The Company may contribute Qualified Non-Elective Contributions pursuant
to subparagraph (2) or recharacterize Salary Deferral Contributions as Matching
Contributions pursuant to subparagraph (3) only to the extent such Qualified
Non-Elective Contributions or recharacterized Salary Deferral Contributions
satisfy the conditions set forth in Treas.
Regs. 1.401(m)-1(b)(5).
Article VII
ALLOCATIONS OF COMPANY PROFIT SHARING
CONTRIBUTIONS AND FORFEITURES
7.01 Method of Allocation. For each Plan Year, Company Profit Sharing
Contributions shall be allocated to the Profit Sharing Contribution Accounts of
those Participants who, as of the Anniversary Date for the Plan Year then
ending, qualify as members of the Allocation Group defined in Section 7.03.
Company Profit Sharing Contributions shall be allocated to the Profit Sharing
Contribution Accounts so that each Participant receives the amount contributed
on his behalf pursuant to Section 4.01. Forfeitures derived from Company
contributions shall be used to reduce the Company's Matching Contribution, for
the Plan Year in which such forfeitures shall have occurred; and to the extent
that such forfeitures shall exceed the amount of Matching Contribution not
otherwise provided for, such forfeitures shall be used to reduce the Matching
Contribution for the subsequent Plan Year.
7.02 Minimum Allocation if Plan is Top Heavy. Notwithstanding Section
7.01, for any Plan Year in which the Plan is Top Heavy, the amount (excluding
Salary Deferral Contributions) allocated to the Participant Account of each
Participant who (1) is a member of the Allocation Group and (2) is a Non-Key
Employee, shall be not less than three percent (3%) of such Participant's Plan
Year Compensation, unless the Allocation Fund for such Plan Year is less than
three percent (3%) of the Plan Year Compensation of all members of the
Allocation Group, in which event the amount allocated to the Participant Account
of each Participant who is not a Key Employee, when expressed as a percentage of
Plan Year Compensation, shall be not less than the highest amount, when
expressed as a percentage of Plan Year Compensation, allocated to the
<PAGE> 14
Participant Account of a Key Employee for such Plan Year. For purposes of the
preceding sentence, Salary Deferral Contributions made to the Participant
Accounts of Key Employees shall be included as allocations to the Participant
Accounts of Key Employees.
7.03 The Profit Sharing Allocation Group. The Profit Sharing Allocation
Group for each Plan Year shall consist of (1) each Participant who is employed
by the Company as of the Anniversary Date for the Plan Year then ending, and (2)
each Participant whose employment with the Company terminated during the Plan
Year then ending by reason of disability, death, or retirement on or after his
Normal Retirement Date.
7.04 Limitation on Participants' Interest in Plan. The amount allocated
to a Participant's account shall not vest in him any right, title, or interest
in or to any assets of the Trust Fund except at the times and upon the terms and
conditions expressly set forth in this instrument.
7.05 Time of Allocation. The Allocation Fund for each Plan Year shall be
allocated only as herein set forth, and until any such amounts contributed to
the Plan are allocated they shall be held in a suspense account of the Trust
Fund.
Article VIII
LIMIT ON ANNUAL ADDITIONS
8.01 In General. Notwithstanding any provisions of this Plan, the
maximum annual addition to a Participant's account shall in no event exceed the
lesser of (1) $30,000 (or such larger amount, equal to 1/4 of the amount set
forth in Code Section 415(b)(1)(A), as adjusted for increases in the cost of
living in accordance with regulations issued by the Secretary of the Treasury
under the authority granted by Section 415(d) of the Code), or (2) twenty-five
percent (25%) of the Participant's annual compensation.
For purposes of this Section, Compensation shall not include amounts
which are contributed to a retirement plan, deferred compensation plan, or other
plan and which are not included as taxable income for such year, or amounts
which are not deemed to be income for current services rendered, such as amounts
realized from the sale, exercise, or exchange of Company stock or stock options.
For the period ending December 31, 1993, the provisions of this Article
VIII shall be applied by adjusting the sum of $30,000, referred to in the first
sentence of this Section 8.01, to a sum equal to eleven-twelfths (11/12) thereof
or $27,500.
8.02 Application of Limitations to Participants in Other Plans
Maintained by the Company. The limitation contained in Section 8.01 above with
respect to any Participant who at any time has been or is a Participant in any
other defined contribution plan (as defined in Section 414(i) of the Code)
maintained by the Company shall apply as if the total benefits payable under all
defined contribution plans in which the Participant has been a Participant are
payable from one plan.
8.03 Participants in Defined Benefit Pension Plans Maintained by the
Company. If a Participant in this Plan is also a Participant in a defined
benefit plan (as defined in Section 414(j) of the Code) to which contributions
are made by the Company, then in addition to the limitation contained in Section
8.01, such Participant shall be subject to the limitation set forth in Section
415(e) of the Code.
8.04 Limitation of Allocations. In the event it is necessary to limit
the annual addition to the Account of a Participant, the following amounts shall
be repaid in the following order:
(1) Profit Sharing forfeitures allocated to the Participant's
Account shall be reallocated among the other Plan Participants in the manner
provided in Section 7.01.
(2) The amount by which the Company contribution exceeds the
amount of such contribution that can be allocated to Participants' Accounts
shall be maintained in a suspense account of the Trust and shall be added to the
Allocation Fund in the next succeeding Plan Year. No gain or loss of the Trust
Fund shall be allocated to such suspense account.
<PAGE> 15
Article IX
TRUST AGREEMENT
9.01 Trust Agreement. The Company shall make its contributions to this
Plan in Trust for the benefit of Plan Participants, under a Trust Agreement by
this reference made a part hereof. Such Trust Agreement is an integral part of
the Plan, and all references herein to the Plan include reference to the Trust
Agreement. The Trust Agreement may from time to time be amended in the manner
therein provided.
9.02 Removal of Trustee. The Company may at any time remove the existing
Trustee and appoint a successor Trustee, and direct the existing Trustee to
transfer all or part of the Trust Fund to the successor Trustee.
9.03 Conflict with Trust Agreement. In the event of any conflict between
the provisions of this Plan and the provisions of the Trust Agreement regarding
the duties and obligations of the Trustee, the Trust Agreement shall control.
9.04 Investment Funds. The Trustee shall maintain in the Trust Fund the
following Investment Funds for the purpose of allowing Participants to choose
between basic investment strategies:
(1) A "Money Market Fund" which is designed to generate a high
level of current income consistent with the preservation of capital and a high
degree of liquidity;
(2) A "Balanced Fund" containing both fixed income and equity
securities, which seeks to achieve both capital growth and income; and
(3) A "Company Stock Fund" which will invest exclusively in
the common stock of the Company.
Amounts allocated by a Participant to the Money Market Fund and the
Balanced Fund shall be treated under the Plan as allocated to the Participant's
Cash Account. Amounts allocated by a Participant to the Company Stock Fund shall
be treated under the Plan as allocated to the Participant's Stock Account.
9.05 Participant Direction of Investments. Each Participant shall direct
the Committee as to the allocation of the portion of his Account attributable to
Salary Deferral Contributions made on or after February 1, 1992 ("Post-91 Salary
Deferrals") among the Investment Funds. Each Participant may elect to have all
of his Account attributable to Post-91 Salary Deferrals invested in a single
Investment Fund or in any combination of Investment Funds in ten percent (10%)
increments. The Committee shall promptly transmit such investment directions to
the Trustee in a form acceptable to the Trustee. Each Participant who is a
Participant as of February 1, 1992 shall make an initial election as to the
allocation of his Post-91 Salary Deferrals among Investment Funds on or before
January 24, 1992, and each Participant who enters the Plan after February 1,
1992 shall make an initial election as to the allocation of his Account among
Investment Funds at the time he enrolls in the Plan. A Participant may change
his election as of any February 1 or August 1 by giving the Committee at least
fifteen (15) days' advance written notice in accordance with procedures
established by the Committee. A Participant's election to change his allocation
among Investment Funds must specify whether such change shall apply only to
Salary Deferral Contributions made after the effective date of such change
("Future Contributions") or to all Post-91 Salary Deferrals; provided that a
Participant may not elect to change his allocation among the Investment Funds in
a manner that reduces the percentage of his Post-91 Salary Deferrals allocated
to the Company Stock Account unless such reduction in the allocation to the
Company Stock Account applies only to Future Contributions. If the Committee has
not received a valid investment election for any Participant, his Account shall
be invested entirely in the Company Stock Fund.
Article X
ADJUSTMENT FOR REVALUATIONS
10.01 Quarterly Valuation of Trust. For the purpose of reflecting the
effect of any valuation of the Trust Fund, the Cash Accounts and Stock Accounts
of all Participants and former Participants shall be adjusted
<PAGE> 16
as of each Quarterly Valuation Date (which shall be the valuation date of the
Trust) to reflect the effect of increases or decreases of the fair market value
of the Trust Fund, dividends, interest, other income or profit received, losses,
expenses, if any, and of all other transactions involving the Trust Fund since
the last preceding Quarterly Valuation Date. The Committee may also direct the
Trustee to value the Trust Fund as of any date in addition to the Quarterly
Valuation Date.
10.02 Method of Adjusting Participants' Cash Accounts. Following the
valuation described in Section 7.01, the value of each Participant's Cash
Account shall be adjusted by debiting or crediting each Cash Account with that
portion of the net increase or net decrease in value of the Cash Accounts in the
Trust Fund which the value of such Cash Account bears to the total value of all
the Cash Accounts immediately before giving effect to said adjustment; provided,
however, that (i) for purposes of this Section 10.02, Cash Accounts shall not be
deemed to include any amounts allocated to an Investment Fund (other than the
Company Stock Fund) pursuant to Section 9.05; and (ii) in accordance with
procedures to be adopted in the discretion of the Committee, the manner in which
such net increase or decrease in the value of the Cash Accounts is allocated may
also include reasonable adjustments that are designed to effect the
time-weighting of earnings, in order to take account of differences in the rate
at which Participants' Cash Accounts change during the valuation period,
resulting from such occurrences as distributions from a Participant's Cash
Account pursuant to Sections 11.07 or 13.01 or suspension of contributions
pursuant to Section 5.01.
10.03 Allocation of Dividends. Cash dividends received on Stock shall be
credited to Participants' Cash Accounts in proportion to the number of shares
held in the Participants' Stock Accounts as of the record date for payment of
the dividend. Stock dividends received on Stock shall be credited to
Participants' Stock Accounts in proportion to the shares of Stock held therein
as of the record date for payment of the dividend.
If Stock is acquired with cash contributed by a Participating Company or
received as dividends, such Stock shall be allocated, as of the next succeeding
Quarterly Valuation Date, in whole and fractional shares to Participants' Stock
Accounts in proportion to the Participants' Cash Accounts (determined without
regard to the portion of a Participant's Cash Account that is allocated pursuant
to Section 9.05 to an Investment Fund other than the Company Stock Fund);
provided that such Stock shall be deemed allocated to the Participants' Stock
Accounts immediately upon purchase for purposes of determining the allocation of
any cash dividends paid on such Stock pursuant to the first paragraph of this
Section.
10.04 Valuation of Participants' Accounts. The value of a Participant
Account on any specific date shall be deemed to be the same as the value of such
Participant Account on the Quarterly Valuation Date immediately preceding or
coincident with such specific date, increased by any contributions made to such
Participant Account since such Quarterly Valuation Date and reduced by any
amounts paid from the Participant Account as benefits since such Quarterly
Valuation Date.
10.05 Revaluation of Investment Funds. For the purpose of reflecting the
effect of any valuation of the Investment Funds, the accounts of all
Participants and former Participants attributable to Post-91 Salary Deferrals
("Participant Post-91 401(k) Account") (except those who have become
Participants as of the date of said valuation) in each Investment Fund in the
Trust Fund shall be adjusted to reflect the effect of increases or decreases of
the fair market value of the Investment Fund, including dividends, interest, or
other income or profit received, losses, expenses, if any, and of all other
transactions involving the Investment Fund as of each Quarterly Valuation Date.
Such adjustment shall be made by debiting or crediting each Account with that
portion of the net increase or net decrease in value of the Investment Fund
which the value of each Participant's Post-91 401(k) Account in such Investment
Fund (as adjusted pursuant to this Section) bears to the total value of all the
Participants' Post-91 401(k) Accounts in such Investment Fund (as adjusted
pursuant to this Section) immediately before giving effect to said adjustment.
For purposes of the calculation described in the preceding sentence, the
Committee shall develop an equitable method designed to adjust the value of each
Participant's Post-91 401(k) Account in an Investment Fund to reflect any Salary
Deferral Contributions made to the Participant's Post-91 401(k) Account in such
Investment Fund and any distributions made from the Participant's 401(k) Account
in such Investment Fund since the immediately preceding Quarterly Valuation
Date.
<PAGE> 17
Article XI
BENEFITS
11.01 Retirement Benefit. A Participant who retires on his Normal
Retirement Date shall be 100% vested in his Participant Account and shall be
entitled to receive the full balance credited to his Participant Account. A
Participant's retirement benefit shall be paid in the manner set forth in
Article XII.
11.02 Deferred Retirement Benefit. A Participant who continues in the
Company's employ after his Normal Retirement Date shall continue to participate
in the Plan until the Participant actually retires. Upon such deferred
retirement, the Participant shall be 100% vested in his Participant Account and
shall be entitled to receive the full balance credited to his Participant
Account. A Participant's deferred retirement benefit shall be paid in the manner
set forth in Article XII.
11.03 Death Benefit. Upon the death of a Participant prior to his
retirement, the Participant's Account shall become 100% vested and his
Beneficiary or Beneficiaries, determined as provided in Article XIV , shall be
entitled to receive as a death benefit the full balance credited to such
Participant Account. Payment of the death benefit shall be made in the manner
provided in Article XII.
11.04 Disability Benefit. When the Committee deems a Participant is
disabled he shall be 100% vested in his Participant Account and shall be
entitled to receive as a disability benefit the full balance credited to his
Participant Account. The Committee shall determine whether a Participant is
disabled based upon whether the Participant has qualified for receipt of
disability payments under the Federal Social Security Act. The disability
benefit shall be paid in the manner provided in Article XII.
11.05 Leave of Absence. If a Participant does not return to the
Company's employ within thirty (30) days after the expiration of a leave of
absence, or if the Participant fails to remain in the Company's employ for more
than thirty (30) days after returning from a leave of absence, then his
participation in the Plan shall terminate as of the expiration of his leave of
absence and the termination benefit he shall be entitled to receive under
Article XII hereof shall be determined under Section 11.06.
11.06 Termination Benefit. Upon the termination of employment of a
Participant for any reason other than the reasons set forth in Sections 11.01
through 11.05 above, he shall cease to be a Participant in this Plan, and he
shall be entitled to receive, in the manner set forth in Article XII hereof, the
full value of his Salary Deferral Account, plus that portion of his Matching
Contribution Account and Profit Sharing Contribution Account that is determined
in accordance with his number of Years of Service as follows:
Years of Service
Vested Percentage
Less than Two Years
0%
Two Years
20%
Three Years
40%
Four Years
60%
Five Years
80%
<PAGE> 18
Six Years
100%
11.07 Distribution Following Attainment of Age 59. Upon the written
request of a Participant, made at least thirty (30) days in advance, the
Participant shall, at any time following attainment of age 59, be entitled to
receive a distribution of all or any portion of his Participant Account, even
though such Participant's employment has not terminated. A distribution pursuant
to this Section shall not affect the right of the Participant to continue to
participate in the Plan.
11.08 Forfeiture of Nonvested Portion of Account Balance. When a
Participant has five consecutive one-year Breaks in Service, or, if earlier,
when a Participant receives a distribution of the full amount of his vested
account balance pursuant to Section 12.02, that portion of the Participant's
Matching Contribution Account and Profit Sharing Contribution Account which is
not vested shall be allocated as a forfeiture in the manner provided in Sections
6.01 and 7.01, respectively; provided, however, that if such Participant resumes
employment with the Company prior to incurring five (5) consecutive one-year
Breaks in Service, there shall be allocated to the Participant's Matching
contribution Account and Profit Sharing Contribution Account, as of the
Anniversary Date for the Plan Year during which the Participant resumes
employment, from the Company Profit Sharing Contribution for such Plan Year, an
amount equal to the amount of such Participant's Accounts previously reallocated
as a forfeiture. A Participant who terminates employment with the Company at a
time when the Participant's Salary Deferral Account is zero and the vested
percentage of the Participant's Matching Contribution Account and Profit Sharing
Contribution Account is zero shall be treated as having received a complete
distribution of his Participant Account.
11.09 Vesting in Participant's Account Where Participant Resumes
Employment Following a Distribution. If a Participant receives a distribution of
benefits prior to becoming one hundred percent (100%) vested and prior to
incurring five (5) consecutive one-year Breaks in Service, the vested portion of
such Participant's Matching Contribution Account and Profit Sharing Contribution
Account at any relevant time shall be equal to an amount ("X") determined by the
formula: X=P[AB+(RxD)]-(RxD). For purposes of applying the formula: P is the
Participant's vested percentage in his Matching Contribution Account and Profit
Sharing Contribution Account at the relevant time; AB is the balance in such
Accounts at the relevant time; D is the amount of the benefit distributed to the
Participant from such Accounts; and R is the ratio of his balance in such
Accounts at the relevant time to his balance in such Accounts immediately after
the distribution of his benefit.
11.10 Crediting of Service if Participant Resumes Participation
Following Five One-Year Breaks in Service. If a Participant receives a
distribution of benefits under Section 12.01 upon his termination of employment
for reasons other than death, disability, or retirement and such Participant's
employment resumes after five (5) consecutive one-year Breaks in Service, then
Years of Service after such Breaks in Service shall not be taken into account
for purposes of determining the vested portion of such Participant's Matching
Contribution Account and Profit Sharing Contribution Account made prior to such
Break in Service. For purposes of determining the vested portion of a
Participant's Matching Contribution Account and Profit Sharing Contribution
Account after he resumes employment following five (5) consecutive one-year
Breaks in Service, such Participant's Years of Service shall include his Years
of Service prior to such Breaks in Service; provided, however, that if such
Participant had not acquired a vested interest in his Matching Contribution
Account and Profit Sharing Contribution Account prior to incurring five
consecutive one-year Breaks in Service, then such Participant's Years of Service
shall not include his Years of Service prior to the Breaks in Service.
11.11 Reallocation of Lost Participant's Account. If all or a portion of
a Participant's Account becomes payable under Article XII and the Committee,
after a reasonable search, cannot locate the Participant (or his Beneficiary, if
such Beneficiary is entitled to payment), the vested Account shall be
reallocated in accordance with Sections 6.01 or 7.01 on the day the Participant
incurs a Break in Service, or such later date as the Committee may decide. If
the Participant or his Beneficiary subsequently presents a valid claim for
benefits to the Committee, the Committee shall cause the vested Account, equal
to the amount which was reallocated under this Section, to be restored through
an additional Company contribution.
<PAGE> 19
Article XII
PAYMENT OF BENEFITS
12.01 In General. The benefits for each Participant shall be paid in a
single lump sum. Each Participant or Beneficiary entitled to receive a
distribution shall elect, on or before the first Quarterly Valuation Date
following the event which entitles the Participant to receive a distribution of
his Account, to receive his entire distribution in Stock or in cash; provided
however that if the Participant or Beneficiary elects to defer receipt of the
distribution pursuant to this Article, the election to receive a distribution in
Stock or in cash shall be made not later than the Quarterly Valuation Date
immediately preceding the date on which the distribution is to be made. If the
Participant's Account is to be distributed in Stock, the vested portion of the
Participant's Cash Account shall be invested, as of such Quarterly Valuation
Date, in shares of Stock (to the nearest whole share), which Stock, together
with Stock allocated to the Participant's Stock Account, shall be distributed to
the Participant (or Beneficiary) pursuant to Section ___. The balance of the
Participant's Cash Account (if any) will be distributed in cash. If the
Participant's Account is to be distributed in cash, the Participant (or
Beneficiary) shall be entitled to receive the vested portion of the
Participant's Cash Account, together with the value of the Participant's Stock
Account, determined as of such Quarterly Valuation Date. Absent an election by
the Participant or Beneficiary, distribution shall be made in the form of cash.
12.02 Time for Payment of Distribution. When a Participant becomes
entitled to receive a distribution pursuant to Article XI, the vested interest
of his Participant Account shall be distributed to him in a lump sum, as soon as
practicable subsequent to the next succeeding Quarterly Valuation Date, provided
that a distribution of an amount in excess of $3,500 may be made to a
Participant prior to his Normal Retirement Date only with the written consent of
the Participant. The Participant's failure to elect an immediate distribution
shall be deemed to be an election to defer payment of benefits.
12.03 Latest Time Distribution Must Commence. Unless the Participant
elects a later date, the payment of benefits shall commence not later than sixty
days following the last day of the Plan Year within which falls the date which
is or would have been such Participant's Normal Retirement Date, or actual
retirement date, whichever is later. Moreover, distribution of a Participant's
Account shall in all events commence not later than April 1 of the calendar year
following the year in which the Participant attains age 70-1/2, regardless of
whether such Participant's employment has terminated in such year.
12.04 Death of a Participant. If distributions to a Participant have not
commenced at the time of the Participant's death, the vested portion of the
Participant's Account shall be distributed not later than five (5) years after
the death of the Participant, except to the extent the Participant's Account is
distributed to the Participant's surviving spouse, if such distribution is made
not later than the date on which the Participant would have attained age 70_.
12.05 Method of Spousal Consent. Any consent by the Participant's spouse
pursuant to this Plan must (i) be made in writing; (ii) either designate a
Beneficiary (or a form of benefits) which may not be changed without such
spouse's consent or expressly permit such designation by the Participant without
such spouse's further consent; and (iii) acknowledge the effect of such election
and be witnessed by a notary public or a Plan representative. Notwithstanding
the foregoing, spousal consent shall not be required if it is established to the
satisfaction of the Committee that spousal consent cannot be obtained because
the Participant's spouse cannot be located, or because of such other
circumstances as may be prescribed in regulations issued by the Secretary of the
Treasury.
12.06 Application for Benefits. All applications for benefits under the
Plan shall be submitted to the Committee. Applications for benefits must be in
writing on forms prescribed by the Committee and must be signed by the
Participant and his spouse, or in the case of a death benefit, by the
Beneficiary or legal representative of the deceased Participant. Each
application shall be acted upon and approved or disapproved within sixty (60)
days following its receipt by the Committee.
12.07 Review and Appeal of Denial of Benefit Claims. In the event any
application for benefits is denied, in whole or in part, the Company shall
notify the applicant in writing of such denial and of his right to review by the
Committee and shall set forth in a manner calculated to be understood by the
applicant, specific
<PAGE> 20
reasons for such denial, specific references to pertinent Plan provisions on
which the denial is based, a description of any additional material or
information which is necessary and an explanation of the Plan's review
procedures.
Any person, or his duly authorized representative, whose application for
benefits is denied in whole or in part may appeal from such denial to the
Committee for a review of the decision by submitting to the Committee within one
(1) year after receiving written notice from the Committee of the denial of his
claim a written statement:
(a) Requesting a review of his application for benefits by the
Committee.
(b) Setting forth all of the grounds upon which his request for
review is based and any facts in support thereof; and
(c) Setting forth any issues or comments which the applicant deems
pertinent to his application.
The Committee shall review all submitted applications for benefits, and
shall act upon each application within sixty (60) days after receipt of the
applicant's request for review.
The Committee shall make a full and fair review of each such application
and any written materials submitted by the applicant in connection therewith and
may require the applicant to submit such additional facts, documents, or other
evidence as the Committee, in its sole discretion, deems necessary or advisable
in making such a review. On the basis of its review, the Committee shall make an
independent determination of the applicant's eligibility for benefits under the
Plan. The decision of the Committee on any applications for benefits shall be
final and conclusive upon all persons if supported by substantial evidence in
the record.
In the event the Committee denies an application in whole or in part,
the Committee shall give written notice of its decision to the applicant setting
forth in a manner calculated to be understood by the applicant the specific
reasons for such denial and specific references to the pertinent Plan provisions
on which the Committee's decision was based.
12.08 Direct Rollover Option.
(1) This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the plan to the contrary that
would otherwise limit a Distributee's election under this Section, a Distributee
may elect, at the time and in the manner prescribed by the plan administrator,
to have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a direct rollover.
(2) Definitions.
(i) Eligible Rollover Distribution: An Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee except that an Eligible Rollover Distribution does not
include: Any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(ii) Eligible Retirement Plan: An Eligible Retirement Plan
is an individual retirement account described in Section 408(a) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
<PAGE> 21
(iii) Distributee: A Distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.
Article XIII
HARDSHIP WITHDRAWALS
13.01 Withdrawal in the Event of Serious Financial Hardship. In the
event a Participant suffers a Serious Financial Hardship, such Participant may
withdraw from the Plan an amount not to exceed the amount needed to satisfy the
financial need created by the Serious Financial Hardship, plus any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal; provided that the amount
of such withdrawal may not exceed the lesser of (i) the value of the
Participant's Salary Deferral Account, or (ii) the amount of contributions made
to the Participant's Salary Deferral Account. For purposes of the preceding
sentence, Salary Deferral Contributions shall not include any Qualified
Non-elective Contributions or Qualified Matching Contributions made by the
Company on behalf of the Participant pursuant to Section 5.04. A Participant who
believes he has suffered a Serious Financial Hardship shall make an application
to the Committee for a hardship withdrawal pursuant to this Article. The minimum
amount that may be subject to distribution pursuant to this Article is $500, and
no Participant shall be permitted more than one hardship withdrawal in any Plan
Year. In the event the Committee approves a request for a hardship withdrawal
pursuant to this Section, the amount of such withdrawal shall be paid to the
Participant in cash within thirty (30) days of approval by the Committee.
13.02 Definition of Serious Financial Hardship. A Participant shall be
treated as having suffered a Serious Financial Hardship only to the extent
amounts are needed for one of the following:
(1) Expenses for medical care described in Section 213(d) of the
Code incurred by the Participant, the Participant's spouse or any of the
Participant's dependents (as defined in Code Section 152) or necessary for any
of those persons to obtain medical care described in Section 213(d); or
(2) The need to prevent the eviction of the Participant from the
Participant's principal residence or the foreclosure of the mortgage on the
Participant's principal residence.
13.03 Participant Receiving Hardship Withdrawal Must First Receive Other
Distributions And Loans. No withdrawal pursuant to this Article shall be
permitted unless the Participant has first obtained all distributions (other
than hardship distributions) and loans available to the Participant under this
Plan and any other qualified retirement plan maintained by the Company or any
Affiliate.
13.04 Suspension of Participation in the Event of Hardship Withdrawal.
In the event a Participant receives a withdrawal pursuant to this Article, such
Participant shall be suspended from making Salary Deferral Contributions
pursuant to Section 5.01 until the date twelve months following the date of the
withdrawal. In addition, the amount of Salary Deferral Contributions that may be
made in the calendar year following the hardship withdrawal may not exceed the
amount set forth in Section 402(g) of the Code, less the amount of Salary
Deferral Contributions made by the Participant during the calendar year in which
the hardship withdrawal occurred.
Article XIV
DESIGNATION OF BENEFICIARIES
14.01 Method of Designation. Every Participant may designate in a
writing filed with the Committee a Beneficiary or Beneficiaries and successor
Beneficiaries to receive any death benefits provided herein, in the manner
specified by the Committee; and only Beneficiaries so designated (or, if the
Participant fails to designate a Beneficiary, the Beneficiary deemed designated
by the Participant pursuant to
<PAGE> 22
Section 14.02) will be recognized by the Committee as entitled to benefits that
may become payable hereunder. Such designation may be changed from time to time
by a Participant by filing a new designation with the Committee in such form as
it may prescribe. No person other than the spouse of a married Participant may
be designated as the Beneficiary without the prior written consent of such
spouse given in a manner described in Section 12.05.
14.02 Failure to Designate a Beneficiary. If the Participant shall fail
to designate a Beneficiary, the Committee shall be empowered to designate the
Beneficiaries on his behalf from among the following, if living, in the order
named: The spouse, children, parents, brothers and sisters, nephews and nieces,
or estate of the Participant.
14.03 Limitation on Rights of Beneficiary. Limitations on the rights of
Participants shall apply to their Beneficiaries, and no Beneficiary shall have
any greater right or interest hereunder than the Participant through whom the
Beneficiary claims.
14.04 Payment to Minors and Incompetents. If any person to whom a
benefit becomes payable hereunder is a minor, or if the Committee determines
that any person to whom such benefits are payable is incompetent by reason of
physical or mental disability, the Committee shall have the power to cause the
payment becoming due to such person to be made to another person for his
benefit, in the form of a trust to be established for the exclusive benefit of
such person, or to be paid to a custodian for a minor person under the Uniform
Gifts to Minors Act, and neither the Committee nor the Trustee shall have any
responsibility to see to the application of such payment. Any payment made
pursuant to such power shall, as to such payment, operate as a complete
discharge of the Plan, the Committee, the Company and the Trustee.
14.05 Disputes. In the event of a dispute as to whom distribution is to
be made under this Article, payment may be made to a court of proper
jurisdiction, with final distribution to be determined by such court.
Article XV
AMENDMENT OF PLAN
15.01 In General. The Company may amend this Plan at any time, and from
time to time, provided that:
(1) No amendment may be made which will vest in the Company,
directly, or indirectly, any present or future interest, ownership, or control
in the Trust Fund or any funds set aside for Participants in accordance with the
Plan.
(2) No part of the Trust Fund shall by reason of any amendments
be used for or diverted to purposes other than the exclusive benefit of
Participants and their Beneficiaries or for expenses of the Plan which are not
paid by the Company.
(3) Any amendment may be made retroactively which is necessary to
bring the Plan into conformity with governmental regulations in order to qualify
contributions hereunder for tax deductions; provided, however, that no amendment
shall operate retroactively to deprive any Participant of any benefit already
accrued to him.
(4) No amendment shall increase the duties of the Trustee
hereunder without the Trustee's written consent.
15.02 Power to Amend Plan. Subject to the limitations set forth above,
the Company shall have the power to amend the Plan in any manner which it deems
desirable, including without limitation, the right to change or modify the
amount of Company contributions and to change any provisions relating to the
distribution or payment, or both, of any of the assets of the Trust Fund.
15.03 Method of Amending Plan. Any amendment authorized hereby may be
made by an instrument in writing executed by a duly authorized officer of the
Company. This Plan shall be deemed to
<PAGE> 23
have been amended in the manner set forth in any such instrument, and all
Participants and Beneficiaries shall be bound thereby.
Article XVI
TERMINATION OF PLAN
16.01 In General. The Company has established this Plan with the intent
and expectation that from year to year it will be able, and will deem it
advisable, to make contributions as herein provided. However, circumstances not
now foreseen or circumstances beyond the control of the Company may make it
impossible or inadvisable to continue to make contributions as herein provided,
or it may become advisable to terminate the Plan in its entirety.
16.02 Directors May Terminate Plan. If the Directors, in their sole and
absolute discretion, decide that it is impossible or inadvisable for the Company
to continue to make contributions as herein provided, or that it is advisable to
terminate the Plan in its entirety, the Directors shall have the power to
discontinue permanently further Company contributions to the Plan, or to
terminate the Plan in its entirety, by appropriate resolution. A certified copy
of such resolution shall be delivered to the Committee and to the Trustee, and
as soon as possible thereafter, the Committee shall send or deliver to each
Participant or Beneficiary a notice of such discontinuance of contributions, or
of termination of the Plan.
16.03 Effect of Termination of Plan. Upon the complete discontinuance of
Company contributions or the complete or partial termination of this Plan, the
Company shall make no further contributions hereunder, and the rights of all
affected Participants hereunder shall become fully vested and nonforfeitable.
The duties of the Committee shall continue as before, and all other provisions
of the Plan shall remain in force which are necessary, in the judgment of the
Committee, other than the provisions for contributions by the Company. The Trust
shall remain in existence, and all provisions of the Trust shall remain in force
which are necessary in the judgment of the Trustee, other than the provisions
relating to Company contributions.
16.04 Effect of Termination on Plan Assets. All the assets of the Trust
Fund allocable to the Participants on the date of discontinuation of
contributions shall be held, administered, and distributed by the Trustee in the
manner provided for herein. Under no circumstances shall any part of the corpus
or income of the Trust Fund held by the Trustee under the Plan be used for, or
diverted to, purposes other than the exclusive benefit of the Participants and
their Beneficiaries.
16.05 Full Vesting Upon Termination. If the Directors, in their sole and
absolute discretion, decide to terminate the Plan in its entirety, the Plan
shall be terminated as of the date specified by the Directors. On such
termination, the rights of all Participants hereunder shall become fully vested
and nonforfeitable and the Trustee shall, in accordance with the written
instructions of the Committee, liquidate the Trust Fund, and after deducting all
expenses and fees, including expenses and fees of liquidation and distribution,
pay to each Participant and Beneficiary of a deceased Participant such sums as
may be allocable to him under the provisions hereof, and which remain in his
credit after giving effect to any decreases of the Trust Fund, or his share
thereof, by reason of losses and authorized payments.
16.06 Merger or Consolidation of Plan. In the event that this Plan
merges or consolidates with, or transfers its assets or liabilities to, any
other qualified plan under Code Section 401(a), no Participant herein shall,
solely on account of such merger, consolidation or transfer, be entitled to a
benefit on the date following such event which is less than the benefit to which
he was entitled on the date preceding such event. For purposes of this Section,
the benefit to which a Participant is entitled shall be calculated based upon
the assumption that Plan termination and distribution of assets occurred on the
day as of which the amount of the Participant's benefit is being determined.
Article XVII
TOP HEAVY PROVISIONS
17.01 Determination of Top Heavy Status. The Plan will be considered Top
Heavy for any Plan Year if, as of the Anniversary Date of the preceding Plan
Year, either (1) the value of the Participant Accounts
<PAGE> 24
of Participants who are Key Employees exceeds sixty percent (60%) of the value
of the Participant Accounts of all Participants (the "60% Test") or (2) the Plan
is part of a required aggregation group and the value of the Participant
Accounts (plus, in the case of a defined benefit plan, the sum of the present
values of the accrued benefits) of the Participants in all plans which are part
of such required aggregation group who are Key Employees exceeds sixty percent
(60%) of the value of the Participant Accounts (plus, in the case of a defined
benefit plan, the sum of the present values of the accrued benefits) of all
Participants in all plans which are part of the required aggregation group.
Notwithstanding the above, the Plan shall not be considered Top Heavy for any
Plan Year in which the Plan is apart of a required or permissive aggregation
group, if the value of the Participant Accounts (plus, in the case of a defined
benefit plan, the sum of the present values of the accrued benefits) of all
Participants of all plans in the required or permissive aggregation group who
are Key Employees does not exceed sixty percent (60%) of the value of the
Participant Accounts (plus, in the case of a defined benefit plan, the sum of
the present values of the accrued benefits) of all Participants of all plans
which are part of the required or permissive aggregation group.
17.02 Certain Definitions. For purposes of this Article XVII:
(1) "permissive aggregation group" shall mean the required
aggregation group of plans plus any other plan or plans which, when considered
together with the required aggregation group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410;
(2) "required aggregation group" shall mean (i) each qualified
plan of the Company in which at least one Key Employee of the Company
participated during the Plan Year including the Anniversary Date as of which the
Top Heavy determination is being made or during any of the four preceding Plan
Years (the "determination period"), plus (ii) any other qualified plan of the
Company which, during the determination period, enabled a plan described in (i)
to meet the requirements of Code Sections 401(a)(4) or 410; and
(3) the determination of whether the 60% Test is satisfied shall
be made in accordance with the provisions of Section 416(g) of the Code.
Article XVIII
MISCELLANEOUS
18.01 Effect of Plan Participation. Participation in this Plan shall not
give to any Employee the right to be retained in the Company's employ for any
particular period of time or under any specified conditions, or give rise to any
right or interest in this Plan other than is herein specifically provided.
18.02 Effect of Payment. Any payment to a Participant or his legal
representative or his Beneficiary in accordance with the terms of the Plan and
the Trust Agreement shall (to the extent thereof) be in full satisfaction of all
claims such person may have against the Trustee, the Committee, the Directors
and the Company hereunder, any of whom may require such Participant's legal
representative or Beneficiary, as a condition precedent to such payment, to
execute a receipt and release therefor in such form as shall be determined by
the Trustee, the Committee, the Directors or the Company, as the case may be.
18.03 Headings. The headings and subheadings of this instrument are
inserted for convenience of reference only and are not to be considered in the
construction of this Plan.
18.04 Counterparts. This Plan may be executed in several counterparts.
In that event, each and any of them shall be deemed an original, and said
counterparts shall constitute but one and the same instrument, which may be
sufficiently evidenced by one counterpart.
18.05 Governing Law. Except to the extent required by ERISA, the Plan
shall be construed, administered and governed in all respects under and by the
laws of the State of California.
18.06 No Assignment or Alienation. Each and every person at any time
entitled to payment or benefits hereunder is hereby restrained from selling,
transferring, assigning, hypothecating, anticipating, or
<PAGE> 25
otherwise disposing of his interest or estate hereunder, and shall be without
power to do so; nor shall such property, interest or estate be subject to his
liabilities, obligations, judgments, bankruptcy proceedings, claims of creditors
or other legal process. Provided, however, that nothing herein shall prohibit
the transfer or disposition of a person's interest or estate hereunder in
accordance with a "qualified domestic relations order" as defined in Section
414(p)(1) of the Code.
18.07 Benefits Payable from Trust Fund. All benefits payable under the
Plan shall be paid and provided for solely from the Trust Fund and the Company
assumes no liability or responsibility therefor.
TO RECORD THE ADOPTION OF THIS AGREEMENT, the Company has caused it to
be executed by its duly authorized officers this 26 day of May, 1990.
WILLIAMS-SONOMA, INC.
By: /s/ Kent C. Larson
-------------------------------
Its: President
By: /s/ W. Howard Lester
-------------------------------
Its: Chief Executive Officer
<PAGE> 26
AMENDMENT NUMBER ONE
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"),
WHEREAS, Article XI of the Plan permits the Company to amend the Plan at
any time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
February 1, 1989:
1. This amendment shall be known as Amendment Number One.
2. Section 1.47(l) shall be amended by the addition of the following
immediately following the first sentence thereof:
For purposes of the preceding sentence, a Salaried Employee
shall be credited with 45 Hours of Service for each calendar
week during which he performs at least one Hour of Service.
3. Section 4.01 shall be amended by changing subparagraphs (i) through
(iii) thereof to read as follows:
(i) With respect to each Participant whose Compensation for
the twelve-month period ending January 31, 1990 does not exceed
$20,000: 4.5% of the Participant's Compensation for the period
from September 1, 1989 through January 31, 1990.
(ii) With respect to each Participant whose Compensation for
the twelve-month period ending January 31, 1990 is greater than
$20,000 but not greater than $30,000: 3.4% of the Participant's
Compensation for the period from September 1, 1989 through
January 31, 1990.
(iii) With respect to each Participant whose Compensation
for the twelve-month period ending January 31, 1990 is greater
than $30,000: 2.27% of the Participant's Compensation for the
period from September 1, 1989 through January 31, 1990.
4. The second sentence of Section 6.01 shall be amended to read as
follows:
As of each Quarterly Valuation Date, the Company shall
contribute to the Matching Contribution Account of each
Participant an amount equal to a percentage, to be determined
annually by the Directors prior to the first day of the Plan
Year, of the Salary Deferral Contribution made by such
Participant; provided that for purposes of this sentence, Salary
Deferral Contributions shall be ignored to the extent that they
exceed 3% of Plan Year Compensation for Participants with an
annual rate of Compensation for the Plan Year of not more than
$30,000 (a "$30,000-or-Under Participant"), and to the extent
that they exceed 6% of Plan Year Compensation for Participants
with an annual rate of Compensation for the Plan Year of more
than $30,000 (an "Over-$30,000 Participant"); provided, however,
that the Directors may, in their sole discretion, determine for
any Plan Year that Salary Deferral Contributions made by any
Highly Compensated Employees shall be ignored to the extent they
exceed 3% of Plan Year Compensation.
<PAGE> 27
IN WITNESS WHEREOF, the Company has executed this Amendment Number One
this 27 day of April, 1990.
WILLIAMS-SONOMA, INC.
By: /s/ Kent C. Larson
-------------------------------
Its: President
By: /s/ Howard Lester
-------------------------------
Its: Chief Executive Officer
<PAGE> 28
AMENDMENT NUMBER TWO
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"),
WHEREAS, Article XV of the Plan permits the Company to amend the Plan at
any time;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. This amendment shall be known as Amendment Number Two.
2. Effective as of February 1, 1990, Section 1.17 is hereby amended to
read as follows:
"Eligible Employee" means every Employee of a Participating
Company, other than an Employee who is a Participant in or covered by
any other qualified retirement benefit plan to which the Company makes
contributions pursuant to a good faith collective bargaining agreement
between the Company and a bargaining unit representing such covered
Employee; provided that officers of the Company shall not be eligible to
make Salary Deferral Contributions prior to August 1, 1990."
3. Effective as of May 1, 1990, Section 1.48 is hereby amended by the
addition of the following:
"(3) For purposes of applying this Section to individuals who
were employed by California Closets, a California corporation, on April
30, 1990, service with California Closets on or after May 1, 1989 shall
be treated as service with the Company."
IN WITNESS WHEREOF, the Company has executed this Amendment Number One
this 12 day of December, 1990.
WILLIAMS-SONOMA, INC.
By: /s/ Kent C. Larson
-------------------------------
Its: President
By: /s/ James R. Riley
-------------------------------
Its: Chief Financial Officer
<PAGE> 29
AMENDMENT NUMBER THREE
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"); and
WHEREAS, Article XV of the Plan permits the Company to amend the Plan at
any time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
February 1, 1992:
1. This Amendment shall be known as Amendment Number Three.
2. Section 1.07 is hereby amended in its entirety to read as
follows:
"Cash Account" means the portion of a Participant Account in the
Trust Fund that (i) is not invested in the Company Stock Fund,
or (ii) is invested in the Company Stock Fund but has not yet
been used to purchase Stock.
3. The first sentence of Section 4.02 is hereby amended to read as
follows:
Any contributions made pursuant to this Plan shall be made in
cash or in Stock, in the discretion of the Company (but subject
to the provisions of Section 9.05).
4. The second sentence of Section 6.01 shall be amended to read as
follows:
As of each Quarterly Valuation Date, the Company shall
contribute to the Matching Contribution Account of each
Participant an amount equal to a percentage, to be determined
annually by the Directors prior to the first day of the Plan
Year, of the Salary Deferral Contributions made by such
Participant; provided that for purposes of this sentence, (i)
effective as of February 1, 1992, Salary Deferral Contributions
shall be ignored to the extent they are not allocated to the
Company Stock Account pursuant to Section 9.01; and (ii) Salary
Deferral Contributions shall be ignored to the extent that they
exceed 3% of Plan Year Compensation for Participants with an
annual rate of Compensation for the Plan Year of not more than
$30,000 (a "$30,000-or-Under Participant"), and to the extent
that they exceed 6% of Plan Year Compensation for Participants
with an annual rate of Compensation for the Plan Year of more
than $30,000 (an "Over-$30,000-Participant"); provided, however,
that the Directors may, in their sole discretion, determine for
any Plan Year that Salary Deferral Contributions made by any
Highly Compensated Employees shall be ignored to the extent they
exceed 3% of Plan Year Compensation.
5. Article IX is hereby amended by the addition of the following
new sections:
9.04 Investment Funds. The Trustee shall maintain in the
Trust Fund the following Investment Funds for the purpose of
allowing Participants to choose between basic investment
strategies:
(1) A "Money Market Fund" which is designed to generate
a high level of current income consistent with the preservation
of capital and a high degree of liquidity;
<PAGE> 30
(2) A "Balanced Fund" containing both fixed income and
equity securities, which seeks to achieve both capital growth
and income; and
(3) A "Company Stock Fund" which will invest
exclusively in the common stock of the Company.
Amounts allocated by a Participant to the Money Market Fund and
the Balanced Fund shall be treated under the Plan as allocated
to the Participant's Cash Account. Amounts allocated by a
Participant to the Company Stock Fund shall be treated under the
Plan as allocated to the Participant's Stock Account.
9.05 Participant Direction of Investments. Each Participant
shall direct the Committee as to the allocation of the portion
of his Account attributable to Salary Deferral Contributions
made on or after February 1, 1992 ("Post-91 Salary Deferrals")
among the Investment Funds. Each Participant may elect to have
all of his Account attributable to Post-91 Salary Deferrals
invested in a single Investment Fund or in any combination of
Investment Funds in ten percent (10%) increments. The Committee
shall promptly transmit such investment directions to the
Trustee in a form acceptable to the Trustee. Each Participant
who is a Participant as of February 1, 1992 shall make an
initial election as to the allocation of his Post-91 Salary
Deferrals among Investment Funds on or before January 24, 1992,
and each Participant who enters the Plan after February 1, 1992
shall make an initial election as to the allocation of his
Account among Investment Funds at the time he enrolls in the
Plan. A Participant may change his election as of any February 1
or August 1 by giving the Committee at least fifteen (15) days'
advance written notice in accordance with procedures established
by the Committee. A Participant's election to change his
allocation among Investment Funds must specify whether such
change shall apply only to Salary Deferral Contributions made
after the effective date of such change ("Future Contributions")
or to all Post-91 Salary Deferrals; provided that a Participant
may not elect to change his allocation among the Investment
Funds in a manner that reduces the percentage of his Post-91
Salary Deferrals allocated to the Company Stock Account unless
such reduction in the allocation to the Company Stock Account
applies only to Future Contributions. If the Committee has not
received a valid investment election for any Participant, his
Account shall be invested entirely in the Company Stock Fund.
6. Section 10.02 is hereby amended in its entirety to read as
follows:
Method of Adjusting Participants' Cash Accounts. Following
the valuation described in Section 7.01, the value of each
Participant's Cash Account shall be adjusted by debiting or
crediting each Cash Account with that portion of the net
increase or net decrease in value of the Cash Accounts in the
Trust Fund which the value of such Cash Account bears to the
total value of all the Cash Accounts immediately before giving
effect to said adjustment; provided, however, that (i) for
purposes of this Section 10.02, Cash Accounts shall not be
deemed to include any amounts allocated to an Investment Fund
(other than the Company Stock Fund) pursuant to Section 9.05;
and (ii) in accordance with procedures to be adopted in the
discretion of the Committee, the manner in which such net
increase or decrease in the value of the Cash Accounts is
allocated may also include reasonable adjustments that are
designed to effect the time-weighting of earnings, in order to
take account of differences in the rate at which Participants'
Cash Accounts change during the valuation period, resulting from
such occurrences as distributions from a Participant's Cash
Account pursuant to Sections 11.07 or 13.01 or suspension of
contributions pursuant to Section 5.01.
7. The last paragraph of Section 10.03 is hereby amended to read as
follows:
If Stock is acquired with cash contributed by a
Participating Company or received as dividends, such Stock shall
be allocated, as of the next succeeding Quarterly Valuation
Date,
<PAGE> 31
in whole and fractional shares to Participants' Stock Accounts
in proportion to the Participants' Cash Accounts (determined
without regard to the portion of a Participant's Cash Account
that is allocated pursuant to Section 9.05 to an Investment Fund
other than the Company Stock Fund); provided that such Stock
shall be deemed allocated to the Participants' Stock Accounts
immediately upon purchase for purposes of determining the
allocation of any cash dividends paid on such Stock pursuant to
the first paragraph of this Section.
8. Article X is hereby amended by the addition of the following new
section:
10.05 Revaluation of Investment Funds. For the purpose of
reflecting the effect of any valuation of the Investment Funds,
the accounts of all Participants and former Participants
attributable to Post-91 Salary Deferrals ("Participant Post-91
401(k) Account") (except those who have become Participants as
of the date of said valuation) in each Investment Fund in the
Trust Fund shall be adjusted to reflect the effect of increases
or decreases of the fair market value of the Investment Fund,
including dividends, interest, or other income or profit
received, losses, expenses, if any, and of all other
transactions involving the Investment Fund as of each Quarterly
Valuation Date. Such adjustment shall be made by debiting or
crediting each Account with that portion of the net increase or
net decrease in value of the Investment Fund which the value of
each Participant's Post-91 401(k) Account in such Investment
Fund (as adjusted pursuant to this Section) bears to the total
value of all the Participants' Post-91 401(k) Accounts in such
Investment Fund (as adjusted pursuant to this Section)
immediately before giving effect to said adjustment. For
purposes of the calculat`ion described in the preceding
sentence, the Committee shall develop an equitable method
designed to adjust the value of each Participant's Post-91
401(k) Account in an Investment Fund to reflect any Salary
Deferral Contributions made to the Participant's Post-91 401(k)
Account in such Investment Fund and any distributions made from
the Participant's 401(k) Account in such Investment Fund since
the immediately preceding Quarterly Valuation Date.
9. The first sentence of Section 13.01 is hereby amended to read as
follows:
In the event a Participant suffers a Serious Financial Hardship,
such Participant may withdraw from the Plan an amount not to
exceed the amount needed to satisfy the financial need created
by the Serious Financial Hardship, plus any amounts necessary to
pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal; provided
that the amount of such withdrawal may not exceed the lesser of
(i) the value of the Participant's Salary Deferral Account, or
(ii) the amount of contributions made to the Participant's
Salary Deferral Account.
10. Section 13.02 is hereby amended in its entirety to read as
follows:
13.02 Definition of Serious Financial Hardship. A
Participant shall be treated as having suffered a Serious
Financial Hardship only to the extent amounts are needed for one
of the following:
(1) Expenses for medical care described in Section
213(d) of the Code incurred by the Participant, the
Participant's spouse or any of the Participant's dependents (as
defined in Code Section 152) or necessary for any of those
persons to obtain medical care described in Section 213(d); or
(2) The need to prevent the eviction of the Participant
from the Participant's principal residence or the foreclosure of
the mortgage on the Participant's principal residence.
<PAGE> 32
IN WITNESS WHEREOF, the Company has executed this Amendment Number Three
this 10 day of March, 1992.
WILLIAMS-SONOMA, INC.
By: /s/ Claudia Abrams
-------------------------------
Its: Vice-President, Human Resources
<PAGE> 33
AMENDMENT NUMBER FOUR
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"); and
WHEREAS, Article XV of the Plan permits the Company to amend the Plan at
any time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
February 1, 1989 (except as otherwise specifically indicated).
1. This Amendment shall be known as Amendment Number Four.
2. Section 1.03 is hereby amended by the addition of the following:
Provided, however, that the Average Deferral Percentage Test
shall not be satisfied based on the test set forth in clause
(ii) of the preceding sentence if the Average Contribution
Percentage Test is satisfied pursuant to the test set forth in
clause (ii) of Section 1.04. The determination whether to apply
clause (ii) of the Average Deferral Percentage Test or clause
(ii) of the Average Contribution Percentage Test shall be made
for each Plan Year by the Committee.
3. Section 1.04 is hereby amended by the addition of the following:
Provided, however, that the Average Contribution Percentage Test
shall not be satisfied based on the test set forth in clause
(ii) of the preceding sentence if the Average Deferral
Percentage Test is satisfied pursuant to the test set forth in
clause (ii) of Section 1.03. The determination whether to apply
clause (ii) of the Average Deferral Percentage Test or clause
(ii) of the Average Contribution Percentage Test shall be made
for each Plan Year by the Committee.
4. Section 1.12 is hereby amended in its entirety to read as
follows:
1.12 "Compensation" means the amount of regular, recurring
compensation of an Employee, including monthly salary and hourly
wages, plus overtime pay and commissions, but not including any
other items of compensation, such as (i) bonuses paid at the
discretion of the Company or (ii) the value of stock options
granted to or exercised by an Employee during the Plan Year, and
in no event including car allowances or expense reimbursements;
provided that (i) for purposes of Section 7.02 and for purposes
of determining which Participants are Key Employees (as defined
in Section 1.23), "Compensation" means the amount of wages,
within the meaning of Section 3401(a) of the Code, paid to an
Employee, but determined without regard to any rules that limit
the amounts included in wages based on the nature or location of
employment or the nature of the services performed; (ii) for all
purposes of the Plan other than Section 8.01, Compensation shall
be determined prior to reduction for any Salary Deferral
Contributions made on behalf of a Participant and for any
amounts allocated to a cafeteria plan maintained pursuant to
Code Section 125, and (iii) for all purposes of the Plan,
Compensation shall not exceed $200,000, as adjusted in
accordance with the provisions of Section 415(d) of the Code.
The $200,000 limitation shall apply to all Compensation paid to
the Participant, the Participant's spouse and the Participant's
lineal descendants who have not attained age 19 by the end of
the Plan Year, and shall be
<PAGE> 34
aggregated among such individuals in accordance with the rules
set forth in Code Section 401(a)(17) and the Regulations
thereunder.
5. Section 1.21 is hereby amended in its entirety to read as
follows:
1.21 "Highly Compensated Employee" shall mean an Employee who
performs service during a Determination Year and is described in one or more of
the following groups:
a. An Employee who is a 5% owner of the Company, as
defined in Code Section 416(i)(1)(iii), at any time during the Determination
Year or the Look-Back Year.
b. An Employee who receives Compensation in excess of
$75,000 (indexed in accordance with Code Section 415(d)) during the Look-Back
Year.
c. An employee who receives Compensation in excess of
$50,000 (indexed in accordance with Section 415(d)) during the Look-Back Year
and is a member of the Top-Paid Group for the Look-Back Year.
d. An employee who is an officer (within the meaning of
Code Section 416(i)) during the Look-Back Year and who receives Compensation
during the Look-Back Year in excess of 50% of the dollar limitation in effect
under Code Section 415(b)(1)(A) for the calendar year within which the Look-Back
Year begins, or, if no officer of the company receives Compensation in excess of
50% of the dollar limitation in effect under Code Section 415(b)(1)(A), the
highest paid officer.
e. An Employee who is one of the one hundred (100)
Employees who receives the highest Compensation from the Company during the
Determination Year, and who would be described in paragraph (2), (3) or (4)
above if those paragraphs were modified to substitute the Determination Year for
the Look-Back Year.
For purposes of this Section, the following rules shall apply:
(1) The Determination Year is the Plan Year with respect to which
the determination of which Employees are Highly Compensated Employees is being
made.
(2) The Look-Back Year is the twelve month period immediately
preceding the Determination Year.
(3) The Top-Paid Group consists of the top 20% of Employees,
ranked on the basis of Compensation received during the year. For purposes of
determining the number of Employees in the Top-Paid Group; Employees described
in Code Section 414(q)(8) and Q & A 9(b) of Treas. Regs. Section 1.414(q)-1T
shall not be taken into account.
(4) The number of officers shall not exceed 50 (or, if lesser,
the greater of three Employees or 10% of the number of Employees, with such 10%
calculation not taking into account any Employees who are excluded in
determining the Top-Paid Group).
(5) Compensation shall have the meaning set forth in Code Section
415(c)(3), and shall include any elective or salary reduction contributions made
to a cafeteria plan, to a cash or deferred arrangement (including the Plan), or
to a tax-sheltered annuity.
(6) The Company and any Affiliate shall be treated as a single
employer for purposes of making the determinations required pursuant to this
Section.
(7) Highly compensated Employees shall also include any former
Employee who separated from service of the Company prior to the Determination
Year, and who was a Highly Compensated Employee for either (1) the Plan Year
during which the Employee separated from service, or (2) any
<PAGE> 35
Determination Year ending on or after the Employee's 55th birthday. An
individual who separated from service of the Company prior to January 1, 1987,
will be considered a Highly Compensated Employee only if such individual was a
5% owner of the Company or received Compensation in excess of $50,000 during (1)
the Plan Year in which the Employee separated from service (or the year
preceding such Plan Year), or (2) any Plan Year ending on or after such
Employee's 55th birthday (or the last Plan Year ending before such Employee's
55th birthday).
6. Section 1.48 is hereby amended by revising subparagraph (1)
thereof to read as follows:
(1) For purposes of the participation requirement of Article III,
"Year of Service" means the twelve (12) consecutive month period commencing on
the date an Employee first performs an Hour of Service and during which he is
credited with not less than one Thousand (1,000) Hours of Service. For purposes
of the preceding sentence, a Salaried Employee shall be credited with 45 Hours
of Service for each calendar week during which he performs at least one Hour of
Service. Subsequent twelve (12) consecutive month periods will be the Plan Year
beginning with the Plan Year that begins after the Employee's date of hire.
7. Article I is hereby amended by the addition of the following:
1.49 "Highly Compensated Family Aggregation Employee" means a
Highly Compensated Employee who is either (i) a 5% owner of the
Company, or (ii) one of the ten most highly compensated
Employees of the Company.
1.50 "Highly Compensated Family Group" shall mean a Highly
Compensated Family Aggregation Employee, the spouse of the
Highly Compensated Family Aggregation Employee, and the lineal
ascendants and descendants (and spouses of such ascendants and
descendants) of the Highly Compensated Family Aggregation
Employee.
8. Section 4.04 is hereby amended in its entirety to read as
follows:
If any contribution by the Company is made by reason of a
mistake of fact, the Company may direct the return of such
contribution to it within one year after the payment of the
contribution. Each contribution by a Participating Company is
conditioned upon the initial qualification of the Plan under
Code Section 401(a) and the deductibility of such contribution
under Code Section 404. In the event the deduction for any
contribution is disallowed by the Internal Revenue Service, the
Company may direct the return to it of any contribution (to the
extent disallowed) within one year after the final determination
of disallowance. In the event of a final determination that the
Plan is not initially qualified under Section 401(a) of the
Code, any contribution made conditioned on such initial
qualification of the Plan may be returned to the Company, but
not later than one year after the date of such final
determination, and only if an application for qualification of
the Plan was filed with the Internal Revenue Service within the
time limits prescribed by law for filing the Company's tax
return for the taxable year in which the Plan was adopted (or
such later date as may be prescribed by law).
9. Article IV is hereby amended by the addition of the following
new section:
4.05. Qualified Non-elective Contributions. In the event the
Company, within its discretion, determines that it is necessary
in order to satisfy the Average Deferral Percentage Test or the
Average Contribution Percentage Test, the Company may contribute
to the Plan, pursuant to the provisions of section 5.04(2) or
6.03(2), as the case may be, amounts ("Qualified Non-elective
Contributions") to be allocated to the accounts of Participants
who are not Highly Compensated Employees, to the extent set
forth in Section 5.04(2) or 6.03(2), as the case may be. Any
Qualified Non-elective Contributions shall be contributed
subject to the terms of Section 5.04 or 6.03, as the case may
be.
10. Section 5.04 is hereby amended in its entirety to read as
follows:
<PAGE> 36
Plan Must Satisfy Average Deferral Percentage Test. The Company
may at any time reduce or suspend the amount of Salary Deferral
Contributions that may be made by a Participant, if the
Committee determines, in its sole discretion, that such
reduction or suspension is necessary to meet any requirement of
Code Section 401(k). In addition, in the event that, in any Plan
Year, the amount of Salary Deferral Contributions made to the
Plan on behalf of Participants who are Highly Compensated
Employees exceeds the amounts permitted under the Average
Deferral Percentage Test, the Committee shall, in its sole
discretion, take one or more of the following actions:
a. Distribute to each Participant who is a Highly Compensated
Employee, not later than twelve (12) months following the end of the Plan Year
in which such Salary Deferral Contributions were made, Salary Deferral
Contributions (together with earnings thereon, determined in the manner set
forth in Treas. Regs. 1.401(k)-1(f)(4)(ii)), to the extent necessary to allow
the Plan to satisfy the Average Deferral Percentage Test;
b. Contribute to the Plan, pursuant to Section 4.05, to be
allocated among the accounts of Participants who are not Highly Compensated
Employees, such additional amounts ("Qualified Non-elective Contributions") as
may be required to enable the Plan to satisfy the Average Deferral Percentage
Test; or
c. Recharacterize Matching Contributions made to the Plan
pursuant to Article VI hereof as Salary Reduction Contributions ("Qualified
Matching Contributions"), in such amounts as may be required to enable the Plan
to satisfy the Average Deferral Percentage Test.
Any amounts treated as Salary Deferral Contributions pursuant to
subparagraphs (2) and (3) above shall be treated for all purposes of the
Plan in the same manner as if they had been contributed as Salary
Deferral Contributions by the Participant to whose account such
contributions are allocated, irrespective of whether such amounts are
actually taken into account as Salary Deferral Contributions for
purposes of the Average Deferral Percentage Test.
The amount distributed to a Highly Compensated Employee pursuant
to subparagraph (1) above ("Excess Contributions") will be determined by
first reducing the Salary Deferral Contributions of the Highly
Compensated Employee with the highest Deferral Percentage to the extent
necessary to cause the Deferral Percentage of such Highly Compensated
Employee to equal the Deferral Percentage of the Highly Compensated
Employee with the next highest Deferral Percentage (or, if it would
result in a lesser reduction, the amount necessary to satisfy the Actual
Deferral Percentage Test), and then repeating this process to the extent
required until the Average Deferral Percentage Test is satisfied. The
amount of Excess Contributions for a Highly Compensated Employee equals
the total of Salary Deferral Contributions and other contributions taken
into account with regard to such Highly Compensated Employee for
purposes of the Average Deferral Percentage Test, less the product of
the Employee's Deferral Percentage (calculated after taking into account
the reductions described above), multiplied by the Employee's
Compensation. In the case of a Highly Compensated Employee who is a
member of a Highly Compensated Family Group, the amount of Excess
Contributions shall be determined by reducing the Deferral Percentage of
the entire Highly Compensated Family Group in accordance with the
foregoing procedures, and then allocating such Excess Contributions
among all members of the Highly Compensated Family Group in proportion
to the Salary Deferral Contributions made by each member of the Highly
Compensated Family Group.
Any Excess Contributions to be distributed pursuant to this
Section shall be reduced by any Excess Deferrals previously distributed
for the taxable year ending in the same Plan Year.
The Company may contribute Qualified Non-Elective Contributions
pursuant to subparagraph (2) or recharacterize Matching Contributions as
Salary Deferral Contributions pursuant to subparagraph (3) only to the
extent such Qualified Non-Elective Contributions or recharacterized
Matching Contributions satisfy the conditions set forth in Treas. Regs.
1.401(k)-1(b)(5).
11. Section 6.03 is hereby amended in its entirety to read as
follows:
<PAGE> 37
Plan Must Satisfy Average Contribution Percentage Test. The
Company may at any time reduce or suspend the amount of Matching
Contributions that may be made on behalf of a Highly Compensated
Employee, if the Committee determines, in its sole discretion,
that such reduction or suspension is necessary to meet the
Average Contribution Percentage Test. In addition, in the event
that, in any Plan Year, the amount of Matching Contributions made
to the Plan on behalf of Participants who are Highly Compensated
Employees exceeds the amounts permitted under the Average
Contribution Percentage Test, the Committee shall, in its sole
discretion, take one of the following actions:
(a) Distribute to each Participant who is a Highly Compensated
Employee, not later than twelve (12) months following the end of the
Plan Year in which such Matching Contributions were made, or, to the
extent such amounts are forfeitable, forfeit an amount of Matching
Contributions (together with earnings thereon, determined in the manner
set forth in Treas. Regs. 1.401(m)-1(e)(3)(iii)), determined on the
basis of the respective portions of such amounts attributable to each
Highly Compensated Employee, to the extent necessary to allow the Plan
to satisfy the Average Contribution Percentage Test;
(b) Contribute to the Plan, to be allocated among the accounts of
Participants who are not Highly Compensated Employees, such additional
amounts ("Qualified Non-elective Contributions") as may be required to
enable the Plan to satisfy the Average Contribution Percentage Test; or
(c) Recharacterize Salary Deferral Contributions made to the Plan
pursuant to Article V hereof as Matching Contributions in such amounts
as may be required to enable the Plan to satisfy the Average
Contribution Percentage Test, but only to the extent that doing so does
not cause the Plan to fail to satisfy the Average Deferral Percentage
Test.
The amount distributed to a Highly Compensated Employee pursuant
to subparagraph (1) above ("Excess Aggregate Contributions") will be
determined by first reducing the Matching Contributions of the Highly
Compensated Employee with the highest Contribution Percentage to the
extent necessary to cause the Contribution Percentage of such Highly
Compensated Employee to equal the Contribution Percentage of the Highly
Compensated Employee with the next highest Contribution Percentage (or,
if it would result in a lesser reduction, the amount necessary to
satisfy the Average Contribution Percentage Test), and then repeating
this process to the extent required until the Average Contribution
Percentage Test is satisfied. The amount of Excess Aggregate
Contributions for a Highly Compensated Employee equals the total of
Matching Contributions and other contributions taken into account with
regard to such Highly Compensated Employee for purposes of the Average
Contribution Percentage Test, less the product of the Employee's
Contribution Percentage (calculated after taking into account the
reductions described above), multiplied by the Employee's Compensation.
In the case of a Highly Compensated Employee who is a member of a Highly
Compensated Family Group, the amount of Excess Aggregate Contributions
shall be determined by reducing the Contribution Percentage of the
entire Highly Compensated Family Group in accordance with the foregoing
procedures, and then allocating such Excess Aggregate Contributions
among all members of the Highly Compensated Family Group in proportion
to the Matching Contributions and other contributions taken into account
for purposes of the Average Contribution Percentage Test made by each
member of the Highly Compensated Family Group.
Any amounts treated as Matching Contributions pursuant to
subparagraph (2) above shall be treated for all purposes of the Plan as
if they had been contributed as Salary Deferral Contributions by the
Participant to whose account such contributions are allocated (including
without limitation the vesting and distribution restrictions of the Plan
applicable to Salary Deferral Contributions), irrespective of whether
such amounts are actually taken into account as Matching Contributions
for purposes of the Average Contribution Percentage Test.
The Company may contribute Qualified Non-Elective Contributions pursuant
to subparagraph (2) or recharacterize Salary Deferral Contributions as
Matching Contributions pursuant
<PAGE> 38
to subparagraph (3) only to the extent such Qualified
Non-Elective Contributions or recharacterized Salary Deferral
Contributions satisfy the conditions set forth in Treas. Regs.
1.401(m)-1(b)(5).
12. Section 7.02 is hereby amended in its entirety to read as follows:
7.02 Minimum Allocation if Plan is Top Heavy. Notwithstanding
Section 7.01, for any Plan Year in which the Plan is Top Heavy,
the amount (excluding Salary Deferral Contributions) allocated to
the Participant Account of each Participant who (1) is a member
of the Allocation Group and (2) is a Non-Key Employee, shall be
not less than three percent (3%) of such Participant's Plan Year
Compensation, unless the Allocation Fund for such Plan Year is
less than three percent (3%) of the Plan Year Compensation of all
members of the Allocation Group, in which event the amount
allocated to the Participant Account of each Participant who is
not a Key Employee, when expressed as a percentage of Plan Year
Compensation, shall be not less than the highest amount, when
expressed as a percentage of Plan Year Compensation, allocated to
the Participant Account of a Key Employee for such Plan Year. For
purposes of the preceding sentence, Salary Deferral Contributions
made to the Participant Accounts of Key Employees shall be
included as allocations to the Participant Accounts of Key
Employees.
13. The first sentence of Section 8.01 is hereby amended to read as
follows:
Notwithstanding any provisions of this Plan, the maximum annual
addition to a Participant's account shall in no event exceed the
lesser of (1) $30,000 (or such larger amount, equal to 1/4 of the
amount set forth in Code Section 415(b)(1)(A), as adjusted for
increases in the cost of living in accordance with regulations
issued by the Secretary of the Treasury under the authority
granted by Section 415(d) of the Code), or (2) twenty-five
percent (25%) of the Participant's annual compensation.
14. Effective as of February 1, 1991, Section 11.08 is hereby amended in
its entirety to read as follows:
When a Participant has five consecutive one-year Breaks in
Service, or, if earlier, when a Participant receives a
distribution of the full amount of his vested account balance
pursuant to Section ____, that portion of the Participant's
Matching Contribution Account and Profit Sharing Contribution
Account which is not vested shall be allocated as a forfeiture in
the manner provided in Sections 6.01 and 7.01, respectively;
provided, however, that if such Participant resumes employment
with the Company prior to incurring five (5) consecutive one-year
Breaks in Service, there shall be allocated to the Participant's
Matching Contribution Account and Profit Sharing Contribution
Account, as of the Anniversary Date for the Plan Year during
which the Participant resumes employment, from the Company Profit
Sharing Contribution for such Plan Year, an amount equal to the
amount of such Participant's Accounts previously reallocated as a
forfeiture. A Participant who terminates employment with the
Company at a time when the Participant's Salary Deferral Account
is zero and the vested percentage of the Participant's Matching
Contribution Account and Profit Sharing Contribution Account is
zero shall be treated as having received a complete distribution
of his Participant Account.
<PAGE> 39
IN WITNESS WHEREOF, the Company has executed this Amendment Number Four
this 9 day of June, 1993.
WILLIAMS-SONOMA, INC.
By: /s/ Claudia Abrams
-----------------------------
Its: Vice President, Human Resources
<PAGE> 40
AMENDMENT NUMBER FIVE
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"); and
WHEREAS, Article XV of the Plan permits the Company to amend the Plan
at any time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
January 1, 1994 (except as otherwise specifically indicated).
1. This Amendment shall be known as Amendment Number Five.
2. Section 1.02 is hereby amended in its entirety to read as follows:
1.02 "Anniversary Date" means the last day of December,
1993, and the last day of December in each subsequent year.
3. Section 1.12 is hereby amended by the addition of the following:
For the eleven-month period ended December 31, 1993, Clause (iii)
of the preceding sentence shall be applied by substituting
$183,333 in place of $200,000, and for all years after December
31, 1993, said Clause shall be applied by substituting $150,000
in place of $200,000.
4. Section 1.20 is hereby amended in its entirety to read as follows:
1.20 "Entry Date" means January 1 and July 1.
5. Section 1.35 is hereby amended in its entirety to read as follows:
1.35 "Plan Year" mean the eleven-month period ending
December 31, 1993, and each calendar year thereafter.
6. Section 1.36 is hereby amended by deleting the reference therein to
"August 1" and by substituting in lieu thereof "July 1".
7. Section 1.48 is hereby amended by adding thereto the following:
[P]rovided, however, that any Employee who completes not
less than nine hundred sixteen (916) Hours of Service during the
eleven (11) consecutive month period ending December 31, 1993,
shall be deemed to have completed a Year of Service; and provided
further, that any Employee who attains twenty years and eleven
months of age by December 31, 1993 shall be deemed to have
attained twenty-one years of age as of that date
8. Section 2.02 is hereby amended by deleting the first sentence
therefrom and by substituting in lieu thereof the following:
The Committee shall consist of three (3) members.
<PAGE> 41
9. Section 3.02 is hereby amended by adding thereto the following:
Further, any Employee who shall have terminated his service with
the Company before becoming a Participant hereunder, but after
having completed one thousand (1,000) Hours of Service within an
Eligibility Computation Period (as hereinafter defined), and who
shall be rehired prior to the date on which he shall have
incurred the greater of (i) five (5) consecutive One-Year Breaks
in Service or (ii) the number of One-Year Breaks in Service equal
to the number of Eligibility Computation Periods during which the
Employee shall have completed any service with the Company prior
to such series of Breaks in Service shall be credited with his
pre-Break service for purposes of this Article III.
10. Section 5.01 is hereby amended by deleting the third sentence
therefrom and by substituting in lieu thereof the following:
A Participant shall make his initial salary deferral percentage
upon enrolling in the Plan and, subject to the foregoing, may
change his deferral election as of any January 1 or July 1 by
providing to the Committee at least ten (10) days' advance
written notice.
11. Section 6.01 is hereby amended in its entirety as follows:
6.01 Amount of Matching Contributions. The Company shall
make Matching Contributions to the Trust. As of each Quarterly
Valuation Date, the Company shall contribute to the Matching
Contribution Account of each Participant an amount equal to fifty
percent (50%) of the Salary Deferral Contribution made by such
Participant to the extent that such Salary Deferral Contribution
does not exceed 6% of such Participant's compensation; provided,
however, that the matching percentage level may be altered for
any year by a resolution of the Board of Directors adopted prior
to the first date of such year, and provided, further, that
Salary Deferral Contributions shall not be taken into account to
the extent that they are not allocated to the Company Stock
Account pursuant to Section 9.01.
12. Section 7.01 is restated in its entirety to read as follows:
7.01 Method of Allocation. For each Plan Year, Company
Profit Sharing Contributions shall be allocated to the Profit
Sharing Contribution Accounts of those Participants who, as of
the Anniversary Date for the Plan Year then ending, qualify as
members of the Allocation Group defined in Section 7.03. Company
Profit Sharing Contributions shall be allocated to the Profit
Sharing Contribution Accounts so that each Participant receives
the amount contributed on his behalf pursuant to Section 4.01.
Forfeitures derived from Company contributions shall be used to
reduce the Company's Matching Contribution, for the Plan Year in
which such forfeitures shall have occurred; and to the extent
that such forfeitures shall exceed the amount of Matching
Contribution not otherwise provided for, such forfeitures shall
be used to reduce the Matching Contribution for the subsequent
Plan Year.
13. Section 8.01 is hereby amended by adding thereto the following:
For the period ending December 31, 1993, the provisions of this
Article VIII shall be applied by adjusting the sum of $30,000,
referred to in the first sentence of this Section 8.01, to a sum
equal to eleven-twelfths (11/12) thereof or $27,500.
14. Article XII of said Plan is hereby amended by adding thereto the
following Section 12.08:
12.08 Direct Rollover Option
(a) This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the plan to the
contrary that would otherwise limit a
<PAGE> 42
Distributee's election under this Section, a Distributee may
elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a direct rollover.
(b) Definitions.
(i) Eligible Rollover Distribution: An Eligible
Rollover Distribution is any distribution of all or any portion
of the balance to the credit of the Distributee except that an
Eligible Rollover Distribution does not include: Any distribution
that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code and the portion of any distribution
that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to
employer securities).
(ii) Eligible Retirement Plan: An Eligible
Retirement Plan is an individual retirement account described in
Section 408(a) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section
401(a) of the Code that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee: A Distributee includes an
Employee or former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code, are Distributees with regard to the interest
of the spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a
payment by the Plan to the Eligible Retirement Plan specified by
the Distributee.
IN WITNESS WHEREOF, the Company has executed this Amendment Number Five
this 23 day of December, 1993.
WILLIAMS-SONOMA, INC.
By: /s/ Claudia Abrams
---------------------------
Its: Vice President, Human
Resources
<PAGE> 43
AMENDMENT NUMBER SIX
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
WHEREAS, WILLIAMS-SONOMA, INC., a California corporation (the
"Company"), established the Williams-Sonoma, Inc. Employee Profit Sharing and
Stock Incentive Plan (the "Plan"); and
WHEREAS, Article XV of the Plan permits the Company to amend the Plan
at any time;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
January 15, 1995:
1. This Amendment shall be known as Amendment Number Six.
2. Section 9.05 of said Plan is hereby amended by deleting the words and
figures "ten percent (10%)" from the second sentence of said Section and by
substituting in lieu of said words and figures the words "whole percentage."
3. Section 9.05 of said Plan is hereby further amended by deleting the
fifth sentence therefrom and by substituting in lieu thereof the following:
"A Participant may change his or her election once in each
calendar quarter in conformity with procedures established by the
Committee and uniformly applicable to all Participants, or more
frequently if such procedures so provide."
4. Section 5.01 of said Plan is hereby amended by deleting the third
sentence therefrom and by substituting in lieu thereof the following:
"A Participant shall determine his or her initial salary
deferral percentage upon enrolling in the Plan and, subject to
the foregoing, may change his or her deferral election as of the
first day of any calendar quarter by giving the Commit-tee such
advance notice as it may require under procedures established by
it and uniformly applicable to all Participants."
5. Section 5.01 of said Plan is hereby further amended by deleting the
fourth sentence therefrom and by substituting in lieu thereof the following:
"A Participant may elect to suspend making Salary Deferral
Contributions at any time by providing to the Committee upon such
advance notice as the Committee may require under procedures
uniformly applicable to all Participants."
IN WITNESS WHEREOF, the Company has executed this Amendment Number Six
this 6th day of May, 1996.
WILLIAMS-SONOMA, INC.
By: /s/ Mark W. Yaukey
---------------------------------
Its: Director, Compensation and
Benefits
<PAGE> 44
AMENDMENT NUMBER SEVEN
TO THE
WILLIAMS-SONOMA, INC.
EMPLOYEE PROFIT SHARING AND STOCK INCENTIVE PLAN
Williams-Sonoma, Inc., a California corporation (the "Company"), hereby
adopts this Amendment Number Seven to the Williams-Sonoma, Inc. Employee Profit
Sharing and Stock Incentive Plan, with reference to the following facts:
1. The Company maintains the Williams-Sonoma, Inc. Employee Profit
Sharing and Stock Incentive Plan (the "Plan").
2. Article XV of the Plan permits the Company to amend the Plan at any
time.
3. The Company desires to amend the Plan as set forth in this Amendment
Number Seven.
NOW, THEREFORE, the Plan is hereby amended as follows:
(i) Effective May 1, 1997, the name of the Plan shall be the
"Williams-Sonoma, Inc. Associate Stock Incentive Plan."
(ii) Effective as of May 1, 1997, Section 1.20 is hereby amended
in its entirety to provide as follows:
1.20. "Entry Date" means the day after the day on which an
Eligible Employee satisfies the requirements for participation
under Section 3.01.
(iii) Effective as of January 1, 1994, Section 1.38 is hereby
amended in its entirety to provide as follows:
1.38. "Quarterly Valuation Date" means March 31, June
30, September 30, and December 31.
(iv) Effective as of May 1, 1997, the second sentence of
paragraph 1 of Section 1.48 (dealing with the weekly crediting of Hours
of Service to Salaried Employees, as heretofore added by Amendment
Number One and Amendment Number Four to the Plan) is hereby deleted.
(v) Effective as of May 1, 1997, Section 3.01 is hereby amended
in its entirety to provide as follows:
3.01. Eligibility to Participate. Every Eligible Employee
whom the Company designates to the Committee as a "Non-Limited
Employee" shall become a Participant on the Entry Date following
the later of (a) the thirtieth (30th) day after such Eligible
Employee's date of hire, or (b) such Eligible Employee's
twenty-first (21st) birthday. Each Eligible Employee whom the
Company designates to the Committee as a "Limited Employee" shall
become a Participant on the Entry Date following the later of (i)
the thirtieth (30th) day after the date on which such Eligible
Employee completes one thousand (1,000) Hours of Service within
an "Eligibility Computation Period" (as defined below), or (ii)
such Eligible Employee's twenty-first (21st) birthday. For
purposes of this Plan, the term "Eligibility Computation Period"
means the period of twelve (12) consecutive months beginning on
the Eligible Employee's Employment Commencement Date, the Plan
Year including the first anniversary of such Employment
Commencement Date, and each succeeding Plan Year.
<PAGE> 45
(vi) Effective for the first payroll period beginning on or after
May 5, 1997 for Williams-Sonoma Store Associates, and for the first
payroll period beginning on or after May 12, 1997 for all other
Associates (including, but not limited to, Memphis Distribution Center
Associates and Non-Exempt Associates), Section 6.01 is hereby amended in
its entirety to provide as follows:
6.01. Amount of Matching Contributions. The Company shall
make Matching Contributions to the Trust. As of each Quarterly
Valuation Date, the Company shall contribute to the Matching
Contribution Account of each Participant an amount equal to one
hundred percent (100%) of the Salary Deferral Contributions made
by such Participant to the extent that such Salary Deferral
Contributions do not exceed six percent (6%) of such
Participant's Compensation; provided, however, that the
percentage level of the Matching Contributions may be altered for
any Plan Year by a resolution of the Board of Directors adopted
before the first day of such Plan Year, and provided, further,
that Salary Deferral Contributions shall not be matched to the
extent that they are not allocated to the Company Stock Account
pursuant to Section 9.01.
(vii) In all other respects, the terms and provisions of the Plan
are hereby ratified and declared to be in full force and effect.
IN WITNESS WHEREOF, the Company has executed this Amendment Number Seven
as of this 1st day of May, 1997.
WILLIAMS-SONOMA, INC.
By: /s/ Andy Rich
------------------------------
<PAGE> 46
AMENDMENT NUMBER EIGHT
TO THE
WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
Williams-Sonoma, Inc., a California corporation (the "Company"), hereby
adopts this Amendment Number Eight to the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, with reference to the following facts:
A. The Company maintains the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, formerly referred to as the Williams-Sonoma, Inc. Employee
Profit Sharing and Stock Incentive Plan (the "Plan").
B. Article XV of the Plan permits the Company to amend the Plan at
any time.
C. The Company desires to amend the Plan as set forth in this
Amendment Number Eight.
NOW THEREFORE, the Plan is hereby amended as follows:
1. Effective August 18, 1997, the vesting schedule in Section 11.06 of
the Plan is hereby amended to provide as follows:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
--------------------------------------------------------
<S> <C>
Less than 1 year 0%
--------------------------------------------------------
1 Year 20%
--------------------------------------------------------
2 Years 40%
--------------------------------------------------------
3 Years 60%
--------------------------------------------------------
4 Years 80%
--------------------------------------------------------
5 or more years 100%
--------------------------------------------------------
</TABLE>
2. Effective as of the date of the execution of this Amendment Number
Eight, Section 13.02 of the Plan is hereby amended in its entirety to provide as
follows:
"13.02 Definition of Serious Financial Hardship. A participant
shall be treated as having suffered a Serious Financial Hardship
only to the extent amounts are needed for one of the following:
(1) Expenses for medical care described in Section 213(d)
of the Code incurred by the Participant, the Participant's spouse
or any of the Participant's dependents (as defined in Section 152
of the Code), or necessary for any of such persons to obtain
medical care described in Section 213(d) of the Code;
(2) Prevention of the eviction of the Participant from
Participant's principal residence or the foreclosure of the
mortgage on the Participant's principal residence;
(3) Payment of tuition, related educational fees, and room
and board expenses for the next 12 months of post-secondary
education for the Participant, or the Participant's spouse,
children, or dependents (as defined in Section 152 of the Code);
or
(4) Costs related directly to the purchase of a principal
residence for the Participant (excluding mortgage payments).
<PAGE> 47
3. In all other respects, the terms and provisions of the Plan are
hereby ratified and declared to be in full force and effect.
IN WITNESS WHEREOF, the Company has executed this Amendment Number Eight
this 16th day of September, 1997 to be effective as of the dates set forth
above.
WILLIAMS-SONOMA, INC.
By: /s/ Andy Rich
---------------------
<PAGE> 48
AMENDMENT NUMBER NINE
TO THE
WILLIAMS-SONOMA , INC.
ASSOCIATE STOCK INCENTIVE PLAN
Williams-Sonoma, Inc., a California corporation (the "Company") hereby
adopts this Amendment Number Nine to the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, with reference to the following facts:
A. The Company maintains the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, formerly referred to the Williams-Sonoma, Inc. Employee Profit
Sharing And Stock Incentive Plan (the "Plan").
B. Article XV of the Plan permits the Company to amend the Plan at
any time.
C. The Company desires to amend the Plan as set forth in this
Amendment Number Nine.
NOW, THEREFORE, the Plan is hereby amended, effective as of October 1,
1998, as follows:
1. Section 1.31 of the Plan is hereby amended in its entirety to
provide as follows:
"1.31. 'Participating Company' means the Company and any
Affiliate, unless such Affiliate, with the written
consent of the Directors, declines to permits its
Employees to participate in the Plan."
2. The following sentence is added to the end of Section 18.06 of the
Plan:
"Pursuant to Section 414(p)(10) of the Code, benefits may be paid
to a 'alternate payee' under a 'qualified domestic relations
order' before the Participant has terminated his employment,
reached the age of 59_ years, or reached his 'earliest retirement
age' within the meaning of Section 414(p)(4)(B) of the Code."
3. In all other respects, the terms and provisions of the Plan are
hereby ratified and declared to remain in full force and effect.
IN WITNESS WHEREOF, the Company has executed this Amendment Number Nine
this 30th day of September, 1998, to be effective as of October 1, 1998.
WILLIAMS-SONOMA, INC.
By: /s/ Dennis Chatland
---------------------------
<PAGE> 49
AMENDMENT NUMBER TEN
TO THE
WILLIAMS-SONOMA , INC.
ASSOCIATE STOCK INCENTIVE PLAN
Williams-Sonoma, Inc., a California corporation (the "Company") hereby
adopts this Amendment Number Ten to the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, with reference to the following facts:
A. The Company maintains the Williams-Sonoma, Inc. Associate Stock
Incentive Plan, formerly referred to the Williams-Sonoma, Inc. Employee Profit
Sharing And Stock Incentive Plan (the "Plan").
B. Article XV of the Plan permits the Company to amend the Plan at
any time.
C. The Company desires to amend the Plan as set forth in this
Amendment Number Ten.
NOW, THEREFORE, the Plan is hereby amended, effective as of January 1,
1999, as follows:
1. The first sentence of Section 5.01 of the Plan is hereby amended in
its entirety to provide as follows:
"Commencing as of September 1, 1989, a Participant may elect to
make Salary Deferral Contributions of an amount not less than one
percent (1%) and not greater than fifteen percent (15%) of his
Plan Year Compensation (provided that, for all Plan Years
beginning on or after February 1, 1990, such amount must be a
whole percentage of Compensation), provided that a Participant's
Salary Deferral Contributions made in any calendar year may not
exceed $7,000, as adjusted for cost of living increases pursuant
to Code Section 402(g)(5)."
2. The last sentence of Section 12.03 of the Plan is hereby stricken.
3. Section 12.04 of the Plan is hereby amended in its entirety to
provide as follows:
"12.04 Required Distributions
Notwithstanding any other provision of this Plan, distributions
shall be made in accordance with Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement
of Regulation Section 1.401(a)(9)-2. Accordingly, the following
provisions, which are intended to comply with such requirements,
shall apply notwithstanding any other provision of this Plan:
12.04.1 For purposes of this Section 12.04:
(a) In the case of a Participant who is not a Five
Percent Owner (as defined below) for the Plan Year ending with or
within the calendar year in which such Participant attained the age of
seventy and one-half (70 1/2) years, the term "Beginning Date" shall
mean the first day of April of the calendar year following the later
of (a) the calendar year in which the Participant attains the age of
seventy and one-half (70 1/2) years, or (b) the calendar year in which
the Participant retires. In the case of a Participant who is a Five
Percent Owner (as defined below) for the Plan Year ending with or
within the calendar year in which such Participant attained the age of
seventy and one-half (70 1/2) years, the term "Beginning Date" shall
mean the first day of April of the calendar year following the
calendar year in which the Participant attains the age of seventy and
one-half (70 1/2) years.
<PAGE> 50
(b) The term "Distribution Calendar Year" shall mean a
calendar year for which a minimum distribution is required pursuant to
this Section 12.04. For distributions beginning before the Participant's
death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Beginning Date. For distributions beginning after the Participant's
death, the first Distribution Calendar Year is the calendar year in
which the distributions are required to begin pursuant to this Section
12.04.
(c) Life expectancy and joint and last survivor
expectancy shall be computed by the use of the expected return multiples
of Tables V and VI of Regulation Section 1.72-9. Unless otherwise
elected by the Participant (or by the Participant's surviving spouse in
the case of distributions described in Section 12.04.4) by the time
distributions are required to begin, life expectancy shall be
recalculated annually. Such election shall be irrevocable as to the
Participant (or surviving spouse) and shall apply to all subsequent
years. The life expectancy of a non-spouse Beneficiary may not be
recalculated.
(d) The term "Applicable Life Expectancy" shall mean the
life expectancy (or joint and last survivor expectancy) calculated using
the attained age of the Participant (or the Designated Beneficiary) as
of the Participant's (or the Designated Beneficiary's) birthday in the
"Applicable Calendar Year" reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the Applicable Life Expectancy shall
be the life expectancy as so recalculated. The "Applicable Calendar
Year" shall be the first Distribution Calendar Year, and if life
expectancy is being recalculated, each succeeding calendar year. If
annuity payments commence in accordance with the provisions of this
Section 12.04 before the Beginning Date, the "Applicable Calendar Year"
shall be the year such payments commence. If a distribution is in the
form of an immediate annuity purchased after the Participant's death
with the Participant's remaining interest, the "Applicable Calendar
Year" is the year of purchase.
(e) The term "Participant's Benefit" means the balance in
the Participant's interest in the Trust Fund as of the last Valuation
Date in the calendar year (the "Valuation Calendar Year") immediately
preceding the Distribution Calendar Year increased by the amount of any
contributions or forfeitures allocated to the Participant during the
Valuation Calendar Year after such Valuation Date and decreased by
distributions made in the such Valuation Calendar Year after such
Valuation Date; provided, however, that if any portion of the minimum
distribution for the first Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the Beginning Date, the
amount of the minimum distribution made in the second Distribution
Calendar Year shall be treated as if it had been made in the immediately
preceding Distribution Calendar Year.
(f) The term "Five Percent Owner" means any person who
owns (or is considered as owning within the meaning of Section 318 of
the Code) more than five percent (5%) of the outstanding stock of the
employer, or stock possessing more than five percent (5%) of the total
combined voting power of all stock in the employer, or, in the case of
an unincorporated business, any person who owns more than five percent
(5%) of the capital or profits interest in such employer.
12.04.2 Each Participant's entire interest in the Trust Fund
shall be distributed, as of the first Distribution Calendar Year, to such
Participant either (a) in full, not later than such Participant's Beginning
Date, or (b) in installments, beginning not later than such Participant's
Beginning Date, and extending over one of the following periods: (1) the life of
such Participant, (2) the lives of such Participant and his Designated
Beneficiary, (3) a period not extending beyond the life expectancy of such
Participant or (4) a period not extending beyond the life expectancy of the
Participant and his Designated Beneficiary. Once distributions have begun to a
Five Percent Owner under this Section 12.04, they must continue to be
distributed, even if a Participant ceases to be a Five Percent Owner in a
subsequent year.
12.04.3 If a Participant dies after distribution of his interest
in the Trust Fund has begun but before his entire interest in the Trust Fund has
been distributed pursuant to Section 12.04.2,
<PAGE> 51
the portion of his interest in the Trust Fund which remains undistributed at his
death shall be distributed at least as rapidly as it would have been distributed
under the method of distribution which was in use pursuant to Section 12.04.2 on
the date of his death.
12.04.4 If a Participant dies before distribution of his interest
in the Trust Fund begins pursuant to Section 12.04.2, distribution of such
Participant's entire interest shall be completed by December 31 of the calendar
year containing the fifth (5th) anniversary of the Participant's death, except
to the extent that an election is made to receive distributions in accordance
with paragraph (a) or paragraph (b) as follows:
(a) If any portion of the Participant's interest is
payable to a Designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the life expectancy of
such Designated Beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Participant died, or
(b) If the Designated Beneficiary is the Participant's
surviving spouse, the date distributions are required by begin in
accordance with paragraph (a) above shall not be earlier than the later
of (i) December 31 of the calendar year immediately following the
calendar year in which the Participant died or (ii) December 31 of the
calendar year in which the Participant would have attained the age of
seventy and one-half (70_) years. If such surviving spouse dies before
such distributions begin, the provisions of this Section 12.04.4 shall
be applied as if such surviving spouse were the Participant.
If the Participant has not made an election pursuant to this
Section 12.04.4 by the time of his death, the Participant's
Designated Beneficiary must elect the method of distribution no
later than the earlier of (i) December 31 of the calendar year in
which the distributions would be required to begin under this
Section 12.04.4, or (ii) December 31 of the calendar year which
contains the fifth (5th) anniversary of the date of the death of
the Participant. If the Participant has no Designated
Beneficiary, or if the Designated Beneficiary does not elect a
method of distribution, distribution of the Participant's entire
interest in the Trust Fund must be completed by December 31 of
the calendar year containing the fifth (5th) anniversary of the
Participant's death.
12.04.5 If a Participant's interest is to be distributed in other
than a single sum, the following minimum distribution rules shall apply on or
after the Beginning Date:
(a) If the Participant's Benefit is to be distributed
over (i) a period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Designated Beneficiary or (ii) a
period not extending beyond the life expectancy of the Designated
Beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first Distribution Calendar
Year, must at least equal the quotient obtained by dividing the
Participant's Benefit by the Applicable Life Expectancy.
(b) For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the Designated Beneficiary, the
method of distribution selected must assure that at least fifty percent
(50%) of the present value of the amount available for distribution is
paid within the life expectancy of the Participant.
(c) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with distributions for
the first Distribution Calendar Year, shall not be less than the
quotient obtained by dividing the Participant's Benefit by the lesser of
(i) the Applicable Life Expectancy or (ii) if the Participant's spouse
is not the Designated Beneficiary, the applicable divisor determined
from the table set forth in Regulation Section 1.401(a)(9)-2 Q&A-4.
Distributions after the death of the Participant shall be distributed
using the Applicable Life Expectancy set forth in paragraph (a) above as
the relevant divisor without regard to Regulation Section 1.401(a)(9)-2.
<PAGE> 52
(d) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before
the Participant's Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution for the Distribution
Calendar Year in which the Participant's Beginning Date occurs, must be
made on or before December 31 of such Distribution Calendar Year.
(e) If the Participant's Benefit is distributed in the
form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of Section
401(a)(9) of the Code.
12.04.06 For purposes of this Section 12.04, any amount paid to a
child of a Participant shall be treated as if such amount had been paid to such
Participant's surviving spouse if such amount will become payable to such
surviving spouse when such child reaches maturity. For purposes of this Section
12.04, the life expectancy of a Participant and of his surviving spouse may not
be redetermined more frequently than annually (other than in the case of a life
annuity).
12.04.07 For purposes of this Section 12.04, "Designated
Beneficiary" means any individual designated as a Beneficiary by a Participant.
12.04.08 Notwithstanding the foregoing provisions of this Section
7, any designation properly made by a Participant before January 1, 1984 under
Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982 shall
remain in effect."
4. In all other respects, the terms and provisions of the Plan are
hereby ratified and declared to remain in full force and effect.
IN WITNESS WHEREOF, the Company has executed this Amendment Number Ten
this 31st day of December, 1998, to be effective as of January 1, 1998.
WILLIAMS-SONOMA, INC.
By: /s/ Jerry Dratler
---------------------------
<PAGE> 1
EXHIBIT 5.1
OPINION OF IRELL & MANELLA LLP
June 30, 1999
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, California 94109
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission in connection with the registration of 1,221,775 shares of common
stock, par value $.01 per share (the "Shares"), of Williams-Sonoma, Inc., a
California corporation (the "Company"), and of an indeterminate amount of
interests (the "Plan Interests") to be offered or sold pursuant to the terms of
the Company's Associate Stock Incentive Plan (the "Plan"). As your counsel in
connection with this transaction, we have examined the proceedings proposed to
be taken in connection with the Plan and such other matters and documents as we
have deemed necessary or relevant as a basis for this opinion.
Based on these examinations, it is our opinion that upon completion of
the proceedings being taken or which we, as your counsel, contemplate will be
taken prior to the issuance of the Plan Interests and the Shares, the Plan
Interests and the Shares, when issued in the manner referred to in the
Registration Statement and the Plan, will be duly authorized, and legally and
validly issued.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Irell & Manella LLP
-------------------------
Irell & Manella LLP
<PAGE> 1
EXHIBIT 5.2
INTERNAL REVENUE SERVICE DETERMINATION LETTER
<TABLE>
<S> <C> <C>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
2 CUPANIA CIRCLE
MONTEREY PARK, CA 91754
Employer Identification Number: 94-2203880
Date: April 13, 1993 File Folder Number: 940000129
Person to Contact: Vickie Walker
WILLIAMS-SONOMA INC Contact Telephone Number: (213) 725-0905
100 NORTH POINT STREET
SAN FRANCISCO, CA 94133 Plan Name: Williams-Sonoma Inc
Employee Profit
Sharing and Stock
Incentive
Plan Number: 001
</TABLE>
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated 3/2/93. The proposed amendments should
be adopted on or before the date prescribed by the regulations under Code
section 401 (b) .
Your plan does not consider total compensation for purposes of figuring
benefits. In operation, the provision may discriminate in favor of employees who
are highly compensated. If this occurs, your plan will not remain qualified.
This determination letter is applicable for the plan adopted on 1/26/90.
This letter is based upon the certification and demonstrations you
submitted pursuant to Revenue Procedure 91-66. Therefore, the certification and
demonstrations are considered an integral part of this letter. Accordingly, YOU
MUST KEEP A COPY OF THESE DOCUMENTS AS A PERMANENT RECORD OR YOU WILL NOT BE
ABLE TO RELY ON THE ISSUES DESCRIBED IN REVENUE PROCEDURE 91-66.
<PAGE> 2
The information on the enclosed addendum is an integral part of this
determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
By: /s/ Michael J. Quinn
----------------------------
Michael J. Quinn
District Director
<PAGE> 3
This plan does not provide for contributions an behalf of participants with less
than one thousand hours of service during the plan year and/or does not provide
for contributions on behalf of participants not employed on the last day of the
plan year. The provision(s) may, in operation, cause this plan to fail the
coverage requirements of IRC 410(b) and/or the participation requirements of IRC
401(a)(26). If this discrimination occurs, this plan will not remain qualified.
This plan also satisfies the requirements of Code section 401(k).
Effective January 1, 1993, all qualified plans, including this plan, must comply
with Code section 401(a)(31). In general, section 401(a)(31) requires plans to
permit participants to elect to have an eligible retirement distribution paid
directly to an eligible retirement plan in a direct rollover. This requirement
applies to distributions made on or after January 1, 1993. Because your
application was submitted before January 1, 1993, the Service did not review
this plan for compliance with section 401(a)(31). Accordingly, the scope of this
determination letter does not extend to the plan's compliance with section
401(a)(31), and this determination letter may not be relied upon with respect to
that issue. For more details, see Revenue Procedure 93-12, 1993-3 I.R.B.
This determination letter is also applicable for amendments adopted on 4/27/90,
12/12/90 and 3/10/92.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of Williams-Sonoma Inc. of our report dated March 24, 1999
appearing in the Annual Report on Form 10-K of Williams-Sonoma, Inc. for the
fiscal year ended January 31, 1999 and our report dated June 15, 1999 appearing
in the Annual Report on Form 11-K of the Williams-Sonoma, Inc. Associate Stock
Incentive Plan for the year ended December 31, 1998.
DELOITTE AND TOUCHE LLP
/s/ Deloitte and Touche LLP
- ---------------------------
San Francisco, California
June 28, 1999
