EXHIBIT 10.45
MATTEL, INC.
PERSONAL INVESTMENT PLAN
October 1, 2001 Restatement
TABLE OF CONTENTS
Page
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ARTICLE I GENERAL..............................................................1
1.1 Plan Name............................................................1
1.2 Plan Purpose.........................................................1
1.3 Effective Date.......................................................1
1.4 Plan Mergers.........................................................1
ARTICLE II DEFINITIONS.........................................................3
2.1 Accounts.............................................................3
2.2 Affiliated Company...................................................5
2.3 After-Tax Contributions..............................................5
2.4 Before-Tax Contributions.............................................5
2.5 Beneficiary..........................................................6
2.6 Board of Directors...................................................6
2.7 Code.................................................................6
2.8 Committee............................................................6
2.9 Company..............................................................6
2.10 Company Contributions................................................6
2.11 Company Matching Contributions.......................................6
2.12 Company Stock........................................................6
2.13 Compensation.........................................................7
2.14 Deferral Limitation..................................................8
2.15 Distributable Benefit................................................9
2.16 Early Retirement Date................................................9
2.17 Effective Date.......................................................9
2.18 Eligible Employee....................................................9
2.19 Employee.............................................................9
2.20 Employment Commencement Date........................................10
2.21 ERISA...............................................................10
2.22 Fort Wayne Plan.....................................................10
2.23 F-P Savings Plan....................................................10
2.24 Highly Compensated Employee.........................................10
2.25 Hour of Service.....................................................13
2.26 Investment Manager..................................................14
2.27 Murray Hourly Employee..............................................14
2.28 Normal Retirement...................................................14
2.29 Normal Retirement Date..............................................14
2.30 Participant.........................................................14
2.31 Participation Commencement Date.....................................14
2.32 Participating Company...............................................14
2.33 Period of Severance.................................................15
2.34 Plan................................................................15
2.35 Plan Administrator..................................................15
2.36 Plan Year...........................................................15
2.37 Pleasant Plan.......................................................15
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2.38 PrintPaks Plan......................................................15
2.39 Severance Date......................................................15
2.40 Total and Permanent Disability......................................16
2.41 Trust or Trust Fund.................................................16
2.42 Trustee.............................................................16
2.43 Tyco Plan...........................................................16
2.44 Valuation Date......................................................16
2.45 Year of Service.....................................................17
ARTICLE III ELIGIBILITY AND PARTICIPATION.....................................18
3.1 Eligibility to Participate..........................................18
3.2 Commencement of Participation.......................................18
3.3 Former Participants in F-P Savings Plan.............................19
3.4 Former Participants in Tyco Plan....................................19
3.5 Former Participants in PrintPaks Plan...............................19
3.6 Former Participants in Pleasant Plan................................19
ARTICLE IV TRUST FUND.........................................................20
4.1 Trust Fund..........................................................20
ARTICLE V EMPLOYEE CONTRIBUTIONS..............................................20
5.1 Employee Contributions..............................................20
5.2 Amount Subject to Election..........................................21
5.3 Termination of, Change in Rate of, or Resumption of Deferrals.......22
5.4 Limitation on Before-Tax Contributions by Highly Compensated
Employees.........................................................23
5.5 Provisions for Disposition of Excess Before-Tax Contributions by
Highly Compensated Employees......................................26
5.6 Provisions for Return of Annual Before-Tax Contributions in
Excess of the Deferral Limitation.................................28
5.7 Character of Amounts Contributed as Before-Tax Contributions........30
5.8 Participant Transfer/Rollover Contributions.........................30
ARTICLE VI COMPANY CONTRIBUTIONS..............................................31
6.1 General.............................................................31
6.2 Requirement for Net Profits.........................................33
6.3 Special Limitations on After-Tax Contributions and Company
Matching Contributions............................................33
6.4 Provision for Return of Excess After-Tax Contributions and Company
Matching Contributions on Behalf of Highly Compensated Employees..36
6.5 Forfeiture of Company Matching Contributions Attributable to Excess
Deferrals or Contributions........................................38
6.6 Investment and Application of Plan Contributions....................38
6.7 Irrevocability......................................................40
6.8 Company, Committee and Trustee Not Responsible for Adequacy of
Trust Fund.......................................................40
ARTICLE VII PARTICIPANT ACCOUNTS AND ALLOCATIONS..............................41
7.1 General.............................................................41
7.2 Participants' Accounts..............................................41
7.3 Revaluation of Participants' Accounts...............................41
7.4 Treatment of Accounts Following Termination of Employment...........41
7.5 Accounting Procedures...............................................42
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ARTICLE VIII VESTING; PAYMENT OF PLAN BENEFITS................................42
8.1 Vesting.............................................................42
8.2 Distribution Upon Retirement........................................44
8.3 Distribution Upon Death Prior to Termination of Employment..........45
8.4 Death After Termination of Employment...............................46
8.5 Termination of Employment Prior to Normal Retirement Date...........46
8.6 Withdrawals.........................................................48
8.7 Form of Distribution................................................52
8.8 Election for Direct Rollover of Distributable Benefit to Eligible
Retirement Plan...................................................52
8.9 Designation of Beneficiary..........................................54
8.10 Facility of Payment.................................................55
8.11 Requirement of Spousal Consent......................................56
8.12 Additional Documents................................................56
8.13 Company Stock Distribution..........................................56
8.14 Valuation of Accounts...............................................57
8.15 Forfeitures; Repayment..............................................58
8.16 Loans...............................................................59
8.17 Special Rule for Disabled Employees.................................61
8.18 Election for Fully Vested Employees Transferred to Fisher-Price,
Inc. ...............................................................63
8.19 Provision for Small Benefits........................................63
8.20 Special Provisions Applicable to Tyco Plan Accounts.................63
8.21 Special Provisions Applicable to PrintPaks Plan Accounts............64
8.22 Special Provisions Applicable to Fort Wayne Plan Accounts...........65
8.23 Special Provisions Applicable to Pleasant Plan Nonelective Account..65
ARTICLE IX OPERATION AND ADMINISTRATION OF THE PLAN...........................66
9.1 Plan Administration.................................................66
9.2 Committee Powers....................................................66
9.3 Investment Manager..................................................68
9.4 Periodic Review.....................................................68
9.5 Committee Procedure.................................................68
9.6 Compensation of Committee...........................................69
9.7 Resignation and Removal of Members..................................69
9.8 Appointment of Successors...........................................69
9.9 Records.............................................................70
9.10 Reliance Upon Documents and Opinions................................70
9.11 Requirement of Proof................................................71
9.12 Reliance on Committee Memorandum....................................71
9.13 Multiple Fiduciary Capacity.........................................71
9.14 Limitation on Liability.............................................71
9.15 Indemnification.....................................................71
9.16 Allocation of Fiduciary Responsibility..............................72
9.17 Bonding.............................................................72
9.18 Against Certain Actions.............................................73
9.19 Plan Expenses.......................................................73
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ARTICLE X SPECIAL PROVISIONS CONCERNING COMPANY STOCK EFFECTIVE AS
OF OCTOBER 1, 1992................................................73
10.1 Securities Transactions.............................................73
10.2 Valuation of Company Securities.....................................74
10.3 Allocation of Stock Dividends and Splits............................74
10.4 Reinvestment of Dividends...........................................75
10.5 Voting of Company Stock.............................................75
10.6 Confidentiality Procedures..........................................76
10.7 Securities Law Limitation...........................................76
ARTICLE XI MERGER OF COMPANY; MERGER OF PLAN..................................76
11.1 Effect of Reorganization or Transfer of Assets......................76
11.2 Merger Restriction..................................................76
ARTICLE XII PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS..............77
12.1 Plan Termination....................................................77
12.2 Discontinuance of Contributions.....................................77
12.3 Rights of Participants..............................................78
12.4 Trustee's Duties on Termination.....................................78
12.5 Partial Termination.................................................79
12.6 Failure to Contribute...............................................79
ARTICLE XIII APPLICATION FOR BENEFITS.........................................80
13.1 Application for Benefits............................................80
13.2 Action on Application...............................................80
13.3 Appeals.............................................................80
ARTICLE XIV LIMITATIONS ON CONTRIBUTIONS......................................81
14.1 General Rule........................................................81
14.2 Annual Additions....................................................82
14.3 Other Defined Contribution Plans....................................82
14.4 Combined Plan Limitation (Defined Benefit Plan).....................82
14.5 Adjustments for Excess Annual Additions.............................83
14.6 Disposition of Excess Amounts.......................................85
14.7 Affiliated Company..................................................85
ARTICLE XV RESTRICTION ON ALIENATION..........................................85
15.1 General Restrictions Against Alienation.............................85
15.2 Nonconforming Distributions Under Court Order.......................86
ARTICLE XVI PLAN AMENDMENTS...................................................87
16.1 Amendments..........................................................87
16.2 Retroactive Amendments..............................................88
16.3 Amendment of Vesting Provisions.....................................88
ARTI15.2 VII TOP-HEAVY PROVISIONS.............................................88
17.1 Minimum Company Contributions.......................................88
17.2 Compensation........................................................89
17.3 Top-Heavy Determination.............................................89
17.4 Aggregation.........................................................91
ARTICLE XVIII MISCELLANEOUS...................................................92
18.1 No Enlargement of Employee Rights...................................92
18.2 Mailing of Payments; Lapsed Benefits................................92
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18.3 Addresses..........................................................94
18.4 Notices and Communications.........................................94
18.5 Reporting and Disclosure...........................................94
18.6 Governing Law......................................................94
18.7 Interpretation.....................................................94
18.8 Certain Securities Laws Rules......................................95
18.9 Withholding for Taxes..............................................95
18.10 Limitation on Company; Committee and Trustee Liability.............95
18.11 Successors and Assigns.............................................95
18.12 Counterparts.......................................................95
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PERSONAL INVESTMENT PLAN
ARTICLE I
GENERAL
1.1 Plan Name.
---------
This instrument evidences the terms of a tax-qualified retirement plan for
the Eligible Employees of Mattel, Inc. and its participating affiliates to be
known as the "Mattel, Inc. Personal Investment Plan" ("Plan").
1.2 Plan Purpose.
------------
This Plan is intended to qualify under Code Section 401(a) as a profit
sharing plan, although contributions may be made to the Plan without regard to
profits, and with respect to the portion hereof intended to qualify as a
Qualified Cash or Deferred Arrangement, to satisfy the requirements of Code
Section 401(k).
1.3 Effective Date.
--------------
The original effective date of this Plan is November 1, 1983. This
amendment and restatement of the Plan reflects the provisions of the Plan as in
effect as of October 1, 2001, except as otherwise expressly provided herein.
1.4 Plan Mergers.
------------
Effective April 1, 1997, the Fisher-Price, Inc. Matching Savings Plan (the
"F-P Savings Plan") has been merged with and into this Plan and the account
balances under the former F-P Savings Plan have been transferred to
corresponding accounts under this Plan as follows:
F-P Savings Plan Account Corresponding Plan Account
Employee Contribution Account Before-Tax Contributions Account
Company Matching Account Company Matching Account
Discretionary Contribution Account Company Matching Account
Profit Sharing Account Transfer/Rollover Account
Rollover Contributions Account Transfer/Rollover Account
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Effective January 2, 1998, the Tyco Toys, Inc. 401(k) Savings Plan ("Tyco
Plan") has been merged with and into this Plan and the account balances under
the former Tyco Plan have been transferred to corresponding accounts under this
Plan as follows:
Tyco Plan Account Corresponding Plan Account
Deferral Contributions Account Tyco Before-Tax Contributions Account
Regular Matching Contributions Account Tyco Company Matching Account
Rollover Contribution Account Transfer/Rollover Account
Effective June 30, 2000, the PrintPaks, Inc. 401(k) Plan ("PrintPaks Plan")
has been merged with and into this Plan and the account balances under the
former PrintPaks Plan have been transferred to corresponding accounts under this
Plan as follows:
PrintPaks Plan Account Corresponding Plan Account
Elective Deferrals Account PrintPaks Before-Tax Contributions
Account
Matching Contributions Account PrintPaks Company Matching Account
Rollover Contributions Account Transfer/Rollover Account
Effective December 15, 2000, the Mattel-Fort Wayne Hourly 401(k) Plan (the
"Fort Wayne Plan") has been merged with and into this Plan and the account
balances under the former Fort Wayne Plan have been transferred to corresponding
accounts under this Plan as follows:
Fort Wayne Plan Account Corresponding Plan Account
Elective Deferrals Account Fort Wayne Plan Before-Tax
Contributions Account
Matching Contributions Account Fort Wayne Plan Company Matching
Account
Nonelective Contributions Account Fort Wayne Plan Nonelective Account
Rollover Contributions Account Transfer/Rollover Account
2
Effective October 1, 2001, the Pleasant Company Retirement Savings Plan
(the "Pleasant Plan") has been merged with and into this Plan and the account
balances under the former Pleasant Plan have been transferred to corresponding
accounts under this Plan as follows:
Pleasant Plan Account Corresponding Plan Account
Employer Nonelective Contributions Pleasant Plan Nonelective Account
Account
Rollover Contributions Account Transfer/Rollover Account
ARTICLE II
DEFINITIONS
2.1 Accounts.
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"Accounts" or "Participant's Accounts" means the following Plan
accounts maintained by the Committee for each Participant as required by Article
VII:
(a) "Before-Tax Contributions Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Participant Before-Tax Contributions, and any earnings
thereon, in accordance with Article V.
(b) "After-Tax Contributions Account" shall mean the account
established and maintained for each Participant under Article VII to
reflect amounts held in the Trust Fund on behalf of such Participant which
are attributable to Participant After-Tax Contributions and any earnings
thereon, in accordance with Article V.
(c) "Company Matching Account" shall mean the account established and
maintained for each Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which are attributable to
Company Matching Contributions, and any earnings thereon, pursuant to
Section 6.1(d).
(d) "Company Contributions Account" shall mean the account established
and maintained for each Participant under Article VII for purposes of
holding and accounting for amounts held in the Trust Fund which are
attributable to Company Contributions, and any earnings thereon, pursuant
to Section 6.1(a).
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(e) "Transfer/Rollover Account" shall mean the account established and
maintained for each Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which are attributable to
amounts distributed to the Participant from any other plan qualified under
Code Section 401(a), or from an Individual Retirement Account attributable
to employer contributions under another plan qualified under Code Section
401(a), and any earnings on such amounts, as provided in Section 5.8.
(f) "Tyco Before-Tax Contributions Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Participant before-tax contributions to the Tyco Plan,
and any earnings thereon, in accordance with Article V.
(g) "Tyco Company Matching Account" shall mean the account established
and maintained for each Participant under Article VII for purposes of
holding and accounting for amounts held in the Trust Fund which are
attributable to matching contributions to the Tyco Plan, and any earnings
thereon, in accordance with Article V.
(h) "PrintPaks Before-Tax Contributions Account" shall mean the
account established and maintained for each Participant under Article VII
for purposes of holding and accounting for amounts held in the Trust Fund
which are attributable to Participant before-tax contributions to the
PrintPaks Plan, and any earnings thereon, in accordance with Article V.
(i) "PrintPaks Company Matching Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to matching contributions to the PrintPaks Plan, and any
earnings thereon, in accordance with Article V.
(j) "Fort Wayne Plan Before-Tax Contributions Account" shall mean the
account established and maintained for each Participant under Article VII
for purposes of holding and accounting for amounts held in the Trust Fund
which are attributable to Participant before-tax contributions to the Fort
Wayne Plan, and any earnings thereon, in accordance with Article V.
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(k) "Fort Wayne Plan Company Matching Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to matching contributions to the Fort Wayne Plan, and any
earnings thereon, in accordance with Article V.
(l) "Fort Wayne Plan Nonelective Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to nonelective contributions to the Fort Wayne Plan, and
any earnings thereon, in accordance with Article V.
(m) "Pleasant Plan Nonelective Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to nonelective contributions to the Pleasant Plan, and
earnings thereon, in accordance with Article V.
2.2 Affiliated Company.
------------------
"Affiliated Company" shall mean:
(a) Any corporation that is included in a controlled group of
corporations, within the meaning of Section 414(b) of the Code, that
includes the Company,
(b) Any trade or business that is under common control with the
Company within the meaning of Section 414(c) of the Code,
(c) Any member of an affiliated service group, within the meaning of
Section 414(m) of the Code, that includes the Company, and
(d) Any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
2.3 After-Tax Contributions.
-----------------------
"After-Tax Contributions" shall mean those contributions by a Participant
to the Trust Fund in accordance with Article V which do not qualify as Before-
Tax Contributions.
2.4 Before-Tax Contributions.
------------------------
"Before-Tax Contributions" shall mean those amounts contributed to the Plan
as a result of a salary or wage reduction election made by the Participant in
accordance with Article V, to
5
the extent such contributions qualify for treatment as contributions made under
a "qualified cash or deferred arrangement" within the meaning of Section 401(k)
of the Code.
2.5 Beneficiary.
-----------
"Beneficiary" or "Beneficiaries" shall mean the person or persons last
designated by a Participant as set forth in Section 8.9 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons
designated in Section 8.9 to receive the interest of a deceased Participant in
such event.
2.6 Board of Directors.
------------------
"Board of Directors" shall mean the Board of Directors (or its delegate) of
Mattel, Inc. as it may from time to time be constituted.
2.7 Code.
----
"Code" shall mean the Internal Revenue Code of 1986, as in effect on the
date of execution of this Plan document and as thereafter amended from time to
time.
2.8 Committee.
---------
"Committee" shall mean the Committee described in Article IX hereof.
2.9 Company.
-------
"Company" shall mean Mattel, Inc., or any successor thereof, if its
successor shall adopt this Plan.
2.10 Company Contributions.
---------------------
"Company Contributions" shall mean amounts paid by a Participating Company
into the Trust Fund in accordance with Section 6.1(a).
2.11 Company Matching Contributions.
------------------------------
"Company Matching Contributions" shall mean amounts paid by a Participating
Company into the Trust Fund in accordance with Section 6.1(d).
2.12 Company Stock.
-------------
"Company Stock" shall mean whichever of the following is applicable:
(a) So long as the Company has only one class of stock, that class of
stock.
6
(b) In the event the Company at any time has more than one class of
stock, the class (or classes) of the Company's stock constituting "employer
securities" as that term is defined in Section 409(1) of the Code.
2.13 Compensation.
------------
(a) "Compensation" shall mean the full salary and wages (including
overtime, shift differential and holiday, vacation and sick pay) and other
compensation paid by a Participating Company during a Plan Year by reason
of services performed by an Employee, subject, however, to the following
special rules and to the provisions of Subsections 2.13(b) through (e):
(i) Except as specified in (ii) below, fringe benefits and
contributions by the Participating Company to and benefits under any
employee benefit shall not be taken into account in determining
compensation;
(ii) Amounts deducted pursuant to authorization by an Employee or
pursuant to requirements of law (including amounts of salary or wages
deferred in accordance with the provisions of Section 5.1 and which
qualify for treatment under Code Section 401(k) or amounts deducted
pursuant to Code Section 125, 129 or 132(f)(4)) shall be included in
"Compensation" except as specifically provided to the contrary
elsewhere in this Plan;
(iii) Amounts paid or payable by reason of services performed
during any period in which an Employee is not a Participant under the
Plan shall not be taken into account in determining Compensation;
(iv) Amounts deferred by the Employee pursuant to non-qualified
deferred compensation plans, regardless of whether such amounts are
includable in the Employee's gross income for his current taxable
year, shall not be taken into account in determining Compensation;
(v) Amounts included in any Employee's gross income with respect
to life insurance as provided by Code Section 79 shall not be taken
into account in determining compensation; and
(vi) Amounts paid to Employees as "bonuses" shall not be taken
into account in determining compensation.
7
(b) To the extent permitted by Code Section 415(c)(3), in the case of
a Participant who ceases actively to perform services for a Participating
Company prior to January 1, 1989 because such person has sustained a Total
and Permanent Disability, such Participant shall be deemed to have
"Compensation" to the extent provided in the provisions of Section 8.17(d),
for the limited purposes of determining the amount of certain contributions
to this Plan.
(c) The term "Compensation," for purposes of Article XIV of this Plan,
shall mean wages as defined in Section 3401(a) and all other payments of
compensation to an Employee by the Company (in the course of the Company's
trade or business) for which the Company is required to furnish the
Employee a written statement under Code Sections 6041(d) and 6051(a)(3).
Compensation for purposes of this Subsection (c) shall be determined
without regard to any rules under Code Section 3401(a) 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 Code Section 3401(a)(2)).
(d) In the event that this Plan is deemed a Top-Heavy Plan as set
forth in Article XVII, the term "Compensation" shall not include amounts
excluded by reason of and to the extent provided by Sections 17.1 and 17.2.
(e) Effective for Plan Years commencing on and after January 1, 1994,
the "Compensation" of any Employee taken into account under the Plan for
any Plan Year shall not exceed $150,000 (or such adjusted amount as may be
prescribed for such Plan Year pursuant to Section 401(a)(17) of the Code).
Effective for Plan Years commencing on and after January 1, 2002, the
"Compensation" of any Employee taken into account under the Plan for any
Plan Year shall not exceed $200,000 (or such adjusted amount as may be
prescribed for such Plan Year pursuant to Section 401(a)(17) of the Code).
2.14 Deferral Limitation.
-------------------
"Deferral Limitation" shall mean the dollar limitation on the exclusion of
elective deferrals from a Participant's gross income under Section 402(g) of the
Code, as in effect with respect to the taxable year of the Participant, or such
greater limitation on the exclusion of elective deferrals permitted under
Section 5.2(f) and Section 414(v) of the Code, if applicable.
8
2.15 Distributable Benefit.
---------------------
"Distributable Benefit" shall mean the vested interest of a Participant in
this Plan which is determined and distributable in accordance with the
provisions of Article VIII following the termination of the Participant's
employment.
2.16 Early Retirement Date.
---------------------
"Early Retirement Date" shall mean the later of the Participant's 55th
birthday or the date on which the Participant completes three Years of Service.
2.17 Effective Date.
--------------
"Effective Date" shall mean November 1, 1983, which shall be the original
effective date of this Plan.
2.18 Eligible Employee.
-----------------
"Eligible Employee" shall include any individual who (i) prior to October
1, 2001 is at least age twenty and one-half (20-1/2) or on or after October 1,
2001 is at least age twenty (20) and (ii) is employed by a Participating
Company, except
(a) any Employee who is covered by a collective bargaining agreement
to which a Participating Company is a party if there is evidence that
retirement benefits were the subject of good faith bargaining between the
Participating Company and the collective bargaining representative, unless
the collective bargaining agreement provides for coverage under this Plan,
(b) any Employee who is a "leased employee," within the meaning of
Code Section 414(n),
(c) any Employee who is an intern, toy tester, department aide,
associate retail services representative or in the following pay groups:
AFL or MAG, or
(d) Contracted Labor.
2.19 Employee.
--------
(a) "Employee" shall mean each person currently employed in any
capacity by the Company or Affiliated Company any portion of whose income
is subject to withholding of income tax and/or for whom Social Security
contributions are made by the Company. The term "Employee" also includes a
"leased employee," to the extent required by Code Section 414(n).
9
(b) Although Eligible Employees are the only class of Employees
eligible to participate in this Plan, the term "Employee" is used to refer
to persons employed in a non-Eligible Employee capacity as well as Eligible
Employee category. Thus, those provisions of this Plan that are not
limited to Eligible Employees, such as those relating to Hours of Service,
apply to both Eligible and non-Eligible Employees.
2.20 Employment Commencement Date.
----------------------------
"Employment Commencement Date" shall mean each of the following:
(a) The date on which an Employee first performs an Hour of Service in
any capacity for the Company or an Affiliated Company with respect to which
the Employee is compensated or is entitled to compensation by the Company
or the Affiliated Company.
(b) In the case of an Employee who has a one-year Period of Severance
and who is subsequently reemployed by the Company or an Affiliated Company,
the term "Employment Commencement Date" shall also mean the first day
following such one-year Period of Severance on which the Employee performs
an Hour of Service for the Company or an Affiliated Company with respect to
which he is compensated or entitled to compensation by the Company or
Affiliated Company.
2.21 ERISA.
-----
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.22 Fort Wayne Plan.
---------------
"Fort Wayne Plan" shall mean the Mattel-Fort Wayne Hourly 401(k) Plan,
which was merged with and into this Plan effective December 15, 2000.
2.23 F-P Savings Plan.
----------------
"F-P Savings Plan" shall mean the Fisher-Price, Inc. Matching Savings Plan,
which was merged with and into this Plan effective April 1, 1997.
2.24 Highly Compensated Employee.
---------------------------
(a) "Highly Compensated Employee" shall mean any Employee who performs
services for the Company or an Affiliated Company during the Determination
Year (as defined below) and who:
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(i) was at any time during the Determination Year or the Look
Back Year a five percent (5%) owner described in Section 17.3; or
(ii) for the Look Back Year:
(A) received Compensation from the Company or an
Affiliated Company in excess of eighty thousand dollars
($80,000) (adjusted for any cost-of-living increase as permitted
by Section 414(q) of the Code); and
(B) was in the "top-paid group."
The determination of which Employees are Highly Compensated Employees shall
be made in accordance with the provisions of Section 414(q) of the Code.
(b) Determination of a Highly Compensated Employee shall be in
accordance with the following definitions and special rules:
(i) "Determination Year" means the Plan Year for which the
determination of Highly Compensated Employee is being made.
(ii) "Look Back Year" is the twelve (12) month period preceding
the Determination Year.
(iii) An Employee shall be treated as a 5% owner for any
Determination Year or Look Back Year if at any time during such Year
such Employee was a 5% owner (as defined in Section 17.3).
(iv) An Employee is in the "top-paid group" of Employees for
any Determination Year or Look Back Year if such Employee is in the
group consisting of the top twenty percent (20%) of the Employees when
ranked on the basis of Compensation paid during such Year.
(v) For purposes of this Section the term "Compensation" means
Compensation as defined in Code Section 415(c)(3), as set forth in
Section 2.13(c), without regard to the limitations of Section 2.13(e);
provided, however, the determination under this Paragraph (vi) shall
be made without regard to Code Sections 125, 132(f)(4), 402(a)(8), and
401(h)(1)(B), and in the case of Participant contributions made
pursuant to a salary reduction agreement, without regard to Code
Section 403(b).
(vi) For purposes of determining the number of Employees in the
"top-paid" group under this Section, the following Employees shall be
excluded:
11
(A) Employees who have not completed six (6) months of
service,
(B) Employees who normally work less than 17 1/2 hours
per week,
(C) Employees who normally work not more than six (6)
months during any Plan Year, and
(D) Employees who have not attained age 20,
(E) Except to the extent provided in Treasury
Regulations, Employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor finds to be
a collective bargaining agreement between Employee
representatives and the Company, and
(F) Employees who are nonresident aliens and who receive
no earned income (within the meaning of Code Section 911(d)(2))
from the Company which constitutes income from sources within the
United States (within the meaning of Code Section 861(a)(3)).
The Company may elect to apply Subparagraphs (A) through
(D) above by substituting a shorter period of service, smaller
number of hours or months, or lower age for the period of
service, number of hours or months, or (as the case may be) than
as specified in such Subparagraphs.
(vii) A former Employee shall be treated as a Highly Compensated
Employee if
(A) such Employee was a Highly Compensated Employee when
such Employee incurred a severance, or
(B) such Employee was a Highly Compensated Employee at
any time after attaining age fifty-five (55).
(viii) Code Sections 414(b), (c), (m) and (o) shall be applied
before the application of this Section. Also, the term "Employee"
shall include "leased employees," within the meaning of Code Section
414(n), unless such leased Employee is covered under a "safe harbor"
plan of the leasing organization and not covered under a qualified
plan of the Affiliated Company.
12
(c) To the extent permissible under Code Section 414(q), the
Committee may determine which Employees shall be categorized as Highly
Compensated Employees by applying a simplified method and calendar year
election prescribed by the Internal Revenue Service.
2.25 Hour of Service.
---------------
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the Company or
an Affiliated Company or entitled to payment for the performance of
services as an Employee.
(ii) Each hour in or attributable to a period of time during
which the Employee performs no duties (irrespective of whether he has
terminated his Employment) due to a vacation, holiday, illness,
incapacity (including pregnancy or disability), layoff, jury duty,
military duty or a Leave of Absence, for which he is so paid or so
entitled to payment, whether direct or indirect. However, no such
hours shall be credited to an Employee if such Employee is directly or
indirectly paid or entitled to payment for such hours and if such
payment or entitlement is made or due under a plan maintained solely
for the purpose of complying with applicable workmen's compensation,
unemployment compensation or disability insurance laws or is a payment
which solely reimburses the Employee for medical or medically related
expenses incurred by him.
(iii) Each hour for which he is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed to by
the Company or an Affiliated Company, provided that such Employee has
not previously been credited with an Hour of Service with respect to
such hour under paragraphs (i) or (ii) above.
(b) Hours of Service under Subsections (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R. (S)
2530.200b-2(b). Hours of Service shall be credited to the appropriate
computation period according to the Department of Labor Regulation (S)
2530.200b-2(c). However, an Employee will not be considered as being
entitled to payment until the date when the Company or the
13
Affiliated Company would normally make payment to the Employee for such
Hour of Service.
2.26 Investment Manager.
------------------
"Investment Manager" means the one or more Investment Managers, if any,
that are appointed pursuant to Section 9.3.
2.27 Murray Hourly Employee.
----------------------
"Murray Hourly Employee" shall mean an Employee at the Murray, Kentucky
location of Mattel Operations, Inc. who is compensated on a per hour basis.
2.28 Normal Retirement.
-----------------
"Normal Retirement" shall mean a Participant's termination of employment
on or after attaining the Plan's Normal Retirement Date.
2.29 Normal Retirement Date.
----------------------
"Normal Retirement Date" shall be the Participant's sixty-fifth birthday.
2.30 Participant.
-----------
"Participant" shall mean any Eligible Employee who has satisfied the
participation eligibility requirements set forth in Section 3.1 and has begun
participation in this Plan in accordance with the provisions of Section 3.2.
2.31 Participation Commencement Date.
-------------------------------
"Participation Commencement Date" shall mean the day on which an
Employee's participation in this Plan may commence in accordance with the
provisions of Article III.
2.32 Participating Company.
---------------------
"Participating Company" shall mean Mattel, Inc., Mattel Sales, Inc. and
each other Affiliated Company (or similar entity) that has been granted
permission by the Board of Directors to participate in this Plan, provided that
contributions are being made hereunder for the Employees of such Participating
Company. Permission to become a Participating Company shall be granted under
such conditions and upon such conditions as the Board of Directors deems
appropriate. Effective April 1, 1997, Fisher-Price, Inc. and each other
adopting employer in the F-P Savings Plan shall be a Participating Company in
this Plan. Effective January 2, 1998, Tyco Toys, Inc. and each other adopting
employer in the Tyco Plan shall be a Participating Company
14
in this Plan. Effective March 1, 1998, PrintPaks, Inc. and each other adopting
employer in the PrintPaks Plan shall be a Participating Company in this Plan.
Effective October 1, 2001, Pleasant Company and such other adopting employer in
the Pleasant Plan shall be a Participating Company in this Plan.
2.33 Period of Severance.
-------------------
"Period of Severance" shall mean the period of time commencing on the
Participant's Severance Date and continuing until the first day, if any, on
which the Participant completes one or more Hours of Service following such
Severance Date.
2.34 Plan.
----
"Plan" shall mean the Mattel, Inc. Personal Investment Plan herein set
forth, and as it may be amended from time to time.
2.35 Plan Administrator.
------------------
"Plan Administrator" shall mean the administrator of the Plan, within the
meaning of Section 3(16)(A) of ERISA. The Plan Administrator shall be Mattel,
Inc.
2.36 Plan Year.
---------
"Plan Year" shall mean the fiscal year of the Company. Effective as of
January 1, 1992, the fiscal year of the Company is the twelve consecutive month
period ending December 31.
2.37 Pleasant Plan.
-------------
"Pleasant Plan" shall mean the Pleasant Company Retirement Savings Plan,
which was merged with and into this Plan effective October 1, 2001.
2.38 PrintPaks Plan.
--------------
"PrintPaks Plan" shall mean the PrintPaks, Inc. 401(k) Plan, which was
merged with and into this Plan effective June 30, 2000.
2.39 Severance Date.
--------------
"Severance Date" shall mean the earlier of (a) the date on which an
Employee quits, retires, is discharged, or dies; or (b) the first anniversary of
the first date of a period in which an Employee remains absent from service
(with or without pay) with the Company or an Affiliated Company for any reason
other than quit, retirement, discharge or death (such as vacation, holiday,
sickness, disability, leave of absence or layoff).
15
In the case of an Employee who has a maternity or paternity absence
described in Code Sections 410(a)(5)(E) and 411(a)(6)(E), the Employee's Period
of Severance will begin on the second anniversary of the date the Employee is
first absent for a maternity or paternity leave, provided the Employee does not
perform an Hour of Service during such period. The first one-year period of the
absence will be included in the Employee's period of service and the second one-
year period is neither part of the period of service nor part of the Period of
Severance. The Committee may require that the Employee furnish such timely
information as the Committee may reasonably require to establish that the
absence from work is for such a maternity or paternity absence, and the number
of days for which there was such an absence.
2.40 Total and Permanent Disability.
------------------------------
An individual shall be considered to be suffering from a Total and
Permanent Disability if he is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12
months. An individual's disabled status shall be determined by the Committee,
based on such evidence as the Committee determines to be sufficient. The rules
of this Section 2.44 shall be applied by the Committee in accordance with
Treasury Regulations, if any, promulgated under Code Section 415 or Code Section
22(e)(3).
2.41 Trust or Trust Fund.
-------------------
"Trust" or "Trust Fund" shall mean the one or more trusts created for
funding purposes under the Plan.
2.42 Trustee.
-------
"Trustee" shall mean the corporation appointed by the Company to act as
Trustee of the Trust Fund, or any successor or other corporation acting as a
trustee of the Trust Fund.
2.43 Tyco Plan.
---------
"Tyco Plan" shall mean the Tyco Toys, Inc. 401(k) Savings Plan, which was
merged with and into this Plan effective January 2, 1998.
2.44 Valuation Date.
--------------
"Valuation Date" shall mean the last day of each calendar month and such
additional dates as may be determined in rules prescribed by the Committee.
16
2.45 Year of Service.
---------------
"Year of Service" means three hundred sixty five (365) days included in a
period of service recognized under this Section 2.45.
(a) Subject to the succeeding provisions of this Section 2.45, a
Participant shall be credited with a period of service equal to the
elapsed time between his Employment Commencement Date and his subsequent
Severance Date.
(b) A Participant additionally shall receive credit for a Period of
Severance in computing his service hereunder if such Participant completes
an Hour of Service prior to the first anniversary of his Severance Date.
Except as provided in this Section 2.45(b), a Period of Severance shall
not be included in a Participant's period of service hereunder.
(c) If a Participant who does not have any vested interest in his
accounts under the Plan has five (5) consecutive one-year Periods of
Severance, any prior period of service shall be disregarded for all
purposes of the Plan. Periods of service credited under this Section 2.45
before such five (5) consecutive one-year Periods of Severance shall not
include any period or periods of service that are not required to be taken
into account under this Section 2.45(c) by reason of any prior Periods of
Severance.
(d) The number of a Participant's Years of Service for vesting shall
be determined by reference to each three hundred sixty five day period of
service recognized under this Section 2.45, whether or not consecutive.
(e) Notwithstanding any other provision of this Plan, service
performed by Employees for employers other than the Company or Affiliated
Companies may be taken into account in computing service for any purpose
of this Plan to the extent and in the manner determined by resolution of
the Committee in its sole discretion.
(f) Notwithstanding any other provision of this Plan, service
performed for an Affiliated Company prior to such entity becoming an
Affiliated Company may be taken into account for purposes of computing
service for any purpose of this Plan to the extent and in the manner
determined by resolution of the Board of Directors of the Company in its
sole discretion.
(g) In the case of a Participant who was actively employed by Tyco
Toys, Inc. or its affiliates on the date of acquisition of Tyco Toys, Inc.
by the Company, service performed by such Participant for Tyco Toys, Inc.
and its affiliates for periods prior to
17
the date of such acquisition shall be taken into account for purposes of
determining such Participant's vested interest in his Accounts under this
Plan.
(h) In the case of a Participant who was actively employed by
PrintPaks, Inc. or its affiliates on the date of acquisition of PrintPaks,
Inc. by the Company, service performed by such Participant for PrintPaks,
Inc. and its affiliates for periods prior to the date of such acquisition
shall be taken into account for purposes of determining such Participant's
vested interest in his Accounts under this Plan.
(i) In the case of a Participant who was actively employed by
Pleasant Company or its affiliates on the date of acquisition of Pleasant
Company by the Company, service performed by such Participant for Pleasant
Company and its affiliates for periods prior to the date of such
acquisition shall be taken into account for purposes of determining such
Participant's vested interest in his Accounts under this Plan.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate.
--------------------------
(a) Every Eligible Employee who is not a Murray Hourly Employee shall
become eligible to participate in the Plan on the date he becomes an
Eligible Employee. Every Eligible Employee who is a Murray Hourly Employee
shall become eligible to participate in the Plan on the later of (i) the
date he becomes an Eligible Employee or (ii) the date he completes ninety
(90) days of service.
(b) If an Eligible Employee ceases to be an Eligible Employee he
shall again become eligible to participate in the Plan on the date he
again becomes an Eligible Employee.
(c) Notwithstanding the preceding rules of this Section 3.1, the
actual date upon which an Employee will commence participation will be
determined pursuant to the rules of Section 3.2.
3.2 Commencement of Participation.
-----------------------------
(a) Each Eligible Employee shall be entitled automatically to
commence participation in this Plan with respect to the Company
Contributions described in Section 6.1(a) and (b).
18
(b) From January 1, 1987 to June 30, 1988, each Eligible Employee
shall be entitled to commence Employee contributions as set forth in
Article V and Company Matching Contributions as set forth in Section
6.1(d) on the January 1 after their Employment Commencement Date.
(c) Effective July 1, 1988, each Eligible Employee shall be entitled
to commence After-Tax Contributions and Company Matching Contributions as
set forth in Section 6.1(d) as of the date he becomes an Eligible
Employee.
(d) Effective January 1, 1989, each Eligible Employee shall be
entitled to commence Before-Tax Contributions and Company Matching
Contributions as set forth in Section 6.1(d) as of the date he becomes an
Eligible Employee.
(e) The Committee may prescribe such rules as it deems necessary or
appropriate regarding times and procedures for Participants to make
elections to contribute a portion of Compensation as provided in Section
5.1.
3.3 Former Participants in F-P Savings Plan.
---------------------------------------
Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the F-P Savings Plan on March 31, 1997 shall
automatically become a Participant in this Plan effective as of April 1, 1997.
3.4 Former Participants in Tyco Plan.
--------------------------------
Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the Tyco Plan on December 31, 1997, shall automatically
become a Participant in this Plan effective as of January 1, 1998.
3.5 Former Participants in PrintPaks Plan.
-------------------------------------
Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the PrintPaks Plan on February 28, 1998, shall
automatically become a Participant in this Plan effective as of March 1, 1998.
3.6 Former Participants in Pleasant Plan.
------------------------------------
Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the Pleasant Plan on September 30, 2001, shall
automatically become a Participant in this Plan effective as of October 1, 2001.
19
ARTICLE IV
TRUST FUND
4.1 Trust Fund.
----------
(a) The Company has entered into a Trust Agreement for the
establishment of a Trust to hold the assets of the Plan. Simultaneously
with the establishment of this Plan the Company shall pay to the Trustee a
specified sum of money as its initial contribution to the Trust Fund. The
Trustee shall acknowledge receipt of this contribution and shall agree to
hold and administer this contribution together with such additional funds
and assets that may be subsequently deposited with the Trustee pursuant to
the terms of this Plan.
(b) The Trust Fund is authorized to invest in either Company Stock or
such other assets as the Committee or the Investment Manager (if
applicable) may direct. Participants may direct the investment of the
assets in their Accounts in the Trust Fund from among the acceptable
investment alternatives which the Committee may from time to time make
available.
(c) The Committee shall not be required to engage in any transaction,
including without limitation, directing the purchase or sale of Company
Stock, which it determines in its sole discretion, might tend to subject
itself, its members, the Plan, the Company, or any Participant to liability
under federal or state securities law.
ARTICLE V
EMPLOYEE CONTRIBUTIONS
5.1 Employee Contributions.
----------------------
In accordance with rules which the Committee shall prescribe from time to
time, each Participant shall be given an opportunity to elect to have a
percentage of his or her Compensation contributed to the Plan. A contribution
election by a Participant shall remain in effect from year to year
(notwithstanding salary or wage rate changes) until changed by the Participant.
Effective January 1, 1987, at the election of the Participant, contributions
shall be made as Before-Tax Contributions, After-Tax Contributions or a
combination thereof.
20
5.2 Amount Subject to Election.
--------------------------
(a) Effective for Plan Years commencing on and after January 1, 1989,
but prior to January 1, 1997, and for the period January 1, 1997 through
March 31, 1997, subject to the limitations of this Article V, the amount of
an individual's Compensation that may be contributed subject to the
election provided in Section 5.1 shall be a whole percentage of the
individual's Compensation, which percentage is not less than one percent
(1%) nor more than the difference between (i) the Participant's Company
Contributions percentage determined under Section 6.1(a) and (ii) seventeen
percent (17%).
(b) Effective April 1, 1997, but prior to January 1, 2002, subject to
the limitations of this Article V, the amount of a Participant's
Compensation that may be contributed subject to the election provided in
Section 5.1 shall be a whole percentage of the Participant's Compensation,
which percentage is not less than one percent (1%) nor more than: (i) in
the case of a Participant employed by Fisher-Price, Inc. or the Mattel
Operations-East Aurora, Mattel Operations-Medina or Mattel Operations-
Murray divisions, fifteen percent (15%); and (ii) in the case of any other
Participant, the difference between (x) the Participant's Company
Contributions percentage determined under Section 6.1(a) and (y) seventeen
percent (17%).
(c) Effective January 1, 2002, subject to the limitations of Article
V, the amount of a Participant's Compensation that may be contributed
subject to the election provided in Section 5.1 shall be a whole percentage
of the Participant's Compensation, which percentage is not less than one
percent (1%) nor more than (i) in the case of a Highly Compensated
Employee, twenty percent (20%) or (ii) in the case of a Participant who is
not a Highly Compensated Employee, eighty percent (80%).
(d) No Participant shall be permitted to make Before-Tax
Contributions in excess of the Deferral Limitation. Any election by a
Participant to make Before-Tax Contributions shall be deemed to include an
election to automatically substitute After-Tax Contributions for such
Before-Tax Contributions, effective for the period starting on the date
immediately following
21
December 31. In the event a Participant's Before-Tax Contributions exceed
the Deferral Limitation, excess contributions shall be subject to the
provisions of Section 5.6.
(e) For purposes of satisfying one of the tests described under
Section 5.4 and Section 6.3, the Committee may prescribe such rules as it
deems necessary or appropriate regarding the maximum amount that a
Participant may elect to contribute and the timing of such an election.
These rules may prescribe a maximum percentage of Compensation that may be
contributed, or may provide that the maximum percentage of Compensation
that a Participant may contribute will be a lower percentage of his
Compensation above a certain dollar amount of Compensation than the maximum
deferral percentage below that dollar amount of Compensation. These rules
shall apply to all individuals eligible to make the election described in
Section 5.1, except to the extent that the Committee prescribes special or
more stringent rules applicable only to Highly Compensated Employees.
(f) Notwithstanding the foregoing, all employees who are eligible to
make Before-Tax Contributions under this Plan and who have attained age
fifty (50) before the close of a Plan Year shall be eligible to make catch-
up contributions during such Plan Year in accordance with, and subject to
the limitations of, Code Section 414(v). Such catch-up contributions shall
not be taken into account for purposes of the provisions of the Plan
implementing the required limitations of Section 402(g) and 415 of the
Code. The Plan shall not be treated as failing to satisfy the provisions
of the Plan implementing the requirements of Section 401(k)(3), 401(k)(11),
401(k)(12), 410(b) or 416 of the Code, as applicable, by reason of the
making of such catch-up contributions.
5.3 Termination of, Change in Rate of, or Resumption of Deferrals.
-------------------------------------------------------------
(a) A Participant may at any time submit a request to the Committee to
terminate his contributions made pursuant to this Article V.
(b) A Participant may at any time (but not more frequently than once
every two weeks) submit a request to the Committee to alter the rate of, or
resume his contributions made pursuant to this Article V.
(c) A request for termination, alteration, or resumption or alteration
of the rate of contributions shall be in form satisfactory to the
Committee. The Committee may
22
require at least thirty (30) days notice prior to commencement of the
payroll period for which such change is to be effective.
5.4 Limitation on Before-Tax Contributions by Highly Compensated Employees.
----------------------------------------------------------------------
With respect to each Plan Year, Participant Before-Tax Contributions under
the Plan for the Plan Year shall not exceed the limitations on contributions on
behalf of Highly Compensated Employees under Section 401(k) of the Code, as
provided in this Section. In the event that Before-Tax Contributions under this
Plan on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be returned to the Participant or recharacterized
as Participant After-Tax Contributions, as provided in Section 5.5.
(a) The Before-Tax Contributions by a Participant for a Plan Year
shall satisfy the Average Deferral Percentage test set forth in (i)(A)
below, or the alternative Average Deferral Percentage test set forth in
(i)(B) below. To the extent required by regulations under Code Section
401(m), the Before-Tax Contributions by a Participant for any Plan Year
ending prior to January 1, 2002, also shall satisfy the test identified in
(ii) below.
(i) (A) The "Actual Deferral Percentage" for Eligible Employees
who are Highly Compensated Employees for a Plan Year shall not be
more than the "Actual Deferral Percentage" of all other Eligible
Employees for the Comparison Year multiplied by 1.25, or
(i) (B) The excess of the "Actual Deferral Percentage" for
Eligible Employees who are Highly Compensated Employees for a
Plan Year over the "Actual Deferral Percentage" for all other
Eligible Employees for the Comparison Year shall not be more than
two (2) percentage points, and the "Actual Deferral Percentage"
for Eligible Employees who are Highly Compensated Employees for a
Plan Year shall not be more than the "Actual Deferral Percentage"
of all other Eligible Employees for the Comparison Year
multiplied by 2.00.
(ii) The Average Contribution Percentage for any Plan Year ending
prior to January 1, 2002 for Highly Compensated Employees
eligible to participate in this Plan and a plan of the Company or
an Affiliated
23
Company that is subject to the limitations of Section 401(m) of
the Code including, if applicable, this Plan, shall be reduced in
accordance with Section 6.4, to the extent necessary to satisfy
the requirements of Treasury Regulations Section 1.401(m)-2. The
multiple use test described in Treasury Regulations Section
1.401(m)-2 shall not apply for Plan Years beginning after
December 31, 2001.
The "Comparison Year" is the Plan Year being tested.
(b) For the purposes of the limitations of this Section 5.4, the
following definitions shall apply:
(i) "Actual Deferral Percentage" means, with respect to Eligible
Employees who are Highly Compensated Employees and all other Eligible
Employees for a Plan Year, the average of the ratios, calculated
separately for each Eligible Employee in such group, of the amount of
Before-Tax Contributions under the Plan allocated to each Eligible
Employee for such Plan Year to such Employee's "Compensation" for such
Plan Year. An Eligible Employee's Before-Tax Contributions may be
taken into account for purposes of determining his Actual Deferral
Percentage for a particular Plan Year only if such Before-Tax
Contributions relate to Compensation that either would have been
received by the Eligible Employee in the Plan Year (but for the
deferral election), or is attributable to services performed in the
Plan Year and would have been received by the Eligible Employee within
two and one-half (2 1/2) months after the close of the Plan Year (but
for the deferral election), and such Before-Tax Contributions are
allocated to the Eligible Employee as of a date within that Plan Year.
For purposes of this rule, an Eligible Employee's Before-Tax
Contributions shall be considered allocated as of a date within a Plan
Year only if (A) the allocation is not contingent upon the Eligible
Employee's participation in the Plan or performance of services on any
date subsequent to that date, and (B) the Before-Tax Contribution is
actually paid to the Trust no later than the end of the twelve month
period immediately following the Plan Year to which the contribution
relates. To the extent determined by the Committee and in accordance
with regulations issued by the Secretary of the Treasury,
contributions on behalf of an
24
Eligible Employee that satisfy the requirements of Code Section
401(k)(3)(C)(ii) may also be taken into account for the purpose of
determining the Actual Deferral Percentage of such Eligible Employee.
(ii) "Compensation" means Compensation determined by the
Committee in accordance with the requirements of Section 414(s) of the
Code, including, to the extent elected by the Committee, amounts
deducted from an Employee's wages or salary that are excludable from
income under Sections 125, 129, 132(f)(4) or 402(a)(8) of the Code.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 401(a)(4) or 410(b) of the Code only
if aggregated with one or more other plans which include arrangements under
Code Section 401(k), then this Section 5.4 shall be applied by determining
the Actual Deferral Percentages of Eligible Employees as if all such plans
were a single plan, in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(d) For the purposes of this Section, the Actual Deferral Percentage
for any Highly Compensated Employee who is a participant under two or more
Code Section 401(k) arrangements of the Company or an Affiliated Company
shall be determined by taking into account the Highly Compensated
Employee's Compensation under each such arrangement and contributions under
each such arrangement which qualify for treatment under Code Section
401(k), in accordance with regulations prescribed by the Secretary of the
Treasury under Section 401(k) of the Code.
(e) For purposes of this Section, the amount of Before-Tax
Contributions by a Participant who is not a Highly Compensated Employee for
a Plan Year shall be reduced by any Before-Tax Contributions in excess of
the Deferral Limitation which have been distributed to the Participant
under Section 5.6, in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(f) The determination of the Actual Deferral Percentage of any
Participant shall be made after applying the provisions of Section 14.5
relating to certain limits on Annual Additions under Section 415 of the
Code.
25
(g) The determination and treatment of Before-Tax Contributions and
the Actual Deferral Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(h) The Committee shall keep or cause to have kept such records as are
necessary to demonstrate that the Plan satisfies the requirements of Code
Section 401(k) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
5.5 Provisions for Disposition of Excess Before-Tax Contributions by Highly
-----------------------------------------------------------------------
Compensated Employees.
---------------------
(a) The Committee shall determine, as soon as is reasonably possible
following the close of each Plan Year, the extent, if any, to which
deferral treatment under Code Section 401(k) may not be available for
Before-Tax Contributions by Highly Compensated Employees. If, pursuant to
the determination by the Committee, any or all of a Participant's Before-
Tax Contributions are not eligible for tax-deferral treatment, then any
excess Before-Tax Contributions shall be disposed of in accordance with (i)
below or any Excess Before-Tax Contribution and any income for the Plan
Year ("Non-Gap Period Income") allocable thereto shall be disposed of in
accordance with (ii) below.
(i) To the extent permissible under Section 6.3, excess Before-
Tax Contributions by the Highly Compensated Employee in a Plan Year
may be recharacterized as After-Tax Contributions for the Plan Year
not later than two and one-half (2-1/2) months following the close of
the Plan Year. Any recharacterization shall be effective retroactive
to the date of the Highly Compensated Employee's earliest Before-Tax
Contributions during the Plan Year in which the excess Before-Tax
Contributions were made. To the extent required by Treas. Reg. Section
1.401(k)-1(f)(3), Before-Tax Contributions recharacterized as After-
Tax Contributions shall continue to be treated as Before-Tax
Contributions for purposes of Article VIII.
(ii) To the extent a Participant's Before-Tax Contributions cannot
be recharacterized in accordance with (i) above, any excess Before-Tax
Contributions (and any Non-Gap Period income allocable thereto) in a
Plan Year
26
shall, if administratively feasible, be distributed to the Participant
not later than two and one-half (2-1/2) months following the close of
the Plan Year in which such excess Before-Tax Contributions were made,
but in any event no later than the close of the first Plan Year
following the Plan Year in which such excess Before-Tax Contributions
were made after withholding any applicable income taxes due on such
amounts.
(b) For purposes of this Section, the amount of excess Before-Tax
Contributions to be distributed to a Participant for a Plan Year or
recharacterized shall be reduced by the amount of any Before-Tax
Contributions in excess of the Deferral Limitation (for the Participant's
taxable year that ends with or within the Plan Year) which have been
distributed to the Participant under Section 5.6, in accordance with
regulations prescribed by the Secretary of the Treasury under Section
401(k) of the Code.
(c) The Committee shall determine the aggregate amount of any excess
Before-Tax Contributions by Highly Compensated Employees for a Plan Year by
application of the leveling method set forth in Treasury Regulation Section
1.401(k)-1(f)(2) under which the Deferral Percentage of the Highly
Compensated Employee who has the highest Deferral Percentage for such Plan
Year is reduced to the extent required (i) to enable the Plan to satisfy
the Actual Deferral Percentage test, or (ii) to cause such Highly
Compensated Employee's Deferral Percentage to equal the Deferral Percentage
of the Highly Compensated Employee with the next highest Deferral
Percentage. The recharacterization or distribution (as the case may be) of
any excess Before-Tax Contributions shall be made on the basis of the
dollar amounts (rather than the individual Deferral Percentages) of the
Before-Tax Contributions by Highly Compensated Employees, beginning with
the highest such amount.
(d) For purposes of satisfying the Actual Deferral Percentage test,
Non-Gap Period income allocable to a Participant's excess Before-Tax
Contributions, as determined under (b) above, shall be determined in
accordance with any reasonable method used by the Plan for allocating
income to Participant Accounts, provided such method does not discriminate
in favor of Highly Compensated Employees and is consistently applied to all
Participants for all corrective distributions or recharacterizations under
the Plan for a Plan Year. The Committee shall not be liable to
27
any Participant (or his Beneficiary, if applicable) for any losses caused
by misestimating the amount of any Before-Tax Contributions in excess of
the limitations of this Article V and any income allocable to such excess.
(e) To the extent required by regulations under Section 401(k) or 415
of the Code, any excess Before-Tax Contributions with respect to a Highly
Compensated Employee shall be treated as Annual Additions under Article XIV
for the Plan Year for which the excess Before-Tax Contributions were made,
notwithstanding the distribution or recharacterization of such excess in
accordance with the provisions of this Section.
5.6 Provisions for Return of Annual Before-Tax Contributions in Excess of the
-------------------------------------------------------------------------
Deferral Limitation.
-------------------
(a) In the event that due to error or otherwise, a Participant's
Before-Tax Contributions under this Plan exceed the Deferral Limitation for
any calendar year (but without regard to amounts of compensation deferred
under any other plan), the excess Before-Tax Contributions for the Plan
Year, if any, together with any Non-Gap Period income allocable to such
amount shall be distributed to the Participant on or before the first April
15 following the close of the calendar year in which such excess
contribution is made. The amount of excess Before-Tax Contributions that
may be distributed to a Participant under this Section for any taxable year
shall be reduced by any excess Before-Tax Contributions previously
distributed or recharacterized in accordance with Section 5.5 for the Plan
Year beginning with or within such taxable year.
(i) Income on Before-Tax Contributions in excess of the
Deferral Limitation shall be calculated in accordance with Section
5.5(e), except calculations of allocable Non-Gap Period income shall
be made with reference to the calendar year (if the Plan Year is not
the calendar year).
(ii) For the 1987 calendar year only, income shall be calculated
on a reasonable and consistent basis; provided, however, if there is a
loss allocable to the excess Before-Tax Contributions, the amount
distributed shall be the excess amount adjusted to reflect such loss.
(iii) The Committee shall not be liable to any Participant or
his Beneficiary, if applicable, for any losses caused by misestimating
the amount of
28
any Before-Tax Contributions in excess of the limitations of this
Article V and any income allocable to such excess.
(b) If in any calendar year a Participant makes Before-Tax
Contributions under this Plan and additional elective deferrals, within the
meaning of Code Section 402(g)(3), under any other plan maintained by the
Company or an Affiliated Company, and the total amount of the Participant's
elective deferrals under this Plan and all such other plans exceed the
Deferral Limitation, the Company and each Affiliated Company maintaining a
plan under which the Participant made any elective deferrals shall notify
the affected plans in writing, and corrective distributions of the excess
elective deferrals, and any income allocable thereto, shall be made from
one or more such plans, to the extent determined by the Company and each
Affiliated Company. The determination of the amount of a Participant's
elective deferrals for any calendar year shall be made after applying the
provisions of Section 14.5 relating to certain limits on Annual Additions
under Section 415 of the Code. All corrective distributions of excess
elective deferrals shall be made on or before the first April 15 following
the close of the calendar year in which the excess elective deferrals were
made.
(c) In accordance with rules and procedures as may be established by
the Committee, a Participant may submit a claim to the Committee in which
he certifies in writing the specific amount of his Before-Tax Contributions
for the preceding calendar year which, when added to amounts deferred for
such calendar year under any other plans or arrangements described in
Section 401(k), 408(k) or 403(b) of the Code (other than a plan maintained
by the Company or an Affiliated Company), will cause the Participant to
exceed the Deferral Limitation for the calendar year in which the deferral
occurred. Any such claim must be submitted to the Committee no later than
the March 1 of the calendar year following the calendar year of deferral.
To the extent the amount specified by the Participant does not exceed the
amount of the Participant's Before-Tax Contributions under the Plan for the
applicable calendar year, the Committee shall treat the amount specified by
the Participant in his claim as a Before-Tax Contribution in excess of the
Deferral Limitation for such calendar year and return such excess and any
income allocable thereto to the Participant, as provided in (a) above. In
the event that for any reason such Participant's Before-Tax Contributions
in excess of the Deferral Limitation
29
for any calendar year are not distributed to the Participant by the time
prescribed in (a) above, such excess shall be held in the Participant's
Before-Tax Contribution Account until distribution can be made in
accordance with the provisions of this Plan.
(d) To the extent required by regulations under Section 402(g) or 415
of the Code, Before-Tax Contributions with respect to a Participant in
excess of the Deferral Limitation shall be treated as Annual Additions
under Article XIV for the Plan Year for which the excess contributions were
made, notwithstanding the distribution of such excess in accordance with
the provisions of this Section.
5.7 Character of Amounts Contributed as Before-Tax Contributions.
------------------------------------------------------------
Unless otherwise specifically provided to the contrary in this Plan,
amounts deferred pursuant to a Participant's election to make Before-Tax
Contributions in accordance with Section 5.1 (and which qualify for treatment
under Code Section 401(k) and are contributed to the Trust Fund pursuant to
Article VI) shall be treated, for federal and state income tax purposes, as
Participating Company contributions.
5.8 Participant Transfer/Rollover Contributions.
-------------------------------------------
Effective as of an Eligible Employee's Employment Commencement Date, or
such later date as may be determined by the Administrator, amounts, if any,
distributed to such Eligible Employee or payable to such Eligible Employee from
another plan that satisfies the requirements of Code Section 401(a), or held in
an individual retirement account which is attributable solely to a rollover
contribution within the meaning of Code Section 408(d)(3), may be transferred to
this Plan, including by direct rollover from another plan that satisfies the
requirements of Code Section 401(a), and credited to the Participant's
Transfer/Rollover Account in accordance with Code Section 402 and rules which
the Committee shall prescribe from time to time; provided, however, the
Committee determines that the continued qualification of this Plan under Code
Section 401(a) or 401(k) would not be adversely affected by such transfer, or
would cause this Plan to become a "transferee plan," within the meaning of Code
Section 401(a)(11). Effective January 1, 2002, amounts, if any, distributed to
such Eligible Employee or payable to such Eligible Employee from (i) a qualified
plan described in Section 401(a) or 403(a) of the Code (including after-tax
employee contributions), (ii) an annuity contract described in Section 403(b) of
the Code (excluding after-tax employee contributions), (iii) an eligible plan
under Section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency
30
or instrumentality of a state or political subdivision of a state, and (iv) an
individual retirement account or annuity described in Section 408(a) or 408(b)
of the Code that is eligible to be rolled over and would otherwise be includable
in gross income, may be transferred to this Plan and credited to the
Participant's Transfer/Rollover Account in accordance with Code Section 402 and
rules which the Committee shall prescribe from time to time. Any amounts
transferred in accordance with this Section 5.8, which shall be in cash, shall
not be subject to distribution to the Participant except as expressly provided
under the terms of this Plan.
An Eligible Employee who prior to April 1, 1997 has transferred employment
to the Company (or other Participating Company) from Fisher-Price, Inc., and who
has elected to transfer directly to this Plan his entire account balance in the
Fisher-Price, Inc. Matching Savings Plan in accordance with the terms of such
plan, shall be permitted to transfer such account balance directly to this Plan.
The transfer must be made in cash, except that any promissory note evidencing an
outstanding loan to such Eligible Employee from the Fisher-Price, Inc. Matching
Savings Plan may be transferred to this Plan in kind. Any transferred
promissory note shall thereafter be repayable by the Participant to the Plan in
accordance with its terms. Any amounts transferred from the Fisher-Price, Inc.
Matching Savings Plan shall not be subject to distribution to the Participant
except as expressly provided under the terms of this Plan.
ARTICLE VI
COMPANY CONTRIBUTIONS
6.1 General.
-------
Subject to the requirements and restrictions of this Article VI and Article
XIV, and subject also to the amendment or termination of the Plan or the
suspension or discontinuance of contributions as provided herein, a
Participating Company shall contribute for each Participant who is an Employee
of such Participating Company, as follows:
(a) In the case of a Participating Company other than Fisher-Price,
Inc. and the Mattel Operations-East Aurora, Mattel Operations-Medina and
Mattel Operations-Murray divisions, for each month of each Plan Year
commencing on and after January 1, 1989 but prior to April 1, 1997, an
amount to the Participant's Company Contributions Account equal to a
percentage of the Participant's Compensation during such month
31
according to the Participant's attained age as of the last day of the
preceding month, as follows:
Age as of Last Day Percentage of
of Preceding Month Compensation
------------------ ------------
Under 40 2%
40 - 44 4%
45 - 49 5%
50 - 54 6%
55+ 7%
(b) In the case of a Participating Company other than Fisher-Price,
Inc., the Mattel Operations-East Aurora, Mattel Operations-Medina and
Mattel Operations-Murray divisions and the Pleasant Company, for each month
of each Plan Year commencing on and after April 1, 1997, an amount to the
Participant's Company Contributions Account equal to a percentage of the
Participant's Compensation during such month according to the Participant's
attained age as of the last day of the preceding month, as follows:
Age as of Last Day
of Preceding Month Percentage of Compensation
------------------ --------------------------
Under 30 3%
30 - 39 4%
40 - 44 5%
45 - 49 6%
50 - 54 7%
55+ 8%
(c) An amount to the Participant's Before-Tax Contributions Account
which is equal to the amount of the Participant's Before-Tax Contributions
pursuant to Section 5.1 and which qualify for tax treatment under Code
Section 401(k).
(d) An amount to the Participant's Company Matching Account which is
the sum of the amounts in (i) and (ii) below:
(i) A dollar amount equal to the dollar amount of the first two
percent (2%) of the sum of a Participant's Before-Tax and After-Tax
Contributions pursuant to Section 5.1.
32
(ii) A dollar amount equal to 50% of the dollar amount of
the next four percent (4%) of the sum of a Participant's Before-Tax
and After-Tax Contributions pursuant to Section 5.1.
The maximum Company Matching Contribution pursuant to this
Section 6.1(d) shall be four percent (4%) of the Participant's Compensation
(such Compensation to be determined prior to reduction for Before-Tax
Contributions pursuant to Section 5.1).
6.2 Requirement for Net Profits.
---------------------------
Contributions by a Participating Company shall be made without regard
to current or accumulated profits for the year; provided, however, that the Plan
is intended to be designed to qualify as a profit sharing plan for purposes of
Sections 401(a) et. seq. of the Code.
--- ----
6.3 Special Limitations on After-Tax Contributions and Company Matching
-------------------------------------------------------------------
Contributions.
-------------
With respect to each Plan Year, After-Tax Contributions and Company
Matching Contributions under the Plan for the Plan Year shall not exceed the
limitations on contributions on behalf of Highly Compensated Employees under
Section 401(m) of the Code, as provided in this Section. For purposes of this
Section, excess Before-Tax Contributions recharacterized as After-Tax
Contributions after the close of a Plan Year shall be treated as After-Tax
Contributions in a Plan Year as provided in Section 5.5(a)(i). In the event
that After-Tax Contributions and Company Matching Contributions under this Plan
on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be disposed of in accordance with Section 6.4.
For purposes of this Section 6.3, the meaning of the term "Compensation" shall
be as defined in Section 5.4(b).
(a) After-Tax Contributions and Company Matching Contributions on
behalf of Participants under Section 6.1(d) for a Plan Year shall satisfy
the Average Contribution Percentage test set forth in (i)(A) below, or the
Average Contribution Percentage test set forth in (i)(B) below:
(i) (A) The "Average Contribution Percentage" for Eligible
Employees who are Highly Compensated Employees for a Plan Year
shall not be more than the "Average Contribution Percentage" of
all other Eligible Employees for the Comparison Year multiplied
by 1.25, or
33
(i) (B) The excess of the "Average Contribution Percentage" for
Eligible Employees who are Highly Compensated Employees for a
Plan Year over the "Average Contribution Percentage" for all
other Eligible Employees for the Comparison Year shall not be
more than two (2) percentage points, and the "Average
Contribution Percentage" for Eligible Employees who are Highly
Compensated Employees for a Plan Year shall not be more than the
"Average Contribution Percentage" of all other Eligible Employees
for the Comparison Year multiplied by 2.00. The "Comparison Year"
is the Plan Year being tested.
(ii) The Average Contribution Percentage for any Plan Year ending
prior to January 1, 2002 for Highly Compensated Employees
eligible to participate in this Plan and a plan of the Company or
an Affiliated Company that satisfies the requirements of Section
401(k) of the Code, including, if applicable, this Plan, shall be
reduced to the extent necessary to satisfy the requirements of
Treasury Regulations Section 1.401(m)-2 or similar such rule.
The multiple test described in Treasury Regulations Section
1.401(m)-2 shall not apply for Plan Years beginning after
December 31, 2001.
(b) For purposes of this Section, "Average Contribution Percentage"
means, with respect to a group of Eligible Employees for a Plan Year, the
average of the "Contribution Percentage," calculated separately for each
Eligible Employee in such group. The "Contribution Percentage" for any
Eligible Employee is determined by dividing the sum of After-Tax
Contributions during the Plan Year and Company Matching Contributions under
the Plan on behalf of each Eligible Employee for such Plan Year, by such
Eligible Employee's Compensation for such Plan Year. "Company Matching
Contributions" for purposes of the Average Contribution Percentage test
shall include a Company Matching Contribution only if it is allocated to
the Participant's Company Matching Contributions Account during the Plan
Year and is paid to the Trust Fund by the end of the twelfth month
following the close of the Plan Year. To the extent determined by the
Committee and in accordance with regulations issued by the Secretary of the
Treasury under Code Section 401(m)(3), the Before-Tax Contributions on
behalf
34
of an Eligible Employee and any "qualified nonelective contributions,"
within the meaning of Code Section 401(m)(4)(c), on behalf of an Eligible
Employee may also be taken into account for purposes of calculating the
Contribution Percentage of such Eligible Employee, but shall not otherwise
be taken into account. However, any Company Matching Contributions taken
into account for purposes of determining the Actual Deferral Percentage of
an Eligible Employee under Section 5.4(a) shall not be taken into account
under this Section 6.3.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated with this
Plan, then this Section 6.3 shall be applied by determining the
Contribution Percentages of Eligible Employees as if all such plans were a
single plan, in accordance with regulations prescribed by the Secretary of
the Treasury under Section 401(m) of the Code.
(d) For the purposes of this Section, the Contribution Percentage for
any Eligible Employee who is a Highly Compensated Employee under two or
more Code Section 401(a) plans of the Company or an Affiliated Company to
the extent required by Code Section 401(m), shall be determined in a manner
taking into account the participant contributions and matching
contributions for such Eligible Employee under each of such plans.
(e) The determination of the Contribution Percentage of any
Participant shall be made after first applying the provisions of Section
14.5 relating to certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 5.6 relating to the
return of Before-Tax Contributions in excess of the Deferral Limitation,
then applying the provisions of Section 5.5 relating to certain limits
under Section 401(k) of the Code imposed on Pre-Tax Contributions of Highly
Compensated Employees, and last, applying the provisions of Section 6.5
relating to the forfeiture of Company Matching Contributions attributable
to excess Before-Tax or After-Tax Contributions.
35
(f) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records as are
necessary to demonstrate that the Plan satisfies the requirements of Code
Section 401(m) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
6.4 Provision for Return of Excess After-Tax Contributions and Company Matching
---------------------------------------------------------------------------
Contributions on Behalf of Highly Compensated Employees.
-------------------------------------------------------
(a) The Committee shall determine, as soon as is reasonably possible
following the close of the Plan Year, the extent (if any) to which After-
Tax and Company Matching Contributions on behalf of Highly Compensated
Employees may cause the Plan to exceed the limitations of Section 6.3 for
such Plan Year. If, pursuant to the determination by the Committee, After-
Tax and Company Matching Contributions on behalf of a Highly Compensated
Employee may cause the Plan to exceed such limitations, then the Committee
shall take the following steps:
(i) First, any excess After-Tax Contributions that were not
matched by Company Matching Contributions, and any Non-Gap Period
income allocable thereto, shall be distributed to the Highly
Compensated Employee (after withholding any applicable income taxes on
such amounts).
(ii) Second, if any excess remains after the provisions of (i)
above are applied, to the extent necessary to eliminate the excess,
Company Matching Contributions on behalf of the Highly Compensated
Employee, and any Non-Gap Period income allocable thereto, shall be
forfeited, to the extent forfeitable under the Plan, or distributed to
the Highly Compensated Employee, to the extent non-forfeitable under
the Plan (after withholding any applicable income taxes on such
amounts). Any corresponding After-Tax Contributions, and any Non-Gap
Period income allocable thereto, shall be distributed to the Highly
Compensated Employee (after withholding any applicable income taxes on
such amounts).
(iii) If administratively feasible, excess After-Tax
Contributions and Company Matching Contributions which are
nonforfeitable under the Plan,
36
including any Non-Gap Period income allocable thereto, shall be
distributed to Highly Compensated Employees, or, to the extent
forfeitable, forfeited, within two and one-half (2-1/2) months
following the close of the Plan Year for which the excess
Contributions were made, but in any event no later than the end of the
first Plan Year following the Plan Year for which the excess
Contributions were made, notwithstanding any other provision in this
Plan. Amounts of excess Company Matching Contributions forfeited by
Highly Compensated Employees under this Section, including any income
allocable thereto, shall be applied, to the maximum extent
practicable, to reduce Company Matching Contributions for the Plan
Year for which such excess Contributions were made and thereafter
shall be applied as soon as possible to reduce Company Matching
Contributions for succeeding Plan Years.
(b) The Committee shall determine the amount of any excess After-Tax
Contributions and Company Matching Contributions made by or on behalf of
Highly Compensated Employees for a Plan Year by application of the leveling
method set forth in Treasury Regulation Section 1.401(m)-1(e)(2) under
which the Contribution Percentage of the Highly Compensated Employee who
has the highest such Contribution Percentage for such Plan Year is reduced,
to the extent required (i) to enable the Plan to satisfy the Average
Contribution Percentage test, or (ii) to cause such Highly Compensated
Employee's Contribution Percentage to equal the Contribution Percentage of
the Highly Compensated Employee with the next highest Contribution
Percentage. The distribution or forfeiture (as the case may be) of any
excess After-Tax Contributions or Company Matching Contributions shall be
made on the basis of dollar amounts (rather than the individual
Contribution Percentages) of the After-Tax Contributions and Company
Matching Contributions by Highly Compensated Employees beginning with the
highest such amounts.
(c) For purposes of satisfying the Average Contribution Percentage
test, Non-Gap Period income allocable to a Participant's excess After-Tax
Contributions or Company Matching Contributions, as determined under (b)
above, shall be determined by applying procedures comparable to those
provided under Section 5.5.
37
(d) To the extent required by regulations under Section 414(m) or 415
of the Code, any excess After-Tax Contributions or matching Company
Contribution forfeited by or distributed to a Highly Compensated Employee
in accordance with this Section shall be treated as an Annual Addition
under Article XIV for the Plan Year for which the excess contribution was
made, notwithstanding such forfeiture or distribution.
6.5 Forfeiture of Company Matching Contributions Attributable to Excess
-------------------------------------------------------------------
Deferrals or Contributions.
--------------------------
To the extent any Company Matching Contributions allocated to a
Participant's Company Matching Contributions Account are attributable to
excess Before-Tax Contributions required to be distributed to the
Participant in accordance with Section 5.5 or 5.6, or excess After-Tax
Contributions required to be distributed to the Participant in accordance
with Section 6.4, such Company Matching Contributions, including any Non-
Gap Period income allocable thereto, shall be forfeited, notwithstanding
that such Company Matching Contributions may otherwise be nonforfeitable
under the terms of the Plan. Any Company Matching Contributions forfeited
by a Participant in accordance with this Section 6.5 shall be applied to
reduce Company Matching Contributions.
6.6 Investment and Application of Plan Contributions.
------------------------------------------------
(a) Subject to the provisions of Section 4.1(b), all contributions to
the Trust Fund under Section 6.1 (including Before-Tax Contributions) and
Participant After-Tax Contributions under Section 5.1 shall be invested as
provided in this Section 6.6, subject to such rules as the Committee may
adopt, in its sole discretion, to implement the provisions of this Section
6.6. The Committee may establish a choice of investment alternatives for
Accounts from which each Participant may select in determining the manner
in which his Account will be invested. In its sole discretion, the
Committee may establish an investment alternative consisting of Company
Stock. If investment alternatives are established in accordance with this
Section 6.6, the following provisions of this Section 6.6 shall apply,
including, in the event the Committee establishes a Company Stock
alternative, the limitations of (iv) below and the provisions of Article X
relating to investments in Company Stock.
(i) A Participant may elect at any time to change an investment
election with respect to the allocation of future contributions made
by him or on
38
his behalf (such election to apply to all such contributions without
regard to any distinction between Company contributions or Participant
contributions) among the investment alternatives. The Committee may
require at least thirty (30) days notice prior to the commencement of
the payroll period for which such change is to be effective. Any such
election shall be made in any whole percentage, subject to the
provisions of Subsection (iv) below.
(ii) Separate Trust Fund Subaccounts shall be established for
each investment alternative selected by a Participant, and each such
Subaccount shall be valued separately.
(iii) A Participant may elect twice per calendar quarter to
change the investment of his Accounts and reallocate such Accounts
among the investment alternatives in any whole percentage, subject to
the limitations of (iv) below. Subject to such rules as the Committee
may prescribe, any such election to change shall be effective as soon
as practical following receipt of the Participant's election. Any
such change shall be implemented by the Committee in accordance with
practices and procedures established by the Committee to provide for
the orderly liquidation and/or purchase of investments.
(iv) If a Company Stock alternative is established by the
Committee, each Participant may elect to invest up to a maximum of
fifty percent (50%) of contributions made by him or on his behalf
(such limitation to apply to all contributions without regard to any
distinction between Company contributions and Participant
contributions) in the Company Stock alternative in accordance with
this Section 6.6; provided, however, that the 50% limitation shall not
apply to Company Stock held in the F-P Savings Plan on March 31, 1997
and transferred to this Plan on April 1, 1997. Such a Participant may
also elect to transfer amounts from his Accounts held in other
investment alternatives to the Company Stock alternative in accordance
with this Section 6.6, provided, however, that no such transfer shall
be implemented to the extent that such transfer would result in the
value of the Participant's interest in the Company Stock Fund
exceeding fifty percent (50%) of the value of his interest in all
investment alternatives held under the Plan. Notwithstanding the
preceding
39
sentence, neither the Company nor the Committee, nor any
representative of the Company, the Committee or of the Plan shall have
any obligation to monitor the value of a Participant's interest in the
Company Stock Fund, or to manage said fund, and no person shall or
shall have any authority to dispose of any Participant's interest in
the Company Stock Fund except in accordance with a Participant's valid
election or otherwise in accordance with express provisions of this
Plan.
(v) In the case of a Participant who fails to make an effective
election, for any reason whatsoever, as to how all or any portion of
his interest therein shall be invested, the Committee shall prescribe
rules which shall require that the Accounts of such Participant be
invested in the stable asset fund.
6.7 Irrevocability.
--------------
A Participating Company shall have no right or title to, nor interest
in, the contributions made to the Trust Fund, and no part of the Trust Fund
shall revert to the Participating Company except that on and after the Effective
Date funds may be returned to a Participating Company as follows:
(a) In the case of a Participating Company contribution which is made
by a mistake of fact, that contribution may be returned to the
Participating Company within one (1) year after it is made.
(b) All contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. In the event deduction is disallowed
for any such contribution, such contribution may be returned to the
Participating Company.
6.8 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund.
-------------------------------------------------------------------------
The Company, Committee and Trustee shall not be liable or responsible for
the adequacy of the Trust Fund to meet and discharge any or all payments and
liabilities hereunder. All Plan benefits will be paid only from the Trust
assets, and neither the Company, the Committee nor the Trustee shall have any
duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan. Except as required under the
Plan or Trust or under Part 4 or Title I of ERISA, the Company shall not be
responsible for any decision, act or omission of the Trustee, the Committee,
or the Investment Manager (if applicable), and shall not
40
be responsible for the application of any moneys, securities, investments or
other property paid or delivered to the Trustee.
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 General.
-------
(a) All contributions under this plan shall be held in the Trust Fund.
(b) All gains, losses, dividends and other property acquisitions
and/or transfers that occur with respect to the Trust Fund shall be held,
charged, credited, debited or otherwise accounted for under said fund on an
unallocated basis until allocated to Participants' Accounts as of a
Valuation Date as provided under this Plan or otherwise used or applied in
accordance with the provisions of this Plan.
7.2 Participants' Accounts.
----------------------
In order to account for the allocated interest of each Participant in the
Trust Fund, there shall be established and maintained the Accounts described in
Section 2.1.
7.3 Revaluation of Participants' Accounts.
-------------------------------------
As of each Valuation Date, the Accounts of each Participant shall be
revalued so as to reflect a proportionate share in any increase or decrease in
the fair market value of the assets in the Trust Fund as of that date as
compared with the value of the assets in the Trust Fund as of the immediately
preceding Valuation Date. The valuation and allocation provisions of this
Section 7.3 shall be applied and implemented in accordance with the following
rules:
(a) As of each Valuation Date the Accounts holding such assets shall
be revalued so as to reflect to each such Account a proportionate share in
the net income or loss of the assets since the immediately preceding
Valuation Date.
(b) The Company, Committee and Trustee do not in any manner or to any
extent whatsoever warrant, guarantee or represent that the value of a
Participant's Accounts shall at any time equal or exceed the amount
previously contributed thereto.
7.4 Treatment of Accounts Following Termination of Employment.
---------------------------------------------------------
Following a Participant's termination of employment, pending distribution
of the Participant's Distributable Benefit pursuant to the provisions of Article
VIII below, the
41
Participant's Plan Accounts shall continue to be maintained and accounted for in
accordance with all applicable provisions of this Plan.
7.5 Accounting Procedures.
---------------------
The Committee and the Trustee shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VII. From time to time the Committee and
Trustee may modify such accounting procedures for the purpose of achieving
equitable, nondiscriminatory, and administratively feasible allocations among
the Accounts of Participants in accordance with the general concepts of the Plan
and the provisions of this Article VII.
ARTICLE VIII
VESTING; PAYMENT OF PLAN BENEFITS
8.1 Vesting.
-------
Each Participant's vested interest in his Accounts shall be determined as
follows:
(a) Each Participant shall at all times be one hundred percent (100%)
vested in his Before-Tax Contributions Account, his After-Tax Contributions
Account and his Transfer/Rollover Account under the Plan.
(b) Except as provided in (c) and (d) below, each Participant shall
become vested in his Company Matching Account and his Company Contributions
Account according to the applicable table set forth below:
Except as provided in the next paragraph, the applicable table is as
follows (the "3-Year Vesting Schedule"):
Number of Vesting
Years of Service Percentage
---------------- ----------
Less than 3 0%
3 or more 100%
provided, however, if the Participant was eligible to participate in the
-------- -------
Plan before April 1, 2000 and has two (2) Years of Service as of April 1,
2000, the 3-Year Vesting Schedule shall be modified as follows:
42
Number of Vesting
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 25%
3 or more 100%
Notwithstanding the foregoing, if the Participant participated in the
Plan before April 1, 2000 and is not an Employee on April 1, 2000, the
Participant's vested interest (if any) in his Company Matching Account and
his Company Contributions Account shall be determined under the following
table (the "5-Year Vesting Schedule"):
Number of Vesting
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 25%
3 50%
4 75%
5 or more 100%
The 3-Year Vesting Schedule shall not apply to such Participant until such
Participant resumes employment as an Employee after April 1, 2000, in which
event:
(i) The 3-Year Vesting Schedule shall apply to the portion of his
Company Matching Account and his Company Contributions Account that is
attributable to his post-March 31, 2000 participation in the Plan (if
any); and
(ii) The 3-Year Vesting Schedule shall apply to the remainder of
his Company Matching Account and his Company Contributions Account
only (A) if the 5-Year Vesting Schedule had not been applied to
forfeit any of his Company Matching Account or his Company
Contributions Account prior to his resumption of employment or (B) if
the 5-Year Vesting Schedule had been so applied, there has been a
restoration of the resulting forfeited amount pursuant to Section
8.15(b) following his resumption of employment.
(c) Notwithstanding the foregoing, each Participant who completed an
Hour of Service prior to July 1, 1989 shall at all times be one hundred
percent (100%) vested in his Company Contributions Account.
(d) Notwithstanding the foregoing, each Participant who was eligible
to participate in the F-P Savings Plan on March 31, 1997, shall at all
times be one hundred percent (100%) vested in his Company Matching Account.
43
(e) Additionally a Participant shall become one hundred percent (100%)
vested in his Company Matching Account and his Company Contributions
Account upon attainment of Normal Retirement Date while an Employee, or in
the event of death or Total and Permanent Disability while an Employee.
(f) Notwithstanding the foregoing, each Participant who was a
participant in the Tyco Plan on January 1, 1998, shall at all times be one
hundred percent (100%) vested in his Tyco Before-Tax Contributions Account
and his Tyco Company Matching Account.
(g) Notwithstanding the foregoing, each Participant who was a
participant in the PrintPaks Plan on January 31, 1999, shall at all times
be one hundred percent (100%) vested in his PrintPaks Before-Tax
Contributions Account and his PrintPaks Company Matching Account.
(h) Notwithstanding the foregoing, each Participant who was a
participant in the Fort Wayne Plan on December 14, 2000, shall at all times
be one hundred percent (100%) vested in his Fort Wayne Plan Before-Tax
Contributions Account, his Fort Wayne Plan Company Matching Account and his
Fort Wayne Plan Nonelective Account.
(i) Notwithstanding the foregoing, each Participant who was a
participant in the Pleasant Plan on September 30, 2001, shall at all times
be one hundred percent (100%) vested in his Pleasant Plan Nonelective
Contributions Account.
(j) Additionally, each Participant who (i) was employed at the Mattel-
Customer Care Center, Phoenix, Arizona division of the Company on March 27,
2001, (ii) was employed at the Mattel Operations-Murray division of the
Company on April 3, 2001 or (iii) was employed at the Mattel-Hebron,
Kentucky division of the Company on April 24, 2001 shall at all times be
one hundred percent (100%) vested in his Company Matching Account and his
Company Contributions Account.
8.2 Distribution Upon Retirement.
----------------------------
(a) A Participant may retire from the employment of the Company on his
Normal Retirement Date. Subject to the required distribution rules under
(b) below, if the Participant continues in the service of the Company
beyond his Normal Retirement Date, he shall continue to participate in the
Plan in the same manner as Participants who have not reached their Normal
Retirement Dates. At the subsequent termination of the
44
Participant's employment on his late retirement date, his Distributable
Benefit shall be based upon the value of his Accounts as of the applicable
Valuation Date determined with reference to the date of distribution. After
a Participant has reached his Normal Retirement Date, any termination of
the Participant's employment (other than by reason of death or disability)
shall be deemed a Normal Retirement.
(b) Upon Normal Retirement a Participant shall be entitled to a
distribution of his Distributable Benefit in the Trust Fund. Such
distribution shall be made or commence to be made as soon as practicable
but no later than the sixtieth day after the close of the Plan Year in
which occurs the Participant's termination of employment with the Company
and all Affiliated Companies, unless a later date is specified by the
Participant in a written election filed with the Plan Administrator on or
after April 1, 1997. Notwithstanding the foregoing, in the case of a
Participant who is a "5-percent owner" (within the meaning of Section
401(a)(9) of the Code) distribution shall be made or commence to be made
not later than April 1 following the calendar year in which such
Participant attains age 70-1/2, whether or not the Participant's employment
has terminated.
(c) With respect to distributions under the Plan made for calendar
years beginning on or after January 1, 2002, the Plan will apply the
minimum distribution requirements of Section 401(a)(9) of the Code in
accordance with the regulations under Section 401(a)(9) that were proposed
on January 17, 2001, notwithstanding any provision of the Plan to the
contrary. This provision shall continue in effect until the end of the
last calendar year beginning before the effective date of final regulations
under Section 401(a)(9) or such other date as may be specified in guidance
published by the Internal Revenue Service.
8.3 Distribution Upon Death Prior to Termination of Employment.
----------------------------------------------------------
(a) Upon the death of a Participant during his employment the
Committee shall direct the Trustee to make a distribution of the
Participant's Distributable Benefit in the Trust Fund in a single lump sum
to the Beneficiary designated by the deceased Participant, or as otherwise
determined under Section 8.9.
(b) Distribution as provided in Section 8.3(a) shall be made as soon
as practicable but in no event later than sixty (60) days after the close
of the Plan Year in
45
which all facts required by the Committee to be established as a condition
of payment shall have been established to the satisfaction of the Committee
(provided that, to the extent required by Section 401(a)(9) of the Code,
his entire Distributable Benefit shall be distributed within five (5) years
of such Participant's death).
8.4 Death After Termination of Employment.
-------------------------------------
(a) Upon the death of a former Participant after his retirement or
other termination of employment, but prior to the distribution of his
entire Distributable Benefit in the Trust Fund to which he is entitled, the
Committee shall direct the Trustee to make a distribution of the balance to
which the deceased Participant was entitled, in a single lump sum, to the
Beneficiary designated by the deceased Participant or as otherwise
determined under Section 8.9.
(b) Distribution as provided in Section 8.4(a) shall be made as soon
as practicable but in no event later than sixty (60) days after the close
of the Plan Year in which all facts required by the Committee to be
established as a condition of payment shall have been established to the
satisfaction of the Committee (provided that, to the extent required by
Section 401(a)(9) of the Code, his entire Distributable Benefit shall be
distributed within five (5) years of such Participant's death).
8.5 Termination of Employment Prior to Normal Retirement Date.
---------------------------------------------------------
(a) Subject to the provisions of Section 8.5(b) below, if a
Participant's employment for the Company and all Affiliated Companies
terminates prior to his Normal Retirement Date, his Distributable Benefit
in the Trust Fund shall be paid as soon as administratively feasible
following his Normal Retirement Date, unless a later date is specified by
the Participant in a written election filed with the Plan Administrator on
or after April 1, 1997. Unless elected otherwise, in no event shall such
distribution be later than sixty (60) days after the close of the Plan Year
in which occurs the Participant's Normal Retirement Date. Notwithstanding
the foregoing, in the case of a Participant who is a "5-percent owner"
(within the meaning of Section 401(a)(9) of the Code) distribution shall be
made or commence to be made not later than April 1 following the calendar
year in which such Participant attains age 70-1/2.
(b) If the Participant makes a valid written election in accordance
with (c) below, payment of his Distributable Benefit pursuant to this
Section 8.5 may be made
46
on an earlier date which is not later than sixty (60) days after the close
of the Plan Year in which occurs the later of (i) the Participant's
termination of employment with the Company and all Affiliated Companies, or
(ii) a date specified by the Participant in the valid written election
filed by the Participant, on or after April 1, 1997, to the extent
administratively feasible. For purposes of Section 72(t) of the Code, any
distribution to a Participant in accordance with this Section 8.5 during or
following the year in which he attains age fifty-five (55) shall be deemed
to be on account of an event enumerated in Code Section 72(t)(2).
(c) Effective as of January 1, 1989, any written election by a
Participant to receive payment of his Distributable Benefit prior to Normal
Retirement Date shall not be valid unless such election is made both (A)
after the Participant receives a written notice advising him of his right
to defer payment to Normal Retirement Date and (B) within the ninety (90)
day period ending on the Participant's "Benefit Starting Date." The notice
to the Participant advising him of his right to defer payment shall be
given no less than thirty (30) nor more than ninety (90) days prior to the
Participant's Benefit Starting Date. For purposes of this Subsection (c),
"Benefit Starting Date" shall mean the first day of the first period for
which the Participant's Distributable Benefit is paid. Notwithstanding the
foregoing, payment of the Participant's Distributable Benefit may commence
less than thirty (30) days after receipt of the notice, provided that the
Plan Administrator clearly informs the Participant that the Participant has
a right to a period of at least thirty (30) days after receiving the notice
to consider the decision of whether or not to elect to receive payment and
the Participant, after receiving the notice, affirmatively elects to
receive payment.
(d) In the event a Participant is not fully vested in all of his
Company Contributions Account or Company Matching Account under the Plan,
the portion of such Accounts which is not vested shall be forfeited as of
the earlier of the date the vested portion of such Accounts is completely
distributed to him or the date he incurs five (5) consecutive one-year
Periods of Severance.
(e) Notwithstanding the foregoing, if a Participant ceases to be an
Employee by reason of the disposition by the Company or an Affiliated
Company of either (i) substantially all of the assets used by the Company
or an Affiliated Company, as the
47
case may be, in a trade or business, or (ii) the interest of the Company or
an Affiliated Company, as the case may be, in a subsidiary, such
Participant shall be entitled to distribution of his Distributable Benefit
as if, for purposes of this Plan only, such event constitutes a termination
of employment.
8.6 Withdrawals.
-----------
(a) Subject to the succeeding provisions of this Section 8.6, while he
is still an Eligible Employee, a Participant may withdraw amounts from his
Accounts under the Plan; provided, however, that not more than one
withdrawal may be made by a Participant from his Accounts within any single
quarter of a Plan Year and a withdrawal must be for at least $200 (or the
entire amount available for withdrawal, if less). A withdrawal other than
on account of Hardship shall be made from the Participant's Accounts in the
following order, in each case up to the amount available for withdrawal in
such Accounts (i) After-Tax Contributions Account; (ii) Transfer/Rollover
Account; and (iii) Company Matching Account. Payment of a withdrawal shall
be made only in cash and shall be allocated pro rata among the
Participant's investment fund subaccounts, including any Company Stock
subaccount. In no event may any amount be withdrawn by a Participant after
he ceases to be an Eligible Employee.
(b) A withdrawal from a Participant's Transfer/Rollover Account may be
made in accordance with rules of uniform application which the Committee
may from time to time prescribe; provided, however, that, except in the
case of a Participant who is determined to have a Total and Permanent
Disability and who is ineligible to make further contributions under
Section 5.1, no amount representing Employee contributions made within the
preceding six months to the Mattel Investment Plan which were matched by
Company matching contributions under said Plan may be withdrawn from such
Account; and provided further, that unless the Participant has completed an
aggregate of at least sixty (60) months of participation in this Plan and
the Mattel Investment Plan as of the date of withdrawal or has attained age
59-1/2 or is determined by the Committee to have a Total and Permanent
Disability, the withdrawal shall not include amounts attributable to
Company contributions made under the Mattel Investment Plan within the two
(2) year period preceding withdrawal.
48
(c) A withdrawal from a Participant's After-Tax Contribution Account
may be made in accordance with rules of uniform application which the
Committee may from time to time prescribe; provided, however, that except
in the case of a Participant who is determined to have a Total and
Permanent Disability and who is ineligible to make further contributions
under Section 5.1, no amount representing After-Tax Contributions made
within the preceding six months to the Plan which were matched by Company
Matching Contributions may be withdrawn from such Account.
(d) A withdrawal from a Participant's Before-Tax Contributions Account
may be made in accordance with rules of uniform application which the
Committee may from time to time prescribe; provided, however, that no
Participant may make a withdrawal from his Before-Tax Contributions Account
prior to attaining age 59-1/2, or a determination by the Committee that
such Participant has a Total and Permanent Disability or that the
withdrawal is necessary to relieve a hardship of the Participant or his
family. A Participant may receive a withdrawal due to hardship only if the
withdrawal both is made due to an immediate and heavy financial need of the
Participant within the meaning of (i) below and is necessary to satisfy
such financial need within the meaning of (ii) below.
(i) For purposes of this Section 8.6(d), a withdrawal will be
considered to be on account of an immediate and heavy financial need
of the Participant only if the withdrawal is for: (A) expenses for
medical care described in Code Section 213(d) previously incurred by
the Participant, or his Spouse or dependents (as defined in Code
Section 152), or expenses which are necessary for such persons to
obtain medical care (as defined above); (B) costs directly related to
the purchase of a principal residence for the Participant (excluding
mortgage payments); (C) payment of tuition, related educational fees,
and room and board expenses for the next 12 months of post-secondary
education for the Participant, or his Spouse, children, or dependents
(as defined above); (D) payments necessary to prevent the eviction of
the Participant from his principal residence or foreclosure on the
mortgage on such residence; or (E) such other deemed immediate and
heavy financial needs as are set forth by the Internal Revenue
49
Service through the publication of revenue rulings, notices, and other
documents of general applicability.
(ii) For purposes of this Section 8.6(d), a distribution shall be
considered to be necessary to satisfy an immediate and heavy financial
need of the Participant only if all of the following conditions are
satisfied: (A) the distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant, which may
include amounts necessary to pay federal, state, or local income taxes
or penalties reasonably anticipated to result from the distribution;
(B) the Participant has obtained all distributions (other than
hardship distributions) and all non-taxable loans (at the time of the
loan) currently available under all plans maintained by the Company;
(C) the Deferral Limitation for the Participant for the Participant's
taxable year following the taxable year of the hardship distribution
shall be reduced by the amount of the Participant's Before-Tax
Contributions for the taxable year of the hardship distribution
withdrawal; and (D) the Participant's Before-Tax Contributions and
After-Tax Contributions to the Plan and employee contributions under
all qualified and non-qualified plans of deferred compensation
maintained by the Company, including a stock option, stock purchase,
or similar plan, or a cash-or-deferred arrangement that is part of a
cafeteria plan (within the meaning of Code Section 125), will be
suspended under the terms of each such plan, or in accordance with the
terms of an otherwise legally enforceable agreement, for twelve (12)
months (six (6) months effective January 1, 2002) following the
receipt of the hardship distribution.
Notwithstanding the foregoing, the amount of any hardship withdrawal
shall not exceed a Participant's `distributable amount,' which consists of
the total of such Participant's Before-Tax Contributions as of the date of
the hardship withdrawal, including earnings credited thereon before
December 31, 1988 (if any), reduced by the amount of any previous hardship
withdrawals. The Committee will determine whether a hardship withdrawal
satisfies the foregoing standards in a uniform and nondiscriminatory manner
consistent with Code Section 401(k) and the regulations promulgated
thereunder.
(e) A withdrawal from a Participant's vested interest in his Company
Contributions Account may be made in accordance with rules of uniform
application
50
which the Committee may from time to time prescribe; provided, however,
that no participant may withdraw from his Company Contributions Account
prior to attaining age 59-1/2 or a determination by the Committee that such
Participant has a Total and Permanent Disability or that the withdrawal is
necessary to relieve a hardship of the Participant or his family within the
meaning of Section 8.6(d) of the Plan.
(f) A withdrawal from the vested portion of a Participant's Company
Matching Account may be made in accordance with rules of uniform
application which the Committee may from time to time prescribe; provided,
however, that unless the Participant has completed an aggregate of at least
sixty (60) months of participation in this Plan and the Mattel Investment
Plan, the F-P Savings Plan, the Tyco Plan, the PrintPaks Plan or the
Pleasant Plan as of the date of withdrawal or has attained age 59-1/2 or is
determined by the Committee to have Total and Permanent Disability, any
withdrawal from such Company Matching Account shall not include amounts
attributable to Company contributions made within the two (2) year period
preceding withdrawal.
(g) Notwithstanding anything in this Article to the contrary, a
Participant can elect to receive all or any portion of his vested Accounts
once such Participant attains age 70-1/2.
(h) If a Participant makes an in-service withdrawal from his Company
Contributions Account or Company Matching Account at a time when the
Participant does not have a one hundred percent (100%) vested interest in
the value of such Account, and the Participant may increase his vested
interest in the Account:
(i) such account shall be established as a separate Account as of
the date of distribution, and
(ii) at any relevant time the Participant's vested interest in
the value of such separate Account shall be equal to an amount ("X")
determined by the formula:
X = P (AB + D) - D
For purposes of applying the formula above: P is the nonforfeitable
percentage at the relevant time, AB is the Account balance at the
relevant time, and D is the amount of the withdrawal.
51
(i) Disbursement of withdrawals shall be as soon as administratively
practicable after the submission of a request for withdrawal in form
satisfactory to the Committee.
8.7 Form of Distribution.
--------------------
(a) Unless a Participant makes a written election in accordance with
Section 8.7 (c) or 8.8 below, a Participant's Distributable Benefit shall
be payable in the form of a single sum distribution. Except for any
portion of such Distributable Benefit that is payable in the form of
Company Stock in accordance with Section 8.13, such distribution shall be
in cash.
(b) In the case of any cash disbursement from a Participant's
Accounts, such disbursement shall be made ratably from such investment
funds or investment vehicles in which such Participant's Accounts affected
by such disbursement are invested.
(c) Effective April 1, 1997, a Participant who terminates employment
on or after his Normal Retirement Date, Early Retirement Date or by reason
of Total and Permanent Disability may elect to receive his benefit in
installments payable monthly, quarterly or annually for a period of five,
ten or fifteen years (but no longer than the Participant's life expectancy
determined as of his Benefit Starting Date). The installments for each
year shall not be less than the annual installment determined under the
requirements of Section 401(a)(9) of the Code. All such installments shall
be paid in cash or Company Stock and the installment or installments for
the year in which the Participant attains age 70-1/2 and all subsequent
years shall be paid to the Participant on or before December 31 of such
year.
8.8 Election for Direct Rollover of Distributable Benefit to Eligible
-----------------------------------------------------------------
Retirement Plan.
---------------
(a) To the extent required by Section 401(a)(31) of the Code, a
Participant who is eligible to receive payment of his Distributable Benefit
shall be entitled to elect a direct rollover of all or part of his
Distributable Benefit. For purposes of this Section, an "eligible
retirement plan" shall mean any plan described in Code Section
402(c)(8)(B), including an annuity contract described in Section 403(b) of
the Code and an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state or any agency or
instrumentality of a state or political subdivision of a state and which
agrees to separately account for amounts transferred to such plan from the
Plan,
52
the terms of which permit the acceptance of a direct rollover from a
qualified plan. The portion of a Participant's Distributable Benefit
consisting of after-tax contributions which are not includible in income
shall be eligible for a direct rollover in accordance with the provisions
of this Section. However, such portion may be transferred only to an
individual retirement account or annuity described in Section 408(a) or (b)
of the Code, or to a qualified defined contribution plan described in
Section 401(a) or 403(a) of the Code, that agrees to separately account for
amounts so transferred, including separately accounting for the portion of
such Distributable Benefit which is includible in gross income and the
portion of such Distributable Benefit which is not so includible in gross
income.
(b) A Participant's direct rollover election under this Section shall
be in writing and shall be made in accordance with rules and procedures
established by the Committee. Such election shall specify the dollar or
percentage amount of the Distributable Benefit to be rolled over, the name
of the eligible retirement plan selected by the Participant, and such
additional information as the Committee deems necessary or appropriate in
order to implement the election. It shall be the Participant's
responsibility to confirm that the eligible retirement plan designated in
his direct rollover election will accept the direct rollover of his
Distributable Benefit. The Committee shall be entitled to direct the
rollover based on its reasonable reliance on information provided by the
Participant, and shall be not required to independently verify such
information, unless it is clearly unreasonable not to do so.
(c) At least thirty (30) days, but not more than ninety (90) days,
prior to the date a Participant's Distributable Benefit becomes payable,
the Participant shall be given written notice of any right he may have to
elect a direct rollover of the taxable portion of his Distributable Benefit
to an eligible retirement plan. Notwithstanding the foregoing, a direct
rollover of the Participant's Distributable Benefit may be made less than
thirty (30) days after receipt of the notice, provided that the Plan
Administrator clearly informs the Participant that the Participant has a
right to a period of at least thirty (30) days after receiving the notice
to consider the decision of whether or not to elect a direct rollover and
the Participant, after receiving the notice, affirmatively elects a direct
rollover.
53
(d) If a Participant who attained his Normal Retirement Date or whose
Distributable Benefit does not exceed $5,000 fails to file a written
election with the Committee within ninety (90) days after notice is given,
or if the Committee cannot effect the direct rollover within a reasonable
time after the election is filed due to the failure of the Participant to
take such actions as may be required by the eligible retirement plan before
it will accept the direct rollover, the Participant's Distributable Benefit
shall be paid to him after withholding applicable income taxes.
(e) If a Participant has made a direct rollover election with respect
to any portion of his Distributable Benefit that is payable in Company
Stock, as provided in Section 8.13, unless the eligible retirement plan
specified by the Participant will accept a direct rollover of such Stock,
the Stock will be distributed to the Participant, notwithstanding the
Participant's direct rollover election.
(f) To the extent required by Section 401(a)(31) of the Code, if all
or a portion of a Participant's Distributable Benefit is payable to the
Participant's surviving Spouse, or to a former Spouse in accordance with a
"qualified domestic relations order," such surviving Spouse or former
Spouse shall be entitled to elect a direct rollover of all or a portion of
such distribution in accordance with the provisions of this Section.
(g) Notwithstanding the foregoing, a Participant's direct rollover
shall not include any hardship withdrawal described in Section 8.6(d) of
the Plan and Code Section 401(k)(2)(B), and the Participant may not elect
to have any portion of such a distribution paid directly to an eligible
retirement plan.
8.9 Designation of Beneficiary.
--------------------------
(a) Subject to the provisions of Section 8.11, each Participant shall
have the right to designate a Beneficiary or Beneficiaries to receive his
interest in the Trust Fund in the event of his death before receipt of his
entire interest in the Trust Fund. This designation is to be made on the
form prescribed by and delivered to the Committee.
(b) Subject to the provisions of Section 8.11, a Participant shall
have the right to change or revoke any such designation by filing a new
designation or notice of revocation with the Committee. Subject to the
provisions of Section 8.11, no notice to any Beneficiary nor consent by any
Beneficiary shall be required to effect any such change or revocation.
54
(c) If a deceased Participant shall have failed to designate a
Beneficiary, or if the Company shall be unable to locate a designated
Beneficiary after reasonable efforts have been made, or if for any reason
the designation shall be legally ineffective, or if the Beneficiary shall
have predeceased the Participant without effectively designating a
successor Beneficiary, any distribution required to be made under the
provisions of this Plan shall commence within three (3) years after the
Participant's death to the person or persons included in the highest
priority category among the following, in order of priority:
(i) The Participant's surviving spouse;
(ii) The Participant's surviving children, including adopted
children;
(iii) The Participant's surviving parents; or
(iv) The Participant's estate.
The determination by the Committee as to which persons, if any, qualify
within the foregoing categories shall be final and conclusive upon all
persons.
(d) In the event that the deceased Participant was not a resident of
California at the date of his death, the Committee, in its discretion, may
require the establishment of ancillary administration in California. In
the event that a Participant shall predecease his Beneficiary and on the
subsequent death of the Beneficiary a remaining distribution is payable
under the applicable provisions of this Plan, the distribution shall be
payable in the same order of priority categories as set forth above but
determined with respect to the Beneficiary, subject to the same provisions
concerning non-California residency, the unavailability of an estate
representative and/or the absence of administration of the Beneficiary's
estate as are applicable on the death of the Participant.
8.10 Facility of Payment.
-------------------
If any payee under the Plan is a minor or if the Committee reasonably
believes that any payee is legally incapable of giving a valid receipt and
discharge for any payment due him, the Committee may have the payment, or any
part thereof, made to the person (or persons or institution) whom it reasonably
believes is caring for or supporting the payee, unless it has received due
notice of claim therefor from a duly appointed guardian or committee of the
payee. Any payment shall be a payment from the Accounts of the payee and shall,
to the extent thereof, be a complete discharge of any liability under the Plan
to the payee.
55
8.11 Requirement of Spousal Consent.
------------------------------
Notwithstanding any Beneficiary designation submitted by a Participant,
any distribution required to be made under the terms of the Plan by reason of
the death of the Participant shall be paid in full to the Participant's
surviving spouse, unless there is no surviving spouse or the spouse consents in
writing to the beneficiary designation, acknowledging the effect of the
election. Any such spousal consent, to be valid, must be witnessed by a plan
representative or a notary public. The spousal consent requirement of this
Section 8.11 shall be waived and the Participant's Beneficiary designation shall
be made effective if the Participant establishes to the satisfaction of the
Committee that the required consent cannot be obtained because there is no
spouse or the spouse cannot be located.
8.12 Additional Documents.
--------------------
(a) The Committee or Trustee, or both, may require the execution and
delivery of such documents, papers and receipts as the Committee or
Trustee may determine necessary or appropriate in order to establish the
fact of death of the deceased Participant and of the right and identity of
any Beneficiary or other person or persons claiming any benefits under
this Article VIII.
(b) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Committee or Trustee,
or both, may deem appropriate as protection against possible liability for
state or federal death taxes attributable to any death benefits.
8.13 Company Stock Distribution.
--------------------------
Except in the case of a withdrawal in accordance with Section 8.6, payment
of any portion of a Participant's Distributable Benefit held in his Company
Stock subaccount shall be paid in cash, unless the Participant elects in writing
in accordance with procedures established by the Committee that payment shall be
made in Company Stock in lieu of cash (which election may apply to a payment to
the trustee of an "eligible retirement plan" in accordance with Section 8.8).
Within a reasonable period of time prior to the date such Participant's
Distributable Benefit is to be paid, the Committee shall notify the Participant
of his right to elect to have payment of the value of his Company Stock
subaccount made in the form of a cash distribution in lieu of a Company Stock
distribution. Upon being so notified, the Participant shall have a
56
reasonable time (at least thirty (30) days) in which to file a written election
to have such payment made in cash. Any such election shall be irrevocable and
shall operate to require the Trustee to value such Company Stock as of the
immediately following Valuation Date at the then prevailing purchase price.
Neither the Company, the Committee, nor the Trustee shall be required to time
the distribution or sale of Company Stock to anticipate fluctuations in the
purchase price. If a Participant fails to file a written election to receive an
in kind payment of the value of the portion of his Distributable Benefit
attributable to his Company Stock subaccount within thirty (30) days of
receiving notification, payment shall be made in cash.
8.14 Valuation of Accounts.
---------------------
(a) For purposes of determining a Participant's Distributable Benefit
under this Plan, the value of a Participant's Accounts shall be determined
in accordance with rules prescribed by the Committee, subject, however, to
the following provisions:
(i) Unless the provisions of (ii) below apply, if a
Participant's employment terminates for any reason other than death,
the value of a Participant's Accounts shall be determined as of the
Valuation Date coinciding with or next following the date on which a
properly completed application for payment or transfer of the
Participant's Distributable Benefit, and such other forms as may be
required by the Committee in order to process the distribution or
transfer, are received by the Committee.
(ii) If a Participant's employment terminates for any reason
other than death and the Committee does not receive the Participant's
properly completed application for the payment or transfer of the
Participant's Distributable Benefit, and such other forms as may be
required by the Committee to process the payment or transfer, and the
value of such Participant's Accounts at the applicable Valuation Date
does not exceed $5,000, the applicable Valuation Date shall be the
Valuation Date coinciding with or next following the expiration of a
reasonable period of time after the Participant is furnished with such
application and forms, including any tax notice required under Code
Section 402(f).
(iii) In the case of a Participant's death, the value of a
Participant's Accounts for purposes of determining the Participant's
Distributable Benefit shall be determined as of the Valuation Date
coinciding with or next following the date
57
on which the Committee has been furnished with all documents and
information (including but not limited to proof of death, facts
demonstrating the identity and entitlement of any Beneficiary or
other payee, and any and all releases) necessary to distribute such
Participant's Accounts.
(iv) In the case of any withdrawal or loan, the value of a
Participant's Accounts under the Plan shall be determined as of the
Valuation Date coinciding with or next following the date on which
the Participant submits a request for such withdrawal or loan in a
form satisfactory to the Committee and the withdrawal or loan is
approved.
(v) The value of a Participant's Accounts shall be increased or
decreased (as appropriate) by any contributions, forfeitures, or
distributions properly allocable under the terms of this Plan to his
Accounts that occurred on or after the most recent Valuation Date or
for any other reason were not otherwise reflected in the valuation of
his Accounts on such Valuation Date.
(b) Neither the Committee, the Company, nor the Trustee shall have
any responsibility for any increase or decrease in the value of a
Participant's Accounts as a result of any valuation made under the terms
of this Plan after the date of his termination of employment and before
the date of the distribution of his Accounts to him. Also, neither the
Committee, the Company, nor the Trustee shall have any responsibility for
failing to make any interim valuation of a Participant's Accounts between
the date of distribution to the Participant of his Accounts and the
applicable Valuation Date, even though the Plan assets may have been
revalued in that interim for a purpose other than to revalue the Accounts
under this Plan.
8.15 Forfeitures; Repayment.
----------------------
(a) Amounts forfeited in accordance with Section 8.5(d) shall be
applied as soon as practicable to reduce future Company contributions.
(b) A Participant who elects to receive a distribution pursuant to
Subsection 8.5(b) may, in the case of his reemployment as an Eligible
Employee, repay the total amount distributed and shall in such case be
fully restored in amounts forfeited in accordance with Section 8.5(d);
provided, however, that no such repayment shall be permitted unless such
repayment is made prior to the date the Participant incurs five (5)
58
consecutive one-year Periods of Severance and prior to the second
anniversary of his Employment Commencement Date following the Period of
Severance.
8.16 Loans.
-----
(a) From time to time, the Committee may adopt procedures whereby a
Participant may borrow from his Accounts under the Plan. In no event may
any amount be borrowed by a Participant after he ceases to be an Eligible
Employee. In addition to such other requirements as may be imposed by
applicable law, any such loan shall bear a reasonable rate of interest,
shall be adequately secured by proper collateral, and shall be repaid
within a specified period of time according to a written repayment
schedule that calls for substantially level amortization over the term of
the loan.
(b) In connection with the requirements set forth in Subsection (a)
above, the Committee shall establish the applicable interest rate, which
shall be reasonably equivalent to interest rates available commercially
with respect to similar loans. Without prejudice to the right of any
Participant and the Trustee to enter into other appropriate arrangements
to secure repayment of a loan pursuant to this Section 8.16, a loan to a
Participant hereunder may be secured by an interest in the Participant's
vested interest in his Accounts under this Plan. Any loan shall by its
terms require repayment within five (5) years in substantially level
payments made no less frequently than quarterly, except that the repayment
period may be up to a maximum of fifteen (15) years in the case of a loan
certified by the Participant to be used to acquire any dwelling unit which
within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant.
(c) In no event shall the principal amount of a loan hereunder, at
the time the loan is made, together with the outstanding balance of all
other loans to the Participant under this Plan, exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's vested
interest in his Accounts under this Plan (provided, however, for loans
granted or renewed prior to October 19, 1989, the amount determined
under this Subsection 8.16(c)(i) shall not be less than the lesser of
ten thousand dollars ($10,000) or the full value of all such Accounts
of the Participant where such value is less than twenty thousand
dollars ($20,000)), or
59
(ii) fifty thousand dollars ($50,000), reduced by the highest
outstanding loan balance of the Participant from the Plan during the
1-year period ending on the day before the date on which such loan was
made.
No loan less than two thousand dollars ($2,000) will be made. Unless
otherwise determined by the Committee, no Participant may have more than
one loan outstanding under this Plan on any date; provided, however, that a
Participant who was a participant in the F-P Savings Plan on March 31, 1997
may apply for one additional loan on or before December 31, 1997, even if
he then has one or more loans outstanding.
(d) Each Participant desiring to enter into a loan arrangement
pursuant to this Section 8.16 shall apply for a loan by submitting a loan
request in form satisfactory to the Committee. The Committee shall notify
the Participant within a reasonable time whether the request is approved or
denied. Upon arrival of the request by the Committee, the Participant
shall enter into a loan agreement with the Trustee. Such a Participant
shall execute such further written agreements as may be necessary or
appropriate to establish a bona fide debtor-creditor relationship between
such Participant and the Trustee and to protect against the impairment of
any security for said loan.
(e) Any loan made to a Participant shall be secured by a pro rata
portion of his vested investment fund subaccounts, including any Company
Stock subaccount. Repayments of a loan by a Participant shall be invested
among the Participant's investment fund subaccounts in accordance with the
Participant's investment election then in effect under Section 6.6(a)(i).
(f) Loans shall be repaid in accordance with the repayment schedule
provided under the terms of the loan agreement. Notwithstanding the
repayment schedule provided in a loan agreement, however, the amount of any
outstanding loan shall be due and payable on the earlier to occur of (a)
the date on which distribution is made or commences to be made of the
participant's vested interest under the Plan or (b) the expiration of one
hundred eighty (180) days following the date the Participant ceases to be
an Employee. Following a Participant's Severance Date, any outstanding
loan amount which has become due and payable under the foregoing rule or
otherwise, and which is secured by the Participant's vested interest in his
Accounts, shall be treated as distributed from the Plan to the Participant.
60
(g) In the event a Participant fails to repay a loan in accordance
with the terms of a loan agreement, such loan shall be treated as in
default. The date of the enforcement of the security interest due to a
loan in default shall be determined by the Committee, provided no loss of
principal or income shall result due to any delay in the enforcement of
the security interest due to the default. As of the Participant's
Severance Date, the Participant's Distributable Benefit shall be reduced
by the outstanding amount of a loan which is then in default, including
any accrued interest thereon, that is secured by the Participant's vested
interest in his Accounts. Any reasonable costs related to collection of a
loan made hereunder shall be borne by the Participant.
(h) To the extent required to comply with the requirements of Section
401(a)(4) of the Internal Revenue Code, loans hereunder shall be made in a
uniform and non-discriminatory manner.
8.17 Special Rule for Disabled Employees.
-----------------------------------
(a) Subsection 8.17(b) shall apply to any Participant whose active
performance of services for a Participating Company has ceased by reason
of disability, and who has not subsequently resumed the active performance
of such services. Subsections 8.17(c) and (d) shall apply only to a
Participant whose active performance of services for a Participating
Company ceases prior to January 1, 1989 by reason of disability, and who
has not subsequently resumed the active performance of such services.
(b) In the case of a Participant to whom this Section 8.17(b) applies,
so long as such Participant continues to receive Compensation from a
Participating Company, but in no event for longer than a period of six (6)
months commencing with the date of such Participant's cessation of active
service, such Participant may continue to participate in this Plan in the
same manner as any other Participant.
(c) In the case of a Participant to whom this Section 8.17 applied by
reason of a disability prior to January 1, 1989 and who, on or after
expiration of the period described in Section 8.17(b) above, commences to
receive payments under the long term disability benefit coverage provided
by a Participating Company and who also is determined to be suffering from
a Total and Permanent Disability, contributions shall be made by the
Participating Company pursuant to Section 6.1(a) (relating to
contributions
61
to Participants' Company Contributions Accounts) with respect to the
Participant's "Compensation" as defined in Subsection 8.17(d) below, but
the Participant shall not be eligible to make any contributions with
respect to his own Compensation, and shall not be entitled to share in any
other Participating Company contributions to the Plan (including but not
limited to contributions to the Company Matching Account). Contributions
by a Participating Company pursuant to this Section 8.17(c) shall be
subject to amendment or termination of the Plan or other suspension or
discontinuance of contributions, and in any event shall cease to be made
with respect to any Participant after the earlier to occur of such
Participant's death or termination of employment for any other reason,
cessation of Total and Permanent Disability, or attainment of age sixty-
five (65).
(d) In the case of a Participant to whom Section 8.17 applied by
reason of a disability prior to January 1, 1989 and who is eligible to
share in contributions of a Participating Company as provided in Subsection
8.17(c) above, the Compensation of such Participant for a Plan Year shall
be deemed to equal the amount of Compensation which the Participant was
paid (and which was taken into account for purposes of Sections 5.1 and 6.1
hereof) immediately before sustaining such Total and Permanent Disability,
provided, however, that such amounts shall be included in Compensation only
upon the following conditions:
(i) the Participant is not an officer, owner, or highly
compensated individual (within the meaning of such terms under Code
Section 415(c)(3));
(ii) the payments to such Participant under such long term
disability benefit coverage shall be treated as "Compensation" only to
the extent that such payments do not exceed the Participant's wage or
salary rate paid immediately before becoming disabled to an extent
constituting a Total and Permanent Disability; and
(iii) the Participant's accounts under the Plan, to the extent
attributable to contributions made during a period of Total and
Permanent Disability shall be nonforfeitable.
(e) For purposes of this Plan, a Participant shall not be deemed to
have terminated employment prior to his ceasing to be eligible for
contributions under this
62
Section 8.17, and upon such cessation of eligibility shall be deemed to
have terminated employment only if he did not then begin or recommence
employment for the Company or an Affiliated Company.
8.18 Election for Fully Vested Employees Transferred to Fisher-Price, Inc.
---------------------------------------------------------------------
A fully vested Participant who prior to April 1, 1997 transfers employment
from the Company (or other Participating Company) to Fisher-Price, Inc. and who
is eligible to participate in the Fisher-Price, Inc. Matching Savings Plan may
elect to transfer his entire vested account balance in the Plan to the Fisher-
Price, Inc. Matching Savings Plan by filing an election form at the time and in
the manner prescribed by the Committee. The transfer must be made in cash
except that any promissory note evidencing an outstanding loan to the
Participant from the Plan may be transferred in kind. Any transferred
promissory note shall thereafter be repayable by the Participant to the Fisher-
Price, Inc. Matching Savings Plan in accordance with its terms.
8.19 Provision for Small Benefits.
----------------------------
Notwithstanding anything in this Article to the contrary, a Participant
who terminates employment with the Company and all Affiliated Companies shall
receive a distribution of his Distributable Benefit in a single lump sum payment
no later than sixty (60) days after the close of the Plan Year in which the
Participant's termination of employment occurs to the extent administratively
feasible, provided that the value of such Distributable Benefit is equal to or
less than $5,000, determined as of the Valuation Date coincident with or
immediately preceding his termination of employment. Effective January 1, 2002,
for purposes of this Section 8.19, the value of a Participant's Distributable
Benefit shall be determined without regard to that portion of the Participant's
Distributable Benefit that is attributable to the Participant's
Transfer/Rollover Account. If the value of the Participant's Distributable
Benefit as so determined is $5,000 or less, the Participant shall receive a
distribution of his Distributable Benefit in a single lump sum payment.
8.20 Special Provisions Applicable to Tyco Plan Accounts.
---------------------------------------------------
The provisions of this Section 8.20 shall apply to the balance of a
Participant's Tyco Before-Tax Contributions Account and Tyco Company Matching
Account ("Tyco Accounts").
(a) While he is still an Eligible Employee, a Participant may withdraw
amounts from his Tyco Before-Tax Contributions Account to the extent that
the
63
Participant would be permitted to make a withdrawal from his Before-Tax
Contributions Account in accordance with Section 8.6 and a Participant may
withdraw amounts from his Tyco Company Matching Account to the extent that
the Participant would be permitted to make a withdrawal from his Company
Matching Account in accordance with Section 8.6. For this purpose, a
Participant shall be deemed to have incurred a Total and Permanent
Disability if because of a physical or mental disability, he will be unable
to perform the duties of his customary position of employment (or is unable
to engage in any substantial activity) for an indefinite period which the
Committee considers will be of long continued duration.
(b) A Participant may, in addition to the other forms of payment
available under Section 8.7, elect to receive distribution of any amount
payable from the Participant's Tyco Accounts or Transfer/Rollover Account
paid in the form of either monthly, quarterly or annual installments over a
fixed period of time not to exceed the life expectancy of the Participant
or the joint life and last survivor expectancy of the Participant and the
Participant's Beneficiary. A Beneficiary of a deceased Participant may, in
addition to the other forms of payment available under Section 8.3 or 8.4,
elect to receive distribution of any amount payable from the Participant's
Tyco Accounts or Transfer/Rollover Account paid in the form of either
monthly, quarterly or annual installments over a fixed reasonable period of
time not to exceed the life expectancy of the Beneficiary. Any
distribution made under this Section 8.20(b) shall be subject to the
limitations of Section 401 (a)(9) of the Code.
8.21 Special Provisions Applicable to PrintPaks Plan Accounts.
---------------------------------------------------------
The provisions of this Section 8.21 shall apply to the balance of a
Participant's PrintPaks Before-Tax Contributions Account and PrintPaks Company
Matching Account ("PrintPaks Accounts").
(a) While he is still an Eligible Employee, a Participant may withdraw
amounts from his PrintPaks Before-Tax Contributions Account to the extent
that the Participant would be permitted to make a withdrawal from his
Before-Tax Contributions Account in accordance with Section 8.6 and a
Participant may withdraw amounts from his PrintPaks Company Matching
Account to the extent that the Participant would be permitted to make a
withdrawal from his Company Matching Account in accordance with
64
Section 8.6. A Participant who has reached age 55 shall also be eligible
to withdraw amounts from his PrintPaks Company Matching Account while he
is an Eligible Employee to the extent otherwise permitted by Section 8.6.
(b) A Participant may, in addition to the other forms of payment
available under Section 8.7, elect to receive distribution of any amount
payable from the Participant's PrintPaks Accounts or Transfer/Rollover
Account paid in the form of either monthly, quarterly or annual
installments over a fixed reasonable period of time not to exceed the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Beneficiary. A
Beneficiary of a deceased Participant may, in addition to the other forms
of payment available under Section 8.3 or 8.4, elect to receive
distribution of any amount payable from the Participant's PrintPaks
Account or Transfer/Rollover Account paid in the form of either monthly,
quarterly or annual installments over a fixed reasonable period of time
not to exceed the life expectancy of the Beneficiary. Any distribution
made under this Section 8.21(b) shall be subject to the limitations of
Section 401(a)(9) of the Code.
8.22 Special Provisions Applicable to Fort Wayne Plan Accounts.
----------------------------------------------------------
With respect to the balance of a Participant's Fort Wayne Plan Before-Tax
Contributions Account, Fort Wayne Plan Company Matching Account and Fort Wayne
Plan Nonelective Account ("Fort Wayne Plan Accounts"), while the Participant is
still an Eligible Employee, a Participant may withdraw amounts from his Fort
Wayne Plan Before-Tax Contributions Account to the extent that the Participant
would be permitted to make a withdrawal from his Before-Tax Contributions
Account in accordance with Section 8.6 and a Participant may withdraw amounts
from his Fort Wayne Plan Company Matching Account to the extent that the
Participant would be permitted to make a withdrawal from his Company Matching
Account in accordance with Section 8.6.
8.23 Special Provisions Applicable to Pleasant Plan Nonelective Account.
-------------------------------------------------------------------
With respect to the balance of a Participant's Pleasant Plan Nonelective
Account, while the Participant is still an Eligible Employee, a Participant may
withdraw amounts from his Pleasant Plan Nonelective Account to the extent that
the Participant would be permitted to make a withdrawal from his Company
Matching Account in accordance with Section 8.6.
65
ARTICLE IX
OPERATION AND ADMINISTRATION OF THE PLAN
9.1 Plan Administration.
-------------------
(a) Authority to control and manage the operation and administration
of the Plan shall be vested in a committee ("Committee") as provided in
this Article IX.
(b) The members of the Committee shall be appointed by the Board of
Directors and shall hold office until resignation, death or removal by the
Board of Directors. Members of the Committee may, but need not be,
appointed by appropriate designation of a Committee heretofore constituted
pursuant to the provisions of another employee benefit plan maintained by
the Company.
(c) For purposes of ERISA Section 402(a), the members of the Committee
shall be Named Fiduciaries of this Plan.
(d) The Secretary of the Committee shall cause to be attached to the
copy of the Plan maintained in the office of the Committee for the purpose
of inspection an accurate schedule listing the names of all persons from
time to time serving as the Named Fiduciaries of the Plan.
(e) Notwithstanding the foregoing, a Trustee with whom Plan assets
have been placed in trust or an Investment Manager appointed pursuant to
Section 9.3 may be granted exclusive authority and discretion to manage and
control all or any portion of the assets of the Plan.
9.2 Committee Powers.
----------------
The Committee shall have all powers and discretion necessary to supervise
the administration of the Plan and control its operations. In addition to any
powers and authority conferred on the Committee elsewhere in the Plan or by law,
the Committee shall have, by way of illustration but not by way of limitation,
the following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one or more
other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
9.2(a) shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in
66
Section 405(c) of ERISA. The preceding provisions of this Section 9.2(a)
shall not limit the authority of the Committee to appoint one or more
Investment Managers in accordance with Section 9.3.
(b) To designate agents to carry out responsibilities relating to the
Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting, clerical and
other assistance as it may deem appropriate in carrying out the provisions
of this Plan, including one or more persons to render advice with regard to
any responsibility any Named Fiduciary or any other fiduciary may have
under the Plan.
(d) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration and effectuation
of this Plan.
(e) To administer, interpret, construe and apply this Plan in its
discretion and to decide all questions which may arise or which may be
raised under this Plan by any Employee, Participant, former Participant,
Beneficiary or other person whatsoever, including but not limited to all
questions relating to eligibility to participate in the Plan, the amount of
service of any Participant, and the amount of benefits to which any
Participant or his Beneficiary may be entitled by reason of his service
prior to or after the Effective Date hereof.
(f) To determine the manner in which the assets of this Plan, or any
part thereof, shall be disbursed.
(g) To direct the Trustee, in writing, from time to time, to invest
and reinvest the Trust Fund, or any part thereof, or to purchase, exchange,
or lease any property, real or personal, which the Committee may designate.
This shall include the right to direct the investment of all or any part of
the Trust in any one security or any one type of securities permitted
hereunder. Among the securities which the Committee may direct the Trustee
to purchase are "employer securities" as defined in Code Section 409(1) or
any successor statute thereto.
(h) To perform or cause to be performed such further acts as it may
deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
(i) Effective as of December 12, 1994, to take such action as is
necessary to have the Plan comply with Section 414(u) of the Code
(regarding the reemployment of
67
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.
Any action taken in good faith by the Committee in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries. All discretionary powers conferred
upon the Committee shall be absolute.
9.3 Investment Manager.
------------------
(a) The Committee, by action reflected in the minutes thereof, may
appoint one or more Investment Managers, as defined in Section 3(38) of
ERISA, to manage all or a portion of the assets of the Plan.
(b) An Investment Manager shall discharge its duties in accordance
with applicable law and in particular in accordance with Section 404(a)(1)
of ERISA.
(c) An Investment Manager, when appointed, shall have full power to
manage the assets of the Plan for which it has responsibility, and neither
the Company nor the Committee shall thereafter have any responsibility for
the management of those assets.
9.4 Periodic Review.
---------------
(a) At periodic intervals, not less frequently than annually, the
Committee shall review the long-run and short-run financial needs of the
Plan and shall determine a funding policy for the Plan consistent with the
objectives of the Plan and the minimum funding standards of ERISA, if
applicable. In determining the funding policy the Committee shall take
into account, at a minimum, not only the long-term investment objectives of
the Trust Fund consistent with the prudent management of the assets
thereof, but also the short-run needs of the Plan to pay benefits.
(b) All actions taken by the Committee with respect to the funding
policy of the Plan, including the reasons therefor, shall be fully
reflected in the minutes of the Committee.
9.5 Committee Procedure.
-------------------
(a) A majority of the members of the Committee as constituted at any
time shall constitute a quorum, and any action by a majority of the members
present at any
68
meeting, or authorized by a majority of the members in writing without a
meeting, shall constitute the action of the Committee.
(b) The Committee may designate certain of its members as authorized
to execute any document or documents on behalf of the Committee, in which
event the Committee shall notify the Trustee of this action and the name or
names of the designated members. The Trustee, Company, Participants,
Beneficiaries, and any other party dealing with the Committee may accept
and rely upon any document executed by the designated members as
representing action by the Committee until the Committee shall file with
the Trustee a written revocation of the authorization of the designated
members.
9.6 Compensation of Committee.
-------------------------
(a) Members of the Committee shall serve without compensation unless
the Board of Directors shall otherwise determine. However, in no event
shall any member of the Committee who is an Employee receive compensation
from the Plan for his services as a member of the Committee.
(b) All members shall be reimbursed for any necessary or appropriate
expenditures incurred in the discharge of duties as members of the
Committee.
(c) The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee, or other persons retained or employed by the
Committee shall be fixed by the Committee.
9.7 Resignation and Removal of Members.
----------------------------------
Any member of the Committee may resign at any time by giving written notice
to the other members and to the Board of Directors effective as therein stated.
Any member of the Committee may, at any time, be removed by the Board of
Directors.
9.8 Appointment of Successors.
-------------------------
(a) Upon the death, resignation, or removal of any Committee member,
the Board of Directors may appoint a successor.
(b) Notice of appointment of a successor member shall be given by the
Secretary of the Company in writing to the Trustee and to the members of
the Committee.
(c) Upon termination, for any reason, of a Committee member's status
as a member of the Committee, the member's status as a Named Fiduciary
shall concurrently
69
be terminated, and upon the appointment of a successor Committee member the
successor shall assume the status of a Named Fiduciary as provided in
Section 9.1.
9.9 Records.
-------
(a) The Committee shall keep a record of all its proceedings and shall
keep, or cause to be kept, all such books, accounts, records, or other data
as may be necessary or advisable in its judgment for the administration of
the Plan and to properly reflect the affairs thereof.
(b) However, nothing in this Section 9.9 shall require the Committee
or any member thereof to perform any act which, pursuant to law or the
provisions of this Plan, is the responsibility of the Plan Administrator,
nor shall this Section relieve the Plan Administrator from such
responsibility.
9.10 Reliance Upon Documents and Opinions.
------------------------------------
(a) The members of the Committee, the Board of Directors, the Company
and any person delegated under the provisions hereof to carry out any
fiduciary responsibilities under the Plan ("delegated fiduciary"), shall be
entitled to rely upon any tables, valuations, computations, estimates,
certificates and reports furnished by any consultant, or firm or
corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee.
The members of the Committee, the Board of Directors, the Company and any
delegated fiduciary shall be fully protected and shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance
upon any such consultant or firm or corporation which employs one or more
consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered by the
Committee, the Board of Directors, the Company and any delegated fiduciary
shall be conclusive and binding on all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise
provided by law.
(c) The Committee and any delegated fiduciary may, but are not
required to, rely upon all records of the Company with respect to any
matter or thing whatsoever, and may likewise treat those records as
conclusive with respect to all Employees, Participants, Beneficiaries, and
any other persons whomsoever, except as otherwise provided by law.
70
9.11 Requirement of Proof.
--------------------
The Committee or the Company may require satisfactory proof of any matter
under this Plan from or with respect to any Employee, Participant, or
Beneficiary, and no person shall acquire any rights or be entitled to receive
any benefits under this Plan until the required proof shall be furnished.
9.12 Reliance on Committee Memorandum.
--------------------------------
Any person dealing with the Committee may rely on and shall be fully
protected in relying on a certificate or memorandum in writing signed by any
Committee member or other person so authorized, or by the majority of the
members of the Committee, as constituted as of the date of the certificate or
memorandum, as evidence of any action taken or resolution adopted by the
Committee.
9.13 Multiple Fiduciary Capacity.
---------------------------
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
9.14 Limitation on Liability.
-----------------------
(a) Except as provided in Part 4 of Title I of ERISA, no person shall
be subject to any liability with respect to his duties under the Plan
unless he acts fraudulently or in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other fiduciary
or any person to whom fiduciary responsibilities have been allocated or
delegated, except as provided in Part 4 of Title I of ERISA.
(c) No action or responsibility shall be deemed to be a fiduciary
action or responsibility except to the extent required by ERISA.
9.15 Indemnification.
---------------
(a) To the extent permitted by law, the Company shall indemnify each
member of the Board of Directors and the Committee, and any other Employee
of the Company with duties under the Plan, against expenses (including any
amount paid in settlement) reasonably incurred by him in connection with
any claims against him by reason of his conduct in the performance of his
duties under the Plan, except in relation to
71
matters as to which he acted fraudulently or in bad faith in the
performance of such duties. The preceding right of indemnification shall
pass to the estate of such a person.
(b) The preceding right of indemnification shall be in addition to any
other right to which the Board member or Committee member or other person
may be entitled as a matter of law or otherwise.
9.16 Allocation of Fiduciary Responsibility.
--------------------------------------
(a) Part 4 of Title I of ERISA permits the division, allocation and
delegation between Plan fiduciaries of the fiduciary responsibilities owed
to the Plan Participants. Under this concept, each fiduciary, including a
Named Fiduciary, is accountable only for his own functions, except to the
extent of his co-fiduciary liability under Section 405 of ERISA.
(b) Under the preceding provisions of this Article IX, the day-to-day
operational, administrative and investment aspects of the Plan have been
delegated to the Committee. Except to the extent expressly provided to the
contrary in the Plan document, the responsibilities delegated to the
Committee include, by way of illustration but not by way of limitation,
such matters as:
(i) Satisfying accounting and auditing requirements;
(ii) Satisfying insurance and bonding requirements;
(iii) Administering the Plan's claims and procedure; and
(iv) Appointing Investment Managers.
9.17 Bonding.
-------
(a) Except as is prescribed by the Board of Directors, as provided in
Section 412 of ERISA, or as may be required under any other applicable
law, no bond or other security shall be required by any member of the
Committee, or any of her fiduciary under this Plan.
(b) Notwithstanding the foregoing, for purposes of satisfying its
indemnity obligations under Section 9.15, the Company may (but need not)
purchase and pay premiums for one or more policies of insurance. However,
this insurance shall not release the Company of its liability under the
indemnification provisions.
72
9.18 Prohibition Against Certain Actions.
-----------------------------------
(a) To the extent prohibited by law, in administering this Plan the
Committee shall not discriminate in favor of any class of Employees and
particularly it shall not discriminate in favor of highly compensated
Employees, or Employees who are officers or shareholders of the Company.
(b) The Committee shall not cause the Plan to engage in any
transaction that constitutes a nonexempt prohibited transaction under
Section 4975(c) of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with respect to the Plan (as
defined in Section 3(21) of ERISA) shall discharge their fiduciary duties
in accordance with applicable law, and in particular, in accordance with
the standards of conduct contained in Section 404 of ERISA.
9.19 Plan Expenses.
-------------
(a) All expenses incurred in the establishment, administration and
operation of the Plan, including but not limited to the expenses incurred
by the members of the Committee in exercising their duties, shall be
charged to the Trust Fund and allocated to Participants Accounts as
determined by the Committee, but shall be paid by the Company if not paid
by the Trust Fund.
(b) Notwithstanding the foregoing, the cost of interest and normal
brokerage charges which are included in the cost of securities purchased
by the Trust Fund (or charged to proceeds in the case of sales) or other
charges relating to specific assets of the Plan shall be charged and
allocated in a fair and equitable manner to the Accounts to which the
securities (or other assets) are allocated.
ARTICLE X
SPECIAL PROVISIONS
CONCERNING COMPANY STOCK
EFFECTIVE AS OF OCTOBER 1, 1992
10.1 Securities Transactions.
-----------------------
Subject to the limitations of Section 6.6(a)(iv), the Trustee shall
acquire Company Stock in the open market or from the Company or any other
person, including a party in interest, pursuant to a Participant's election to
invest any Company contributions on his behalf (including
73
Before-Tax Contributions), or Participant After-Tax Contributions, in the
Company Stock alternative established by the Committee in accordance with
Section 6.6, or to transfer amounts held in other investment alternatives to
such Company Stock alternative. No commission will be paid in connection with
the Trustee's acquisition of Company Stock from a party in interest. Pending
acquisition of Company Stock and pursuant to a Participant's investment
election, elected amounts shall be allocated to the Participant's Company Stock
subaccount in cash and may be invested in any short-term interest fund of the
Trustee. Neither the Company, nor the Committee, nor any Trustee have any
responsibility or duty to time any transaction involving Company Stock in order
to anticipate market conditions or changes in Company Stock value. Neither the
Company, nor the Committee nor any Trustee have any responsibility or duty to
sell Company Stock held in the Trust Fund in order to maximize return or
minimize loss.
10.2 Valuation of Company Securities.
-------------------------------
When it is necessary to value Company Stock held by the Plan, the value
will be the current fair market value of the Company Stock, determined in
accordance with applicable legal requirements.
If the Company Stock is publicly traded, fair market value will be based
on the most recent closing price in public trading, as reported in The Wall
--------
Street Journal or any other publication of general circulation designated by the
- --------------
Committee, unless another method of valuation is required by the standards
applicable to prudent fiduciaries.
If the Company Stock cannot be valued on the basis of its closing price in
recent public trading, fair market value will be determined by the Company in
good faith based on all relevant factors for determining the fair market value
of securities. Relevant factors include an independent appraisal by a person
who customarily makes such appraisals, if an appraisal of the fair market value
of the Company Stock as of the relevant date was obtained.
In the case of a transaction between the Plan and a party in interest, the
fair market value of the Company Stock must be determined as of the date of the
transaction rather than as of some other Valuation Date occurring before or
after the transaction. In other cases, the fair market value of the Company
Stock will be determined as of the most recent Valuation Date.
10.3 Allocation of Stock Dividends and Splits.
----------------------------------------
Company Stock received by the Trust as a result of a Company Stock split
or Company Stock dividend on Company Stock held in Participants' Accounts will
be allocated as of the
74
Valuation Date coincident with or following the date of such split or dividend,
to each Participant who has such an Account. The amount allocated will bear
substantially the same proportion to the total number of shares received as the
number of shares in the Participant's Account bears to the total number of
shares allocated to such Accounts of all Participants immediately before the
allocation. The shares will be allocated to the nearest thousandth of a share.
10.4 Reinvestment of Dividends.
-------------------------
Upon direction of the Committee, cash dividends may be reinvested as soon
as practicable by the Trustee in shares of Company Stock for Participants'
Accounts. Cash dividends may be reinvested in Company Stock purchased as
provided in Section 10.1 or purchased from the Accounts of Participants who
receive cash distributions of a fractional share or a fractional interest
therein.
10.5 Voting of Company Stock.
-----------------------
The Trustee shall have no discretion or authority to vote Company Stock
held in the Trust on any matter presented for a vote by the stockholders of the
Company except in accordance with timely directions received by the Trustee from
Participants, unless otherwise required by applicable law.
(a) Each Participant shall be entitled to direct the Trustee as to the
voting of all Company Stock allocated and credited to his Account.
(b) All Participants entitled to direct such voting shall be notified
by the Company, pursuant to its normal communications with shareholders,
of each occasion for the exercise of such voting rights within a
reasonable time before such rights are to be exercised. Such notification
shall include all information distributed to shareholders either by the
Company or any other party regarding the exercise of such rights. If a
Participant shall fail to direct the Trustee as to the exercise of voting
rights arising under any Company Stock credited to his Accounts, or if any
Company Stock held in the Plan has not been allocated to Participants'
Accounts, the Trustee shall not be required to vote such Company Stock
except as otherwise required by applicable law. The Trustee shall maintain
confidentiality with respect to the voting directions of all Participants.
(c) Each Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for
which he has the right to
75
direct the voting under the Plan but solely for the purpose of exercising
voting rights pursuant to this Section 10.5.
10.6 Confidentiality Procedures.
--------------------------
The Committee shall establish procedures intended to ensure the
confidentiality of information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and similar rights. The
Committee shall also be responsible for ensuring the adequacy of the
confidentiality procedures and monitoring compliance with such procedures. The
Committee may, in its sole discretion, appoint an independent fiduciary to carry
out any activities that it determines involve a potential for undue Company
influence on Participants with respect to the exercise of their rights as
shareholders.
10.7 Securities Law Limitation.
-------------------------
Neither the Committee nor the Trustee shall be required to engage in any
transaction, including, without limitation, directing the purchase or sale of
Company Stock, which it determines in its sole discretion might tend to subject
itself, its members, the Plan, the Company, or any Participant or Beneficiary to
a liability under federal or state securities laws.
ARTICLE XI
MERGER OF COMPANY; MERGER OF PLAN
11.1 Effect of Reorganization or Transfer of Assets.
----------------------------------------------
In the event of a consolidation, merger, sale, liquidation, or other
transfer of the operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company shall
automatically be deemed to have elected to continue this Plan in full force and
effect, in the same manner as if the Plan had been adopted by resolution of its
Board of Directors, unless the successor(s), by resolution of its Board of
Directors, shall elect not to so continue this Plan in effect, in which case the
Plan shall automatically be deemed terminated as of the applicable effective
date set forth in the board resolution.
11.2 Merger Restriction.
------------------
Notwithstanding any other provision in this Article, this Plan shall not
in whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or transfer
(if the Plan then terminated) which is equal to or greater than the
76
benefit he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
ARTICLE XII
PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS
12.1 Plan Termination.
----------------
(a) (i) Subject to the following provisions of this Section 12.1,
the Company may terminate the Plan and the Trust Agreements at any
time by an instrument in writing executed in the name of the Company
by an officer or officers duly authorized to execute such an
instrument, and delivered to the Trustee.
(ii) The Plan and Trust Agreements may terminate if the Company
merges into any other corporation, if as the result of the merger the
entity of the Company ceases, and the Plan is terminated pursuant to
the rules of Section 11.1.
(b) Upon and after the effective date of the termination, the Company
shall not make any further contributions under the Plan and no
contributions need be made by the Company applicable to the Plan year in
which the termination occurs, except as may otherwise be required by law.
(c) The rights of all affected Participants to benefits accrued to the
date of termination of the Plan, to the extent funded as of the date of
termination, shall automatically become vested as of that date.
12.2 Discontinuance of Contributions.
-------------------------------
(a) In the event the Company decides it is impossible or inadvisable
for business reasons to continue to make contributions under the Plan, the
Company by resolution of its Board of Directors may discontinue
contributions to the Plan. Upon and after the effective date of this
discontinuance, no Participating Company or Participant shall make any
further contributions under the Plan and no contributions need to be made
by a Participating Company with respect to the Plan Year in which the
discontinuance occurs, except as may otherwise be required by law. A
Participant shall be released from any salary reduction agreement under
the Plan as of the effective date of a discontinuance of contributions.
77
(b) The discontinuance of contributions on the part of the Company
shall not terminate the Plan as to the funds and assets then held by the
Trustee, or operate to accelerate any payments of distributions to or for
the benefit of Participants or Beneficiaries, and the Trustee shall
continue to administer the Trust Fund in accordance with the provisions of
the Plan until all of the obligations under the Plan shall have been
discharged and satisfied.
(c) However, if this discontinuance of contributions shall cause the
Plan to lose its status as a qualified plan under Code Section 401(a), the
Plan shall be terminated in accordance with the provisions of this Article
XII.
(d) On and after the effective date of a discontinuance of
contributions, the rights of all affected Participants to benefits accrued
to that date, to the extent funded as of that date, shall automatically
become fully vested as of that date.
12.3 Rights of Participants.
----------------------
In the event of the termination of the Plan, for any cause whatsoever, all
assets of the Plan, after payment of expenses, shall be used for the exclusive
benefit of Participants and their Beneficiaries and no part thereof shall be
returned to the Company, except as provided in Section 6.7 of this Plan.
12.4 Trustee's Duties on Termination.
-------------------------------
(a) On or before the effective date of termination of this Plan, the
Trustee shall proceed as soon as possible, but in any event within six
months from the effective date, to reduce all of the assets of the Trust
Fund to cash and other securities in such proportions as the Committee
shall determine (after approval by the Internal Revenue Service, if
necessary or desirable, with respect to any portion of the assets of the
Trust Fund held in common stock or securities of the Company).
(b) After first deducting the estimated expenses for liquidation and
distribution chargeable to the Trust Fund, and after setting aside a
reasonable reserve for expenses and liabilities (absolute or contingent)
of the Trust, the Committee shall make required allocations of items of
income and expense to the Accounts.
(c) Following these allocations, the Trustee shall promptly, after
receipt of appropriate instructions from the Committee, distribute in
accordance with Section 8.7 to
78
each former Participant in Company stock or cash an amount equal to the
amount credited to his Accounts as of the date of completion of the
liquidation.
(d) The Trustee and the Committee shall continue to function as such
for such period of time as may be necessary for the winding up of this
Plan and for the making of distributions in accordance with the provisions
of this Plan.
(e) Notwithstanding the foregoing, distributions to Participants upon
Plan termination in accordance with this Section 12.4 shall only be made
if a "successor plan," within the meaning of regulations under Code
Section 401(k)(10), is not established. In the event a "successor plan" is
established prior to or subsequent to the termination of the Plan, the
Committee shall direct the Trustee to continue to hold any assets of the
Trust Fund not payable upon the termination until such assets may, at the
direction of the Committee, be transferred to and held in the successor
plan until distributable under the terms of that successor plan.
12.5 Partial Termination.
-------------------
(a) In the event of a partial termination of the Plan within the
meaning of Code Section 411(d)(3), the interests of affected Participants
in the Trust Fund, as of the date of the partial termination, shall become
nonforfeitable as of that date.
(b) That portion of the assets of the Plan affected by the partial
termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall otherwise
be applied.
(c) With respect to Plan assets and Participants affected by a partial
termination, the Committee and the Trustee shall follow the same
procedures and take the same actions prescribed in this Article XII in the
case of a total termination of the Plan.
12.6 Failure to Contribute.
---------------------
The failure of a Participating Company to contribute to the Trust in any
year, if contributions are not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the Plan.
79
ARTICLE XIII
APPLICATION FOR BENEFITS
13.1 Application for Benefits.
------------------------
The Committee may require any person claiming benefits under the Plan to
submit an application therefor, together with such documents and information as
the Committee may require. In the case of any person suffering from a
disability which prevents the claimant from making personal application for
benefits, the Committee may, in its discretion, permit another person acting on
his behalf to submit the application.
13.2 Action on Application.
---------------------
(a) Within ninety days following receipt of an application and all
necessary documents and information, the Committee's authorized delegate
reviewing the claim shall furnish the claimant with written notice of the
decision rendered with respect to the application.
(b) In the case of a denial of the claimant's application, the written
notice shall set forth:
(i) The specific reasons for the denial, with reference to the
Plan provisions upon which the denial is based;
(ii) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his application for
benefits or to contest the amount of benefits payable to him shall follow
the procedures for an appeal of benefits as set forth in Section 13.3
below, and shall exhaust such administrative procedures prior to seeking
any other form of relief.
13.3 Appeals.
-------
(a) (i) A claimant who does not agree with the decision rendered
with respect to his application may appeal the decision to the
Committee.
(ii) The appeal shall be made, in writing, within sixty days
after the date of notice of the decision with respect to the
application.
80
(iii) If the application has neither been approved nor denied
within the ninety day period provided in Section 13.2 above, then the
appeal shall be made within sixty days after the expiration of the
ninety day period.
(b) The claimant may request that his application be given full and
fair review by the Committee. The claimant may review all pertinent
documents and submit issues and comments in writing in connection with the
appeal.
(c) The decision of the Committee shall be made promptly, and not
later than sixty days after the Committee's receipt of a request for
review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as
possible, but not later than one hundred twenty days after receipt of a
request for review.
(d) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant with specific reference to the pertinent Plan
provisions upon which the decision is based.
ARTICLE XIV
LIMITATIONS ON CONTRIBUTIONS
14.1 General Rule.
------------
(a) Except to the extent permitted under Section 5.2(f) of the Plan
and Section 414(v) of the Code, the total Annual Additions under this Plan
to a Participant's Plan Accounts shall not exceed:
(i) for any Limitation Year ending before January 1, 2002, the
lesser of (A) Thirty Thousand Dollars ($30,000) (as adjusted for
increases in the cost-of-living under Section 415(d) of the Code) or
(B) twenty-five percent (25%) of the Participant's total Compensation
from the Company and any Affiliated Companies for the year, excluding
amounts otherwise treated as Annual Additions under Section 14.2; and
(ii) for any Limitation Year beginning after December 31, 2001,
the lesser of (A) Forty Thousand Dollars ($40,000) (as adjusted for
increases in the cost-of-living under Section 415(d) of the Code) or
(B) one hundred percent (100%) of the Participant's total Compensation
from
81
the Company and any Affiliated Companies for the year, excluding
amounts otherwise treated as Annual Additions under Section 14.2.
The limitation in Section 14.1(a)(ii)(B) shall not apply to any
contribution for medical benefits after separation from Service
(within the meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an Annual Addition."
(b) For purposes of this Article XIV, the Company has elected a
"Limitation Year" corresponding to the Plan Year.
14.2 Annual Additions.
----------------
For purposes of Section 14.1, the term "Annual Additions" shall mean, for
any Limitation Year, the sum of:
(a) the amount credited to the Participant's Accounts from Company
contributions for such Limitation Year;
(b) any Employee contributions for the Limitation Year; and
(c) any amounts described in Section 415(1)(1) or 419(A)(d)(2) of the
Code.
Annual Additions for Limitation Years commencing prior to 1987 shall not
be recalculated to take into account all Employee contributions.
14.3 Other Defined Contribution Plans.
--------------------------------
If the Company or an Affiliated Company is contributing to any other
defined contribution plan (as defined in Section 415(k) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 14.1.
14.4 Combined Plan Limitation (Defined Benefit Plan).
-----------------------------------------------
In the event a Participant hereunder also is a participant in any
qualified defined benefit plan (within the meaning of Section 415(k) of the
Code) of the Company or an Affiliated Company, then the benefit payable under
such other defined benefit plan, or any of them, shall be reduced for so long
and to the extent necessary to provide that the sum of the "defined benefit
fraction" and the "defined contribution fraction," for any Limitation Year, as
defined in Section 415(e) of the Code, shall not exceed one (1). The limitation
of this Section 14.4 shall not apply to any Plan Year beginning on or after
January 1, 2000.
82
14.5 Adjustments for Excess Annual Additions.
---------------------------------------
In general, the amount of excess for any Limitation Year under this Plan
and any other defined contribution plan (as defined in Code Section 414(i)) or
defined benefit plan (as defined in Code Section 414(j)) maintained by the
Company or an Affiliated Company will be determined so as to avoid Annual
Additions in excess of the limitations set forth in Sections 14.1 through 14.4.
However, if as a result of an administrative error, the Annual Additions to a
Participant's Accounts under this Plan (after giving effect to the maximum
permissible adjustments under the other plans) would exceed the applicable
limitations described in Sections 14.1 through 14.4, the excess amount shall be
subject to this Section 14.5.
(a) For Plan Years commencing prior to January 1, 1993, the following
rules shall apply:
(i) If the Participant made any after-tax contributions to any
defined contribution plan that is maintained by the Company or an
Affiliated Company, which after-tax contributions were not matched by
matching contributions, these contributions shall be returned to the
Participant to the extent of any excess Annual Additions arising under
Section 14.1(a)(ii).
(ii) If excess Annual Additions remain after the application of
the above rule, such excess amounts (if any) allocated to the
Participant's Company Contributions Account shall be reduced to the
extent necessary to eliminate (if possible) any remaining excess
Annual Additions.
(iii) If excess Annual Additions remain after the application of
(i) and (ii) above, such excess amounts (if any) allocated to the
Participant's Company Matching Contribution Account shall be reduced
to the extent necessary to eliminate (if possible) any remaining
excess Annual additions.
(iv) If any excess Annual Additions remain after the application
of (i), (ii) and (iii) above, such excess amounts (if any) allocated
to the Participant's Before-Tax Contributions Account shall be reduced
to the extent necessary to eliminate (if possible) any remaining
excess Annual Additions.
(b) For Plan Years commencing on or after January 1, 1993, the
following rules shall apply:
83
(i) If the Participant made any after-tax contributions to this
or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax contributions were
not matched by matching contributions, within the meaning of Code
Section 401(m), such after-tax contributions and any earnings thereon
shall be returned to the Participant to the extent of any excess
Annual Additions.
(ii) If excess Annual Additions remain after the application of
the above rule, if the Participant made any Before-Tax Contributions
for the Plan Year to this or any other defined contribution plan that
is maintained by the Company or an Affiliated Company, which Before-
Tax Contributions were not matched by matching contributions, within
the meaning of Code Section 401(m), Before-Tax Contributions and any
earnings thereon shall be returned to the Participant to the extent of
any excess Annual Additions.
(iii) If excess Annual Additions remain after the application of
the above rule, if the Participant made any after-tax contributions
for the Plan Year to this or any other defined contribution plan that
is maintained by the Company or an Affiliated Company, which after-tax
contributions were matched by matching contributions, within the
meaning of Code Section 401(m), any such after-tax contributions and
any earnings thereon shall be returned to the Participant and any
matching contributions attributable thereto shall be reduced to the
extent necessary to eliminate any remaining excess Annual Additions.
(iv) If excess Annual Additions remain after the application of
the above rule, if the Participant made any Before-Tax Contributions
for the Plan Year to this or any other defined contribution plan that
is maintained by the Company or an Affiliated Company, which Before-
Tax Contributions were matched by matching contributions, within the
meaning of Code Section 401(m), any such Before-Tax Contributions and
any earnings thereon shall be returned to the Participant and any
matching contributions attributable thereto shall be reduced to the
extent necessary to eliminate any remaining excess Annual Additions.
84
(v) If excess Annual Additions remain after the application of
the above rule, any other Company contributions for the Plan Year
shall be reduced to the extent necessary to eliminate any remaining
excess Annual Additions.
14.6 Disposition of Excess Amounts.
-----------------------------
Any excess amounts contributed by a Participating Company on behalf of a
Participant for any Plan Year (other than Before-Tax Contributions) shall be
held unallocated in a suspense account for the Plan Year and applied, to the
extent possible, first to reduce the Participating Company contributions for the
Plan Year, and next, to reduce the Participating Company contributions for the
succeeding Plan Year, or Years, if necessary. No investment gains or losses
shall be allocated to a suspense account.
14.7 Affiliated Company.
------------------
For purposes of this Article XIV, the status of an entity as an Affiliated
Company shall be determined by reference to the percentage tests set forth in
Code Section 415(h).
ARTICLE XV
RESTRICTION ON ALIENATION
15.1 General Restrictions Against Alienation.
---------------------------------------
(a) The interest of any Participant or Beneficiary in the income,
benefits, payments, claims or rights hereunder, or in the Trust Fund shall
not in any event be subject to sale, assignment, hypothecation, or
transfer. Each Participant and Beneficiary is prohibited from
anticipating, encumbering, assigning, or in any manner alienating his or
her interest under the Trust Fund, and is without power to do so, except
as may otherwise be provided for in the Trust Agreement. The interest of
any Participant or Beneficiary shall not be liable or subject to his
debts, liabilities or obligations, now contracted, or which may be
subsequently contracted. The interest of any Participant or Beneficiary
shall be free from all claims, liabilities, bankruptcy proceedings, or
other legal process now or hereafter incurred or arising; and the interest
or any part thereof, shall not be subject to any judgment rendered against
the Participant or Beneficiary.
(b) In the event any person attempts to take any action contrary to
this Article XV, that action shall not be effective, and all Participants
and their Beneficiaries, may disregard that action and shall not suffer
any liability for any disregard of that action, and
85
shall be reimbursed on demand out of the Trust Fund for the amount of any
loss, cost or expense incurred as a result of disregarding or of acting in
disregard of that action.
(c) The preceding provisions of this Section 15.1 shall be interpreted
and applied by the Committee in accordance with the requirements of Code
Section 401(a)(13) as construed and interpreted by authoritative judicial
and administrative rulings and regulations.
(d) The provisions of Subsections 15.1(a) and 15.1(b) are expressly
subject to qualified domestic relations orders, as provided in Code
Section 401(a)(13)(B).
15.2 Nonconforming Distributions Under Court Order.
---------------------------------------------
(a) In the event that a court with jurisdiction over the Plan and the
Trust Fund shall issue an order or render a judgment requiring that all or
part of a Participant's interest under the Plan and in the Trust Fund be
paid to a spouse, former spouse and/or children of the Participant by
reason of or in connection with the marital dissolution and/or marital
separation of the Participant and the spouse, and/or some other similar
proceeding involving marital rights and property interests, then
notwithstanding the provisions of Section 15.1 the Committee may, in its
absolute discretion, direct the applicable Trustee to comply with that
court order or judgment and distribute assets of the Trust Fund in
accordance therewith. Pending distribution to an alternate payee of any
portion of a Participant's vested interest in the Trust Fund, pursuant to
a court order or judgment, such portion shall be segregated and invested
in accordance with rules prescribed by the Committee, and neither the
Participant nor the alternate payee shall be entitled to make an election
with respect to the investment of such segregated portion.
(b) The Committee's decision with respect to compliance with any such
court order or judgment shall be made in its absolute discretion and shall
be binding upon the Trustee and all Participants and their Beneficiaries;
provided, however, that the Committee in the exercise of its discretion
shall not make payments in accordance with the terms of an order which is
not a qualified domestic relations order or which the Committee determines
would jeopardize the continued qualification of the Plan and Trust under
Section 401 of the Code. Notwithstanding the foregoing, the Committee may
make a distribution to an alternate payee prior to the date the
Participant attains age fifty (50), if such distribution is required by a
qualified domestic relations order.
86
(c) Neither the Plan, the Company, the Committee nor the Trustee shall
be liable in any manner to any person, including any Participant or
Beneficiary, for complying with any such court order or judgment.
(d) Nothing in this Section 15.2 shall be interpreted as placing upon
the Company, the Committee or any Trustee any duty or obligation to comply
with any such court order or judgment. The Committee may, if in its
absolute discretion it deems it to be in the best interests of the Plan
and the Participants, determine that any such court order or judgment
shall be resisted by means of judicial appeal or other available judicial
remedy, and in that event the Trustee shall act in accordance with the
Committee's directions.
(e) The Committee shall adopt procedures and provide notifications to
a Participant and alternate payees in connection with a qualified domestic
relations order, to the extent required under Code Section 414(p).
ARTICLE XVI
PLAN AMENDMENTS
16.1 Amendments.
----------
The Board of Directors may at any time, and from time to time, amend the
Plan by an instrument in writing executed in the name of the Company by an
officer or officers duly authorized to executed such instrument, and delivered
to the applicable Trustee. However, to the extent required by law, no amendment
shall be made at any time, the effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or diverted
to purposes other than providing benefits to the Participants and their
Beneficiaries, and defraying reasonable expenses of administering the
Plan, except as provided in Section 6.7;
(b) To have any retroactive effect so as to deprive any Participant or
Beneficiary of any accrued benefit to which he would be entitled under
this Plan, in contravention of Code Section 411(d)(6), if his employment
were terminated immediately before the amendment;
(c) To eliminate or reduce an optional form of benefit to the extent
so doing would contravene Code Section 411(d)(6); or
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(d) To increase the responsibilities or liabilities of a Trustee or
an Investment Manager without his written consent.
16.2 Retroactive Amendments.
----------------------
Notwithstanding any provisions of this Article XVI to the contrary, the
Plan may be amended prospectively or retroactively (as provided in Section
401(b) of the Code) to make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or any regulation under
either.
16.3 Amendment of Vesting Provisions.
-------------------------------
Effective January 1, 1989, if the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's vested interest in his
Accounts, each Participant who has completed at least three (3) Years of Service
may elect, within a reasonable time after the adoption of the amendment, to
continue to have his vested interest computed under the Plan without regard to
such amendment. The period during which the election may be made shall commence
when the date of the amendment is adopted and shall end on the latest of: (i) 60
days after the amendment is adopted; (ii) 60 days after the amendment is
effective; or (iii) 60 days after the Participant is issued written notice of
the amendment.
In the event that the Plan's vesting schedule is amended, the
nonforfeitable percentage of every Employee who is a Participant on the date the
amendment is adopted, or the date the amendment is effective, if later, in his
Company Matching Account and/or Company Contributions Account shall be not less
than his percentage computed under the Plan without regard to the amendment.
ARTICLE XVII
TOP-HEAVY PROVISIONS
17.1 Minimum Company Contributions.
-----------------------------
In the event that this Plan is deemed a Top-Heavy plan with respect to any
Plan Year, each Non-Key Employee who is a Participant shall receive Company
contributions that in the aggregate are at least equal to the lesser of three
percent (3%) of Compensation or the percentage at which Company contributions
are made for the Key Employee (under any plan required to be included in an
Aggregation Group) for whom such percentage is the highest for the Plan Year,
regardless of whether the Non-Key Employee elected to make Before-Tax
Contributions to the
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Plan for the Plan Year, completed less than 1,000 Hours of Service during such
Plan Year, or the Non-Key Employee's level of Compensation. For purposes of this
Section 17.1, Company contributions shall include (i) amounts considered
contributed by Key Employees and which qualify for treatment under Code Section
401(k) and (ii) any Company contributions for Key Employees or Non-Key Employees
taken into account under Section 401(k)(3) or 401(m) of the Code. For purposes
of this Section 17.1, Company contributions shall not include amounts considered
as contributed by Non-Key Employees and which qualify for treatment under Code
Section 401(k). Further, in determining the percentage at which Company
contributions are made for the Plan Year for the Key Employee for whom such
percentage is the highest, the contributions for a Key Employee shall be divided
by so much of a Key Employee's compensation for the Plan Year as does not exceed
$200,000, as that amount is adjusted each year by the Secretary of the Treasury.
In the event a Participant is covered by both a defined contribution and a
defined benefit plan maintained by the Company, both of which are determined to
be Top-Heavy Plans, the defined benefit minimum, offset by the benefits provided
under the defined contribution plan, shall be provided under the defined benefit
plan.
17.2 Compensation.
------------
For the purpose of calculating Company contributions to be made to a
Participant for Plan Years commencing prior to January 1, 1989, the annual
Compensation taken into account for any Employee shall not exceed $200,000
(increased by any adjustments made pursuant to Section 416(d)(2) of the Code or
regulations thereunder) if the Plan is deemed a Top-Heavy Plan with respect to
any Plan Year.
17.3 Top-Heavy Determination.
-----------------------
This Plan shall be deemed a Top-Heavy Plan with respect to any Plan Year
in which, as of the Determination Date: (a) the aggregate of the Accounts of Key
Employees under the Plan exceeds 60% of the aggregate of the Accounts of all
Employees; or (b) the aggregate of the Accounts of Key Employees under all
defined contribution plans and the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans includable in an
Aggregation Group exceed 60% of a similar sum for all employees in such group.
As used above, the term "Aggregation Group" includes all plans of Participating
Companies having one or more Key Employees as Participants and any other defined
contribution plan of a Participating
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Company that permits a plan of a Participating Company having one or more Key
Employees to meet the qualification requirements of Sections 401(a)(4) or 410 of
the Code.
The present value of account balances under a defined contribution plan
shall be determined as of the most recent valuation date that falls within or
ends on the Determination Date. The present value of accrued benefits under a
defined benefit plan shall be determined as of the same valuation date used for
computing plan costs for minimum funding. The present value of the cumulative
accrued benefits of a Non-Key Employee shall be determined under either:
(i) the method, if any, that uniformly applies for accrual purposes
under all plans maintained by affiliated companies, within the meaning of
Code Sections 414(b), (c), (m) or (o); or
(ii) if there is no such method, as if such benefit accrued not more
rapidly than the lowest accrual rate permitted under the fractional accrual
rate of Section 411(b)(1)(C) of the Code.
For purposes of this Article XVII, "Determination Date" shall mean, with
respect to any Plan Year, the last day of the preceding Plan Year, or, in the
case of the first Plan Year, the last day of such Plan Year.
The term, "Key Employee" shall mean, for purposes of this Article XVII, any
Employee or former Employee (including any deceased Employee) who, at any time
during the Plan Year that includes the Determination Date was:
(1) an officer of a Participating Company having annual
compensation in excess of $130,000 (as adjusted under Section
416(i)(1) of the Code for Plan Years beginning after December 31,
2002);
(2) a 5% owner of a Participating Company; or
(3) a 1% owner of a Participating Company having annual
compensation in excess of than $150,000.
For this purpose, annual compensation means compensation within the meaning
of Section 415(c) of the Code.
For purposes of (1) above, no more than 50 Employees (or, if lesser, the
greater of 3 or 10% of the Employees) shall be treated as officers.
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A 5% (or 1%, if applicable) owner means any person who owns (or is
considered as owning within the meaning of Section 318 of the Code) more than 5%
(1%) of the outstanding stock of the Participating Company or stock possessing
more than 5% (1%) of the total combined voting power of all stock of the
Participating Company.
For purposes of applying the constructive ownership rules under Section
318(a)(2) of the Code, subparagraph (C) of such Section shall be applied by
substituting "5 percent" for "50 percent."
For purposes of determining "5% owners" and/or "1% owners," the
aggregating rules of Sections 414(b), (c) and (m) of the Code shall not apply.
For purposes of determining whether an Employee has compensation of more than
$150,000, however, compensation from each entity required to be aggregated under
Sections 414(b), (c) and/or (m) of the Code shall be taken into account.
For purposes of determining the amount of a Participant's Account for
purposes of this Section 17.3, the amount shall include the aggregate
distributions under the Plan made to or with respect to the Participant during
the one year period ending on the Determination Date. In the case of a
distribution made for a reason other than separation from Service, death or
disability, this paragraph shall be applied by substituting "five year period"
for "one year period."
The following shall not be taken into account for purposes of determining
whether this Plan is a Top-Heavy Plan: (1) any rollover to the Plan that is
initiated by a Participant; (2) the account value of any Participant who is not
a Key Employee with respect to any Plan Year but was a Key Employee with respect
to any prior Plan Year; and (3) the account value of a Participant who has not
performed services for any Participating Company during the one year period
ending on the Determination Date.
17.4 Aggregation.
-----------
Each Plan of a Participating Company required to be included in an
"Aggregation Group" shall be treated as a Top-Heavy Plan if such group is a
"Top-Heavy Group."
For purposes of this Article XVII, an "Aggregation Group" shall mean: (i)
each plan of a Participating Company in which a Key Employee is a Participant,
and (ii) each other plan of a Participating Company which enables any plan
described in (i) above to meet the requirements of Section 401(a)(4) or 410 of
the Code.
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Any plan of a Participating Company that is not required to be included in
an Aggregation Group may be treated as part of such group if such group would
continue to meet the requirements of Section 401(a)(4) and 410 of the Code with
such plan taken into account.
For purposes of this Section 17.4, a "Top-Heavy Group" means any
Aggregation Group if the sum (as of the Determination Date) of the present value
of the cumulative accrued benefits for Key Employees under all defined benefit
plans included in such group and the aggregate of the accounts of Key Employees
under all defined contribution plans included in such group exceed 60% of a
similar sum determined for all Employees.
ARTICLE XVIII
MISCELLANEOUS
18.1 No Enlargement of Employee Rights.
---------------------------------
(a) This Plan is strictly a voluntary undertaking on the part of the
Company and shall not be deemed to constitute a contract between the
Company and any Employee, or to be consideration for, or an inducement to,
or a condition of, the employment of any Employee.
(b) Nothing contained in this Plan or the Trust shall be deemed to
give any Employee the right to be retained in the employ of the Company or
to interfere with the right of the Company to discharge or retire any
Employee at any time.
(c) No Employee, nor any other person, shall have any right to or
interest in any portion of the Trust Fund other than as specifically
provided in this Plan.
18.2 Mailing of Payments; Lapsed Benefits.
------------------------------------
(a) All payments under the Plan shall be delivered in person or mailed
to the last address of the Participant (or, in the case of the death of
the Participant, to the last address of any other person entitled to such
payments under the terms of the Plan) furnished pursuant to Section 18.3
below.
(b) In the event that a benefit is payable under this Plan to a
Participant or any other person and after reasonable efforts such person
cannot be located for the purpose of paying the benefit for a period of
three (3) consecutive years, the Committee, in its sole discretion, may
determine that such person conclusively shall be presumed dead and upon
the termination of such three (3) year period the benefit shall be
forfeited and as
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soon thereafter as practicable shall be applied to reduce future Company
Contributions; provided, however, should any person entitled to such
benefit thereafter claim such benefit, such benefit shall be restored.
Alternatively, benefits that cannot be paid may escheat to the state in
accordance with applicable state law.
(c) For purposes of this Section 18.2, the term "Beneficiary" shall
include any person entitled under Section 8.9 to receive the interest of a
deceased Participant or deceased designated Beneficiary. It is the
intention of this provision that the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 8.9 if no
eligible Beneficiary in a higher priority category can be located by the
Committee after reasonable efforts have been made.
(d) The Accounts of a Participant shall continue to be maintained
until the amounts in the Accounts are paid to the Participant or his
Beneficiary. Notwithstanding the foregoing, in the event that the Plan is
terminated, the following rules shall apply:
(i) All Participants (including Participants who have not
previously claimed their benefits under the Plan) shall be notified of
their right to receive a distribution of their interests in the Plan;
(ii) All Participants shall be given a reasonable length of
time, which shall be specified in the notice, in which to claim their
benefits;
(iii) All Participants (and their Beneficiaries) who do not claim
their benefits within the designated time period shall be presumed to
be dead. The Accounts of such Participants shall be forfeited at such
time. These forfeitures shall be disposed of according to rules
prescribed by the Committee, which rules shall be consistent with
applicable law.
(iv) The Committee shall prescribe such rules as it may deem
necessary or appropriate with respect to the notice and forfeiture
rules stated above.
(e) Should it be determined that the preceding rules relating to
forfeiture of benefits upon Plan termination are inconsistent with any of
the provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Committee shall
prescribe rules that are consistent with the applicable provisions of the
Code and/or ERISA.
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18.3 Addresses.
---------
Each Participant shall be responsible for furnishing the Committee with
his correct current address and the correct current name and address of his
Beneficiary or Beneficiaries.
18.4 Notices and Communications.
--------------------------
(a) All applications, notices, designations, elections, and other
communications from Participants shall be in writing, on forms prescribed
by the Committee and shall be mailed or delivered to the office designated
by the Committee, and shall be deemed to have been given when received by
that office.
(b) Each notice, report, remittance, statement and other communication
directed to a Participant or Beneficiary shall be in writing and may be
delivered in person or by mail. An item shall be deemed to have been
delivered and received by the Participant when it is deposited in the
United States Mail with postage prepaid, addressed to the Participant or
Beneficiary at his last address of record with the Committee.
18.5 Reporting and Disclosure.
------------------------
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
18.6 Governing Law.
-------------
All legal questions pertaining to the Plan shall be determined in
accordance with the provisions of ERISA and the laws of the State of California.
All contributions made hereunder shall be deemed to have been made in
California.
18.7 Interpretation.
--------------
(a) Article and Section headings are for convenient reference only
and shall not be deemed to be part of the substance of this instrument or
in any way to enlarge or limit the contents of any Article or Section.
Unless the context clearly indicates otherwise, masculine gender shall
include the feminine, and the singular shall include the plural and the
plural the singular.
(b) The provisions of this Plan shall in all cases be interpreted in a
manner that is consistent with this Plan satisfying:
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(i) The requirements (of Code Section 401(a) and related
statutes) for qualification as a Profit Sharing Plan; and
(ii) The requirements (of Code Section 401(k) and related
statutes) for qualification as a Qualified Cash or Deferred
Arrangement.
18.8 Certain Securities Laws Rules.
-----------------------------
Any election or direction made under this Plan by an individual who is or
may become subject to liability under Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), may be conditioned upon such
restrictions as are necessary or appropriate to qualify for an applicable
exemption under Section 16(b) of the Exchange Act, or any rule promulgated
thereunder. To the extent required by Section 401(a)(4) of the Code, the rules
under this Section 18.8 shall be administered in a non-discriminatory manner.
18.9 Withholding for Taxes.
---------------------
Any payments out of the Trust Fund may be subject to withholding for
taxes as may be required by any applicable federal or state law.
18.10 Limitation on Company; Committee and Trustee Liability.
------------------------------------------------------
Any benefits payable under this Plan shall be paid or provided for solely
from the Trust Fund and neither the Company, the Committee nor the Trustee
assume any responsibility for the sufficiency of the assets of the Trust to
provide the benefits payable hereunder.
18.11 Successors and Assigns.
----------------------
This Plan and the Trust established hereunder shall inure to the benefit
or, and be binding upon, the parties hereto and their successors and assigns.
18.12 Counterparts.
------------
This Plan document may be executed in any number of identical
counterparts, each of which shall be deemed a complete original in itself and
may be introduced in evidence or used for any other purpose without the
production of any other counterparts.
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IN WITNESS WHEREOF, in order to record the adoption of this Plan, Mattel,
Inc. has caused this instrument to be executed by its duly authorized officers
this 8th day of November, 2001, effective, however, as of October 1, 2001,
except as otherwise expressly provided herein.
MATTEL, INC.
By: /s/ Alan Kaye
---------------------------
Alan Kaye, Senior Vice President
Human Resources
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