EXHIBIT 99.9
MATTEL, INC.
PERSONAL INVESTMENT PLAN
1993 Restatement
TABLE OF CONTENTS
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ARTICLE I
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Plan Name. . . . . . . . . . . . . . . . . . . . 1
1.2 Plan Purpose.. . . . . . . . . . . . . . . . . . 1
1.3 Effective Date.. . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Accounts.. . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliated Company.. . . . . . . . . . . . . . . 3
2.3 After-Tax Contributions. . . . . . . . . . . . . 3
2.4 Before-Tax Contributions.. . . . . . . . . . . . 3
2.5 Beneficiary. . . . . . . . . . . . . . . . . . . 3
2.6 Reserved for Plan Modifications. . . . . . . . . 3
2.7 Board of Directors.. . . . . . . . . . . . . . . 3
2.8 Reserved for Plan Modifications. . . . . . . . . 4
2.9 Reserved for Plan Modifications. . . . . . . . . 4
2.10 Code. . . . . . . . . . . . . . . . . . . . . . 4
2.11 Committee. . . . . . . . . . . . . . . . . . . . 4
2.12 Company. . . . . . . . . . . . . . . . . . . . . 4
2.13 Company Contributions. . . . . . . . . . . . . . 4
2.14 Company Matching Contributions.. . . . . . . . . 4
2.15 Company Stock. . . . . . . . . . . . . . . . . . 4
2.16 Compensation.. . . . . . . . . . . . . . . . . . 4
2.17 Deferral Limitation. . . . . . . . . . . . . . . 6
2.18 Reserved for Plan Modifications. . . . . . . . . 6
2.19 Distributable Benefit. . . . . . . . . . . . . . 6
2.20 Effective Date.. . . . . . . . . . . . . . . . . 7
2.21 Eligible Employee. . . . . . . . . . . . . . . . 7
2.22 Employee.. . . . . . . . . . . . . . . . . . . . 7
2.23 Employment Commencement Date.. . . . . . . . . . 8
2.24 ERISA. . . . . . . . . . . . . . . . . . . . . . 8
2.25 Hardship.. . . . . . . . . . . . . . . . . . . . 8
2.26 Highly Compensated Employee. . . . . . . . . . . 8
2.27 Hour of Service. . . . . . . . . . . . . . . . .12
2.28 Investment Manager.. . . . . . . . . . . . . . .12
2.29 Normal Retirement. . . . . . . . . . . . . . . .13
2.30 Normal Retirement Date.. . . . . . . . . . . . .13
2.31 Participant. . . . . . . . . . . . . . . . . . .13
2.32 Participation Commencement Date. . . . . . . . .13
2.33 Participating Company. . . . . . . . . . . . . .13
2.34 Period of Severance. . . . . . . . . . . . . . .13
2.35 Plan. . . . . . . . . . . . . . . . . . . . . .13
2.36 Plan Administrator.. . . . . . . . . . . . . . .13
2.37 Plan Year. . . . . . . . . . . . . . . . . . . .14
2.38 Reserved for Plan Modifications. . . . . . . . .14
2.39 Severance Date.. . . . . . . . . . . . . . . . .14
2.40 Reserved for Plan Modifications. . . . . . . . .14
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2.41 Reserved for Plan Modifications. . . . . . . . .14
2.42 Reserved for Plan Modifications. . . . . . . . .14
2.43 Reserved for Plan Modifications. . . . . . . . .14
2.44 Total and Permanent Disability.. . . . . . . . .14
2.45 Trust and Trust Fund.. . . . . . . . . . . . . .15
2.46 Trustee. . . . . . . . . . . . . . . . . . . . .15
2.47 Valuation Date.. . . . . . . . . . . . . . . . .15
2.48 Year of Service. . . . . . . . . . . . . . . . .15
ARTICLE III
ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . .17
3.1 Eligibility to Participate.. . . . . . . . . . .17
3.2 Commencement of Participation. . . . . . . . . .17
ARTICLE IV
TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . .18
4.1 Trust Fund.. . . . . . . . . . . . . . . . . . .18
ARTICLE V
EMPLOYEE CONTRIBUTIONS . . . . . . . . . . . . . . . . . .19
5.1 Employee Contributions.. . . . . . . . . . . . .19
5.2 Amount Subject to Election.. . . . . . . . . . .19
5.3 Termination of, Change in Rate of, or
Resumption of Deferrals.. . . . . . . . . . .20
5.4 Limitation on Before-Tax Contributions by
Highly Compensated Employees. . . . . . . . .20
5.5 Provisions for Disposition of Excess Before-
Tax Contributions by Highly Compensated
Employees.. . . . . . . . . . . . . . . . . .23
5.6 Provisions for Return of Annual Before-Tax
Contributions in Excess of the Deferral
Limitation. . . . . . . . . . . . . . . . . .25
5.7 Character of Amounts Contributed as Before-
Tax Contributions.. . . . . . . . . . . . . .27
5.8 Participant Transfer/Rollover Contributions. . .28
ARTICLE VI
COMPANY CONTRIBUTIONS. . . . . . . . . . . . . . . . . . .29
6.1 General. . . . . . . . . . . . . . . . . . . . .29
6.2 Requirement for Net Profits. . . . . . . . . . .30
6.3 Special Limitations on After-Tax
Contributions and Company Matching
Contributions.. . . . . . . . . . . . . . . .30
6.4 Provision for Return of Excess After-Tax
Contributions and Company Matching
Contributions on Behalf of Highly
Compensated Employees.. . . . . . . . . . . .33
6.5 Forfeiture of Company Matching Contributions
Attributable to Excess Deferrals or
Contributions.. . . . . . . . . . . . . . . .35
6.6 Investment and Application of Plan
Contributions.. . . . . . . . . . . . . . . .35
6.7 Irrevocability.. . . . . . . . . . . . . . . . .38
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6.8 Company, Committee and Trustee Not
Responsible for Adequacy of Trust Fund. . . .38
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS . . . . . . . . . . .39
7.1 General. . . . . . . . . . . . . . . . . . . . .39
7.2 Participants' Accounts.. . . . . . . . . . . . .39
7.3 Revaluation of Participants' Accounts. . . . . .39
7.4 Treatment of Accounts Following Termination
of Employment.. . . . . . . . . . . . . . . .40
7.5 Accounting Procedures. . . . . . . . . . . . . .40
ARTICLE VIII
VESTING; PAYMENT OF PLAN BENEFITS. . . . . . . . . . . . .41
8.1 Vesting. . . . . . . . . . . . . . . . . . . . .41
8.2 Distribution Upon Retirement.. . . . . . . . . .41
8.3 Distribution Upon Death Prior to Termination
of Employment.. . . . . . . . . . . . . . . .42
8.4 Death After Termination of Employment. . . . . .42
8.5 Termination of Employment Prior to Normal
Retirement Date.. . . . . . . . . . . . . . .43
8.6 Withdrawals. . . . . . . . . . . . . . . . . . .44
8.7 Form of Distribution.. . . . . . . . . . . . . .47
8.8 Election for Direct Rollover of Distributable
Benefit to Eligible Retirement Plan.. . . . .48
8.9 Designation of Beneficiary.. . . . . . . . . . .49
8.10 Facility of Payment. . . . . . . . . . . . . . .50
8.11 Requirement of Spousal Consent.. . . . . . . . .51
8.12 Additional Documents.. . . . . . . . . . . . . .51
8.13 Company Stock Distribution.. . . . . . . . . . .51
8.14 Valuation of Accounts. . . . . . . . . . . . . .52
8.15 Forfeitures; Repayment.. . . . . . . . . . . . .53
8.16 Loans. . . . . . . . . . . . . . . . . . . . . .54
8.17 Special Rule for Disabled Employees. . . . . . .56
ARTICLE IX
OPERATION AND ADMINISTRATION OF THE PLAN . . . . . . . . .59
9.1 Plan Administration. . . . . . . . . . . . . . .59
9.2 Committee Powers.. . . . . . . . . . . . . . . .59
9.3 Investment Manager.. . . . . . . . . . . . . . .61
9.4 Periodic Review. . . . . . . . . . . . . . . . .61
9.5 Committee Procedure. . . . . . . . . . . . . . .61
9.6 Compensation of Committee. . . . . . . . . . . .62
9.7 Resignation and Removal of Members.. . . . . . .62
9.8 Appointment of Successors. . . . . . . . . . . .62
9.9 Records. . . . . . . . . . . . . . . . . . . . .63
9.10 Reliance Upon Documents and Opinions.. . . . . .63
9.11 Requirement of Proof.. . . . . . . . . . . . . .64
9.12 Reliance on Committee Memorandum.. . . . . . . .64
9.13 Multiple Fiduciary Capacity. . . . . . . . . . .64
9.14 Limitation on Liability. . . . . . . . . . . . .64
9.15 Indemnification. . . . . . . . . . . . . . . . .64
9.16 Reserved for Plan Modifications. . . . . . . . .65
9.17 Allocation of Fiduciary Responsibility.. . . . .65
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9.18 Bonding. . . . . . . . . . . . . . . . . . . . .65
9.19 Reserved for Plan Modifications. . . . . . . . .66
9.20 Reserved for Plan Modifications. . . . . . . . .66
9.21 Reserved for Plan Modifications. . . . . . . . .66
9.22 Prohibition Against Certain Actions. . . . . . .66
9.23 Plan Expenses. . . . . . . . . . . . . . . . . .66
ARTICLE X
SPECIAL PROVISIONS CONCERNING COMPANY STOCK
EFFECTIVE AS OF OCTOBER 1, 1992. . . . . . . . . . . . . .67
10.1 Securities Transactions. . . . . . . . . . . . .67
10.2 Valuation of Company Securities. . . . . . . . .67
10.3 Allocation of Stock Dividends and Splits.. . . .68
10.4 Reinvestment of Dividends. . . . . . . . . . . .68
10.5 Voting of Company Stock. . . . . . . . . . . . .68
10.6 Confidentiality Procedures.. . . . . . . . . . .69
10.7 Securities Law Limitation. . . . . . . . . . . .69
ARTICLE XI
MERGER OF COMPANY; MERGER OF PLAN. . . . . . . . . . . . .70
11.1 Effect of Reorganization or Transfer of
Assets. . . . . . . . . . . . . . . . . . . .70
11.2 Merger Restriction.. . . . . . . . . . . . . . .70
ARTICLE XII
PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS . . .71
12.1 Plan Termination.. . . . . . . . . . . . . . . .71
12.2 Discontinuance of Contributions. . . . . . . . .71
12.3 Rights of Participants.. . . . . . . . . . . . .72
12.4 Trustee's Duties on Termination. . . . . . . . .72
12.5 Partial Termination. . . . . . . . . . . . . . .73
12.6 Failure to Contribute. . . . . . . . . . . . . .73
ARTICLE XIII
APPLICATION FOR BENEFITS . . . . . . . . . . . . . . . . .74
13.1 Application for Benefits.. . . . . . . . . . . .74
13.2 Action on Application. . . . . . . . . . . . . .74
13.3 Appeals. . . . . . . . . . . . . . . . . . . . .74
ARTICLE XIV
LIMITATIONS ON CONTRIBUTIONS . . . . . . . . . . . . . . .76
14.1 General Rule.. . . . . . . . . . . . . . . . . .76
14.2 Annual Additions.. . . . . . . . . . . . . . . .76
14.3 Other Defined Contribution Plans.. . . . . . . .76
14.4 Combined Plan Limitation (Defined Benefit
Plan).. . . . . . . . . . . . . . . . . . . .77
14.5 Adjustments for Excess Annual Additions. . . . .77
14.6 Disposition of Excess Amounts. . . . . . . . . .79
14.7 Affiliated Company.. . . . . . . . . . . . . . .79
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ARTICLE XV
RESTRICTION ON ALIENATION. . . . . . . . . . . . . . . . .80
15.1 General Restrictions Against Alienation. . . . .80
15.2 Nonconforming Distributions Under Court
Order.. . . . . . . . . . . . . . . . . . . .80
ARTICLE XVI
PLAN AMENDMENTS. . . . . . . . . . . . . . . . . . . . . .83
16.1 Amendments.. . . . . . . . . . . . . . . . . . .83
16.2 Retroactive Amendments.. . . . . . . . . . . . .83
16.3 Amendment of Vesting Provisions. . . . . . . . .83
ARTICLE XVII
TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . .85
17.1 Minimum Company Contributions. . . . . . . . . .85
17.2 Compensation.. . . . . . . . . . . . . . . . . .85
17.3 Top-Heavy Determination. . . . . . . . . . . . .85
17.4 Maximum Annual Addition. . . . . . . . . . . . .88
17.5 Aggregation. . . . . . . . . . . . . . . . . . .88
ARTICLE XVIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .90
18.1 No Enlargement of Employee Rights. . . . . . . .90
18.2 Mailing of Payments; Lapsed Benefits.. . . . . .90
18.3 Addresses. . . . . . . . . . . . . . . . . . . .91
18.4 Notices and Communications.. . . . . . . . . . .92
18.5 Reporting and Disclosure.. . . . . . . . . . . .92
18.6 Governing Law. . . . . . . . . . . . . . . . . .92
18.7 Interpretation.. . . . . . . . . . . . . . . . .92
18.8 Certain Securities Laws Rules. . . . . . . . . .93
18.9 Withholding for Taxes. . . . . . . . . . . . . .93
18.10 Limitation on Company; Committee and
Trustee Liability.. . . . . . . . . . . . . .93
18.11 Successors and Assigns. . . . . . . . . . . .93
18.12 Counterparts. . . . . . . . . . . . . . . . .93
MATTEL, INC.
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
January 1, 1993, except as otherwise expressly provided
herein.
ARTICLE II
DEFINITIONS
2.1 Accounts.
"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(c).
(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).
(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.
2
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 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 Reserved for Plan Modifications.
2.7 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.
3
2.8 Reserved for Plan Modifications.
2.9 Reserved for Plan Modifications.
2.10 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.
2.11 Committee.
"Committee" shall mean the Committee described in
Article IX hereof.
2.12 Company.
"Company" shall mean Mattel, Inc., or any
successor thereof, if its successor shall adopt this Plan.
2.13 Company Contributions.
"Company Contributions" shall mean amounts paid by
a Participating Company into the Trust Fund in accordance
with Section 6.1(a).
2.14 Company Matching Contributions.
"Company Matching Contributions" shall mean
amounts paid by a Participating Company into the Trust Fund
in accordance with Section 6.1(c).
2.15 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.
(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 409A(1) of the Code.
2.16 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
4
rules and to the provisions of Subsections 2.16(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 or 129)
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.
(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.
5
(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, 1989, the "Compensation" of any
Employee taken into account under the Plan for any Plan
Year shall not exceed $200,000, as that amount is
adjusted each year by the Secretary of the Treasury.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include
only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result
of the application of such rules the adjusted $200,000
limitation is exceeded, then, the limitation shall be
prorated among the affected individuals in proportion
to each such individual's Compensation as determined
under this Subsection (e) prior to the application of
this limitation.
2.17 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.
2.18 Reserved for Plan Modifications.
2.19 Distributable Benefit.
"Distributable Benefit" shall mean the vested
interest of a Participant in this Plan which is determined
6
and distributable in accordance with the provisions of
Article VIII following the termination of the Participant's
employment.
2.20 Effective Date.
"Effective Date" shall mean November 1, 1983,
which shall be the original effective date of this Plan.
2.21 Eligible Employee.
"Eligible Employee" shall include any individual
who is at least age twenty-one (21) and 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), or
(c) any Employee who is classified as a
temporary Employee, unless such temporary Employee has
been an Employee for a twelve (12) consecutive month
period.
2.22 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).
(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.
7
2.23 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.
2.24 ERISA.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.25 Hardship.
"Hardship" shall mean a need created by immediate
and heavy financial obligations of the Participant, which
obligations cannot be met by other sources reasonably
available to the Participant, and shall be limited to a
distribution for the purpose of meeting major medical
expenses of the Participant or his Spouse or dependents. A
distribution shall be deemed to be necessary for the purpose
of meeting major medical expenses if such expenses were
previously incurred, or if such distribution is necessary to
obtain major medical care. The amount required to meet a
Hardship need may include amounts necessary to pay federal,
state or local income taxes or penalties reasonably
anticipated to result from the distribution. Any
determination of Hardship shall be in accordance with
regulations promulgated under Code Section 401(k). The
existence of a Participant's financial Hardship and the
amount required to meet the need created by the Hardship
shall be determined by the Committee in accordance with
rules of uniform application which the Committee may from
time to time prescribe.
2.26 Highly Compensated Employee.
(a) "Highly Compensated Employee" shall mean
any Employee who
8
(i) was a 5% owner during the
Determination Year or the Look Back Year;
(ii) received Compensation from the
Company in excess of $75,000 during the Look Back
Year;
(iii) received Compensation from the
Company in excess of $50,000 during the Look Back
Year and was in the "top-paid group" of Employees
for such Look Back Year;
(iv) was at any time an officer during
the Look Back Year and received Compensation
greater than fifty percent (50%) of the amount in
effect under Section 415(b)(1)(A) of the Code in
such Look Back Year; or
(v) was an Employee described in
Paragraph (ii), (iii), or (iv) above for the
Determination Year and was a member of the group
consisting of the 100 Employees paid the greatest
Compensation during the Determination Year.
(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, no
more than fifty (50) Employees (or, if lesser, the
greater of three (3) Employees or ten
percent (10%) of the Employees) shall be treated
as officers. To the extent required by Code
Section 414(q), if for any Determination Year or
9
Look Back Year no officer of the Company is
described in this Section, the highest paid
officer of the Company for such year shall be
treated as described in this Section.
(vi) If any individual is a "family
member" with respect to a 5% owner or of a Highly
Compensated Employee in the group consisting of
the ten (10) Highly Compensated Employees paid the
greatest Compensation during the Determination
Year or Look Back Year, then
(A) such individual shall not be
considered a separate Employee, and
(B) any Compensation paid to such
individual (and any applicable contribution
or benefit on behalf of such individual)
shall be treated as if it were paid to (or on
behalf of) the 5% owner or Highly Compensated
Employee.
For purposes of this Paragraph (vi), the term
"family member" means, with respect to any
Employee, such Employee's spouse and lineal
ascendants or descendants and the spouses of such
lineal ascendants or descendants.
(vii) For purposes of this Section the
term "Compensation" means Compensation as defined
in Code Section 415(c)(3), as set forth in
Section 2.16(c), without regard to the limitations
of Section 2.16(e); provided, however, the
determination under this Paragraph (vi) shall be
made without regard to Code Sections 125,
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).
(viii) For purposes of determining the
number of Employees in the "top-paid" group under
this Section, the following Employees shall be
excluded:
(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
10
(D) Employees who have not
attained age 21,
(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.
(ix) 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).
(x) 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.
(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.
11
2.27 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.
[section] 2530.200b-2(b). Hours of Service shall be credited
to the appropriate computation period according to the
Department of Labor Regulation [section] 2530.200b-2(c).
However, an Employee will not be considered as being
entitled to payment until the date when the Company or
the Affiliated Company would normally make payment to
the Employee for such Hour of Service.
2.28 Investment Manager.
"Investment Manager" means the one or more
Investment Managers, if any, that are appointed pursuant to
Section 9.3.
12
2.29 Normal Retirement.
"Normal Retirement" shall mean a Participant's
termination of employment on or after attaining the Plan's
Normal Retirement Date.
2.30 Normal Retirement Date.
"Normal Retirement Date" shall be the
Participant's sixty-fifth birthday.
2.31 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.
2.32 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.
2.33 Participating Company.
"Participating Company" shall mean Mattel, Inc.
and each 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.
2.34 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.
2.35 Plan.
"Plan" shall mean the Mattel, Inc. Personal
Investment Plan herein set forth, and as it may be amended
from time to time.
2.36 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.
13
2.37 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
each December 31.
2.38 Reserved for Plan Modifications.
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).
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 Reserved for Plan Modifications.
2.41 Reserved for Plan Modifications.
2.42 Reserved for Plan Modifications.
2.43 Reserved for Plan Modifications.
2.44 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
14
Section 2.44 shall be applied by the Committee in accordance
with Treasury Regulations, if any, promulgated under Code
Section 415 or Code Section 37(e)(3).
2.45 Trust and Trust Fund.
"Trust" or "Trust Fund" shall mean the one or more
trusts created for funding purposes under the Plan.
2.46 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.
2.47 Valuation Date.
"Valuation Date" shall mean the date as of which
the Trustee shall determine the value of the assets in the
Trust Fund for purposes of determining the value of each
Account, which shall be the last business day of each
calendar month or such other dates as may be determined in
rules prescribed by the Committee.
2.48 Year of Service.
"Year of Service" means three hundred sixty five
(365) days included in a period of service recognized under
this Section 2.48.
(a) Subject to the succeeding provisions of
this Section 2.48, 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 2.48(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 2.48 before such five (5)
consecutive one-year Periods of Severance shall not
include any period or periods of service that are not
15
required to be taken into account under this
Section 2.48(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 2.48, 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 Administrative 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
shall be taken into account for purposes of computing
service under this Plan unless determined otherwise by
resolution of the Board of Directors of the Company.
16
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate.
(a) Every Eligible Employee shall become
eligible to participate in the Plan on the date he
becomes an Eligible Employee.
(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).
(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(c) 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(c) 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(c) 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.
17
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.
18
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.
5.2 Amount Subject to Election.
(a) Effective for Plan Years commencing on
and after January 1, 1989, 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) 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 the date the Participant's
Before-Tax Contributions for a calendar year equal the
Deferral Limitation and ending on the immediately
following 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.
(c) 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
19
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.
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 per calendar quarter) 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 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, and to the extent required by
regulations under Code Section 401(m), also shall
satisfy the test identified in (ii) below:
20
(i)(A) The "Actual Deferral
Percentage" for Eligible Employees who are
Highly Compensated Employees shall not be
more than the "Actual Deferral Percentage" of
all other Eligible Employees multiplied by
1.25, or
(i) (B) The excess of the "Actual
Deferral Percentage" for Eligible Employees
who are Highly Compensated Employees over the
"Actual Deferral Percentage" for all other
Eligible Employees shall not be more than two
percentage points, and the "Actual Deferral
Percentage" for Highly Compensated Employees
shall not be more than the "Actual Deferral
Percentage" of all other Eligible Employees
multiplied by 2.00.
(ii) Average Contribution Percentage
for Highly Compensated Employees eligible to
participate in this Plan and a plan of the Company
or an Affiliated 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.
(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
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
21
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 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, 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) If an Eligible Employee (who is also a
Highly Compensated Employee) is subject to the family
aggregation rules in Section 2.26(b)(vi), the combined
Actual Deferral Percentage for the family group (which
is treated as one Highly Compensated Employee) shall be
the Actual Deferral Percentage determined by combining
the Before-Tax Contributions, amounts treated as
Before-Tax Contributions under Code
Section 401(k)(3)(D)(ii), and Compensation of all
eligible family members.
22
(f) 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.
(g) 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.
(h) 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.
(i) 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 and any income allocable thereto shall be
disposed of in accordance with (i) or (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
23
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 in a Plan Year 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 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 such 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. This process shall be repeated
until the Plan satisfies the Actual Deferral Percentage
test. For each Highly Compensated Employee, the amount
of excess Before-Tax Contributions shall be equal to
the total Before-Tax Contributions (plus any amounts
treated as Before-Tax Contributions) made or deemed to
be made by such Highly Compensated Employee (determined
prior to the application of the foregoing provisions of
this Subsection (c)) minus the amount determined by
multiplying the Highly Compensated Employee's Deferral
Percentage (determined after application of the
24
foregoing provisions of this Subsection (c)) by his
Compensation.
(d) The determination and correction of
excess Before-Tax Contributions of a Highly Compensated
Employee whose Actual Deferral Percentage is determined
under the family aggregation rules in Section 5.4(e)
shall be accomplished by reducing the Actual Deferral
Percentage as required under Subsections (a) and (b)
above and allocating the excess Before-Tax
Contributions for the family unit among family members
in proportion to the Before-Tax Contributions of each
family member that are combined to determine the Actual
Deferral Percentage.
(e) For purposes of satisfying the Actual
Deferral Percentage test, 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 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.
(f) 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 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
25
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 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 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.
26
(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 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 Employer
contributions.
27
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 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 and
credited to the Participant's Transfer/Rollover Account in
accordance with Code Section 402(a) 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)(ll). 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.
28
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) For each month of each Plan Year
commencing on and after January 1, 1989, 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 Percentage of
of Preceding Month Compensation
------------------ -------------
Under 40 2%
40 - 44 4%
45 - 49 5%
50 - 54 6%
55+ 7%
(b) 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).
(c) 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.
(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(c) shall be four percent (4%) of the
Participant's Compensation (such Compensation to be
29
determined prior to reduction for Before-Tax
Contributions pursuant to Section 5.1).
6.2 Requirement for Net Profits.
Contributions by a Participating Employer 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(c) 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 shall not be
more than the "Average Contribution
Percentage" of all other Eligible Employees
multiplied by 1.25, or
(i) (B) The excess of the "Average
Contribution Percentage" for Eligible
Employees who are Highly Compensated
Employees over the "Average Contribution
Percentage" for the other Eligible Employees
shall not be more than two (2) percentage
points, and the "Average Contribution
Percentage" for Eligible Employees who are
30
Highly Compensated Employees shall not be
more than the "Average Contribution
Percentage" of all other Eligible Employees
multiplied by 2.00.
(ii) The Average Contribution
Percentage 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.
(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 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
31
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) If an Eligible Employee (who is also a
Highly Compensated Employee) is subject to the family
aggregation rules in Section 2.26(b)(vi), the combined
Average Contribution Percentage for the family group
(which is treated as one Highly Compensated Employee)
shall be the Average Contribution Percentage
determined by combining the After-Tax Contributions,
Company Matching Contributions, amounts treated as
Company Matching Contributions under Code
Section 401(m)(3), and Compensation of all the eligible
family members.
(f) 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.
(g) 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.
(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(m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary
of the Treasury.
32
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 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 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
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, including any 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
33
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 Proposed Treasury
Regulation Section 1.401(m)-1(e)(2) under which the
Contribution Percentage of the Highly Compensated
Employee who has the highest such 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.
This process shall be repeated until the Plan satisfies
the Average Contribution Percentage test. For each
Highly Compensated Employee, the amount of excess
After-Tax and Company Matching Contributions shall be
equal to the total After-Tax and Company Matching
Contributions (plus any amounts treated as Company
Matching Contributions) made on behalf of such Highly
Compensated Employee (determined prior to the
application of the foregoing provisions of this
Subsection (b)) minus the amount determined by
multiplying the Highly Compensated Employee's
Contribution Percentage (determined after the
application of the foregoing provisions of this
Subsection (b)) by his Compensation.
(c) The determination and correction of
excess After-Tax and Company Matching Contributions
made by and on behalf of a Highly Compensated Employee
whose Average Contribution Percentage is determined
under the family aggregation rules in Section 6.3(e)
shall be accomplished by reducing the Average
Contribution Percentage of the Highly Compensated
Employee as required under Subsections (a) and (b)
above and allocating the excess After-Tax and Company
Matching Contributions for the family unit among the
family members in proportion to the After-Tax and
Company Matching Contributions of each family member
that are combined to determine the Average Contribution
Percentage.
34
(d) For purposes of satisfying the Average
Contribution Percentage test, 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.
(e) 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 6.10, such Company Matching Contributions,
including any 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,
35
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 to change
an investment election with respect to the
allocation of future contributions made by him or
on 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.
Subject to such rules as the Committee may
prescribe, any such election to change shall be
effective as of the next succeeding January 1,
April 1, July 1, or October 1. 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 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 of the next
succeeding January 1, April 1, July 1, or
October 1. 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 twenty-five
percent (25%) 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. 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
36
in the Company Stock Fund exceeding twenty-five
percent (25%) of the value of his interest in all
investment alternatives held under the Plan.
Notwithstanding the preceding 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 current guaranteed investment
contract.
(b) If a fund consisting of one or more
guaranteed investment contracts is made available as an
investment alternative, from time to time the Company
may advise Participants of the projected rate of return
to be credited on contributions held or deposited in a
Participant's guaranteed investment fund subaccount
during a future period, not to exceed twelve (12)
months (the "Guarantee Period"). To the extent the
actual rate of return on contributions deposited or
held in the guaranteed investment fund during a
Guarantee Period is less than the projected rate
communicated to Participants, the Company may, in its
sole discretion make one or more contributions on
behalf of each Participant for such Guarantee Period,
which shall not exceed the amount required, if any, to
increase the rate of return on such Participant's
guaranteed investment fund subaccount for such
Guarantee Period to the projected rate of return for
the Guarantee Period.
Notwithstanding the foregoing, no contribution and
allocation shall be made under this Subsection with
respect to a Highly Compensated Employee to the extent
such contribution would result in prohibited
discrimination, within the meaning of Section 401(a)(4)
of the Code. Further, notwithstanding the foregoing,
neither this Section 6.6 nor any other provision of
this Plan shall be construed or applied to cause the
Company to be an insurer or guarantor of any
investment, either as to income or principal.
37
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 of 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 be responsible for
the application of any moneys, securities, investments or
other property paid or delivered to the Trustee.
38
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.
(a) As of each Valuation Date, and within
sixty days after the removal or resignation of the
Trustee, the Trustee shall value the assets of the
Trust on the basis of fair market values.
(b) As soon as is reasonably possible after
receipt of these valuations from the Trustee, the
Committee shall revalue the Accounts of each
Participant as of the applicable Valuation Date so as
to reflect a proportionate share in any increase or
decrease in the fair market value of the assets in the
Trust Fund, determined by the Trustee 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:
(i) As of each Valuation Date the
Committee shall revalue the Accounts holding such
assets 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.
39
(ii) 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 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.
40
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) below, each
Participant shall become vested in his Company Matching
Account and his Company Contributions Account according
to the table set forth below:
Number of Vesting
Years of Service Percentage
---------------- ----------
Less than 1 0
At least 1 but less than 2 0
At least 2 but less than 3 25
At least 3 but less than 4 50
At least 4 but less than 5 75
5 or more 100
(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) 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.
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 Participant's employment on his late retirement
date, his Distributable Benefit shall be based upon the
41
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; provided,
however, in the case of a Participant who is a
"5-percent owner" (within the meaning of
Section 401(a)(9) of the Code) and, in the case of any
Participant who attains age 70-1/2 after December 31,
1987, distribution shall 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.
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 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 or commence to be made not
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).
8.4 Death After Termination of Employment.
Upon the death of a former Participant after his
retirement or other termination of employment, but prior to
the distribution of his 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, to the Beneficiary
42
designated by the deceased Participant or as otherwise
determined under Section 8.9.
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 in a lump sum
distribution as soon as administratively feasible
following his Normal Retirement Date, or prior to his
Normal Retirement Date in accordance with
Subsection 8.5(b). Unless the Participant's
Distributable Benefit is payable prior to his Normal
Retirement in accordance with (b), the Participant
shall be deemed to have elected to defer distribution
until his Normal Retirement Date. 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.
(b) If the Participant makes a valid written
election in accordance with (c) below (and without
regard to any such election if the distribution is not
more than $3,500), payment of his Distributable Benefit
pursuant to this Section 8.5 may be made on an earlier
date which is not later than sixty (60) days after the
close of the Plan Year in which occurs the
Participant's termination of employment with the
Company and all Affiliated Companies, 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.
43
(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 such Accounts are
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 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. 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
44
Mattel Investment Plan within the two (2) year period
preceding withdrawal.
(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, no Participant may withdraw 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. For purposes of this
Section 8.6(d), a withdrawal may be considered to be
necessary on account of a Hardship of the Participant
if the Committee determines that the amount required to
meet such Hardship is not readily available to the
Participant from other resources, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code. The Committee may
determine that a withdrawal is necessary on account of
a Hardship on the basis of facts and circumstances, as
provided in (i) below, or on the basis of the criteria
specified in (ii) below:
(i) A distribution generally may be
treated as necessary on account of a Hardship of a
Participant if the Committee reasonably relies on
the Participant's representations to the
Committee, unless the Committee has actual
knowledge to the contrary, that the Hardship
cannot be relieved (A) through reimbursement or
compensation by insurance or otherwise, (B) by
reasonable liquidation of assets, if such
liquidation would not itself cause an immediate
and heavy financial need, (C) by the cessation of
Participant Before-Tax Contributions to the Plan,
or (D) by other distributions or non-taxable loans
from plans of the Company or any other employer,
or by borrowing from commercial sources on
reasonable commercial terms, unless the obligation
to repay the loan would be inconsistent with the
45
purpose of the withdrawal. For purposes of this
Section, a Participant's resources shall be deemed
to include those assets of his spouse and minor
children that are reasonably available to the
Participant.
(ii) A distribution shall be deemed by
the Committee to be necessary on account of a
Hardship of a Participant if all of the following
requirements are satisfied: (A) the distribution
is not in excess of the amount of the Hardship,
(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 Participant's Before-Tax
Contributions and After-Tax Contributions and
employee contributions under all qualified and
nonqualified 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 following the receipt of the
distribution, and (D) the Deferral Limitation for
the Participant for the Participant's taxable year
following the taxable year of distribution is
reduced by the amount of the Participant's Before-
Tax Contributions for the taxable year of
distribution.
No earnings credited to a Participant's Before-Tax
Contributions Account after December 31, 1988 shall be
available for a Hardship withdrawal.
(e) A withdrawal from a Participant's vested
interest in his Company 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 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.
(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,
46
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 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) 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.
(h) Disbursement of withdrawals shall be as
soon as administratively practicable after the
Valuation Date which occurs at the end of the month in
which the Participant completes the filing 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 8.8 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 disbursement from a
Participant's Accounts, such disbursement shall be made
ratably from such investment funds or investment
47
vehicles in which such Participant's Accounts affected
by such disbursement are invested.
8.8 Election for Direct Rollover of Distributable
Benefit to Eligible Retirement Plan.
(a) Effective as of January 1, 1993, 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 the taxable portion
of his Distributable Benefit to an "eligible retirement
plan." For purposes of this Section, an "eligible
retirement plan" shall mean any plan described in Code
Section 402(c)(8)(B), except that such plan must be a
defined contribution plan, the terms of which permit
the acceptance of a direct rollover from a qualified
plan. Any non-taxable portion of the Participant's
Distributable Benefit shall be payable to the
Participant in accordance with Section 8.7 above.
(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 and
address 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; provided, however, a
Participant who attained his Normal Retirement Date or
whose Distributable Benefit does not exceed $3,500 may
waive the thirty (30) day notice requirement by making
an affirmative election to make or not to make a direct
rollover of all or a portion of his Distributable
Benefit.
48
(d) If a Participant who attained his Normal
Retirement Date or whose Distributable Benefit does not
exceed $3,500 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.
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.
(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
49
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.
50
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 Company Stock, unless the Participant
elects in writing in accordance with procedures established
by the Committee that payment shall be made in cash in lieu
of Company Stock (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 reasonable time (at
51
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 a
cash 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 Company Stock.
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 $3500, 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
52
Distributable Benefit shall be determined as of
the Valuation Date coinciding with or next
following the date 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
53
repayment shall be permitted unless such repayment is
made prior to the date the Participant incurs five (5)
consecutive one-year Periods of Severance and prior to
the fifth 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 in the discretion of the Committee 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, determined as of the Valuation
Date occurring at the end of the month in which
the Participant's loan application is completed in
form satisfactory to the Committee (provided,
54
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
(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.
(d) Each Participant desiring to enter into
a loan arrangement pursuant to this Section 8.16 shall
apply for a loan by filing a properly completed
application with the Committee. The Committee shall
notify the Participant within a reasonable time whether
the application is approved or denied. Upon approval
of the application 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
55
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.
(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
56
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 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.
57
(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 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.
58
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 the 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
59
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 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 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 409A(1) or any
successor statute thereto.
60
(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.
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 meeting, or authorized by a majority of
61
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.
62
(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 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
63
as conclusive with respect to all Employees,
Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law.
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
64
claims against him by reason of his conduct in the
performance of his duties under the Plan, except in
relation to 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 Reserved for Plan Modifications.
9.17 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
procedure; and
(iv) Appointing Investment Managers.
9.18 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 other fiduciary under this Plan.
65
(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.
9.19 Reserved for Plan Modifications.
9.20 Reserved for Plan Modifications.
9.21 Reserved for Plan Modifications.
9.22 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.
9.23 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.
66
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 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.
67
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 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
68
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 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 Administration 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 Administration Committee shall also be
responsible for ensuring the adequacy of the confidentiality
procedures and monitoring compliance with such procedures.
The Administration 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.
69
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 benefit he would have
been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then
terminated).
70
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 fully 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 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.
(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
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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 each former Participant
in Company stock or cash an amount equal to the amount
72
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.
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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.
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(ii) The appeal shall be made, in writing,
within sixty-five days after the date of notice of the
decision with respect to the application.
(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-five 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.
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ARTICLE XIV
LIMITATIONS ON CONTRIBUTIONS
14.1 General Rule.
(a) Notwithstanding anything to the contrary
contained in this Plan, the total Annual Additions
under this Plan to a Participant's Plan Accounts for
any Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000)
(or if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in
Section 415(b) of the Code as in effect for the
Limitation Year); or
(ii) Twenty-five percent 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.
(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(l)(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(i) 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
76
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).
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
77
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:
(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.
78
(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.
(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).
79
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 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
80
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.
(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.
81
(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).
82
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 execute 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
(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
83
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.
84
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 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 amounts considered contributed by Key Employees and
which qualify for treatment under Code Section 401(k), and
any Company contributions for Key Employees taken into
account under Section 401(k)(3) or 401(m) of the Code, but
shall not include such amounts considered as contributed by
or for Non-Key Employees. 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
85
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
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 who,
at any time during such Plan Year (or any of the 4 preceding
Plan Years) is:
(1) an officer of a Participating Company
having an annual compensation in excess of 50 percent
of the amount in effect under Section 415(b)(1)(A) of
the Code for such Plan Year;
(2) one of the 10 Employees having an annual
compensation in excess of 150 percent of the amount in
effect under Section 415(c)(1)(A) of the Code owning
(or considered as owning within the meaning of
86
Section 318 of the Code) the largest interests in a
Participating Company;
(3) a 5% owner of a Participating Company;
or
(4) 1% owner of a Participating Company
having an annual compensation from a Participating
Company of more than $150,000.
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.
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 the Participant during the five year period
ending on the Determination Date.
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 received any
compensation from any Participating Company under the Plan
(other than benefits under the Plan) during the five year
period ending on the Determination Date.
87
17.4 Maximum Annual Addition.
(a) Except as set forth below, in the case
of any Top-Heavy Plan the rules of Section 14.4 shall
be applied by substituting "1.0" for "1.25" in the
defined benefit plan fraction and the defined
contribution fraction.
(b) The rule set forth in Subsection (a)
above shall not apply if the requirements of both
Paragraphs (i) and (ii), below, are satisfied.
(i) The requirements of this
Paragraph (i) are satisfied if the rules of
Section 17.4(a) above would be satisfied after
substituting "four percent (4%)" for "three
percent (3%)" where it appears therein with
respect to Participants covered only under a
defined contribution plan.
(ii) The requirements of this
Paragraph (ii) are satisfied if the Plan would not
be a Top-Heavy Plan if "ninety percent (90%)" were
substituted for "sixty percent (60%)" each place
it appears in Section 17.3(a)(ii).
(c) The rules of Subsection (a) shall not
apply with respect to any Employee as long as there are
no --
(i) Company contributions, forfeitures,
or voluntary nondeductible contributions allocated
to the Employee under a defined contribution plan
maintained by the Company, or
(ii) Accruals by the Employee under a
defined benefit plan maintained by the Company.
17.5 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.
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
88
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 17.5, 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.
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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 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
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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.
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.
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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:
(i) The requirements (of Code
Section 401(a) and related statutes) for
qualification as a Profit Sharing Plan; and
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(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 l934, 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.
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
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this 4th day of May, 1993, effective, however,
as of January 1, 1993, except as otherwise expressly
provided herein.
MATTEL, INC.
By: /s/ Francesca Luzuriaga
---------------------------
By:
---------------------------
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