EXHIBIT 10.41
1994 RESTATEMENT
FISHER-PRICE PENSION PLAN
OFFICIAL TEXT
effective January 1, 1989
(Composite Copy through Fifth Amendment)
TABLE OF CONTENTS
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PAGE
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ARTICLE 1 NAME, EFFECTIVE DATE AND DEFINITIONS........................................... 5
Section 1.1. Name....................................................................... 5
Section 1.2. Effective Dates............................................................ 5
Section 1.3. Plan Year.................................................................. 5
Section 1.4. Definitions................................................................ 5
Section 1.5. Rights of Employees and Obligations of Company............................. 9
ARTICLE 2 ELIGIBILITY FOR PARTICIPATION.................................................. 9
Section 2.1.............................................................................. 9
(a) Eligibility for Participation Prior to July 1, 1991............................. 9
(b) Eligibility for Participation After December 31, 1994........................... 9
(c) Eligibility for Participation After March 31, 2000.............................. 10
(d) Resumption by Non-Vested Employee with Forfeiture Period of Severance........... 10
(e) Regular Employees; Changes in Status............................................ 10
Section 2.2. Termination and Resumption of Participation................................ 11
Section 2.3. Transfers Prior to Spin-Off Date........................................... 11
(a) Transfer to Division............................................................ 11
(b) Transfer from Division.......................................................... 11
Section 2.4. Service with and Transfers Involving Affiliated Corporations............... 11
(a) Service with Affiliated Corporations............................................ 11
(b) Transfer of Employment.......................................................... 12
(c) Change to Eligible Status....................................................... 12
(d) Change from Eligible Status..................................................... 12
(e) Subsidiary...................................................................... 12
ARTICLE 3 RETIREMENT BENEFITS............................................................ 12
Section 3.1. Normal Retirement.......................................................... 12
Section 3.2. Deferred Retirement........................................................ 13
Section 3.3.............................................................................. 13
(a) Accrued Monthly Pension Benefit................................................. 13
(1) Accrued Benefit on December 31, 1986....................................... 13
(2) Profit Sharing Annuity Increase............................................ 13
(3) Accrued Benefit for Plan Years Beginning on and after January 1, 1987...... 13
(4) 1990 Retirement Incentive.................................................. 15
(5) 1998 Retirement Incentive.................................................. 15
(6) 2000 Retirement Incentive.................................................. 15
(b) Compensation.................................................................... 15
(c) OBRA `93 Annual Limits.......................................................... 16
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Section 3.4...................................................................... 16
(a) Early Retirement........................................................ 16
(b) Reduced Benefit......................................................... 16
Section 3.5...................................................................... 17
(a) Social Security Disability.............................................. 17
(b) [Reserved].............................................................. 17
(c) Limitation on Retroactive Payment....................................... 17
(d) Cessation of Disability................................................. 17
Section 3.6. Form of Benefit Payments........................................... 17
Section 3.7. No Other Death Benefit............................................. 17
Section 3.8. Benefit Accruals for Pre-January 1, 1989 Service................... 17
Section 3.9...................................................................... 18
(a) Preretirement Survivor Annuity for Active Vested Participants........... 18
(1) Surviving Spouse................................................... 18
(2) Dependents......................................................... 18
(b) Inactive Vested Participants............................................ 19
Section 3.10..................................................................... 19
(a) Maximum Benefit......................................................... 19
(b) Further Limitation on Benefits.......................................... 20
Section 3.11. Changes in Social Security Benefits............................... 20
Section 3.12. Reemployment of Retirees.......................................... 20
(a) Regular Employment...................................................... 20
(b) Other Employment........................................................ 21
Section 3.13. Increase in Benefits for Retirees and Beneficiaries............... 21
ARTICLE 4 NORMAL AND OPTIONAL FORMS OF BENEFIT................................... 21
Section 4.1...................................................................... 21
(a) Qualified Joint and Survivor Annuity.................................... 21
(b) Information to Be Provided Participant.................................. 22
(c) Election Period......................................................... 23
Section 4.2. Life Annuity Option................................................ 23
(a) Normal Form for Unmarried Participant................................... 23
Section 4.3. Ten Years Certain Option........................................... 23
Section 4.4. Small Benefit Cash-Outs............................................ 24
(a) Payment of Small Benefits............................................... 24
(b) Direct Rollovers........................................................ 24
(c) Eligible Rollover Distribution.......................................... 24
(d) Eligible Retirement Plan................................................ 24
(e) Distributee............................................................. 24
(f) Direct Rollover......................................................... 24
Section 4.5. Limitations on Benefit Distributions............................... 24
ARTICLE 5 TERMINATION OF EMPLOYMENT.............................................. 25
Section 5.1. Nonforfeitable Interest in Accrued Monthly Pension Benefit......... 25
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Section 5.2...................................................................... 26
(a) Years of Service........................................................ 26
(b) Years of Service Disregarded............................................ 26
(c) Hour of Service......................................................... 26
Section 5.3...................................................................... 27
(a) Form, Time and Manner of Payment........................................ 27
Section 5.4. Payment of Small Benefits......................................... 28
ARTICLE 6 FUNDING................................................................ 28
Section 6.1. Company Contributions............................................. 28
Section 6.2. Forfeitures Reduce Contributions.................................. 28
Section 6.3. Actuarial Valuations.............................................. 29
ARTICLE 7 ADMINISTRATION OF PLAN................................................. 29
Section 7.1. Plan Administrator................................................ 29
Section 7.2. Named Fiduciary................................................... 29
Section 7.3. Claims by Employees and Participants.............................. 29
ARTICLE 8 THE PENSION TRUST...................................................... 29
Section 8.1. Continuation of Trust............................................. 29
Section 8.2. Source of Payments................................................ 29
Section 8.3. Payment of Benefits and Expenses.................................. 29
ARTICLE 9 RIGHT TO ALTER OR AMEND................................................ 30
Section 9.1. Right to Alter or Amend........................................... 30
Section 9.2. Limitations on Power of Amendment................................. 30
Section 9.3. Form of Amendment................................................. 30
ARTICLE 10 TERMINATION OF PLAN AND TRUST......................................... 31
Section 10.1. Right to Terminate Fully Reserved................................. 31
Section 10.2..................................................................... 31
(a) Continuation of Plan by Successor....................................... 31
(b) Merger, Consolidation or Transfer of Assets............................. 31
(c) Merger After Change in Control.......................................... 31
Section 10.3. Distribution of Assets on Termination of Plan..................... 31
Section 10.4. Provisions to Prevent Discrimination.............................. 32
(a) Restriction of Benefits................................................. 32
(b) Restrictions on Distributions........................................... 32
(c) Restricted Employee..................................................... 32
(d) Restricted Benefit...................................................... 32
(e) Effective Date.......................................................... 33
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Section 10.5. No Further Liability.............................................. 33
Section 10.6. Change in Control................................................. 33
(a) Five-Year Period........................................................ 33
(b) Two Year Period......................................................... 33
(c) Definitions............................................................. 34
(1) Change in Control.................................................... 34
(2) Excess Assets........................................................ 35
(3) Conditions of Employment............................................. 36
ARTICLE 11 MISCELLANEOUS PROVISIONS.............................................. 36
Section 11.1. New York and Applicable Federal Law Govern........................ 36
Section 11.2. Headings for Convenience Only..................................... 36
Section 11.3. Rights of All Parties Determined by the Terms of the Plan......... 36
Section 11.4..................................................................... 37
(a) Spendthrift Clause...................................................... 37
(b) Qualified Domestic Relations Orders..................................... 37
Section 11.5. Notice to Employees............................................... 37
Section 11.6. No Employment Rights Created...................................... 37
Section 11.7. Diversion from Employees Prohibited............................... 37
Section 11.8. Right to Judicial Accounting...................................... 38
Section 11.9. Masculine Gender to Include Feminine and Singular to
Include Plural................................................... 38
Section 11.10. Forfeiture on Account of Inability to Locate Participant or
Beneficiary...................................................... 38
Section 11.11. Assignment........................................................ 38
ARTICLE 12 TOP-HEAVY PROVISIONS.................................................. 38
Section 12.1. Application of Top-Heavy Rules.................................... 38
Section 12.2. Definition of Top-Heavy Plan...................................... 39
Section 12.3. Top Heavy Rules................................................... 40
(a) Nonforfeitable Benefit.................................................. 40
(b) Minimum Accrued Monthly Pension Benefit................................. 40
(c) Adjustments for Super Top-Heavy Plans................................... 41
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ARTICLE 1
NAME, EFFECTIVE DATE AND DEFINITIONS
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Section 1.1. Name. The Plan maintained by this instrument shall be
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called "Fisher-Price Pension Plan" and is sometimes herein referred to as the
"Plan".
The funds to provide benefits under the Plan shall be held, managed,
invested and disbursed in accordance with the terms of this Plan and pursuant to
a separate Agreement of Trust entered into with a Trustee to fund the benefits
under the Plan which agreement is hereby incorporated into this Plan by
reference.
Section 1.2. Effective Dates. The original effective date of the Plan
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was January 1, 1976. The effective date of the 1989 restatement was January 1,
1989, except as otherwise specifically provided. This 1994 Restatement is
intended to replace the 1989 Restatement in order to meet requirements of the
Internal Revenue Service in obtaining a favorable determination letter and to
meet statutory and regulatory requirements adopted since the date the 1989
Restatement was executed.
Section 1.3. Plan Year. The "Plan Year" of the Plan and Trust is the
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twelve-month period beginning each January 1 and ending on the following
December 31.
Section 1.4. Definitions. As used herein:
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(a) Beginning in January, 1995, the term "Company" means Fisher-Price,
Inc. and Mattel Operations, Inc. Beginning in January, 1998 the term "Company"
shall also include Tyco Preschool, Inc. Notwithstanding the preceding, for
purposes of Article 9, the term "Company" shall mean Fisher-Price, Inc.
(b) "Division" means the Fisher-Price Division of The Quaker Oats
Company. As of the Spin-off Date, the term "Division" shall have the same
meaning as the term "Company;" as of such date, both of these terms mean Fisher-
Price, Inc.
(c) "Spin-off Transaction" means the corporate transaction whereby The
Quaker Oats Company transfers assets and liabilities associated with the
business of the Division to a newly formed wholly owned corporation known as
Fisher-Price, Inc. following which the common stock of Fisher-Price, Inc. is
subsequently distributed to the shareholders of The Quaker Oats Company.
(d) "Spin-off Date" means the effective date of the distribution to
Fisher-Price, Inc., on which assets and liabilities associated with the business
of the Division are to be transferred to Fisher-Price, Inc.
(e) "Trustee" means the trustee appointed and serving from time to
time under the separate Agreement of Trust.
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(f) "Regular employee" means a common-law employee, excluding any
employee who is hired on a seasonal basis or who otherwise has an irregular work
schedule.
(g) "Affiliated corporation" means any corporation which is a member
of a controlled group of corporations, as defined in Section 414(b) of the Code,
which includes the Company. This term shall also include any other trade or
business (whether or not incorporated) which is under common control, as defined
in Section 414(c) of the Code, with the Company, as well as any service
organization which is a member of any affiliated service group which includes
the Company and any other entity required to be aggregated with the Company
pursuant to Sections 414(m) and (o) of the Code.
(h) "Covered compensation" for each Plan Year means the average
(without indexing) of the taxable wage bases in effect for each calendar year
during the 35-year period ending with the current Plan Year. "Covered
Compensation" shall be automatically adjusted each Plan Year. For purposes of
this definition, the term "taxable wage base" means the contribution and benefit
base under Section 230 of the Social Security Act.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(j) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
(k) For purposes of Section 3.9, the term "dependent" means a
dependent as defined in Section 152 of the Code with respect to whom the
Participant or his estate is entitled to a Federal income tax exemption under
Section 151 of the Code for the taxable year of the Participant's death.
(l) "Vested Participant" means any Participant who has a
nonforfeitable right to an accrued benefit under the Plan.
(m) "Participant" means an employee of the Company who has met the
eligibility requirement under Article 2 and who has become a Participant under
the terms of Article 2.
(n) "Year of service" means a year of service as defined in Section
5.2(a).
(o) "Hour of service" means an hour of service as defined in Section
5.2(c).
(p) Except as otherwise specifically provided, the term "compensation"
means compensation as defined in Section 3.3(b).
(q) "Profit Sharing Plan" means the Fisher-Price Profit Sharing and
Retirement Savings Plan, as amended from time to time.
(r) "Entry Date" means January 1 and July 1 of each year.
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(s) "Date of Hire" means the date on which an employee first completes
an Hour of Service.
(t) "Look-back Year", for purposes determining who is a highly
compensated employee, in accordance with Code Section 414(q) and the Regulations
issued thereunder, shall be the Plan Year for which testing is being performed.
(No separate determination year calculation is required).
(u) "Forfeiture Period of Severance" means a Period of Severance of
sixty (60) or more consecutive months in duration. A Period of Severance that
begins with a Parental Leave, however, must be at least seventy-two (72), rather
than sixty (60), consecutive months in duration in order to constitute a
Forfeiture Period of Severance.
(v) "Period of Service" of an individual means the period beginning on
the individual's Date of Hire or Re-Employment Commencement Date and ending on
the individual's next succeeding Severance from Service Date.
(w) "Period of Severance" of an individual means the period beginning
immediately following the individual's Severance from Service Date and ending
immediately prior to the individual's next Re-Employment Commencement Date (if
any).
(x) "Qualifying Period of Severance" of an individual means a Period
of Severance that:
(i) begins immediately following a Severance from Service
Date described in Section 1.4(y)(i); and
(ii) does not exceed twelve (12) consecutive months in
duration.
If the Severance from Service Date described in Section 1.4(y)(i)
occurred while the individual was absent from employment as described in Section
1.4(y)(ii), however, the Period of Severance will not be a Qualifying Period of
Severance unless it ends by the first anniversary of the date on which such
absence from employment began.
(y) "Severance from Service Date" means the date on which an
individual's employment with the Company and all Affiliated Corporations
terminates. Such date is considered to be the earlier of:
(i) the date on which the individual quits, retires, is
discharged or dies; or
(ii) the first anniversary of the date on which the
individual is first absent from employment (with or without pay) for
any other reason (for example, vacation, holiday, sickness, Parental
Leave, disability, leave of absence or layoff).
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Notwithstanding the foregoing, an individual who terminates employment
with an Affiliated Corporation to enter the military service of the United
States shall not experience a Severance from Service Date if (A) the
individual's right to re-employment by the Affiliated Corporation is protected
by federal law and (B) the individual returns to employment with the Affiliated
Corporation within the period required by law to preserve the individual's right
to re-employment.
(z) "Parental Leave" of an Affiliated Corporation employee means the
employee's absence from work with an Affiliated Corporation (i) which begins
after 1984 and (ii) which is by reason of the pregnancy of the employee, the
birth of a child of the employee or the placement of a child with the employee
in connection with the employee's adoption of the child or is for purposes of
caring for the child over a period beginning immediately following such birth or
placement of the child. In order for an absence to qualify as a Parental Leave,
the reasons therefor and the length thereof must be established by the employee
to the reasonable satisfaction of the Company at such time and pursuant to such
procedures as the Company shall establish for such purpose. While an employee's
Parental Leave shall entitle the employee to be credited with service to the
limited extent specifically provided in the Plan, such Parental Leave shall not
constitute a parental leave of absence for any non-Plan purposes, or entitle the
employee to any non-Plan benefits or reemployment following such Parental Leave,
except to the extent, if any, provided under the employment practices and
policies of the Affiliated Corporation who employed the employee at the time of
the Parental Leave, applied without regard to the Plan.
(aa) "Re-Employment Commencement Date" means the date on which an
individual first performs an Hour of Service following a Period of Severance.
(bb) "Vesting Service," with respect to a Participant, means the sum
of the Participant's Periods of Service and Qualifying Periods of Severance.
The determination of Vesting Service shall also be subject to the following
rules:
(i) Vesting Service shall be expressed as years, with a
year consisting of three hundred sixty-five (365) days. In such
regard, to determine Vesting Service, the Participant's Period(s) of
Service and (if any) Qualifying Period(s) of Severance shall be
totaled, expressing any Period of Service or Qualifying Period of
Severance as days, and the resulting total divided by three hundred
sixty-five (365). Any fractional year of Vesting Service shall not be
rounded up or down. In determining Vesting Service, in no event shall
the same day be counted more than once. (A similar procedure shall be
followed for the purposes of determining whether a Period of Severance
is a Qualifying Period of Severance or a Forfeiture Period of
Severance.)
(ii) If a Participant has a Forfeiture Period of
Severance, any Vesting Service for Periods of Service and Qualifying
Periods of Severance that occur after the Forfeiture Period of
Severance shall not be taken into account for purposes of determining
whether the Participant is a Vested Participant under this Plan at the
time of, or at any time before, the Forfeiture Period of Severance.
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(iii) If a Participant who has never been a Vested
Participant under this Plan incurs a Forfeiture Period of Severance,
any Vesting Service prior to the Forfeiture Period of Severance shall
be disregarded. In the application of this subsection, there shall be
disregarded any Period of Service or Qualifying Period of Severance
previously disregarded by reason of the application of this subsection
to a prior Forfeiture Period of Severance (or by reason of a
comparable prior provision of the Plan or any of its predecessors in
interest).
(iv) If a Participant participated in the Plan prior to
April 1, 2000, the Participant's Vesting Service for time before April
1, 2000 shall mean (and be limited to) the Participant's "Years of
Service" under and as defined in Section 5.2(a) of the Plan as of
March 31, 2000.
(v) A Participant's Vesting Service shall include
employment with an employer that is not an Affiliated Corporation, or
with an employer before it becomes an Affiliated Corporation, but only
if, to the extent and in the manner provided by a resolution of the
Board of Directors in its sole discretion or by an amendment to the
Plan.
Section 1.5. Rights of Employees and Obligations of Company. Except
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as expressly provided herein, the rights of employees of the Company covered
under the Plan who have retired or have otherwise terminated their employment
with the Company prior to the effective date of this restated Plan and the
obligations of the Company on any date prior to the effective date of the
restated Plan shall be governed by the terms of the Plan as in effect as of such
date. After December 31, 1988, the rights of employees who retire or otherwise
terminate their service with the Company and the obligations of the Company
shall be only as set forth herein or as the Plan shall hereafter be amended from
time to time.
ARTICLE 2
ELIGIBILITY FOR PARTICIPATION
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Section 2.1.
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(a) Eligibility for Participation Prior to July 1, 1991. Each employee
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of the Company who was a Participant in this Plan prior to the effective date of
the restatement shall remain a Participant hereunder. With respect to Plan
participation prior to July 1, 1991, each other regular employee of the Company
shall become a Participant in the Plan after eight weeks of employment with the
Division. If an employee is not hired as a regular employee but becomes a
regular employee thereafter, he shall become a Participant after eight weeks of
employment as a regular employee. No other employee shall be eligible for
participation in the Plan prior to July 1, 1991.
(b) Eligibility for Participation After December 31, 1994. Each
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regular employee of Fisher-Price, Inc. who became a Participant in the Plan
prior to January 1, 1995 and who continued as an employee of Fisher-Price, Inc.
or Mattel Operations, Inc. following December 31, 1994 shall continue as an
active Participant hereunder as a result of the
9
maintenance of this Plan by Fisher-Price, Inc. and Mattel Operations, Inc.
thereafter, so long as such employee continues in an eligible status.
Each other regular employee of the Company who is employed in an
eligible status shall become a Participant on the first Entry Date coincident
with or following his or her completion of one Year of Participation Service
with the Company. For purposes of this Article, "Year of Participation Service"
means:
(1) the 12 consecutive month period commencing with an
employee's Date of Hire and ending on the last day before the
anniversary of his or her Date of Hire, or
(2) a Plan Year commencing after the employee's Date of
Hire, during which he or she completes at least 1,000 hours of
service.
(c) Eligibility for Participation After March 31, 2000. A regular
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employee of the Company who is employed in an eligible status and who is not
described in Section 2.1(a) or (b) (regarding pre-April 1, 2000 Participants in
the Plan) shall become a Participant in the Plan on the first Entry Date
coincident with or following the date the employee's Periods of Service and
Qualifying Periods of Severance (including any Period of Service or Qualifying
Period of Severance then in progress) equals one (1) year.
(d) Resumption by Non-Vested Employee with Forfeiture Period of
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Severance. If (1) a Participant who, upon his separation from the service of the
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Company, has not acquired a nonforfeitable right under Article 5 to his accrued
monthly pension benefit or (2) an employee who separates from the service of the
Company prior to satisfying the service requirement set forth in subsection (c)
incurs a Forfeiture Period of Severance, such Participant shall not be eligible
to resume active participation in the Plan until he satisfies the service
requirement set forth in subsection (c) after the Forfeiture Period of
Severance. In determining if such individual satisfies the service requirement
set forth in subsection (c) after the Forfeiture Period of Severance, he shall
be treated as if (i) he is a new employee under subsection (c) and (ii) his or
her Employment Commencement Date is the date on which he or she completes the
first Hour of Service after the Forfeiture Period of Severance.
(e) Regular Employees; Changes in Status. Each regular employee of the
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Company who has completed the service requirement but who is separated from the
service of the Company prior to his or her Entry Date or who is not employed in
an eligible status on such date shall become a Participant immediately upon his
or her return to the service of the Company as a regular employee in an eligible
status unless subsection (d) applies. Notwithstanding the preceding sentence, an
employee shall not in any event commence participation in the Plan prior to the
Entry Date which otherwise would have applied had the employee not separated
from the service of the Company. An employee who is not a regular employee
employed in an eligible status shall not become a Participant hereunder. If an
employee of the Company who is not a Participant becomes a regular employee in
an eligible status, he or she shall commence participation in the Plan on the
later of the date on which he or she became a regular employee in an eligible
status or the first Entry Date coincident with or following the date the
employee's
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Periods of Service and Qualifying Periods of Severance (including any Period of
Service or Qualifying Period of Severance then in progress) equals one (1) year.
For purposes of this Plan, an employee of the Company is employed in
an eligible status if he or she is employed:
(i) by Fisher-Price, Inc., excluding for periods prior to
January 1, 1999 any employee of Fisher-Price, Inc. who was eligible to
receive an automatic contribution under the Mattel, Inc. Personal
Investment Plan;
(ii) by Mattel Operations, Inc. in the Mattel Operations -
East Aurora, Mattel Operations - Medina or Mattel Operations - Murray
divisions; and
(iii) by Tyco Preschool, Inc. for periods beginning January
1, 1998.
Section 2.2. Termination and Resumption of Participation. Upon
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separation from service with the Company, an employee shall cease to be an
active Participant in the Plan. If a former Participant is reemployed by the
Company in an eligible status, he shall resume participation in the Plan
immediately upon reemployment unless Section 2.1(d) applies.
Section 2.3. Transfers Prior to Spin-Off Date.
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(a) Transfer to Division. An employee who transfers from the Company
--------------------
(other than the Division) or any Affiliated corporation to the Division as a
regular employee prior to the Spin-off Date shall become a Participant in the
Plan upon completion of eight weeks of employment with the Company (including
service with any Affiliated corporation) or the date of his transfer to the
Division, whichever is later. For purposes of Article 5 (but not for benefit
accrual under Article 3), such employee shall be credited with hours of service
with the Division under Section 5.2(c) for hours of service as defined in such
Section completed with the Company or any Affiliated corporation.
(b) Transfer from Division. For purposes of Article 5 (but not for
----------------------
purposes of benefit accrual under Article 3), an employee who transfers from the
Division to another division of the Company or any Affiliated corporation shall
be credited with hours of service with the Division under Section 5.2(c) for
hours of service as defined in such Section completed with the Company or any
such affiliate prior to the Spin-off Date.
Section 2.4. Service with and Transfers Involving Affiliated
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Corporations.
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(a) Service with Affiliated Corporations. Hours of Service completed
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by a Participant with an Affiliated corporation shall be credited for
eligibility and vesting purposes under this Plan under Articles 2 and 5, but not
for purposes of benefit accrual under Article 3, except as specifically provided
hereunder.
With respect to employees who transfer to the Company after November
30, 1993 directly from Mattel, Inc. or any Subsidiary, the service credited
under this subsection shall
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include all service with such Subsidiary or with Mattel, Inc., including service
prior to the date the Subsidiary or Mattel, Inc. became an Affiliated
corporation, unless at the time of the event at which a Subsidiary became an
Affiliated corporation, the Board of Directors of Fisher-Price, Inc.
specifically provides otherwise. The amount of service to be credited under the
preceding sentence shall be based on the terms of a qualified plan maintained by
Mattel, Inc. or the Subsidiary under which the transferred employee was
participating immediately prior to the transfer or under the terms of this Plan
for crediting service for eligibility and vesting if the employee was not
participating in such a plan. Notwithstanding the foregoing, the Board of
Directors of Fisher-Price, Inc. may also specifically provide for the crediting
of service under this Section with a predecessor employer or any entity other
than a Subsidiary prior to the date such predecessor employer or other entity
was acquired by an Affiliated corporation or otherwise became an Affiliated
corporation.
(b) Transfer of Employment. If a Participant transfers employment
----------------------
from the Company or any business entity that has adopted or is maintaining this
Plan to any Affiliated corporation that has not adopted or is not maintaining
this Plan, such transfer shall not be considered a separation from service or
termination of employment under this Plan. Such Participant shall continue to be
credited with Hours of Service as provided in subsection (a). If a person
transfers employment from any Affiliated corporation that has not adopted the
Plan to the Company or any business entity that has adopted or is maintaining
this Plan, he or she shall immediately commence active participation in the Plan
if such person is employed in an eligible status, has satisfied the age and
service requirements under the Plan and if the Entry Date that would otherwise
apply to such person has already occurred.
(c) Change to Eligible Status. If the employment status of an person
-------------------------
changes so that he or she is eligible for participation hereunder as a result of
a transfer from ineligible status, he or she shall immediately commence active
participation in the Plan following the date of his or her change in employment
status if such person has satisfied the age and service requirements hereunder
and if the Entry Date that would otherwise apply to such person has already
occurred.
(d) Change from Eligible Status. If the employment status of a
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Participant changes so that he or she is no longer in an eligible status under
the Plan but he or she is still in the service of the Company, he or she shall
be credited with Hours of Service for vesting purposes for Hours of Service with
the Company after the change in employment status.
(e) Subsidiary. The term "Subsidiary" means any corporation included
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in a chain of corporations connected through stock ownership with a common
parent corporation as defined under Section 1563(a)(1) of the Code where the
common parent is Mattel, Inc.
ARTICLE 3
RETIREMENT BENEFITS
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Section 3.1. Normal Retirement. Each Participant may retire from
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active service with the Company as of the end of his normal work day on his
normal retirement date,
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which shall be the last day of the month in which his sixty-fifth birthday
falls, and shall be entitled to an accrued monthly pension benefit, determined
under Section 3.3, commencing on the first day of the month following his normal
retirement date.
Section 3.2. Deferred Retirement. If a Participant continues in the
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active service of the Company after his normal retirement date, he shall
continue as a participant under the Plan until the date of his actual
retirement. Such Participant may continue to accrue benefits after his normal
retirement date, subject to the provisions of this Article, until the date of
his actual retirement. Upon his actual retirement, the Participant shall be
entitled to an accrued monthly pension benefit determined under Section 3.3
commencing on the first day of the month following his actual retirement date.
Such benefit shall not be actuarially increased on account of deferred
commencement of payment.
Section 3.3.
-----------
(a) Accrued Monthly Pension Benefit. A Participant's accrued monthly
-------------------------------
pension benefit on retirement or other termination of employment shall be an
amount equal to the sum of (1), (2) and (3) and, if applicable, the amount
described in (4), (5) or (6) as follows:
(1) Accrued Benefit on December 31, 1986. The Participant's
------------------------------------
accrued monthly pension benefit as determined under the terms of the Plan as in
effect on December 31, 1986. Such accrued benefit is calculated under the
provisions of Sections 3.3, 3.8 and 5.1 as in effect on such date and as set
forth in Schedule A.
(2) Profit Sharing Annuity Increase. A monthly benefit amount
-------------------------------
calculated separately for each Participant based on participation in the Plan
from 1976 through 1983 as set forth in Schedule B.
(3) Accrued Benefit for Plan Years Beginning on and after January
-------------------------------------------------------------
1, 1987. One-twelfth of the sum of (i), (ii), (iii), and (iv) below and subject
- -------
to the limitation of (vi) below:
(i) For a Participant during the 1987 Plan Year--
(A) 1.1% multiplied by his Plan Year Compensation up to
$15,600, plus
(B) 1.8% multiplied by his Plan Year compensation in
excess of $15,600.
(ii) For a Participant during the 1988 Plan Year--
(A) 1.1% multiplied by his Plan Year compensation up to
$16,800, plus
13
(B) 1.8% multiplied by his Plan Year compensation in
excess of $16,800.
(iii) For a Participant during the 1989 Plan Year, the sum
of--
(A) 1.4% multiplied by his Plan Year compensation up to
the integration level for the Plan Year, plus
(B) 1.8% multiplied by his Plan Year compensation in
excess of the integration level for the Plan Year.
Notwithstanding the foregoing, the benefit accrual for any
Participant, other than a Participant who is a highly compensated
employee within the meaning of Section 414(q)(1)(A) or (B) of the
Code, shall not be less than the sum of 1.1% multiplied by his Plan
Year compensation up to $15,708 plus 1.8% multiplied by his Plan Year
compensation in excess of $15,708.
(iv) For a Participant for Plan Years after December 31,
1989 items (A) and (B) shall be calculated for each Plan Year. The
sum of such annual Plan Year calculations will equal the benefit
accrued under this subsection (iv). Each annual Plan Year
calculations shall include:
(A) 1.4% multiplied by his compensation for such Plan
Year up to the integration level, plus
(B) 1.8% multiplied by his compensation for such Plan
Year in excess of the integration level for the Plan Year.
Notwithstanding the foregoing, the benefit accrual for any
Participant, other than a Participant who is a highly compensated employee
within the meaning of Section 414(q)(1)(A) or (B) of the Code, for the 1990 and
1991 Plan Years shall not be less than: (1) for the 1990 Plan Year, the sum of
1.1% multiplied by his Plan Year compensation up to $16,968, plus 1.8%
multiplied by his Plan Year compensation in excess of $16,968, and (2) for the
1991 Plan Year, the sum of 1.1% multiplied by his Plan Year compensation up to
$18,312, plus 1.8% multiplied by his Plan Year compensation in excess of
$18,312.
(v) For purposes of this subsection, the term "integration
level" means 150.1% of Covered compensation for the Plan Year, as
defined in Section 1.4(h), rounded to the next highest multiple of
$100.
(vi) Notwithstanding the provisions of (iii) and (iv) above,
once a Participant accrues benefits under the Plan for 43 Plan Years,
the accruals for each Plan Year after 43 shall be 1.4% multiplied by
his compensation for such Plan Year.
14
(4) 1990 Retirement Incentive. A monthly benefit amount
-------------------------
calculated under Schedule E for each Participant who meets the eligibility
requirements set forth in Schedule E.
(5) 1998 Retirement Incentive. A monthly benefit amount
-------------------------
calculated under Schedule F for each Participant who meets the eligibility
requirements set forth in Schedule F.
(6) 2000 Retirement Incentive. A monthly benefit amount
-------------------------
calculated under Schedule G for each Participant who meets the eligibility
requirements set forth in Schedule G.
Notwithstanding the foregoing, the benefits described in (2) above
shall be payable only to a Participant who was actively employed by the Division
or the Company on December 11, 1987 or a Participant who terminated his
employment during 1987 after (i) both the attainment of age 55 and completion of
five years of service, (ii) completion of 25 years of service, (iii) death, or
(iv) disability retirement under Section 3.5. The benefit described in (2)
above shall also be payable to a Participant whose disability retirement date
occurred in 1986 but whose benefit from the Plan was not payable until 1987.
The calculation of benefits under (3) shall be based only on compensation paid
to a Participant as a regular employee.
In all cases, there shall be no reduction of accrued benefits as a
result of amendments made in the formula for calculating accrued benefits under
this restated Plan.
(b) Compensation. The term "compensation" of a Participant for any
------------
period means the total amount of "wages" as defined in Section 3401(a) of the
Code, without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2) of the
Code), which are paid to such Participant by the Company during such period plus
any contributions made on a salary reduction basis under Sections 125 or
402(a)(8) of the Code which are not otherwise included as wages under Section
3401 of the Code.
Notwithstanding the preceding sentence, compensation shall not include
amounts representing cash or merchandise prizes awarded for suggestions or
ideas, commissions, special allowances, expense reimbursements, severance pay,
pay for inactive status pending retirement, any profits under stock plans, any
payments out of the short term or long term disability plans or sickness and
accident plans, any compensation the receipt of which is deferred pursuant to a
plan or contract, or any amounts representing benefits under the Profit Sharing
Plan. Any questions as to whether any other amount paid to a Participant are
compensation shall be determined by the Company.
The compensation of each Participant taken into account under the Plan
for any Plan Year shall not exceed $200,000. Such $200,000 limitation shall be
adjusted at the same time and in the same manner as permitted under Section
415(d) of the Code.
15
(c) OBRA `93 Annual Limits. In addition to other applicable
----------------------
limitations set forth in the Plan, and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Participant taken into account under the Plan
shall not exceed the "OBRA `93 annual compensation limit." The "OBRA `93 annual
compensation limit" is $150,000, as adjusted by the Commissioner for increases
in the cost of living in accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA `93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA `93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining a Participant's benefits accruing in the current Plan
Year, the compensation for that prior determination period is subject to the
OBRA `93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA
annual compensation limit is $150,000.
Section 3.4.
-----------
(a) Early Retirement. A Participant may retire as of the first day
----------------
of any month before his normal retirement date and after he has attained age 55
and has completed at least 5 years of Vesting Service. Such Participant's
accrued monthly pension benefit, determined under Section 3.3, shall be payable
on the first day of the month coincident with or following his sixty-fifth
birthday, unless the Participant elects otherwise under subsection (b).
(b) Reduced Benefit. A Participant who has retired under this
---------------
Section may elect to receive a reduced benefit to begin the first day of any
month prior to his normal retirement date. Such reduced benefit shall be equal
to his benefit otherwise computed under Section 3.3, reduced by one-half of one
percent (.005) per month for each month by which the date benefit payments begin
precedes the first day of the month coincident with or following such
Participant's sixty-fifth (65th) birthday.
16
Section 3.5.
-----------
(a) Social Security Disability. If a Participant in the active
--------------------------
service of the Company or on an approved leave of absence becomes permanently
and totally disabled and he is eligible for and receives disability benefits
under the Social Security Act, he shall be retired for disability, and his
disability retirement date shall be the first day of the month coincident with
or immediately following the date of permanent disability as established by the
Social Security Administration. Such Participant shall be entitled to his
accrued monthly pension benefit determined under Section 3.3, commencing on his
disability retirement date.
(b) [Reserved]
(c) Limitation on Retroactive Payment. Benefit payments under this
---------------------------------
Section shall commence as of a Participant's disability retirement date, and
payments shall be made retroactively if the determination of disability occurs
in a month subsequent to the month in which such retirement date occurs.
Notwithstanding the preceding sentence or any other provision of this Section,
no retroactive payments shall be made with respect to any month for which the
Participant has received any payment from any plan, fund or program maintained
by the Company on account of disability.
(d) Cessation of Disability. With respect to any retirement under
-----------------------
this Section, the Company may require that a Participant certify his continuing
eligibility to receive disability benefits under the Social Security Act or
submit to a reexamination by a physician or physicians selected by the Company
not more often than semi-annually as shall be necessary for the Company to
determine the continuing eligibility of such Participant to receive benefits
under this Section. If a Participant who retires under this Section recovers
from such disability at any time prior to his normal retirement date, benefit
payments under this Section shall cease and he shall not be entitled to any
benefit accrual hereunder or be credited with years of service under Section 5.2
after the date his disability retirement began. Such Participant shall be
entitled to an adjusted benefit under Article 5, based on his benefit accrual
and years of service as of the date he last retired under this Section adjusted
to take into account prior benefit payments made to the Participant hereunder.
Notwithstanding the preceding, if such Participant recovers from disability and
is immediately reemployed by the Company, the period of his disability under
this Section and years of service credited immediately preceding such disability
shall be considered years of active service for purposes of vesting under
Article 5 of this Plan.
Section 3.6. Form of Benefit Payments. The accrued monthly pension
----------- ------------------------
benefit payable under Sections 3.1, 3.2, 3.4 or 3.5 shall be paid in accordance
with the normal form of benefit under Sections 4.1 or 4.2, or in accordance with
an optional form of benefit selected by a Participant under Section 4.3.
Section 3.7. No Other Death Benefit. Except for Sections 3.9, 4.1 or
----------- ----------------------
4.3, there shall be no death benefit payable on account of the Participant's
participation in this Plan.
Section 3.8. Benefit Accruals for Pre-January 1, 1989 Service. In all
----------- ------------------------------------------------
cases where benefits are payable to Participants who were Participants prior to
January 1, 1989, the
17
amount of benefit accrual shall be determined under the
provisions of the Plan in effect prior to January 1, 1989. The accrual of
benefits for service after December 31, 1988 shall be determined under the terms
of this restated Plan.
Section 3.9.
-----------
(a) Preretirement Survivor Annuity for Active Vested Participants. In
-------------------------------------------------------------
the case of a Vested Participant who dies while in active service with the
Company and prior to the commencement of benefit payments under the Plan, and
who has a surviving spouse, such spouse shall be entitled to a preretirement
survivor annuity, as hereafter defined. Notwithstanding the preceding, a
preretirement survivor annuity shall also be paid to the dependents of an
unmarried Vested Participant who dies while in the active service of the
Company.
For purposes of this subsection, the term "preretirement survivor
annuity" means a monthly benefit payable in accordance with the following:
(1) Surviving Spouse. If the Vested Participant is survived by
----------------
a spouse, the spouse shall be entitled to receive for such spouse's life a
monthly benefit equal to 50% of the Participant's nonforfeitable accrued monthly
pension benefit determined under Sections 3.3 and 5.1 at the date of his death.
Such monthly benefit shall commence at the first day of the month coincident
with or next following the Participant's date of death.
(2) Dependents. In the case of a Vested Participant who is not
----------
survived by a spouse but is survived by one or more dependents, as defined in
this Section, the total monthly benefit shall be equal to the dollar amount
determined in paragraph (1) above and shall be paid to such dependent or divided
equally among each of such dependents in accordance with the following rules:
(i) Any benefits payable hereunder to a dependent other
than a surviving spouse shall cease upon the earlier of:
(A) the death of the recipient; or
(B) the distribution of the 120th monthly payment to
such recipient.
(C) Notwithstanding (A) and (B), in the case of a
child, monthly payments shall be paid until the earlier of the 23rd
birthday of the child or such child's death.
(ii) If a benefit payable under this Section ceases to be
paid to a recipient for any reason, the benefit payable to any other
recipient shall not be increased.
18
(b) Inactive Vested Participants. In the case of a Vested
----------------------------
Participant who has retired or separated from service and who dies prior to the
commencement of benefit payments, the surviving spouse of such Participant will
be entitled to a preretirement survivor annuity commencing on the first day of
the month coincident with or immediately following the later of (1) the deceased
Participant's earliest retirement age under the Plan (but only if such spouse is
living on such date) or (2) the Participant's date of death, and continuing
during the spouse's lifetime. However, the preretirement survivor annuity will
not be paid if the deceased Participant had not been married to such spouse
during the entire twelve-month period ending on the date of the Participant's
death. The amount of the preretirement survivor annuity under this subsection
shall be the amount which would have been payable as a survivor annuity under
the joint and survivor annuity provision of the Plan in Section 4.1(a) assuming:
(1) in the case of a Participant who dies after the date on
which the Participant attained the earliest retirement age, such Participant had
retired with an immediate benefit under Section 4.1(a) on the day before the
Participant's date of death, or
(2) in the case of a Participant who dies on or before the date
on which the Participant would have attained the earliest retirement age, such
Participant had separated from service on his date of death, survived to the
earliest retirement age, retired with an immediate benefit under Section 4.1(a)
at the earliest retirement age, and died on the day after the day on which he
would have attained the earliest retirement age.
Section 3.10.
------------
(a) Maximum Benefit. If a Participant's accrued monthly pension
---------------
benefit exceeds one-twelfth of his maximum annual benefit, as hereinafter
defined, his accrued monthly pension benefit shall be reduced until it does not
exceed one-twelfth of such maximum annual benefit. The maximum annual benefit of
a Participant under this Plan at any time shall equal the lesser of:
(1) $90,000, plus cost of living adjustments provided in Section
415(d) of the Code, or such actuarial equivalent amount determined under
regulations prescribed by the Secretary of the Treasury if the benefit hereunder
begins before or after the Participant's Social Security retirement age,
adjusted in the case of a Participant with fewer than ten years of participation
in the Plan by multiplying the dollar amount determined under this paragraph by
the number of the Participant's years of participation under the Plan and
dividing the product obtained by ten; or
(2) the greater of
(A) 100% of the Participant's compensation for his high
three consecutive years of service, divided by three; or
(B) $10,000 if the Participant has not at any time
participated in a defined contribution plan, as defined in Section
414(i) of the Code, maintained by the Company or an affiliated
corporation.
19
In the case of a Participant with fewer than ten years of service with
the Company the amounts determined in (2)(A) or (2)(B) shall be adjusted by
multiplying such amounts by the number of the Participant's years of service
with the Company and dividing the product obtained by ten.
For purposes of this Section, the term "compensation" means wages
within the meaning of Section 3401(a) of the Code, for purposes of income tax
withholding at the source, but determined without regard to any rules that limit
the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Section 3401(a)(2) of the Code). The term "limitation year" means the
Plan Year.
In determining the single life annuity equivalence of a form of
benefit where the entire benefit constitutes a qualified joint and survivor
annuity as defined for purposes of Section 401(a)(11) of the Code, the benefit
payable to the spouse shall be ignored so that the single life annuity actuarial
equivalent shall be the amount payable to the Participant.
(b) Further Limitation on Benefits. The limitations described in
------------------------------
subsection (a) are intended to impose the limitations of Section 415 of the
Code, the terms of which are hereby incorporated by reference. To the extent
that any provision in subsection (a) is inconsistent with the requirements of
Section 415 of the Code or the regulation issued thereunder, the provisions of
the Code or the regulations shall control.
With respect to any Participant in this Plan who has been credited
with any annual additions, as defined in Section 415 of the Code, under any
defined contribution plan maintained by the Company, the limitations of Section
415(e) of the Code may further reduce the benefits payable hereunder. In the
event that the sum of a Participant's defined benefit fraction and defined
contribution fraction, as defined in Section 415(e) of the Code, exceed 1.0, the
accrued monthly pension benefit under this Plan shall be reduced until such sum
is equal to 1.0. For purposes of applying the limitations of this Section and
Section 415 of the Code, all defined benefit plans of the Company (whether or
not terminated) are to be treated as one defined benefit plan, and all defined
contribution plans of the Company (whether or not terminated) are to be treated
as one defined contribution plan. The limitation in this Section 3.10(b) shall
not apply to any Plan Year beginning on or after January 1, 2000.
Section 3.11. Changes in Social Security Benefits. The benefit of a
------------ -----------------------------------
Participant or beneficiary or the benefit of a Participant who has separated
from the service of the Company with a nonforfeitable right to a deferred
benefit shall not be decreased by reason of any increase in the benefit levels
under Title II of the Social Security Act.
Section 3.12. Reemployment of Retirees.
------------ ------------------------
(a) Regular Employment. If a Participant has retired under this
------------------
Article and is subsequently reemployed by the Company as a regular employee, the
payment of his or her retirement benefits under this Plan shall cease during the
period of such reemployment. Such
20
Participant shall continue to accrue benefits subject to the provisions of this
Article. Upon subsequent retirement after the period of reemployment, such
Participant shall be entitled to an adjusted accrued monthly pension benefit
determined under this Article as if such subsequent retirement was the
Participant's initial retirement hereunder. Benefits upon such retirement may be
paid in a form the Participant shall choose under the terms of the Plan, but the
accrued monthly pension benefit prior to adjustment, if any, for forms of
benefit payment shall not be less than such benefit in effect prior to
reemployment.
(b) Other Employment. If a Participant has retired under this
----------------
Article and is subsequently reemployed by the Company or an Affiliated
corporation in part-time, casual, seasonal or other employment not constituting
"Section 203(a)(3)(B) service" as described in Section 2530.203-3(c) of the
Department of Labor Regulations, there shall be no suspension or interruption of
retirement payments under the Plan. Such Participant shall not be entitled to
accrue any additional benefits during the period of such reemployment. If the
Participant's employment becomes "Section 203(a)(3)(B) service," his status
under the Plan shall then be determined under subsection (a).
Section 3.13. Increase in Benefits for Retirees and Beneficiaries.
------------ ---------------------------------------------------
As a result of amendments adopted under the Plan and effective January 1, 1988,
the monthly benefit payable to each Participant or beneficiary that was in pay
status prior to January 1, 1987 was increased by the greater of $10 per month or
37% of the monthly benefit being paid immediately before January 1, 1988. This
same increase was applicable to the benefit of any Participant who retired under
the early retirement provisions of the Plan as in effect before January 1, 1987
but who had not yet begun to receive benefits before January 1, 1987 and the
beneficiary or beneficiaries of a Participant who died before January 1, 1987
but the benefit payable as a result of his death had not began before January 1,
1987. With respect to such early retirees or beneficiaries, the percentage
benefit increase described under this Section was based on the benefit amount
being paid immediately before January 1, 1988 or the accrued monthly pension
benefit if the early retirement benefit was not in pay status before January 1,
1988.
ARTICLE 4
NORMAL AND OPTIONAL FORMS OF BENEFIT
------------------------------------
Section 4.1.
-----------
(a) Qualified Joint and Survivor Annuity. Unless a Participant
------------------------------------
elects otherwise in accordance with subsection (b), if the Participant is
married on the first day of the first period for which an amount is payable as
an annuity (or in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the Participant to
such benefit), which date is hereafter referred to as the "annuity starting
date," the accrued monthly pension benefit to which the Participant is entitled
for normal, deferred, early or disability retirement or termination of
employment under Sections 3.1, 3.2, 3.4, 3.5 or 5.1 will be actuarially adjusted
and paid in the form of a qualified joint and survivor annuity.
21
The term, "qualified joint and survivor annuity" means a monthly
benefit that commences immediately on the annuity starting date and which is
actuarially equivalent to the accrued monthly pension benefit payable in the
normal form for an unmarried Participant in Section 4.2 and provided for under
Sections 3.1, 3.2, 3.4, 3.5 or 5.1 and which is payable for the life of the
Participant and upon the Participant's death, if such Participant is survived by
the spouse to whom such Participant was married at the annuity starting date,
for the life of such spouse, in an amount equal to 50% of the benefit payable to
such Participant. In calculating the actuarial equivalent of the accrued
monthly pension benefit to which the Participant is entitled at his annuity
starting date, equivalence shall be determined on the basis of the factors set
forth in Schedule C. The benefit payable to such spouse shall not be terminated
on account of such spouse's subsequent remarriage.
(b) Information to Be Provided Participant. No less than 30 days and
--------------------------------------
no more than 90 days before a Participant's annuity starting date, the Plan
Administrator shall furnish or cause to be furnished to each Participant (by
mail or by personal delivery) a general explanation of the joint and survivor
annuity provisions of the Plan. Such notice shall describe the terms and
conditions of the qualified joint and survivor annuity, explain the right to
elect to waive the joint and survivor annuity and the effect of such election,
explain the rights of the Participant's spouse under the Plan, explain the right
to revoke an election to waive the joint and survivor annuity and the effect of
such revocation, and explain the relative values of the various optional forms
of benefit under the Plan. A Participant may elect (with applicable spousal
consent) to waive any requirement that such written explanation be provided at
least thirty (30) days prior to the Participant's annuity starting date provided
the payment of benefits commences more than seven (7) days after such written
explanation is provided. The Plan Administrator shall also furnish such employee
with notice of the availability of:
(1) a written explanation of the terms and conditions of a joint
and survivor annuity; and
(2) Information concerning the financial effect upon the
particular Participant's benefit of making an election not to receive his
or her benefit in such form.
After receiving such notice, the Participant may request the
additional information and such information shall be mailed or personally
delivered to him or her within 30 days of such request. A Participant may
request such additional information only once.
Any election made under this Section shall be made in writing and
shall clearly indicate that the Participant is electing to receive his benefit
under the Plan in a specific form other than that of a joint and survivor
annuity. Such election shall specifically identify nonspouse beneficiaries,
including any class of beneficiaries or contingent beneficiaries. Any election
not to take benefits in the form of a joint and survivor annuity shall not take
effect unless the Participant's spouse consents in writing to such election and
the spouse's consent acknowledges the effect of such election and is witnessed
by a plan representative or a notary public. Such a consent shall not be
required if it is established to the satisfaction of the Plan Administrator that
the otherwise required consent may not be obtained because there is no spouse,
because the spouse cannot be located, or because of other circumstances as
provided in
22
applicable Treasury Regulations. The election may be revoked during
the election period in writing before the annuity starting date, and another
election (including the election of a qualified joint and survivor annuity) may
be made prior to the annuity starting date.
(c) Election Period. The election period with respect to a
---------------
Participant under this Section shall be the 90 day period ending on the
Participant's annuity starting date. If a Participant requests the additional
information under subsection (b), benefits shall not commence less than 90
calendar days after the date on which such additional information is personally
delivered or mailed to the Participant. If the commencement of payment of
benefits to a Participant is delayed beyond such Participant's normal retirement
date, benefits shall be paid retroactively to his normal retirement date.
For purposes of this Section, a person who terminates his employment
with the Company and has a nonforfeitable right to any portion of an accrued
monthly pension benefit will be considered a Participant.
Section 4.2. Life Annuity Option.
----------- -------------------
(a) Normal Form for Unmarried Participant. Unless a Participant
-------------------------------------
elects otherwise in accordance with the procedures established by the Company,
if a Participant is not married on the date his retirement benefit begins, he
shall receive his accrued monthly pension benefit in the form of monthly
payments for his life only in the amount determined under the applicable
sections of Articles 3 or 5.
(b) Optional Form for Married Participants. A married Participant, in
--------------------------------------
accordance with Section 4.1, may elect the life annuity form of benefit
described in Section 4.2(a) as an optional form of benefit.
Section 4.3. Ten Years Certain Option. In addition, a Participant
----------- ------------------------
may elect to receive a retirement benefit payable monthly during his lifetime
and terminating with the monthly payment coinciding with or next preceding the
date of his death, with the provision that 120 monthly payments shall be made in
any event to him or such beneficiary or beneficiaries as he may have designated.
Such election shall be by written notice to the Company. The reduced retirement
benefit shall be determined under Schedule C.
If a Participant and his beneficiary or beneficiaries die after the
Participant has retired but before a total of 120 monthly payments have been
made to the Participant and his beneficiary, a commuted lump sum payment shall
be made to the estate of the last survivor of the Participant and his
beneficiary or beneficiaries. The calculation of such commuted lump sum value
shall be made based on the interest rate assumption set forth in Section 5.4.
The designation of a beneficiary or beneficiaries under this option may be
changed at any time, and a beneficiary receiving payments under this option may
designate a beneficiary other than his estate.
23
Section 4.4. Small Benefit Cash-Outs.
----------- -----------------------
(a) Payment of Small Benefits. Notwithstanding any other provision
-------------------------
in this Article, if the present value of the accrued monthly pension benefit, as
determined in accordance with the assumptions set forth in Section 5.4, to which
a Participant is entitled is not in excess of five thousand dollars ($5,000),
such value shall be paid to such Participant in a single lump sum.
(b) Direct Rollovers. This subsection 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 options 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.
(c) 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 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).
(d) Eligible Retirement Plan. An eligible retirement plan is an
------------------------
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(e) Distributee. A distributee includes a Participant or former
-----------
Participant. In addition, the Participant's or former Participant's surviving
spouse and the Participant's or former Participant'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.
(f) Direct Rollover. A direct rollover is a payment by the Plan to
---------------
the eligible retirement plan specified by the distributee.
Section 4.5. Limitations on Benefit Distributions. Notwithstanding
----------- ------------------------------------
any other provision of this Plan, all benefit distributions hereunder shall meet
the requirements of this Section.
24
(a) In no event shall the Plan Administrator authorize the payment of
benefits in any manner unless the form, time and manner of benefit distribution
results in the distribution of the entire interest of the Participant -
(1) commencing no later than the required beginning date, and
(2) in accordance with applicable Treasury regulations, over the
life of the Participant or over the lives of such Participant and a
designated beneficiary (or over a period not extending beyond the life
expectancy of such Participant or the life expectancy of such Participant
and a designated beneficiary).
(b) For purposes of this Section, the term "required beginning date"
means April 1 following the later of the calendar year in which the Participant
(A) attains age 70 1/2 or (B) terminates employment with the Company and an
Affiliated Corporation. Distribution to a Participant who is employed by the
Company or its Affiliates and who is a key employee within the meaning of
Section 416(i)(1)(A)(iii) of the Code shall be made no later than the April 1
following the calendar year in which the Participant attains age seventy and
one-half (70 1/2).
(c) Notwithstanding the election of any optional form of benefit
payment hereunder other than a qualified joint and survivor annuity, including a
single life annuity or a ten year certain and life annuity, benefit payment
shall commence no later than the Participant's required beginning date.
(d) For purposes of this Section, the term "required beginning date"
means April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
ARTICLE 5
TERMINATION OF EMPLOYMENT
-------------------------
Section 5.1. Nonforfeitable Interest in Accrued Monthly Pension
----------- --------------------------------------------------
Benefit. A Participant shall have a nonforfeitable right to an accrued monthly
- -------
pension benefit equal to the amount of such benefit multiplied by the percentage
opposite his years of Vesting Service according to the applicable vesting
schedule below:
The vesting schedule applicable to Participants who are credited with
at least one Hour of Service after March 31, 2000 is as follows:
Years of Vesting Service Nonforfeitable Percentage
------------------------ -------------------------
Less than 3 0%
3 or more 100%
The vesting schedule applicable to Participants who are credited with
at least one Hour of Service after December 31, 1988 but who are not credited
with any Hours of Service after March 31, 2000 is as follows:
25
Years of Service Nonforfeitable Percentage
---------------- -------------------------
Less than 4 0%
4 or more 100%
Notwithstanding the preceding, a Participant shall be entitled to 100%
of his accrued monthly pension benefit upon attainment of age 65 while an
employee.
Section 5.2.
-----------
(a) Years of Service. The term "years of service" for purposes of
this Article means the sum of:
(1) His years of service credited through December 31, 1986 under
the terms of the Plan as in effect on such date.
(2) One year of service for each Plan Year after December 31,
1986 in which the employee completes at least 1,000 hours of service, as
hereafter defined.
(b) Years of Service Disregarded. Notwithstanding subsection (a),
----------------------------
years of service before at least a one-year break in service, as hereafter
defined, shall be excluded in the case of an employee who does not have any
nonforfeitable right to his accrued monthly pension benefit and who incurs a
number of consecutive one-year breaks in service equal to or in excess of six.
For purposes of this Plan, the term "one-year break in service" means
any Plan Year during which an employee does not complete any hours of service.
(c) Hour of Service. For all purposes of this Plan, "hours of
---------------
service" shall be credited to employees as follows:
(1) one hour of service for each hour for which an employee is
paid or entitled to payment by the Company for performance of duties during
a computation period;
(2) one hour of service for each hour for which an employee is
paid or entitled to such payment by the Company for reasons other than for
the performance of duties during a computation period, including but not
limited to, payment for vacation, sickness, or disability;
(3) one hour of service for each hour for which an employee
receives back pay (irrespective of mitigation of damages) for hours of
service for which he has not otherwise received credit under this Section.
Such hours of service shall be credited to the computation period to which
the back pay pertains.
26
Crediting of hours of service under (2) above, or under (3) above with
respect to periods described in (2), shall be limited to a maximum of 501 hours
with respect to any single continuous period during which the employee performs
no duties, regardless of whether such period occurs in a single computation
period. No hours shall be credited under (2) or (3) if payment is made or due
to the employee under a plan maintained solely for the purpose of complying with
applicable worker's compensation, unemployment compensation or disability
insurance laws, or if such payment solely reimburses an employee for medical or
medically-related expenses incurred by such employee.
Where an employee is credited with hours of service under (2) above,
the number of hours to be credited and the computation period to which such
hours shall be credited shall be determined under Title 29, Code of Federal
Regulations, Section 2530.200b-2(b) and (c), which regulation is hereby
incorporated into this Plan by reference.
An employee will be credited with hours of service based on his
standard work schedule while he is on a Company approved leave of absence or on
layoff status (not in excess of one year). Such absences may be granted for
sickness, temporary disability, education, or similar reasons. In granting
leaves of absence, all employees under similar circumstances shall be treated
alike. Any employee who interrupts his service with the Company to become, and
who does become, a member of the armed forces of the United States and who has
reemployment rights under applicable laws and complies with the requirements of
such laws as to reemployment, and is reemployed in accordance with such laws
shall be credited with hours of service based on his standard work schedule
during the period of such interruption in service.
The Company shall also take such action as is necessary to have the
Plan comply with Section 414(u) of the Code (regarding the reemployment of
military veterans), and in such regard, and notwithstanding any provision of the
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code.
Section 5.3.
-----------
(a) Form, Time and Manner of Payment. Payment of an accrued monthly
--------------------------------
pension benefit to which a Participant has a nonforfeitable right under this
Article shall begin no later than the first day of the month following the
terminated Participant's normal retirement date, unless he elects otherwise
under subsection (b). A benefit under this Section shall be payable in
accordance with the normal form under Sections 4.1 or 4.2, or in accordance with
an optional form of benefit selected by a Participant under Section 4.3.
(b) Reduced Benefits. If he has completed five years of service, as
----------------
defined in Section 5.2, such terminated Participant may elect, by application to
the Company, to receive a reduced accrued monthly pension benefit, determined
under the second sentence of Section 3.4(b), to begin on the first day of any
month coincident with or following his fifty-fifth birthday.
27
(c) No Death Benefit. If an unmarried employee terminates his
----------------
employment with the Company and dies before payment of his benefit begins, no
benefit shall be payable under the Plan to any party.
Section 5.4. Payment of Small Benefits. If upon termination of
----------- -------------------------
employment the present value of a Participant's accrued monthly pension benefit
does not exceed $5,000, the Company shall direct the Trustee to pay to the
Participant the actuarial equivalent of his entire accrued monthly pension
benefit and the Participant's accrued benefit shall be cancelled. For purposes
of this Section, actuarial equivalence shall be determined as the average of the
appropriate actuarial factors for a male and a female based on the following
assumptions:
Mortality Table - The "applicable mortality table," as such term is defined
---------------
in Section 417(e)(3) of the Code, as amended by the Retirement Protection
Act of 1994.
Interest Rate - The "applicable interest rate" as defined in Section
-------------
417(e)(3) of the Code, as amended by the Retirement Protection Act of 1994.
The "lookback month" (within the meaning of Treasury Regulation (S)
1.417(e)-1T(d)(4)(iii)) for the determination of the applicable interest
rate for any payment made under this Section during a Plan Year shall be
the immediately preceding October. The "stability period" (within the
meaning of Treasury Regulation (S) 1.417(e)-1T(d)(4)(ii)) during which the
applicable interest rate remains constant shall be the Plan Year
immediately succeeding the lookback month.
Notwithstanding the foregoing, if a Participant is reemployed by the
Company before he has incurred six consecutive breaks in service years, such
Participant may repay to the Trustee the amount paid to him under the preceding
sentence within five years after resuming employment with the Company, together
with interest at the rate of five percent per annum, or such other rate as
adjusted by the Secretary of the Treasury under Section 411(c)(2) of the Code,
compounded annually to the date of repayment, and his accrued benefit forfeited
under the preceding sentence shall be restored.
ARTICLE 6
FUNDING
-------
Section 6.1. Company Contributions. The Company shall pay all costs
----------- ---------------------
to provide benefits under the Plan. The Company shall pay over to the Trustee,
under the Trust created pursuant to Article 8, an amount actuarially determined
to satisfy the minimum funding standards of ERISA. There shall be no employee
contributions.
Section 6.2. Forfeitures Reduce Contributions. Any forfeitures
----------- --------------------------------
arising from the termination of employment or death of a Participant or for any
other reason shall be applied against the contributions otherwise required under
the Plan and shall not be applied to increase the benefit any Participant would
otherwise receive under the Plan at any time.
28
Section 6.3. Actuarial Valuations. In determining the amount required
----------- --------------------
to be contributed in order to meet the minimum funding standards of ERISA, the
Pension Committee, relying on an actuarial certification of an "enrolled
actuary," as defined in Section 7701 of the Code, shall certify to the Company
the amount necessary to be contributed by the Company for each year.
ARTICLE 7
ADMINISTRATION OF PLAN
----------------------
Section 7.1. Plan Administrator. The Company shall be the Plan
----------- ------------------
Administrator of the Plan.
Section 7.2. Named Fiduciary. The Company shall be the named
----------- ---------------
fiduciary of the Plan. The Company by action of its Board of Directors or
Executive Committee thereof (a) may designate persons other than itself to carry
out fiduciary responsibilities (other than trustee responsibilities) under the
Plan, and (b) may appoint one or more investment managers to control and manage
(including the power to acquire and dispose of) all or any part of the Trust
assets.
Section 7.3. Claims by Employees and Participants. The Company shall
----------- ------------------------------------
make all determinations as to the right of any Participant or beneficiary to a
benefit. Any denial of a claim for a benefit shall be stated in writing and
shall set forth the specific reasons for the denial in a manner that may be
understood by the claimant. The Company shall afford a reasonable opportunity to
any Participant or beneficiary whose claim has been denied for a full and fair
review of the decision denying the claim.
ARTICLE 8
THE PENSION TRUST
-----------------
Section 8.1. Continuation of Trust. In accordance with the terms of
----------- ---------------------
this Plan, the Company shall continue the separate Agreement of Trust,
establishing a trust under the Plan consisting of such sums of money and such
other property acceptable to the Trustee as heretofore were and hereafter shall
be paid or delivered to the Trustee, together with the earnings and profits
thereon. All such money and other property, all investments made therewith and
the proceeds thereof, and all earnings and profits thereon, less the payments
made by the Trustee, are referred to herein as the "Trust."
Section 8.2. Source of Payments. Except for payments made by the
----------- ------------------
Pension Benefit Guaranty Corporation, if any, benefits payable under this Plan
shall be payable only from assets of the Trust created under Section 8.1 and
then only to the extent that such assets are sufficient and in accordance with
the terms of the Agreement of Trust.
Section 8.3. Payment of Benefits and Expenses. The Company shall
----------- ---------------------------------
direct the Trustee as to the manner and time of all benefit payments to be made
from the Trust. Expenses
29
of administration of the Plan shall be paid from the Trust at the discretion of
the Company, unless the Company shall itself expressly assume such expenses.
ARTICLE 9
RIGHT TO ALTER OR AMEND
-----------------------
Section 9.1. Right to Alter or Amend. Subject to Section 9.2, the
----------- -----------------------
Company by action of its Board of Directors or the Executive Committee thereof
reserves the right to amend, alter, modify or suspend, in whole or in part, any
provision or provisions of this instrument at any time, retroactively or
otherwise.
Section 9.2. Limitations on Power of Amendment. No amendment,
----------- ---------------------------------
alteration, modification or suspension shall
(a) increase the duties or responsibilities of the Trustee without the
Trustee's consent in writing;
(b) vest in the Company any right, title or interest in or to any
property or funds held hereunder;
(c) divert any part of the Trust for purposes other than the exclusive
benefit of the Participants or their beneficiaries;
(d) amend the provisions of Section 10.6 after a Change in Control, as
defined therein;
(e) reduce the accrued benefit of any Participant or decrease a
Participant's vested interest;
(f) eliminate or reduce an early retirement benefit, if any, or
eliminate an optional form of benefit with respect to benefits attributable to
service before the effective date of such amendment, alteration, modification or
suspension;
(g) amend the provisions of Section 10.1 within three years from the
Spin-off Date; or
(h) reduce the rate at which Participants accrue a monthly pension for
service during the three-year period following the Spin-off Date to a rate less
than the applicable rate in effect on the Spin-off Date.
Section 9.3. Form of Amendment. Any such amendment, alteration,
----------- -----------------
modification or suspension shall be set forth in a written instrument adopted by
the Board of Directors of the Company or the Executive Committee thereof.
30
ARTICLE 10
TERMINATION OF PLAN AND TRUST
-----------------------------
Section 10.1. Right to Terminate Fully Reserved. Subject to the
------------ ---------------------------------
provisions of Section 10.6 and the last sentence of this Section 10.1, the
Company reserves the right to revoke or terminate this Plan and the Trust
created pursuant thereto, with respect to its employees in whole or in part, at
any time, or to reduce, suspend or discontinue its contribution hereunder. Such
revocation or termination shall become effective in accordance with the
provisions and regulations of Title IV of ERISA. Notwithstanding the first
sentence of this Section 10.1, the Company has no right during the three-year
period following the Spin-off Date to (a) revoke or terminate this Plan and the
Trust created pursuant thereto, in whole or in part; (b) divert the use of any
assets of this Plan held in the Trust in a manner not provided for by the Plan
in effect on the Spin-off Date (except to the extent permitted in accordance
with Code Sections 401(h) and 420 for purposes of providing for the payment of
benefits for sickness, accident, hospitalization, and medical expenses of
retired employees, their spouses and their dependents); or (c) merge or
consolidate the Plan with, or transfer assets and liabilities to, any other
Plan.
Section 10.2.
------------
(a) Continuation of Plan by Successor. The Plan and the Trust
---------------------------------
hereunder may be continued by any other organization succeeding to the business
of the Company if some or all of the Participants are employed by such successor
organization and if such entity agrees to assume the liabilities of this Plan as
to such Participants.
(b) Merger, Consolidation or Transfer of Assets. The Plan shall not be
-------------------------------------------
merged, consolidated with, or transfer its assets or liabilities to, any other
plan unless each Participant in the Plan would receive (if the Plan then
terminated) a benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
then terminated).
(c) Merger After Change in Control. Any merger, consolidation or
------------------------------
transfer occurring after a Change in Control of the Company shall be subject to
the provisions of Section 10.6.
Section 10.3. Distribution of Assets on Termination of Plan.
------------ ---------------------------------------------
(a) Upon termination or partial termination of the Plan, the rights of
all affected employees to benefits accrued to the date of termination or partial
termination to the extent then funded, shall be nonforfeitable. The assets held
in trust under the Plan and separate Agreement of Trust shall be allocated in
accordance with Section 4044 of ERISA to the extent of the sufficiency of such
assets.
31
(b) Subject to the provisions of Section 10.6, any assets remaining
after the satisfaction of all liabilities to employees and their beneficiaries
due to erroneous actuarial assumptions shall be distributed to the Company.
(c) The allocations referred to in Section 4044 of ERISA may be
implemented through the continuance of the existing Trust, through a new trust
instrument for that purpose, through the purchase of an insurance company
annuity contract or contracts or by a combination of the above.
Section 10.4. Provisions to Prevent Discrimination.
------------ ------------------------------------
(a) Restriction of Benefits. Notwithstanding any other provision of
-----------------------
this Plan, in the event of plan termination, the benefit of any highly
compensated employee (and any highly compensated former employee) shall be
limited to a benefit that is nondiscriminatory under Code Section 401(a)(4) and
the regulations issued thereunder.
(b) Restrictions on Distributions. Annual benefit payments to any
-----------------------------
"restricted employee," as defined below, are restricted to an amount equal to
the payment that would be made on behalf of the employee under a single life
annuity that is the actuarial equivalent of the sum of the employee's accrued
benefit under the Plan and the employee's other benefits under the Plan. The
restrictions in this subsection do not apply, however, if:
(1) After payment to a restricted employee of his "restricted
benefits", as defined below, the value of plan assets equals or exceeds 110% of
the value of current liabilities of the Plan, as defined in Code Section
412(1)(7),
(2) The value of restricted benefits to be paid to a restricted
employee is less than 1% of such current liabilities of the Plan before
distribution, or
(3) The value of the benefits payable to the restricted employee
does not exceed five thousand dollars ($5,000).
(c) Restricted Employee. For purposes of this Section, the term
-------------------
"restricted employee" shall include all highly compensated employees and highly
compensated former employees, as defined in Code Section 414(q). Notwithstanding
the foregoing, the total number of employees whose benefits are subject to
restriction under this Section in any Plan Year shall be limited to a group not
to exceed 25 such employees or former employees. The employees included in such
limited group shall consist of the 25 highly compensated employees and highly
compensated former employees having the greatest compensation, as determined for
purposes of the Plan under Section 3.10(a)(2) in the current or any prior year.
(d) Restricted Benefit. For purposes of this Section, the term
------------------
"restricted benefits" shall include a Participant's accrued monthly pension
benefit, any loans in excess of the amounts set forth in Code Section
72(p)(2)(A), any periodic income or withdrawal values payable to a living
employee and not otherwise included in the Participant's accrued monthly pension
benefit, and any death benefits not provided for by insurance on the
Participant's life.
32
(e) Effective Date. The terms of this Section shall be in effect as
--------------
of the effective date of Section 1.401(a)(4)-5 of the Treasury Regulations. For
periods prior to such effective date, the terms of the Plan adopted to comply
with Section 1.401-4 of the Treasury Regulations as included in the Plan
immediately prior to January 1, 1989 shall remain in effect.
Section 10.5. No Further Liability. Subject to the provisions of
------------ --------------------
Section 10.6, upon the termination of the Plan, the payment to a Participant of
the amount to which he is entitled under Section 10.3 shall be full satisfaction
of any liability to him under any other provisions of this Plan.
Section 10.6. Change in Control.
------------ -----------------
(a) Five-Year Period. The following provisions of this subsection
----------------
(a) shall be applicable for the period commencing on the date on which a Change
in Control (as defined below) occurs and ending on the earlier of the first date
thereafter on which the Plan does not have Excess Assets (as defined below) or
the fifth anniversary of such date (the "Change-in-Control 5-Year Period"):
(1) The rate at which Participants accrue a monthly pension for
service during the Change-in-Control 5-Year Period shall not be less than the
applicable rate in effect immediately prior to the Change in Control.
(2) in the event of any merger or consolidation of the Plan with,
or transfer of assets and liabilities to, any other plan, during the Change-in-
Control 5-Year Period, the accrued monthly pension of each Participant and the
amount payable to or on account of any retired or deceased Participant shall be
increased to the extent that, immediately prior to the date of such merger,
consolidation or transfer, there are no Excess Assets. Subject to the provisions
of Section 3.10, such increases shall be made by allocating the Excess Assets to
the Participant's accrued benefits on a basis that would not be deemed
discriminatory were the Plan not merged or consolidated, or its assets
transferred.
(3) In the event that the Plan is terminated during the
Change-in-Control 5-Year Period, no Plan assets shall directly or indirectly
revert to the Company. To the extent that Excess Assets remain after
satisfaction of all liabilities to or on account of Plan Participants, the
accrued benefit of each Participant and the amount payable to or on account of
any retired or deceased Participant shall be increased. Subject to the
provisions of Section 3.10, such increases shall be made by allocating the
Excess Assets to the Participants' accrued benefits on a basis that would not be
deemed discriminatory were the Plan not terminated.
(b) Two Year Period. The provisions of this subsection (b) shall be
---------------
applicable for the period commencing on the date on which a Change in Control
(as defined below) occurs and ending on the second anniversary of such date (the
"Change in Control 2-Year Period"). Any Participant whose employment with the
Company during the Change in Control 2-Year Period is either involuntarily
terminated (other than a discharge for gross misconduct) or is
33
terminated in lieu of the Participant accepting continued employment with the
Company which involves a significant change in the Participant's terms and
conditions of employment (as defined below) shall:
(1) be deemed to have 5 years of Service for purposes of Article
5;
(2) receive an increase in accrued benefit, in addition to any
other amounts otherwise accrued pursuant to the Plan but subject to the
provisions of Section 3.10, equal to .0025 multiplied by the Participant's
compensation for the last calendar year (as used to determine the Participant's
amount of monthly pension benefit under Article 3), multiplied by the
Participant's years of service, unreduced, pursuant to Section 3.4, because of a
benefit commencement prior to the Participant's 65th birthday;
(3) if the Participant at the time of termination has 10 or more
years of service and is at least age 50 but less than age 55, receive an
increase in accrued benefit, in addition to any other amounts otherwise accrued
pursuant to the Plan (including the increase under subsection (b)(2)) but
subject to the provisions of Section 3.10, equal to $240 per year multiplied by
the Participant's years of service. An increase in accrued benefit pursuant to
this subparagraph shall be unreduced pursuant to Section 3.4, because of a
benefit commencement prior to the Participant's 65th birthday, and shall not
apply to retirement income payable to a Participant or a Participant's
beneficiary after the Participant's 65th birthday; and
(4) if the Participant at the time of termination has 10 or more
years of service and is age 55 or over, receive an increase in accrued benefit,
in addition to any other amounts otherwise accrued pursuant to the Plan
(including the increase under subsection (b)(2)) but subject to the provisions
of Section 3.10, equal to $360 per year multiplied by the Participant's years of
service. An increase in accrued benefit pursuant to this subparagraph shall be
unreduced pursuant to Section 3.4, because of a benefit commencement prior to
the Participant's 65th birthday, and shall not apply to retirement income
payable to a Participant or a Participant's beneficiary after the Participant's
65th birthday.
(c) Definitions.
-----------
(1) Change in Control. A "change in control" shall be deemed to
-----------------
have occurred if:
(A) any "Person", which shall mean a "person" as such term
is used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934 as amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's
then outstanding voting securities;
34
(B) during any period of 24 consecutive months, individuals,
who at the beginning of such period constitute the Company's Board of
Directors ("Board"), and any new director whose election by the Board,
or whose nomination for election by the Company's stockholders, was
approved by a vote of at least two-thirds of the directors (other than
in connection with a contested election) before the beginning of the
period cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve (i) a plan of
complete liquidation of the Company or (ii) the sale or disposition by
the Company of all or substantially all of the Company's assets unless
the acquirer of the assets or its directors shall meet the Conditions
for a merger or consolidation in subparagraphs (D)(i) or (D)(ii); or
(D) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other than:
(i) such a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
70% of the combined voting power of the Company's or such surviving
entity's outstanding voting securities immediately after such merger
or consolidation; or
(ii) such a merger or consolidation which would result in
the directors of the Company who were directors immediately prior
thereto continuing to constitute at least 50% of the directors of the
surviving entity immediately after such merger or consolidation.
In this subparagraph (D), "surviving entity" shall mean only an entity
in which all of the Company's stockholders immediately before such merger or
consolidation become stockholders by the terms of such merger or consolidation,
and the phrase "directors of the Company who were directors immediately prior
thereto" shall include only individuals who were directors of the Company at the
beginning of the 24 consecutive month period preceding the date of such merger
or consolidation, or who were new directors (other than any director designated
by a Person who has entered into an agreement with the Company to effect a
transaction described in subparagraph (A), (C)(ii), (D)(i) or (D)(ii) of this
paragraph) whose election by the Board, or whose nomination for election by the
Company's stockholders, was approved by a vote of at least two-thirds of the
directors before the beginning of such period.
(2) Excess Assets. The term "Excess Assets" means Plan assets
-------------
to the extent that the fair market value of such assets exceeds the lesser of
(i) the present value of all liabilities of the Plan determined on a termination
basis, using the assumptions used by the Pension Benefit Guaranty Corporation,
or (ii) the present value of all liabilities of the Plan
35
determined on the basis of the assumptions in effect on that date for purposes
of determining actuarial equivalencies under the Plan.
(3) Conditions of Employment. A "significant change in a
------------------------
Participant's terms and conditions of employment" shall be deemed to have
occurred when during a Change in Control 2-Year Period:
(i) there is any reduction of the total of the
Participant's salary and incentive bonus, based upon the amounts equal
to the Participant's salary immediately prior to the Change in Control
2-Year Period, and the most recent incentive bonus paid, or fully
accrued and payable, to the Participant immediately prior to the
Change in Control 2-Year Period;
(ii) the location of continued employment is beyond a 30-
mile radius of the Participant's location of employment immediately
prior to the Change in Control 2-Year Period; or
(iii) the Participant is to be paid on an hourly basis.
(d) Notwithstanding any other provisions of the Plan, the provisions
of this Section 10.6 may not be amended during a Change-in-Control 5-Year Period
in a manner which would reduce payments, benefits or benefit accruals for any
Participant.
ARTICLE 11
MISCELLANEOUS PROVISIONS
------------------------
Section 11.1. New York and Applicable Federal Law Govern. This Plan
------------ ------------------------------------------
shall be construed according to the law of the State of New York and applicable
federal law and all provisions hereof shall be administered according to the
law of such state and applicable federal law.
Section 11.2. Headings for Convenience Only. The headings and
------------ -----------------------------
subheadings of the Plan are inserted for convenience and reference only, and
are not to be used in construing this Plan or any provision thereof.
Section 11.3. Rights of All Parties Determined by the Terms of the
------------ ----------------------------------------------------
Plan. The Plan and Trust thereunder are purely voluntary on the part of
----
the Company. The Trust shall be the sole source of benefits and in no event
shall the Company be liable or responsible therefor. This Plan shall be binding
upon the parties hereto and all Participants under the Plan, and upon their
respective heirs, executors, administrators, successors and assigns, and upon
all persons having or claiming to have any interest of any kind or nature in
or under this Plan or the Trust thereunder.
36
Section 11.4.
------------
(a) Spendthrift Clause. Except to the extent permitted by law, none
------------------
of the benefits, payments or proceeds arising out of or by virtue of this Plan
shall be subject to any claim of or any legal process by any creditor of any
Participant, Retirement Participant or beneficiary thereof, and no Participant,
Retirement Participant or beneficiary thereof shall have any right to
anticipate, alienate, encumber or assign any right or benefit arising out of or
by virtue of this Plan.
(b) Qualified Domestic Relations Orders. Notwithstanding anything in
-----------------------------------
subsection (a), upon receipt of a domestic relations order made pursuant to a
State domestic relations law, the Plan Administrator shall:
(1) promptly notify the Participant and any other alternate
payee, as defined by Section 414(p)(8) of the Code, of the receipt of such order
and the Plan's procedures for determining the qualified status of the domestic
relations order;
(2) determine within a reasonable period after receipt of such
order, whether the domestic relations order is a qualified domestic relations
order, as defined in Section 414(p) of the Code, and notify the Participant and
any other alternate payee of such determination; and
(3) hold in a separate account under the Plan the amounts which
would have been payable to the alternate payee during such period of
determination, as specified in paragraph (2), if the order had been determined
to be a qualified domestic relations order.
If the Plan Administrator determines that the order is a qualified
domestic relations order, then it shall direct the Trustee to comply with the
terms of the order and shall release the amount held in the separate account to
the alternative payee.
Section 11.5. Notice to Employees. Notice of the existence and the
------------ -------------------
provisions of this Plan and amendments thereto shall be communicated to all
persons who are or who become employees of the Company who become eligible to
participate in the Plan.
Section 11.6. No Employment Rights Created. The creation and
------------ ----------------------------
maintenance of this Plan shall not confer any right to continued employment on
any employee, and all employees shall remain subject to discharge to the same
extent as if it had never been established.
Section 11.7. Diversion from Employees Prohibited. Neither the
------------ -----------------------------------
corpus nor the income of the Trust, nor any part thereof, shall be diverted for
any purpose other than for the benefit of the Participants hereunder or their
beneficiaries, except:
(a) In the case of a contribution made by the Company by a mistake of
fact, such contribution may be returned to the Company within one year after its
payment in accordance with Section 403(c)(2)(A) of ERISA; and
37
(b) All contributions made by the Company are conditioned on the
deductibility of such amount under Section 404 of the Code, and shall be
returned to the Company to the extent of any disallowance of such a deduction
within one year after the disallowance.
Section 11.8. Right to Judicial Accounting. Nothing contained in
------------ ----------------------------
this Plan shall be construed as depriving the Trustee of the right to have a
judicial settlement of its accounts. Upon any proceeding by the Trustee for a
judicial settlement of its accounts or for instructions, the only necessary
party thereto in addition to the Trustee shall be the Company. None of the
Participants or other beneficiaries of the Plan shall have any right to compel
an accounting, judicial or otherwise, by the Trustee, and all of them shall be
bound with respect to all accounts submitted by the Trustee to the Company as
provided by this Plan and Agreement of Trust.
Section 11.9. Masculine Gender to Include Feminine and Singular to
------------ ----------------------------------------------------
Include Plural. Whenever any words are used herein in the masculine gender
- --------------
they shall be construed as though they were also used in the feminine gender in
all cases where they would so apply, and whenever any words are used herein in
the singular form they shall be construed as though they were used in the plural
form in all cases where they would so apply.
Section 11.10. Forfeiture on Account of Inability to Locate
------------- --------------------------------------------
Participant or Beneficiary. Notwithstanding any other provision of this Plan,
- --------------------------
if a benefit becomes payable to a Participant or his beneficiary and if the
Company, after all reasonable efforts, is unable to locate such Participant or
beneficiary within one year of the date such benefit became payable, the benefit
payable to the Participant or beneficiary shall be forfeited. If, after such
forfeiture occurs, the Participant or his beneficiary makes a claim for such
benefit, such benefit shall then be reinstated and paid in accordance with such
claim.
Section 11.11. Assignment. On or prior to the Spin-off Date, The
------------- ----------
Quaker Oats Company ("Quaker") and Fisher-Price, Inc. anticipate they will enter
into a Distribution Agreement which, by its terms, is expected to provide for
Quaker's assignment of all rights and responsibilities under this Plan to
Fisher-Price, Inc. Pursuant to the Distribution Agreement, and in accordance
with this Plan, Fisher-Price, Inc. will assume all obligations, perform all
undertakings, and abide by the covenants imposed by this Plan from and after the
Spin-off Date.
ARTICLE 12
TOP-HEAVY PROVISIONS
--------------------
Section 12.1. Application of Top-Heavy Rules. If this Plan is a Top-
------------ ------------------------------
Heavy Plan, as described below, with respect to a Plan Year, the provisions of
Section 12.3 shall become applicable for such Plan Year, notwithstanding any
other provision of the Plan to the contrary.
38
Section 12.2. Definition of Top-Heavy Plan.
------------ ----------------------------
(a) This Plan shall be considered a "Top-Heavy" Plan for a Plan Year
(beginning with the 1984 Plan Year) if on the last day of the preceding Plan
Year ("Determination Date") the "Cumulative Accrued Benefits", as hereafter
defined, of "Key Employees", as hereafter defined, exceed 60% of the Cumulative
Accrued Benefits, of all Participants under the Plan or under all plans included
in an Aggregation Group, as hereafter defined, if the Plan is included in an
Aggregation Group.
(b) For purposes of subsection (a), the terms listed below shall have
the meaning indicated:
(1) The term "Key Employee" means any employee (including a
beneficiary of such employee) who is a Key Employee as defined in Section 416(i)
of the Code and the regulations thereunder.
(2) The term "Cumulative Accrued Benefit" with respect to any
Participant means the present value of the Participant's Accrued Benefit under
the Plan, determined based on the actuarial assumptions promulgated by the
Pension Benefit Guaranty Corporation for the purpose of determining the
sufficiency of a plan's assets if it were terminated on the Valuation Date. For
purposes of this Section, the term "Cumulative Accrued Benefit" shall not
include the value of the accounts nor the present value of the cumulative
accrued benefits of any Participant who has not performed services for the
Company at any time during the five-year period ending on the Determination
Date, plus the sum of the value of the defined contribution accounts for such
Participant under all defined contribution plans included in an Aggregation
Group. An Aggregation Group shall include (i) each plan of the Company in which
a Key Employee is a Participant, and (ii) each other plan of the Company which
enables any plan in which a Key Employee participates to meet the requirements
of Sections 401(a)(4) and 410 of the Code. Any other plan of the Company may be
included in an Aggregation Group if such Aggregation Group would continue to
meet the requirements of Sections 401(a)(4) and 410 of the Code with respect to
such plan being taken into account. In computing such present value, any
distribution made with respect to a Participant from the Plan during the five-
year period ending on the Determination Date and any distribution under a
terminated plan which if it had not been terminated would have been required to
be included in an Aggregation Group shall be added to the amount determined
under the preceding sentence, except to the extent that any such distributions
made after the Valuation Date and before the Determination Date are included in
the Cumulative Accrued Benefit. For purposes of this Section, if an Aggregation
Group includes two or more defined benefit plans, the same actuarial assumptions
as prescribed in this Section shall be used with respect to all such plans.
(3) The term "Accrued Benefit" means the accrued monthly pension
benefit to which a Participant would be entitled under Article 3, at normal
retirement date if he terminated his employment on the Valuation Date
immediately preceding the Determination Date with respect to which such Accrued
Benefit is to be calculated.
39
(4) Valuation Date. The term "Valuation Date" means, with
respect to each Plan Year, January 1.
Section 12.3. Top Heavy Rules. If the Plan is top-heavy for a Plan
------------ ---------------
Year, the following rules shall apply during such Plan Year notwithstanding
any provision of the Plan to the contrary:
(a) Nonforfeitable Benefit. If a Participant terminates his
----------------------
employment prior to his death or retirement during a Plan Year in which the Plan
is a Top-Heavy Plan, he shall have a nonforfeitable right to his accrued monthly
pension benefit under Article 3 in accordance with the following schedule:
Years of Services Nonforfeitable Percentage
----------------- -------------------------
2 but less than 3 20%
3 but less than 4 40%
4 or more 100%
If the Plan ceases to be a Top-Heavy Plan, the nonforfeitable
percentage of each Participant who completed at least three years of service as
of the end of the last Plan Year in which the Plan was a Top-Heavy Plan shall
continue to be determined under this subsection. With respect to other
Participants, only the Participant's accrued monthly pension benefit at the end
of the last Plan Year in which the Plan was a Top-Heavy Plan shall be subject to
this subsection.
(b) Minimum Accrued Monthly Pension Benefit. The minimum accrued
---------------------------------------
monthly pension benefit of a Participant shall be equal to:
(1) 2% of his or her average monthly compensation during his five
highest paid consecutive calendar years of service with the Company or an
affiliated corporation, multiplied by
(2) each of the first ten years of service in which the Plan is a
Top-Heavy Plan.
Notwithstanding the preceding, "3%" shall be substituted for "2%"
above for any Plan Year during which any Participant in the Plan receives any
allocation of employer contributions, forfeitures or voluntary nondeductible
contributions in a defined contribution plan maintained by the Company or an
affiliated corporation.
For purposes of this Section, "compensation" has the same meaning as
defined in Code Section 415(c)(3) and Section 1.415-2(d) of the Treasury
Regulations, but including amounts contributed by the Company pursuant to a
salary reduction agreement which are excludible from the Participant's gross
income under Code Section 125, 402(a)(8), 402(h) or 403(b).
40
(c) Adjustments for Super Top-Heavy Plans. If the Plan is a "super
-------------------------------------
top-heavy plan" for a Plan Year, "1.0" shall be substituted for "1.25" in
calculating plan fractions in accordance with Section 415(e) of the Code. A plan
is a super top-heavy plan if, as of the determination date, the plan would meet
the definition in this Section for a Top-Heavy Plan if 90% were substituted for
60% in such definition.
IN WITNESS WHEREOF, Fisher-Price, Inc. has executed this Plan by its
duly authorized officer on the date indicated.
FISHER-PRICE, INC. Attest:
By: /s/ Alan Kaye Date: 10/13/00
------------------------ --------------- -----------------------
41
SCHEDULE A
----------
Section 3.3.
------------
(a) Accrued Monthly Pension Benefit. A Participant's accrued monthly
-------------------------------
pension benefit on retirement or other termination of employment shall be an
amount equal to the sum of:
(1) one and one-half percent (1.5%) of his final average monthly
compensation as computed under subsection (b) below as of December 31, 1986,
less one and one-half percent (1.5%) of his primary Social Security amount as
defined in subsection (d) below multiplied by the Participant's Benefit Accrual
Years, determined under Section 3.8(a) of this Schedule A as of December 31,
1986; and
(2) three-fourths percent (0.75%) of his final average monthly
compensation as computed under subsection (b) below as of December 31, 1986 less
three-fourths percent (0.75%) of his primary Social Security amount as defined
in subsection (d) below, multiplied by the Participant's Past Credited Service,
as defined in Section 3.8(b) of this Schedule A.
(b) Final Average Monthly Compensation. The term "final average monthly
----------------------------------
compensation" for a Participant means the amount determined by adding the
monthly compensation paid to him over the 60 consecutive calendar months in
which he has received his highest monthly compensation during the 120 calendar
months ending on December 31, 1986 and by dividing the total so determined by
60, or in the case of a Participant who has received such compensation over
fewer than 60 months, by dividing his total compensation by the months over
which he has received such compensation.
For a Participant who receives compensation over at least 60 months,
monthly compensation shall be determined for the Plan Year in which the
Participant retires or otherwise terminates employment by his actual
compensation for each such calendar month, and for the months of each preceding
Plan Year by dividing the Participant's annual compensation for such year by
twelve.
If for any of the months used to determine a Participant's final
average monthly compensation such Participant was employed on a regular part-
time schedule, the compensation rate of such Participant for that period shall
be multiplied by a full-time schedule.
(c) Compensation. The term "compensation" of a Participant for any period
------------
means the total amount of wages as defined in Section 3121 of the Code, without
regard to the dollar limitation of Section 3121(a) of the Code, which are paid
to such Participant by the Division during such period.
Notwithstanding the preceding sentence, compensation shall not include
amounts representing cash or merchandise prizes awarded for suggestions or
ideas, commissions, special allowances, expense reimbursements, severance pay,
pay for inactive status pending retirement, any profits under stock option
plans, any payments out of the short term or long term disability
42
plans or sickness and accident plans, any compensation the receipt of which is
deferred pursuant to a plan or contract, or any amounts representing benefits
under the Profit Sharing Plan.
(d) Primary Social Security Amount. The term "primary Social Security
------------------------------
amount" shall mean the amount payable under the Old Age, Survivor's, and
Disability Income Act to a Participant at age 65 without regard to any benefit
payable to his spouse on account of his employment. Such benefit shall be
calculated under the provisions of the law as in effect in 1986, assuming that
the Participant had no earnings taken into account for purposes of such
calculation after December 31, 1986, and further assuming that earnings between
1982 and 1986 shall be actual earnings taken into account under the Plan and
that earnings for years prior to 1982 shall be estimated on the basis of
increases in the average national wage as determined by the Social Security
Administration, using as a starting point for such calculation the average of
the Participant's earnings between 1982 and 1986; provided, however, that if a
Participant had no earnings in any year during such period, such year shall not
be included in the calculation of the average.
In lieu of the Social Security amount calculated hereunder, a
Participant shall have the right to furnish the Plan Administrator with adequate
evidence of his earnings history for Social Security purposes and the Plan
Administrator shall calculate an actual Social Security benefit based on the law
as in effect in 1986 and assuming no earnings after 1986. Such evidence must be
presented to the Plan Administrator within a reasonable time following the later
of the date of separation of service or the date the Participant is notified of
the benefit to which he is entitled.
Section 3.8.
------------
(a) Benefit Accrual Years. A Participant shall be credited with Benefit
---------------------
Accrual Years and fractions thereof for service on and after January 1, 1976
(computed to the nearest one-tenth (1/10th)) as follows:
(1) One Benefit Accrual Year for each Plan Year in which he completes
at least 1,600 hours of service, as defined in Section 5.2(c);
(2) A fraction of a Benefit Accrual Year for each Plan Year in which
he completes less than 1,600 hours of service, the numerator of which is his
total hours of service, as defined in Section 5.2(c), completed in such year and
the denominator of which is 1,600.
(b) Past Credited Service. For purposes of this Article, a Participant
---------------------
hired as a regular employee prior to January 1, 1976 and who was a regular
employee on such date shall be credited with Past Credited Service in terms of
years and fractions thereof (computed to the nearest one-tenth (1/10th)) for the
period beginning with his most recent date of hire and ending on December 31,
1975.
(c) Disregarding Years of Service. Notwithstanding subsections (a) and
-----------------------------
(b), Benefit Accrual Years, Past Service Credit and fractions thereof earned
during years of service disregarded under Section 5.2(b), shall be disregarded
under this Section.
43
Section 5.1. Nonforfeitable Interest in Accrued Monthly Pension
------------ --------------------------------------------------
Benefit. A Participant shall have a nonforfeitable right to an accrued monthly
- -------
pension benefit equal to the amount of such benefit multiplied by the percentage
below opposite his years of service according to the vesting table below:
Nonforfeitable
Years of Service Percentage
less than 4 0%
4 but less than 5 40%
5 but less than 6 50%
6 but less than 7 60%
7 but less than 8 70%
8 but less than 9 80%
9 but less than 10 90%
10 or more 100%
Notwithstanding the preceding, a Participant shall be entitled to 100% of his
accrued monthly pension benefit upon attainment of age 65.
44
SCHEDULE B
----------
Profit Sharing Annuity Increase
- -------------------------------
The accrued benefit referred to in Section 3.3(a)(2) shall be
separately calculated for Participants as follows:
(1) An amount will be calculated only for a Participant who received
an allocation under the Profit Sharing Plan for any of the years from 1976
through 1983 and who is (1) actively employed by the Division or the Company on
December 11, 1987 or (2) a Participant who terminated his employment during 1987
after (i) both the attainment of age 55 and the completion of five years of
service, (ii) completion of 25 years of service, (iii) death, or (iv) disability
retirement under Section 3.5.
(2) For each year from 1976 through 1983 for which a Participant
identified in (1) above received an allocation in the Profit Sharing Plan, there
shall be calculated an amount equal to the additional amount that would have
been allocated to such Participant if Division Profits under the Profit Sharing
Plan had been calculated with no reduction for contributions to this Plan.
(3) There shall then be calculated a hypothetical accumulated account
balance for each Participant hereunder based on the assumption that each
Participant has a hypothetical account to which there is credited the amounts
calculated in (2) above as of the January 1 immediately following the Plan Year
with respect to which the contribution was made plus interest on such amount
compounded annually at a rate equivalent to the blended rate of return for the
Guaranteed Interest Rate Fund within the Profit Sharing Plan for each year
through December 31, 1986.
(4) The hypothetical account balance calculated under (3) above shall
be converted as of December 31, 1986 to an additional accrued monthly pension
benefit hereunder which is actuarially equivalent to the lump sum amount in the
hypothetical account on December 31, 1986 based on the 1984 Unisex Pension
Mortality Table (set back two years) and an interest assumption of 7%.
45
SCHEDULE C
----------
Actuarial equivalents for benefit options:
Qualified Joint and 50% Survivor Annuity. The reduced pension payable to the
- ----------------------------------------
Participant shall be 92% of the accrued monthly pension benefit plus 0.4% for
each year to the nearest year that the contingent annuitant is older than the
Participant or minus 0.4% for each year to the nearest year that the contingent
annuitant is younger than the Participant.
Ten Year Certain Option. The reduced pension payable to the Participant shall
- -----------------------
be 93% of the accrued monthly pension benefit plus 0.5% for each year to the
nearest year that the Participant is younger than age 65 (not to exceed 100%) or
minus 1.0% for each year to the nearest year that the Participant is older than
age 65.
46
SCHEDULE D
----------
Reduction Factors for Disability Benefits
- -----------------------------------------
Reduction Factors for disability benefit under Section 3.5(b) for benefits
starting prior to age 55:
Benefit Benefit
Starting Reduction Starting Reduction
Age Factor Age Factor
54 .340 29 .028
53 .280 28 .025
52 .238 27 .023
51 .215 26 .021
50 .195 25 .019
49 .176 24 .018
48 .160 23 .016
47 .145 22 .015
46 .132 21 .014
45 .120 20 .013
44 .109
43 .099
42 .090
41 .082
40 .075
39 .068
38 .062
37 .057
36 .052
35 .047
34 .043
33 .040
32 .036
31 .033
30 .030
47
SCHEDULE E
----------
1990 Retirement Incentive
- -------------------------
An additional accrued benefit shall be separately calculated and payable
for certain eligible Participants as follows:
(1) An additional accrued benefit shall be payable only for a Participant
who meets the following requirements:
(a) As of May 1, 1990, the Participant is a salaried employee of the
Division and is located at the Division's headquarters in East Aurora, New York;
(b) As July 31, 1990, the Participant will have attained at least age
55, and completed at least five years of service, as defined in Section 5.2 (the
age and service requirements for early retirement under Section 3.4);
(c) The Participant is not a highly compensated employee, within the
meaning of Code Section 414(q), during the Plan Year ending December 31, 1990
(without consideration of the preceding Plan Year) for purposes of making
determination as otherwise provided for in Code Section 414(q); and
(d) The Participant either:
(i) Terminates employment on or before June 28, 1990; or
(ii) (A) Submits to the Company on or before June 28,
1990, a written election in accordance with procedures established by
the Company that he will terminate employment on or before July 31,
1990; and
(B) Terminates employment on or before July 31, 1990.
(2) For each Participant identified in (1) above, his accrued monthly
pension benefit for all Plan purposes except as otherwise herein provided, shall
include the amount equal to the sum of (a) and (b), adjusted in accordance with
(c), and reduced by (d) as follows:
(a) The Participant's accrued monthly benefit determined in accordance
with Section 3.3 as of July 31, 1990 and without regard to the provisions of
this Schedule E.
(b) One-third (four times one-twelfth) of:
(i) 1.1% multiplied by his compensation up to covered
compensation, as defined in Section 1.4, for the Plan Year ended in
December 31, 1989, plus
48
(ii) 1.8% multiplied by his compensation in excess of
covered compensation, as defined in Section 1.04, for the Plan year
ended December 31, 1989.
(c) The sum of (a) and (b) above shall be reduced by one-half percent
(.5%) per month for each month by which August 1, 1994 precedes the first day of
the month coincident with or following such Participant's sixty-fifth (65th)
birthday.
(d) The amount determined pursuant to (a) above reduced by one-half
percent (.5%) per month by which August 1, 1990 precedes the first day of the
month coincident with or following such Participant's sixty-fifth (65th)
birthday.
(3) The amount determined pursuant to (2) above shall be payable
commencing effective as of August 1, 1990, without further adjustment under
Section 3.4(b).
(4) The amount determined pursuant to (2) above shall be considered a
change in the benefit structure of the Plan for purposes applying the provisions
of Section IV of Model Amendment I of the Plan, as adopted in accordance with
Internal Revenue Service Notice 87-2.
(5) In addition to the normal form of benefits provided under Section
4.1 and 4.2 (immediate joint and survivor annuity for married Participants and
immediate straight life annuity for unmarried participants), the Participant may
also elect to receive the amount determined pursuant to (2) above as an
immediate lump sum payment, and for married participants as an immediate life
annuity described in Section 4.2(a), subject to the election, notice, and waiver
requirements provided for in Section 4.1 and 4.2 with respect to electing an
optional form of benefit. No other optional forms of benefits provided under
the Plan shall apply to such amount. For purposes of the foregoing, the lump
sum value shall be determined using the 1971 Group Annuity Mortality Tables
(compiled on a unisex basis weighted 60% male and 40% female) and the interest
rate shall be such rate as of the date of the distribution used by the Pension
Benefit Guaranty Corporation for purposes of determining the present value of a
lump sum distribution of plan termination.
49
SCHEDULE F
----------
1998 RETIREMENT INCENTIVE
An additional accrued benefit under the East Aurora Retirement
Incentive Program or the Murray Retirement Incentive Program shall be separately
calculated and payable for certain eligible Participants as follows:
East Aurora Retirement Incentive Program
- ----------------------------------------
(1) An additional accrued benefit shall be payable only for a
Participant who meets the following requirements:
(a) As of February 16, 1998, the Participant is an employee of
Fisher-Price, Inc. or Mattel Operations-East Aurora;
(b) As of April 30, 1998, the Participant will have attained at
least age 55, and completed at least five years of service, as defined in
Section 5.2 (the age and service requirements for early retirement under Section
3.4);
(c) The Participant is not a highly compensated employee, within
the meaning of Code Section 414(q), for the Plan Year ending December 31, 1998;
and
(d) The Participant either:
(i) Terminates employment on or before April 30, 1998; or
(ii) Submits to the Company on or before April 30, 1998, a
written election in accordance with procedures established by the
Company that he or she will terminate employment on or before April
30, 1998.
(2) For each Participant identified in (1) above, his or her accrued
monthly pension benefit for all Plan purposes except as otherwise herein
provided, shall include the amount equal to the sum of (a) and (b), adjusted in
accordance with (c), and reduced by (d) as follows:
(a) The Participant's accrued monthly benefit determined in
accordance with Section 3.3 as of April 30, 1998, without regard to the
provisions of this Schedule F.
(b) One-Fourth (three times one-twelfth) of:
(i) 1.4% multiplied by his compensation up to covered
compensation, as defined in Section 1.4, for the Plan Year ended
December 31, 1997, plus
50
(ii) 1.8% multiplied by his compensation in excess of covered
compensation, as defined in Section 1.04, for the Plan year ended
December 31, 1997.
(c) The sum of (a) and (b) above shall be reduced by one-half
percent (.5%) per month for each month by which May 1, 2001 precedes the first
day of the month coincident with or following such Participant's sixty-fifth
(65th) birthday.
(d) The amount determined pursuant to (a) above reduced by one-
half percent (.5%) per month by which May 1, 1998 precedes the first day of the
month coincident with or following such Participant's sixty-fifth (65th)
birthday.
(3) The amount determined pursuant to (2) above shall be payable
commencing effective as of May 1, 1998, without further adjustment under Section
3.4(b).
(4) In addition to the normal form of benefits provided under Section
4.1 and 4.2 (immediate joint and survivor annuity for married Participants and
immediate straight life annuity for unmarried participants), the Participant may
also elect to receive the amount determined pursuant to (2) above as an
immediate lump sum payment, and for married participants as an immediate life
annuity described in Section 4.2(a), subject to the election, notice, and waiver
requirements provided for in Section 4.1 and 4.2 with respect to electing an
optional form of benefit. No other optional forms of benefits provided under
the Plan shall apply to such amount. For purposes of the foregoing, the lump
sum value shall be determined using the 1971 Group Annuity Mortality Tables
(compiled on a unisex basis weighted 60% male and 40% female) and the interest
rate shall be such rate as of January 1, 1998 used by the Pension Benefit
Guaranty Corporation for purposes of determining the present value of a lump sum
distribution on plan termination.
Murray Retirement Incentive Program
- -----------------------------------
(1) An additional accrued benefit shall be payable only for a
Participant who meets the following requirements:
(a) As of May 1, 1998, the Participant is an employee of Mattel
Operations - Murray;
(b) As of October 31, 1998, the Participant will have attained at
least age 55, and completed at least five years of service, as defined in
Section 5.2 (the age and service requirements for early retirement under Section
3.4);
(c) The Participant is not a highly compensated employee, within the
meaning of Code Section 414(q), for Plan Year ending December 31, 1998; and
(d) The Participant either:
(i) Terminates, employment on or before October 31, 1998; or
51
(ii) Submits to the Company on or before October 9, 1998, a
written election in accordance with procedures established by the
Company that he or she will terminate employment on or before October
31, 1998.
(2) For each Participant identified in (1) above, his or her accrued
monthly pension benefit for all Plan purposes except as otherwise herein
provided, shall include the amount equal to the sum of (a) and (b), adjusted in
accordance with (c), and reduced by (d) as follows:
(a) The Participant's accrued monthly benefit determined in
accordance with Section 3.3 as of October 31, 1998 and without regard to the
provisions of this Schedule F .
(b) One-Fourth (three times one-twelfth) of:
(i) 1.4% multiplied by his compensation up to covered
compensation, as defined in Section 1.4, for the Plan Year ended
December 31, 1997, plus
(ii) 1.8% multiplied by his compensation in excess of
covered compensation, as defined in Section 1.04, for the Plan year
ended December 31, 1997.
(c) The sum of (a) and (b) above shall be reduced by one-half
percent (.5%) per month for each month by which November 1, 2001 precedes the
first day of the month coincident with or following such Participant's sixty-
fifth (65th) birthday.
(d) The amount determined pursuant to (a) above reduced by one-
half percent (.5%) per month by which November 1, 1998 precedes the first day of
the month coincident with or following such Participant's sixty-fifth (65th)
birthday.
(3) The amount determined pursuant to (2) above shall be payable
commencing effective as of November 1, 1998, without further adjustment under
Section 3.4(b).
(4) In addition to the normal form of benefits provided under Section
4.1 and 4.2 (immediate joint and survivor annuity for married Participants and
immediate straight life annuity for unmarried participants), the Participant may
also elect to receive the amount determined pursuant to (2) above as an
immediate lump sum payment, and for married participants as an immediate life
annuity described in Section 4.2(a), subject to the election, notice, and waiver
requirements provided for in Section 4.1 and 4.2 with respect to electing an
optional form of benefit. No other optional forms of benefits provided under
the Plan shall apply to such amount. For purposes of the foregoing, the lump
sum value shall be determined using the 1971 Group Annuity Mortality Tables
(compiled on a unisex basis weighted 60% male and 40% female) and the interest
rate shall be such rate as of January 1, 1998 used by the Pension Benefit
Guaranty Corporation for purposes of determining the present value of a lump sum
distribution on plan termination.
52
SCHEDULE G
----------
2000 RETIREMENT INCENTIVE
An additional benefit under the Fisher-Price Voluntary Early Retirement
Incentive Program shall be separately calculated and payable for certain
eligible Participants as follows:
(1) The additional benefit shall be payable only for a Participant who
meets the following requirements:
(a) As of September 11, 2000, the Participant is an employee of
Fisher-Price, Inc. or Mattel Operations-East Aurora;
(b) As of December 31, 2000, the Participant will have attained at
least age 52, and completed at least five years of Vesting Service, as
defined in Section 1.4(bb);
(c) The Participant is not a highly compensated employee, within the
meaning of Code Section 414(q), for the Plan Year ending December 31, 2000;
and
(d) The Participant:
(i) Terminates employment on or before December 31, 2000; and
(ii) Submits to the Company on or before December 6, 2000 a
written election and general release in accordance with procedures
established by the Company that he or she will terminate employment on
or before December 31, 2000 and does not thereafter revoke such
election and general release.
(2) For each Participant identified in (1) above, his or her monthly
pension benefit for all Plan purposes, except as otherwise herein provided,
shall include an "Enhanced Retirement Benefit" and a "REMBA Benefit." An
eligible Participant's Enhanced Retirement Benefit shall be equal to the sum of
(a) and (b) below, adjusted in accordance with (c) below, and offset by (d)
below. An eligible Participant's "REMBA Benefit" shall be equal to the amount
described in (e) below.
(a) The Participant's accrued monthly benefit determined in accordance
with Section 3.3 as of December 31, 2000, without regard to the provisions
of this Schedule G.
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(b) One-fourth (three times one-twelfth) of:
(i) 1.4% multiplied by the Participant's "Adjusted Incentive
Compensation" (as defined below) up to 150.1% of Covered
Compensation, as defined in Section 1.4(h), rounded to the next
highest multiple of $100, for the Plan Year ended December 31,
1999, plus
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(ii) 1.8% multiplied by the Participant's Adjusted Incentive
Compensation in excess of 150.1% of Covered Compensation, as
defined in Section 1.4(h), rounded to the next highest multiple
of $100, for the Plan Year ended December 31, 1999.
For purposes of this paragraph (b), a Participant's "Adjusted Incentive
Compensation" means the Participant's compensation as defined in Section
3.3(b) for the Plan Year ended December 31, 1999 multiplied by 103%.
(c) The sum of (a) and (b) above shall be reduced by one-half percent
(.5%) per month for each month by which January 1, 2004 precedes the first
day of the month coincident with or following such Participant's sixty-
fifth (65th) birthday.
(d) The amount determined pursuant to (a) above reduced by one-half
percent (.5%) per month by which January 1, 2001 precedes the first day of
the month coincident with or following such Participant's sixty-fifth
(65th) birthday; provided, however, (i) in no event shall the amount
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determined pursuant to (a) above be reduced by more than 60% and (ii) the
offset described in this paragraph (d) shall apply only for the period from
and after the date the Participant attains age 55.
(e) An additional monthly annuity benefit payable as of January 1,
2001 which is actuarially equivalent to 130% of the lump sum amount that
would otherwise have been credited to the Participant's REMBA Plan Account
if the Participant had remained employed through, and retired as of,
December 31, 2003. For purposes of the foregoing, such lump sum amount
shall be converted to a monthly annuity benefit based on the 1983 Group
Annuity Mortality Table (compiled on a unisex basis weighted 50% male and
50% female) and an interest assumption of 5.72%.
(3) An eligible Participant's Enhanced Retirement Benefit and REMBA Benefit
shall be payable commencing effective as of January 1, 2001, without further
adjustment under Section 3.4(b).
(4) In addition to the normal form of benefits provided under Section 4.1
and 4.2 (immediate joint and survivor annuity for married Participants and
immediate straight life annuity for unmarried Participants), the Participant may
also elect to receive his or her Enhanced Retirement Benefit and REMBA Benefit
as an immediate lump sum payment, and for married Participants as an immediate
life annuity described in Section 4.2(a), subject to the election, notice, and
waiver requirements provided for in Section 4.1 and 4.2 with respect to electing
an optional form of benefit. An eligible Participant shall be entitled to make
separate method of payment elections for the Participant's Enhanced Retirement
Benefit and REMBA Benefit. No other optional forms of benefits provided under
the Plan shall apply to a Participant's Retirement Benefit and REMBA Benefit.
For purposes of the foregoing, the lump sum value of an eligible Participant's
Enhanced Retirement Benefit and REMBA Benefit shall be determined using the 1983
Group Annuity Mortality Table (compiled on a unisex basis weighted 50% male and
50% female) and an interest assumption of 5.72%, the rate for 30-year U.S.
Treasury bonds for August, 2000.
54