EXHIBIT 99.3
MATTEL, INC.
PERSONAL INVESTMENT PLAN
APRIL 1, 1997 RESTATEMENT
TABLE OF CONTENTS
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ARTICLE I GENERAL
1.1 Plan Name............................................................. 1
1.2 Plan Purpose.......................................................... 1
1.3 Effective Date........................................................ 1
1.4 Plan Merger........................................................... 1
ARTICLE II DEFINITIONS
2.1 Accounts.............................................................. 3
2.2 Affiliated Company.................................................... 4
2.3 After-Tax Contributions............................................... 5
2.4 Before-Tax Contributions.............................................. 5
2.5 Beneficiary........................................................... 5
2.6 Reserved for Plan Modifications....................................... 5
2.7 Board of Directors.................................................... 6
2.8 Reserved for Plan Modifications....................................... 6
2.9 Reserved for Plan Modifications....................................... 6
2.10 Code.................................................................. 6
2.11 Committee............................................................. 6
2.12 Company............................................................... 6
2.13 Company Contributions................................................. 6
2.14 Company Matching Contributions........................................ 7
2.15 Company Stock......................................................... 7
2.16 Compensation.......................................................... 7
2.17 Deferral Limitation................................................... 10
2.18 Distributable Benefit................................................. 10
2.19 Early Retirement Date................................................. 11
2.20 Effective Date........................................................ 11
2.21 Eligible Employee..................................................... 11
2.22 Employee.............................................................. 12
2.23 Employment Commencement Date.......................................... 12
2.24 ERISA................................................................. 13
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2.25 F-P Savings Plan...................................................... 13
2.26 Highly Compensated Employee........................................... 13
2.27 Hour of Service....................................................... 17
2.28 Investment Manager.................................................... 19
2.29 Normal Retirement..................................................... 19
2.30 Normal Retirement Date................................................ 19
2.31 Participant........................................................... 20
2.32 Participation Commencement Date....................................... 20
2.33 Participating Company................................................. 20
2.34 Period of Severance................................................... 20
2.35 Plan.................................................................. 20
2.36 Plan Administrator.................................................... 21
2.37 Plan Year............................................................. 21
2.38 Reserved for Plan Modifications....................................... 21
2.39 Severance Date........................................................ 21
2.40 Reserved for Plan Modifications....................................... 22
2.41 Reserved for Plan Modifications....................................... 22
2.42 Reserved for Plan Modifications....................................... 22
2.43 Reserved for Plan Modifications....................................... 22
2.44 Total and Permanent Disability........................................ 22
2.45 Trust and Trust Fund.................................................. 23
2.46 Trustee............................................................... 23
2.47 Valuation Date........................................................ 23
2.48 Year of Service....................................................... 23
ARTICLE III ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate............................................. 26
3.2 Commencement of Participation.......................................... 26
3.3 Former Participants in F-P Savings Plan................................ 27
ARTICLE IV TRUST FUND
4.1 Trust Fund............................................................. 28
ARTICLE V EMPLOYEE CONTRIBUTIONS
5.1 Employee Contributions................................................. 29
5.2 Amount Subject to Election............................................. 29
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5.3 Termination of, Change in Rate of, or Resumption of Deferrals................. 31
5.4 Limitation on Before-Tax Contributions by Highly Compensated Employees........ 32
5.5 Provisions for Disposition of Excess Before-Tax Contributions by Highly
Compensated Employees...................................................... 37
5.6 Provisions for Return of Annual Before-Tax Contributions in Excess of the
Deferral Limitation........................................................ 41
5.7 Character of Amounts Contributed as Before-Tax Contributions.................. 44
5.8 Participant Transfer/Rollover Contributions................................... 45
ARTICLE VI COMPANY CONTRIBUTIONS
6.1 General....................................................................... 47
6.2 Requirement for Net Profits................................................... 49
6.3 Special Limitations on After-Tax Contributions and Company Matching
Contributions.............................................................. 49
6.4 Provision for Return of Excess After-Tax Contributions and Company Matching
Contributions on Behalf of Highly Compensated Employees.................... 54
6.5 Forfeiture of Company Matching Contributions Attributable to Excess
Deferrals or Contributions................................................. 58
6.6 Investment and Application of Plan Contributions.............................. 58
6.7 Irrevocability................................................................ 61
6.8 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund..... 62
ARTICLE VII PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 General....................................................................... 63
7.2 Participants' Accounts........................................................ 63
7.3 Revaluation of Participants' Accounts......................................... 63
7.4 Treatment of Accounts Following Termination of Employment..................... 64
7.5 Accounting Procedures......................................................... 64
ARTICLE VIII VESTING; PAYMENT OF PLAN BENEFITS
8.1 Vesting....................................................................... 66
8.2 Distribution Upon Retirement.................................................. 67
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8.3 Distribution Upon Death Prior to Termination of Employment................... 68
8.4 Death After Termination of Employment........................................ 69
8.5 Termination of Employment Prior to Normal Retirement Date.................... 70
8.6 Withdrawals.................................................................. 73
8.7 Form of Distribution......................................................... 79
8.8 Election for Direct Rollover of Distributable Benefit to Eligible Retirement
Plan....................................................................... 80
8.9 Designation of Beneficiary................................................... 83
8.10 Facility of Payment.......................................................... 85
8.11 Requirement of Spousal Consent............................................... 85
8.12 Additional Documents......................................................... 86
8.13 Company Stock Distribution................................................... 86
8.14 Valuation of Accounts........................................................ 87
8.15 Forfeitures; Repayment....................................................... 90
8.16 Loans........................................................................ 90
8.17 Special Rule for Disabled Employees.......................................... 95
8.18 Election for Fully Vested Employees Transferred to Fisher-Price, Inc......... 97
8.19 Provision for Small Benefits................................................. 98
ARTICLE IX OPERATION AND ADMINISTRATION OF THE PLAN
9.1 Plan Administration.......................................................... 99
9.2 Committee Powers............................................................. 100
9.3 Investment Manager........................................................... 102
9.4 Periodic Review.............................................................. 103
9.5 Committee Procedure.......................................................... 103
9.6 Compensation of Committee.................................................... 104
9.7 Resignation and Removal of Members........................................... 105
9.8 Appointment of Successors.................................................... 105
9.9 Records...................................................................... 105
9.10 Reliance Upon Documents and Opinions......................................... 106
9.11 Requirement of Proof......................................................... 107
9.12 Reliance on Committee Memorandum............................................. 107
9.13 Multiple Fiduciary Capacity.................................................. 108
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9.14 Limitation on Liability...................................................... 108
9.15 Indemnification.............................................................. 108
9.16 Reserved for Plan Modifications.............................................. 109
9.17 Allocation of Fiduciary Responsibility....................................... 119
9.18 Bonding...................................................................... 110
9.19 Reserved for Plan Modifications.............................................. 110
9.20 Reserved for Plan Modifications.............................................. 110
9.21 Reserved for Plan Modifications.............................................. 111
9.22 Prohibition Against Certain Actions.......................................... 111
9.23 Plan Expenses................................................................ 111
ARTICLE X SPECIAL PROVISIONS CONCERNING COMPANY STOCK
EFFECTIVE AS OF OCTOBER 1,1992
10.1 Securities Transactions...................................................... 113
10.2 Valuation of Company Securities.............................................. 114
10.3 Allocation of Stock Dividends and Splits..................................... 115
10.4 Reinvestment of Dividends.................................................... 115
10.5 Voting of Company Stock...................................................... 116
10.6 Confidentiality Procedures................................................... 117
10.7 Securities Law Limitation.................................................... 117
ARTICLE XI MERGER OF COMPANY; MERGER OF PLAN
11.1 Effect of Reorganization or Transfer of Assets............................... 118
11.2 Merger Restriction........................................................... 118
ARTICLE XII PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS
12.1 Plan Termination............................................................. 120
12.2 Discontinuance of Contributions.............................................. 121
12.3 Rights of Participants....................................................... 122
12.4 Trustee's Duties on Termination.............................................. 122
12.5 Partial Termination.......................................................... 124
12.6 Failure to Contribute........................................................ 124
ARTICLE XIII APPLICATION FOR BENEFITS
13.1 Application for Benefits..................................................... 125
13.2 Action on Application........................................................ 125
13.3 Appeals...................................................................... 126
ARTICLE XIV LIMITATIONS ON CONTRIBUTIONS
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14.1 General Rule................................................................ 128
14.2 Annual Additions............................................................ 128
14.3 Other Defined Contribution Plans............................................ 129
14.4 Combined Plan Limitation (Defined Benefit Plan)............................. 129
14.5 Adjustments for Excess Annual Additions..................................... 130
14.6 Disposition of Excess Amounts............................................... 133
14.7 Affiliated Company.......................................................... 133
ARTICLE XV RESTRICTION ON ALIENATION
15.1 General Restrictions Against Alienation..................................... 134
15.2 Nonconforming Distributions Under Court Order............................... 135
ARTICLE XVI PLAN AMENDMENTS
16.1 Amendments.................................................................. 138
16.2 Retroactive Amendments...................................................... 139
16.3 Amendment of Vesting Provisions............................................. 139
ARTICLE XVII TOP-HEAVY PROVISIONS
17.1 Minimum Company Contributions............................................... 141
17.2 Compensation................................................................ 142
17.3 Top-Heavy Determination..................................................... 142
17.4 Maximum Annual Addition..................................................... 146
17.5 Aggregation................................................................. 147
ARTICLE XVIII MISCELLANEOUS
18.1 No Enlargement of Employee Rights........................................... 148
18.2 Mailing of Payments; Lapsed Benefits........................................ 148
18.3 Addresses................................................................... 151
18.4 Notices and Communications.................................................. 151
18.5 Reporting and Disclosure.................................................... 151
18.6 Governing Law............................................................... 152
18.7 Interpretation.............................................................. 152
18.8 Certain Securities Laws Rules............................................... 152
18.9 Withholding for Taxes....................................................... 153
18.10 Limitation on Company; Committee and Trustee Liability...................... 153
18.11 Successors and Assigns...................................................... 153
18.12 Counterparts................................................................ 153
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PERSONAL INVESTMENT PLAN
ARTICLE I
GENERAL
1.1 Plan Name.
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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.
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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 April 1, 1997, except as otherwise expressly provided herein.
1.4 Plan Merger.
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Effective April 1, 1997, the Fisher-Price, Inc. Matching Savings Plan
(the "F-P Savings Plan") has been merged with and into this Plan and the account
balances under the former
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F-P Savings Plan have been transferred to corresponding accounts under this
Plan, as follows:
F-P SAVINGS PLAN ACCOUNT CORRESPONDING PLAN ACCOUNT
Employee Contribution Account Before-Tax Contributions Account
Company Matching Account Company Matching Account
Discretionary Contribution Account Company Matching Account
Profit Sharing Account Transfer/Rollover Account
Rollover Contributions Account Transfer/Rollover Account
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ARTICLE II
DEFINITIONS
2.1 Accounts.
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"Accounts" or "Participant's Accounts" means the following Plan
accounts maintained by the Committee for each Participant as required by Article
VII:
(a) "Before-Tax Contributions Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Participant Before-Tax Contributions, and any earnings
thereon, in accordance with Article V.
(b) "After-Tax Contributions Account" shall mean the account
established and maintained for each Participant under Article VII to
reflect amounts held in the Trust Fund on behalf of such Participant which
are attributable to Participant After-Tax Contributions and any earnings
thereon, in accordance with Article V.
(c) "Company Matching Account" shall mean the account established
and maintained for each Participant under Article VII for purposes of
holding and accounting for amounts held in the Trust Fund which are
attributable to Company Matching Contributions, and any earnings thereon,
pursuant to Section 6.1(d).
(d) "Company Contributions Account" shall mean the account
established and maintained for each Participant
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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 Affiliated Company.
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"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
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(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.
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"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.
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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.
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(d).
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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 409(1) of the
Code.
2.16 Compensation.
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(a) "Compensation" shall mean the full salary and wages
(including overtime, shift differential and holiday, vacation and sick pay)
and other compensation paid by a Participating Company during a Plan Year
by reason of services performed by an Employee, subject, however, to the
following special rules and to the provisions of Subsections 2.16(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
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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.
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(c) The term "Compensation," for purposes of Article XIV of this
Plan, shall mean wages as defined in Section 3401(a) and all other payments
of compensation to an Employee by the Company (in the course of the
Company's trade or business) for which the Company is required to furnish
the Employee a written statement under Code Sections 6041(d) and
6051(a)(3). Compensation for purposes of this Subsection (c) shall be
determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
(d) In the event that this Plan is deemed a Top-Heavy Plan as set
forth in Article XVII, the term "Compensation" shall not include amounts
excluded by reason of and to the extent provided by Sections 17.1 and 17.2.
(e) Effective for Plan Years commencing on and after January 1,
1994, the "Compensation" of any Employee taken into account under the Plan
for any Plan Year shall not exceed $150,000 (or such adjusted amount as may
be prescribed for such Plan Year pursuant to Section 401(a)(17) of the
Code). 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
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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 $150,000 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 Distributable Benefit.
---------------------
"Distributable Benefit" shall mean the vested interest of a
Participant in this Plan which is determined and distributable in accordance
with the provisions of Article VIII following the termination of the
Participant's employment.
2.19 Early Retirement Date.
---------------------
"Early Retirement Date" shall mean the later of the Participant's 55th
birthday or the date on which the Participant completes five Years of Service.
2.20 Effective Date.
--------------
"Effective Date" shall mean November 1, 1983, which shall be the
original effective date of this Plan.
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2.21 Eligible Employee.
-----------------
"Eligible Employee" shall include any individual who (i) prior to
April 1, 1997 is at least age twenty-one (21) or on or after April 1, 1997 is at
least age twenty and one-half (20-1/2) and (ii) is employed by a Participating
Company, except
(a) any Employee who is covered by a collective bargaining
agreement to which a Participating Company is a party if there is evidence
that retirement benefits were the subject of good faith bargaining between
the Participating Company and the collective bargaining representative,
unless the collective bargaining agreement provides for coverage under this
Plan,
(b) any Employee who is a "leased employee," within the meaning
of Code Section 414(n), 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).
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(b) Although Eligible Employees are the only class of Employees
eligible to participate in this Plan, the term "Employee" is used to refer
to persons employed in a non-Eligible Employee capacity as well as Eligible
Employee category. Thus, those provisions of this Plan that are not
limited to Eligible Employees, such as those relating to Hours of Service,
apply to both Eligible and non-Eligible Employees.
2.23 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.
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2.24 ERISA.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
2.25 F-P Savings Plan.
----------------
"F-P Savings Plan" shall mean the Fisher-Price, Inc. Matching Savings
Plan, which was merged with and into this Plan effective April 1, 1997.
2.26 Highly Compensated Employee.
---------------------------
(a) "Highly Compensated Employee" shall mean any Employee who
(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.
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(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 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.
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(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:
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(A) Employees who have not completed six (6) months of
service,
(B) Employees who normally work less than 17-1/2 hours
per week,
(C) Employees who normally work not more than six (6)
months during any Plan Year, and
(D) Employees who have not attained age 20-1/2,
(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
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(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.
2.27 Hour of Service.
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(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
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disability), layoff, jury duty, military duty or a Leave of Absence, for which
he is so paid or so entitled to payment, whether direct or indirect. However, no
such hours shall be credited to an Employee if such Employee is directly or
indirectly paid or entitled to payment for such hours and if such payment or
entitlement is made or due under a plan maintained solely for the purpose of
complying with applicable workmen's compensation, unemployment compensation or
disability insurance laws or is a payment which solely reimburses the Employee
for medical or medically related expenses incurred by him.
(iii) Each hour for which he is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed to by the
Company or an Affiliated Company, provided that such Employee has not previously
been credited with an Hour of Service with respect to such hour under paragraphs
(i) or (ii) above.
(b) Hours of Service under Subsections (a)(ii) and (a)(iii)
shall be calculated in accordance with Department of Labor Regulation 29
C.F.R. (S) 2530.200b-2(b). Hours of Service shall be credited to the
appropriate computation period according to the Department of Labor
Regulation (S) 2530.200b-2(c). However, an Employee will not be considered
as being entitled to payment until the date when the Company or the
Affiliated Company would normally make payment to the Employee for such
Hour of Service.
-18-
2.28 Investment Manager.
------------------
"Investment Manager" means the one or more Investment Managers, if
any, that are appointed pursuant to Section 9.3.
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., Mattel Sales, Inc.
and each other Affiliated Company (or similar entity) that has been granted
permission by the Board of Directors to participate in this Plan, provided that
contributions are being made hereunder for the Employees of such Participating
Company. Permission to become a Participating Company shall be granted
-19-
under such conditions and upon such conditions as the Board of Directors deems
appropriate. Effective April 1, 1997, Fisher-Price, Inc. and each other adopting
employer in the F-P Savings Plan shall be a Participating Company in this Plan.
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.
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
-20-
(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.
-------------------------------
-21-
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 Section 2.44 shall be applied by the Committee in accordance with
Treasury Regulations, if any, promulgated under Code Section 415 or Code Section
22(e)(3).
2.45 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 last day of each calendar month and
such additional dates as may be determined in rules prescribed by the Committee.
-22-
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 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
-23-
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
Committee in its sole discretion.
(f) Notwithstanding any other provision of this Plan, service
performed for an Affiliated Company prior to such entity becoming an
Affiliated Company may be taken into account for purposes of computing
service for any purpose of this Plan to the extent and in the manner
determined by resolution of the Board of Directors of the Company in its
sole discretion.
-24-
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) and (b).
(b) From January 1, 1987 to June 30, 1988, each Eligible Employee
shall be entitled to commence Employee contributions as set forth in
Article V and Company Matching Contributions as set forth in Section 6.1(d)
on the January 1 after their Employment Commencement Date.
(c) Effective July 1, 1988, each Eligible Employee shall be
entitled to commence After-Tax
-25-
Contributions and Company Matching Contributions as set forth in Section
6.1(d) as of the date he becomes an Eligible Employee.
(d) Effective January 1, 1989, each Eligible Employee shall be
entitled to commence Before-Tax Contributions and Company Matching
Contributions as set forth in Section 6.1(d) as of the date he becomes an
Eligible Employee.
(e) The Committee may prescribe such rules as it deems necessary
or appropriate regarding times and procedures for Participants to make
elections to contribute a portion of Compensation as provided in Section
5.1.
3.3 Former Participants in F-P Savings Plan
---------------------------------------
Notwithstanding anything in this Article to the contrary, any
individual who was a participant in the F-P Savings Plan on March 31, 1997 shall
automatically become a Participant in this Plan effective as of April 1, 1997.
-26-
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.
-27-
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, but prior to January 1, 1997, and for the period January 1, 1997
through March 31, 1997, subject to the limitations of this Article V, the
amount of an individual's Compensation that may be contributed subject to
the election provided in Section 5.1 shall be a whole percentage of the
individual's Compensation, which percentage is not less than one percent
(1%) nor more than the difference between (i) the Participant's Company
Contributions percentage determined under Section 6.1(a) and (ii) seventeen
percent (17%).
(b) Effective April 1, 1997, subject to the limitations of this
Article V, the amount of a Participant's
-28-
Compensation that may be contributed subject to the election provided in
Section 5.1 shall be a whole percentage of the Participant's Compensation,
which percentage is not less than one percent (1%) nor more than: (i) in
the case of a Participant employed by Fisher-Price, Inc. or Mattel
Operations, Inc., fifteen percent (15%); and (ii) in the case of any other
Participant, the difference between (x) the Participant's Company
Contributions percentage determined under Section 6.1(a) and (y) seventeen
percent (17%).
(c) 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.
(d) 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
-29-
appropriate regarding the maximum amount that a Participant may elect to
contribute and the timing of such an election. These rules may prescribe a
maximum percentage of Compensation that may be contributed, or may provide
that the maximum percentage of Compensation that a Participant may
contribute will be a lower percentage of his Compensation above a certain
dollar amount of Compensation than the maximum deferral percentage below
that dollar amount of Compensation. These rules shall apply to all
individuals eligible to make the election described in Section 5.1, except
to the extent that the Committee prescribes special or more stringent rules
applicable only to Highly Compensated Employees.
5.3 Termination of, Change in Rate of, or Resumption of Deferrals.
-------------------------------------------------------------
(a) A Participant may at any time submit a request to the
Committee to terminate his contributions made pursuant to this Article V.
(b) A Participant may at any time (but not more frequently than
once every two weeks) submit a request to the Committee to alter the rate
of, or resume his contributions made pursuant to this Article V.
(c) A request for termination, alteration, or resumption or
alteration of the rate of contributions shall be in form satisfactory to
the Committee. The Committee may require at least thirty (30) days notice
prior to
-30-
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:
(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
-31-
(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) 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 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
-32-
Contributions relate to Compensation that either would have been received by the
Eligible Employee in the Plan Year (but for the deferral election), or is
attributable to services performed in the Plan Year and would have been received
by the Eligible Employee within two and one-half (2 1/2) months after the close
of the Plan Year (but for the deferral election), and such Before-Tax
Contributions are allocated to the Eligible Employee as of a date within that
Plan Year. For purposes of this rule, an Eligible Employee's Before-Tax
Contributions shall be considered allocated as of a date within a Plan Year only
if (A) the allocation is not contingent upon the Eligible Employee's
participation in the Plan or performance of services on any date subsequent to
that date, and (B) the Before-Tax Contribution is actually paid to the Trust no
later than the end of the twelve month period immediately following the Plan
Year to which the contribution relates. To the extent determined by the
Committee and in accordance with regulations issued by the Secretary of the
Treasury, contributions on behalf of an 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
-33-
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
-34-
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.
(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.
-35-
5.5 Provisions for Disposition of Excess Before-Tax Contributions by Highly
-----------------------------------------------------------------------
Compensated Employees.
---------------------
(a) The Committee shall determine, as soon as is reasonably
possible following the close of each Plan Year, the extent, if any, to
which deferral treatment under Code Section 401(k) may not be available for
Before-Tax Contributions by Highly Compensated Employees. If, pursuant to
the determination by the Committee, any or all of a Participant's Before-
Tax Contributions are not eligible for tax-deferral treatment, then any
excess Before-Tax Contributions shall be disposed of in accordance with (i)
below or any Excess Before-Tax Contribution and any income for the Plan
Year ("Non-Gap Period Income") allocable thereto shall be disposed of in
accordance with (ii) below.
(i) To the extent permissible under Section 6.3, excess Before-Tax
Contributions by the Highly Compensated Employee in a Plan Year may be
recharacterized as After-Tax Contributions for the Plan Year not later than two
and one-half (2-1/2) months following the close of the Plan Year. Any
recharacterization shall be effective retroactive to the date of the Highly
Compensated Employee's earliest Before-Tax Contributions during the Plan Year in
which the excess Before-Tax Contributions were made. To the extent required by
Treas. Reg. Section 1-401(k)-1(f)(3), Before-Tax Contributions recharacterized
as After-Tax Contributions shall continue to be treated as Before-Tax
Contributions for purposes of Article VIII.
-36-
(ii) To the extent a Participant's Before-Tax Contributions cannot be
recharacterized in accordance with (i) above, any excess Before-Tax
Contributions (and any Non-Gap Period income allocable thereto) in a Plan Year
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
-37-
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 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
-38-
Contributions of each family member that are combined to determine the
Actual Deferral Percentage.
(e) For purposes of satisfying the Actual Deferral Percentage
test, Non-Gap Period income allocable to a Participant's excess Before-Tax
Contributions, as determined under (b) above, shall be determined in
accordance with any reasonable method used by the Plan for allocating
income to Participant Accounts, provided such method does not discriminate
in favor of Highly Compensated Employees and is consistently applied to all
Participants for all corrective distributions or recharacterizations under
the Plan for a Plan Year. The Committee shall not be liable to 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.
-39-
5.6 Provisions for Return of Annual Before-Tax Contributions in Excess of the
-------------------------------------------------------------------------
Deferral Limitation.
-------------------
(a) In the event that due to error or otherwise, a Participant's
Before-Tax Contributions under this Plan exceed the Deferral Limitation for
any calendar year (but without regard to amounts of compensation deferred
under any other plan), the excess Before-Tax Contributions for the Plan
Year, if any, together with any Non-Gap Period income allocable to such
amount shall be distributed to the Participant on or before the first April
15 following the close of the calendar year in which such excess
contribution is made. The amount of excess Before-Tax Contributions that
may be distributed to a Participant under this Section for any taxable year
shall be reduced by any excess Before-Tax Contributions previously
distributed or recharacterized in accordance with Section 5.5 for the Plan
Year beginning with or within such taxable year.
(i) Income on Before-Tax Contributions in excess of the Deferral
Limitation shall be calculated in accordance with Section 5.5(e), except
calculations of allocable Non-Gap Period income shall be made with reference to
the calendar year (if the Plan Year is not the calendar year).
(ii) For the 1987 calendar year only, income shall be calculated on a
reasonable and consistent basis; provided, however, if there is a loss allocable
to the excess Before-Tax Contributions, the amount distributed shall be the
excess amount adjusted to reflect such loss.
-40-
(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.
-41-
(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
-42-
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.
5.8 Participant Transfer/Rollover Contributions.
-------------------------------------------
Effective as of an Eligible Employee's Employment Commencement Date,
or such later date as may be determined by the Administrator, amounts, if any,
distributed to such Eligible Employee or payable to such Eligible Employee from
another plan that satisfies the requirements of Code Section 401(a), or held in
an individual retirement account which is attributable solely
-43-
to a rollover contribution within the meaning of Code Section 408(d)(3), may be
transferred to this Plan, including by direct rollover from another plan that
satisfies the requirements of Code Section 401(a), and credited to the
Participant's Transfer/Rollover Account in accordance with Code Section 402 and
rules which the Committee shall prescribe from time to time; provided, however,
the Committee determines that the continued qualification of this Plan under
Code Section 401(a) or 401(k) would not be adversely affected by such transfer,
or would cause this Plan to become a "transferee plan," within the meaning of
Code Section 401(a)(11). Any amounts transferred in accordance with this Section
5.8, which shall be in cash, shall not be subject to distribution to the
Participant except as expressly provided under the terms of this Plan.
An Eligible Employee who prior to April 1, 1997 has transferred
employment to the Company (or other Participating Company) from Fisher-Price,
Inc., and who has elected to transfer directly to this Plan his entire account
balance in the Fisher-Price, Inc. Matching Savings Plan in accordance with the
terms of such plan, shall be permitted to transfer such account balance directly
to this Plan. The transfer must be made in cash, except that any promissory
note evidencing an outstanding loan to such Eligible Employee from the Fisher-
Price, Inc. Matching Savings Plan may be transferred to this Plan in kind. Any
transferred promissory note shall thereafter be repayable by the Participant to
the Plan in accordance with its terms. Any amounts
-44-
transferred from the Fisher-Price, Inc. Matching Savings Plan shall not be
subject to distribution to the Participant except as expressly provided under
the terms of this Plan.
-45-
ARTICLE VI
COMPANY CONTRIBUTIONS
6.1 General.
-------
Subject to the requirements and restrictions of this Article VI and
Article XIV, and subject also to the amendment or termination of the Plan or the
suspension or discontinuance of contributions as provided herein, a
Participating Company shall contribute for each Participant who is an Employee
of such Participating Company, as follows:
(a) In the case of a Participating Company other than Fisher-
Price, Inc., for each month of each Plan Year commencing on and after
January 1, 1989 but prior to April 1, 1997, an amount to the Participant's
Company Contributions Account equal to a percentage of the Participant's
Compensation during such month according to the Participant's attained age
as of the last day of the preceding month, as follows:
Age as of Last Day Percentage of
of Preceding Month Compensation
------------------ -------------
Under 40 2%
40 - 44 4%
45 - 49 5%
50 - 54 6%
55+ 7%
(b) In the case of a Participating Company other than Fisher-Price,
Inc. for each month of each Plan Year commencing on and after April 1, 1997, an
amount to the Participant's Company Contributions Account equal to a percentage
-46-
of the Participant's Compensation during such month according to the
Participant's attained age as of the last day of the preceding month, as
follows:
Age as of Last Day
------------------
of Preceding Month Percentage of Compensation
------------------ ---------------------------
Under 30 3%
30 - 39 4%
40 - 44 5%
45 - 49 6%
50 - 54 7%
55+ 8%
(c) An amount to the Participant's Before-Tax Contributions Account
which is equal to the amount of the Participant's Before-Tax Contributions
pursuant to Section 5.1 and which qualify for tax treatment under Code Section
401(k).
(d) An amount to the Participant's Company Matching Account which
is the sum of the amounts in (i) and (ii) below:
(i) A dollar amount equal to the dollar amount of the first two
percent (2%) of the sum of a Participant's Before-Tax and After-Tax
Contributions pursuant to Section 5.1.
(ii) A dollar amount equal to 50% of the dollar amount of the next
four percent (4%) of the sum of a Participant's Before-Tax and After-Tax
Contributions pursuant to Section 5.1.
The maximum Company Matching Contribution pursuant to this Section 6.1(d)
shall be four percent (4%) of the Participant's Compensation (such
Compensation to be
-47-
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).
-48-
(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 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.
-49-
(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
-50-
determining the Actual Deferral Percentage of an Eligible Employee under
Section 5.4(a) shall not be taken into account under this Section 6.3.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated with this
Plan, then this Section 6.3 shall be applied by determining the
Contribution Percentages of Eligible Employees as if all such plans were a
single plan, in accordance with regulations prescribed by the Secretary of
the Treasury under Section 401(m) of the Code.
(d) For the purposes of this Section, the Contribution Percentage
for any Eligible Employee who is a Highly Compensated Employee under two or
more Code Section 401(a) plans of the Company or an Affiliated Company to
the extent required by Code Section 401(m), shall be determined in a manner
taking into account the participant contributions and matching
contributions for such Eligible Employee under each of such plans.
(e) 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
-51-
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
-52-
the regulations thereunder, in accordance with regulations prescribed by
the Secretary of the Treasury.
6.4 Provision for Return of Excess After-Tax Contributions and Company Matching
---------------------------------------------------------------------------
Contributions on Behalf of Highly Compensated Employees .
------------------------------------------------------- -
(a) The Committee shall determine, as soon as is reasonably
possible following the close of the Plan Year, the extent (if any) to which
After-Tax and Company Matching Contributions on behalf of Highly
Compensated Employees may cause the Plan to exceed the limitations of
Section 6.3 for such Plan Year. If, pursuant to the determination by the
Committee, After-Tax and Company Matching Contributions on behalf of a
Highly Compensated Employee may cause the Plan to exceed such limitations,
then the Committee shall take the following steps:
(i) First, any excess After-Tax Contributions that were not matched
by Company Matching Contributions, and any Non-Gap Period income allocable
thereto, shall be distributed to the Highly Compensated Employee (after
withholding any applicable income taxes on such amounts).
(ii) Second, if any excess remains after the provisions of (i) above
are applied, to the extent necessary to eliminate the excess, Company Matching
Contributions on behalf of the Highly Compensated Employee, and any Non-Gap
Period income allocable thereto, shall be forfeited, to the extent forfeitable
under the Plan, or distributed to the Highly Compensated Employee, to the extent
non-forfeitable under the Plan (after
-53-
withholding any applicable income taxes on such amounts). Any corresponding
After-Tax Contributions, and any Non-Gap Period income allocable thereto, shall
be distributed to the Highly Compensated Employee (after withholding any
applicable income taxes on such amounts).
(iii) If administratively feasible, excess After-Tax Contributions
and Company Matching Contributions which are nonforfeitable under the Plan,
including any Non-Gap Period income allocable thereto, shall be distributed to
Highly Compensated Employees, or, to the extent forfeitable, forfeited, within
two and one-half (2-1/2) months following the close of the Plan Year for which
the excess Contributions were made, but in any event no later than the end of
the first Plan Year following the Plan Year for which the excess Contributions
were made, notwithstanding any other provision in this Plan. Amounts of excess
Company Matching Contributions forfeited by Highly Compensated Employees under
this Section, including any income allocable thereto, shall be applied, to the
maximum extent practicable, to reduce Company Matching Contributions for the
Plan Year for which such excess Contributions were made and thereafter shall be
applied as soon as possible to reduce Company Matching Contributions for
succeeding Plan Years.
(b) The Committee shall determine the amount of any excess After-
Tax Contributions and Company Matching Contributions made by or on behalf
of Highly Compensated Employees for a Plan Year by application of the
leveling
-54-
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
-55-
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.
(d) For purposes of satisfying the Average Contribution
Percentage test, Non-Gap Period income allocable to a Participant's excess
After-Tax Contributions or Company Matching Contributions, as determined
under (b) above, shall be determined by applying procedures comparable to
those provided under Section 5.5.
(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
-56-
required to be distributed to the Participant in accordance with Section 5.5 or
5.6, or excess After-Tax Contributions required to be distributed to the
Participant in accordance with Section 6.4, such Company Matching Contributions,
including any Non-Gap Period income allocable thereto, shall be forfeited,
notwithstanding that such Company Matching Contributions may otherwise be
nonforfeitable under the terms of the Plan. Any Company Matching Contributions
forfeited by a Participant in accordance with this Section 6.5 shall be applied
to reduce Company Matching Contributions.
6.6 Investment and Application of Plan Contributions.
------------------------------------------------
(a) Subject to the provisions of Section 4.1(b), all
contributions to the Trust Fund under Section 6.1 (including Before-Tax
Contributions) and Participant After-Tax Contributions under Section 5.1
shall be invested as provided in this Section 6.6, subject to such rules as
the Committee may adopt, in its sole discretion, to implement the
provisions of this Section 6.6. The Committee may establish a choice of
investment alternatives for Accounts from which each Participant may select
in determining the manner in which his Account will be invested. In its
sole discretion, the Committee may establish an investment alternative
consisting of Company Stock. If investment alternatives are established in
accordance with this Section 6.6, the following provisions of this Section
6.6 shall apply, including, in the event the Committee
-57-
establishes a Company Stock alternative, the limitations of (iv) below and
the provisions of Article X relating to investments in Company Stock.
(i) A Participant may elect at any time to change an investment
election with respect to the allocation of future contributions made by him or
on his behalf (such election to apply to all such contributions without regard
to any distinction between Company contributions or Participant contributions)
among the investment alternatives. The Committee may require at least thirty
(30) days notice prior to the commencement of the payroll period for which such
change is to be effective. Any such election shall be made in any whole
percentage, subject to the provisions of Subsection (iv) below.
(ii) Separate Trust Fund Subaccounts shall be established for each
investment alternative selected by a Participant, and each such Subaccount shall
be valued separately.
(iii) A Participant may elect twice per calendar quarter to change
the investment of his Accounts and reallocate such Accounts among the investment
alternatives in any whole percentage, subject to the limitations of (iv) below.
Subject to such rules as the Committee may prescribe, any such election to
change shall be effective as soon as practical following receipt of the
Participant's election. Any such change shall be implemented by the Committee
in accordance with practices and procedures established by the Committee to
provide for the orderly liquidation and/or purchase of investments.
-58-
(iv) If a Company Stock alternative is established by the Committee,
each Participant may elect to invest up to a maximum of fifty percent (50%) of
contributions made by him or on his behalf (such limitation to apply to all
contributions without regard to any distinction between Company contributions
and Participant contributions) in the Company Stock alternative in accordance
with this Section 6.6; provided, however, that the 50% limitation shall not
apply to Company Stock held in the F-P Savings Plan on March 31, 1997 and
transferred to this Plan on April 1, 1997. Such a Participant may also elect to
transfer amounts from his Accounts held in other investment alternatives to the
Company Stock alternative in accordance with this Section 6.6, provided,
however, that no such transfer shall be implemented to the extent that such
transfer would result in the value of the Participant's interest in the Company
Stock Fund exceeding fifty percent (50%) of the value of his interest in all
investment alternatives held under the Plan. Notwithstanding the preceding
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.
-59-
(v) In the case of a Participant who fails to make an effective
election, for any reason whatsoever, as to how all or any portion of his
interest therein shall be invested, the Committee shall prescribe rules which
shall require that the Accounts of such Participant be invested in the stable
asset fund.
6.7 Irrevocability.
--------------
A Participating Company shall have no right or title to, nor interest
in, the contributions made to the Trust Fund, and no part of the Trust Fund
shall revert to the Participating Company except that on and after the Effective
Date funds may be returned to a Participating Company as follows:
(a) In the case of a Participating Company contribution which is
made by a mistake of fact, that contribution may be returned to the
Participating Company within one (1) year after it is made.
(b) All contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. In the event deduction is disallowed
for any such contribution, such contribution may be returned to the
Participating Company.
6.8 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund.
-------------------------------------------------------------------------
The Company, Committee and Trustee shall not be liable or responsible
for the adequacy of the Trust Fund to meet and discharge any or all payments and
liabilities hereunder. All
-60-
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.
-61-
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 General.
-------
(a) All contributions under this Plan shall be held in the Trust
Fund.
(b) All gains, losses, dividends and other property acquisitions
and/or transfers that occur with respect to the Trust Fund shall be held,
charged, credited, debited or otherwise accounted for under said fund on an
unallocated basis until allocated to Participants' Accounts as of a
Valuation Date as provided under this Plan or otherwise used or applied in
accordance with the provisions of this Plan.
7.2 Participants' Accounts.
----------------------
In order to account for the allocated interest of each Participant in
the Trust Fund, there shall be established and maintained the Accounts described
in Section 2.1.
7.3 Revaluation of Participants' Accounts.
-------------------------------------
As of each Valuation Date, the Accounts of each Participant shall be
revalued so as to reflect a proportionate share in any increase or decrease in
the fair market value of the assets in the Trust Fund as of that date as
compared with the value of the assets in the Trust Fund as of the immediately
preceding Valuation Date. The valuation and allocation provisions of this
Section 7.3 shall be applied and implemented in accordance with the following
rules:
-62-
(a) As of each Valuation Date the Accounts holding such assets
shall be revalued so as to reflect to each such Account a proportionate
share in the net income or loss of the assets since the immediately
preceding Valuation Date.
(b) The Company, Committee and Trustee do not in any manner or
to any extent whatsoever warrant, guarantee or represent that the value of
a Participant's Accounts shall at any time equal or exceed the amount
previously contributed thereto.
7.4 Treatment of Accounts Following Termination of Employment.
---------------------------------------------------------
Following a Participant's termination of employment, pending
distribution of the Participant's Distributable Benefit pursuant to the
provisions of Article VIII below, the 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
-63-
accordance with the general concepts of the Plan and the provisions of this
Article VII.
-64-
ARTICLE VIII
VESTING; PAYMENT OF PLAN BENEFITS
8.1 Vesting.
-------
Each Participant's vested interest in his Accounts shall be
determined as follows:
(a) Each Participant shall at all times be one hundred percent
(100%) vested in his Before-Tax Contributions Account, his After-Tax
Contributions Account and his Transfer/Rollover Account under the Plan.
(b) Except as provided in (c) and (d) below, each Participant
shall become vested in his Company Matching Account and his Company
Contributions Account according to the 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) Notwithstanding the foregoing, each Participant who was
eligible to participate in the F-P Savings Plan on March 31, 1997, shall at
all times be one
-65-
hundred percent (100%) vested in his Company Matching Account.
(e) Additionally a Participant shall become one hundred percent
(100%) vested in his Company Matching Account and his Company Contributions
Account upon attainment of Normal Retirement Date while an Employee, or in
the event of death or Total and Permanent Disability while an Employee.
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 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
-66-
the Trust Fund. Such distribution shall be made or commence to be made as
soon as practicable but no later than the sixtieth day after the close of
the Plan Year in which occurs the Participant's termination of employment
with the Company and all Affiliated Companies, unless a later date is
specified by the Participant in a written election filed with the Plan
Administrator on or after April 1, 1997. Notwithstanding the foregoing, in
the case of a Participant who is a "5-percent owner" (within the meaning of
Section 401(a)(9) of the Code) and, in the case of any Participant who
attains age 70-1/2 after December 31, 1987, distribution shall be made or
commence to be made not later than April 1 following the calendar year in
which such Participant attains age 70-1/2, whether or not the Participant's
employment has terminated.
8.3 Distribution Upon Death Prior to Termination of Employment.
----------------------------------------------------------
(a) Upon the death of a Participant during his employment the
Committee shall direct the Trustee to make a distribution of the
Participant's Distributable Benefit in the Trust Fund in a single lump sum
to the Beneficiary designated by the deceased Participant, or as otherwise
determined under Section 8.9.
(b) Distribution as provided in Section 8.3(a) shall be made as
soon as practicable but in no event later than sixty (60) days after the
close of the Plan Year in which all facts required by the Committee to be
established
-67-
as a condition of payment shall have been established to the satisfaction
of the Committee (provided that, to the extent required by Section
401(a)(9) of the Code, his entire Distributable Benefit shall be
distributed within five (5) years of such Participant's death).
8.4 Death After Termination of Employment.
-------------------------------------
(a) Upon the death of a former Participant after his retirement or
other termination of employment, but prior to the distribution of his
entire Distributable Benefit in the Trust Fund to which he is entitled, the
Committee shall direct the Trustee to make a distribution of the balance to
which the deceased Participant was entitled, in a single lump sum, to the
Beneficiary designated by the deceased Participant or as otherwise
determined under Section 8.9.
(b) Distribution as provided in Section 8.4(a) shall be made as
soon as practicable but in no event later than sixty (60) days after the
close of the Plan Year in which all facts required by the Committee to be
established as a condition of payment shall have been established to the
satisfaction of the Committee (provided that, to the extent required by
Section 401(a)(9) of the Code, his entire Distributable Benefit shall be
distributed within five (5) years of such Participant's death).
-68-
8.5 Termination of Employment Prior to Normal Retirement Date.
---------------------------------------------------------
(a) Subject to the provisions of Section 8.5(b) below, if a
Participant's employment for the Company and all Affiliated Companies
terminates prior to his Normal Retirement Date, his Distributable Benefit
in the Trust Fund shall be paid as soon as administratively feasible
following his Normal Retirement Date, unless a later date is specified by
the Participant in a written election filed with the Plan Administrator on
or after April 1, 1997. Unless elected otherwise, in no event shall such
distribution be later than sixty (60) days after the close of the Plan Year
in which occurs the Participant's Normal Retirement Date. Notwithstanding
the foregoing, in the case of a Participant who is a "5-percent owner"
(within the meaning of Section 401(a)(9) of the Code) and, in the case of
any Participant who attains age 70-1/2 after December 31, 1987,
distribution shall be made or commence to be made not later than April 1
following the calendar year in which such Participant attains age 70-1/2.
(b) If the Participant makes a valid written election in
accordance with (c) below, payment of his Distributable Benefit pursuant to
this Section 8.5 may be made on an earlier date which is not later than
sixty (60) days after the close of the Plan Year in which occurs the later
of (i) the Participant's termination of employment with the Company and all
Affiliated Companies, or (ii) a
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date specified by the Participant in the valid written election filed by
the Participant, on or after April 1, 1997, to the extent administratively
feasible. For purposes of Section 72(t) of the Code, any distribution to a
Participant in accordance with this Section 8.5 during or following the
year in which he attains age fifty-five (55) shall be deemed to be on
account of an event enumerated in Code Section 72(t)(2).
(c) Effective as of January 1, 1989, any written election by a
Participant to receive payment of his Distributable Benefit prior to Normal
Retirement Date shall not be valid unless such election is made both (A)
after the Participant receives a written notice advising him of his right
to defer payment to Normal Retirement Date and (B) within the ninety (90)
day period ending on the Participant's "Benefit Starting Date." The notice
to the Participant advising him of his right to defer payment shall be
given no less than thirty (30) nor more than ninety (90) days prior to the
Participant's Benefit Starting Date. For purposes of this Subsection(c),
"Benefit Starting Date" shall mean the first day of the first period for
which the Participant's Distributable Benefit is paid. Notwithstanding the
foregoing, payment of the Participant's Distributable Benefit may commence
less than thirty (30) days after receipt of the notice, provided that the
Plan Administrator clearly informs the Participant that the Participant has
a
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right to a period of at least thirty (30) days after receiving the notice
to consider the decision of whether or not to elect to receive payment and
the Participant, after receiving the notice, affirmatively elects to
receive payment.
(d) In the event a Participant is not fully vested in all of his
Company Contributions Account or Company Matching Account under the Plan,
the portion of such Accounts which is not vested shall be forfeited as of
the earlier of the date the vested portion of such Accounts is completely
distributed to him or the date he incurs five (5) consecutive one-year
Periods of Severance.
(e) Notwithstanding the foregoing, if a Participant ceases to be
an Employee by reason of the disposition by the Company or an Affiliated
Company of either (i) substantially all of the assets used by the Company
or an Affiliated Company, as the 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
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Plan; provided, however, that not more than one withdrawal may be made by a
Participant from his Accounts within any single quarter of a Plan Year and
a withdrawal must be for at least $200 (or the entire amount available for
withdrawal, if less). A withdrawal other than on account of Hardship shall
be made from the Participant's Accounts in the following order, in each
case up to the amount available for withdrawal in such Accounts (i) After-
Tax Contributions Account; (ii) Transfer/Rollover Account; and (iii)
Company Matching Account. Payment of a withdrawal shall be made only in
cash and shall be allocated pro rata among the Participant's investment
fund subaccounts, including any Company Stock subaccount. In no event may
any amount be withdrawn by a Participant after he ceases to be an Eligible
Employee.
(b) A withdrawal from a Participant's Transfer/Rollover Account
may be made in accordance with rules of uniform application which the
Committee may from time to time prescribe; provided, however, that, except
in the case of a Participant who is determined to have a Total and
Permanent Disability and who is ineligible to make further contributions
under Section 5.1, no amount representing Employee contributions made
within the preceding six months to the Mattel Investment Plan which were
matched by Company matching contributions under said Plan may be withdrawn
from such Account; and provided
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further, that unless the Participant has completed an aggregate of at least
sixty (60) months of participation in this Plan and the Mattel Investment
Plan as of the date of withdrawal or has attained age 59-1/2 or is
determined by the Committee to have a Total and Permanent Disability, the
withdrawal shall not include amounts attributable to Company contributions
made under the Mattel Investment Plan within the two (2) year period
preceding withdrawal.
(c) A withdrawal from a Participant's After-Tax Contribution
Account may be made in accordance with rules of uniform application which
the Committee may from time to time prescribe; provided, however, that
except in the case of a Participant who is determined to have a Total and
Permanent Disability and who is ineligible to make further contributions
under Section 5.1, no amount representing After-Tax Contributions made
within the preceding six months to the Plan which were matched by Company
Matching Contributions may be withdrawn from such Account.
(d) A withdrawal from a Participant's Before-Tax Contributions
Account may be made in accordance with rules of uniform application which
the Committee may from time to time prescribe; provided, however, that no
Participant may make a withdrawal from his Before-Tax Contributions Account
prior to attaining age 59-1/2, or a determination by the Committee that
such Participant has a Total and Permanent Disability or that the
withdrawal is necessary to relieve a
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hardship of the Participant or his family. A Participant may receive a
withdrawal due to hardship only if the withdrawal both is made due to an
immediate and heavy financial need of the Participant within the meaning of
(i) below and is necessary to satisfy such financial need within the
meaning of (ii) below.
(i) For purposes of this Section 8.6(d), a withdrawal will be
considered to be on account of an immediate and heavy financial need of the
Participant only if the withdrawal is for: (A) expenses for medical care
described in Code Section 213(d) previously incurred by the Participant, or his
Spouse or dependents (as defined in Code Section 152), or expenses which are
necessary for such persons to obtain medical care (as defined above); (B)
costs directly related to the purchase of a principal residence for the
Participant (excluding mortgage payments); (C) payment of tuition, related
educational fees, and room and board expenses for the next 12 months of post-
secondary education for the Participant, or his Spouse, children, or dependents
(as defined above); (D) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage on such
residence; or (E) such other deemed immediate and heavy financial needs as are
set forth by the Internal Revenue Service through the publication of revenue
rulings, notices, and other documents of general applicability.
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(ii) For purposes of this Section 8.6(d), a distribution shall be
considered to be necessary to satisfy an immediate and heavy financial need of
the Participant only if all of the following conditions are satisfied: (A) the
distribution is not in excess of the amount of the immediate and heavy financial
need of the Participant, which may include amounts necessary to pay federal,
state, or local income taxes or penalties reasonably anticipated to result from
the distribution; (B) the Participant has obtained all distributions (other
than hardship distributions) and all non-taxable loans (at the time of the loan)
currently available under all plans maintained by the Company; (C) the
Deferral Limitation for the Participant for the Participant's taxable year
following the taxable year of the hardship distribution shall be reduced by the
amount of the Participant's Before-Tax Contributions for the taxable year of the
hardship distribution withdrawal; and (D) the Participant's Before-Tax
Contributions and After-Tax Contributions to the Plan and employee contributions
under all qualified and non-qualified plans of deferred compensation maintained
by the Company, including a stock option, stock purchase, or similar plan, or a
cash-or-deferred arrangement that is part of a cafeteria plan (within the
meaning of Code Section 125), will be suspended under the terms of each such
plan, or in accordance with the terms of an otherwise legally enforceable
agreement, for twelve (12) months following the receipt of the hardship
distribution.
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Notwithstanding the foregoing, the amount of any hardship withdrawal
shall not exceed a Participant's 'distributable amount,' which consists of the
total of such Participant's Before-Tax Contributions as of the date of the
hardship withdrawal, including earnings credited thereon before December 31,
1988 (if any), reduced by the amount of any previous hardship withdrawals. The
Committee will determine whether a hardship withdrawal satisfies the foregoing
standards in a uniform and nondiscriminatory manner consistent with Code Section
401(k) and the regulations promulgated thereunder.
(e) A withdrawal from a Participant's vested interest in his
Company Contributions Account may be made in accordance with rules of
uniform application which the Committee may from time to time prescribe;
provided, however, that no participant may withdraw from his Company
Contributions Account prior to attaining age 59-1/2 or a determination by
the Committee that such Participant has a Total and Permanent Disability or
that the withdrawal is necessary to relieve a hardship of the Participant
or his family within the meaning of Section 8.6(d) of the Plan.
(f) A withdrawal from the vested portion of a Participant's
Company Matching Account may be made in accordance with rules of uniform
application which the Committee may from time to time prescribe; provided,
however, that unless the Participant has completed an aggregate of at least
sixty (60) months of participation in
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this Plan and the Mattel Investment Plan or the F-P Savings 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 submission of a
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request for withdrawal in form satisfactory to the Committee.
8.7 Form of Distribution.
--------------------
(a) Unless a Participant makes a written election in accordance
with Section 8.7(c) or 8.8 below, a Participant's Distributable Benefit
shall be payable in the form of a single sum distribution. Except for any
portion of such Distributable Benefit that is payable in the form of
Company Stock in accordance with Section 8.13, such distribution shall be
in cash.
(b) In the case of any cash disbursement from a Participant's
Accounts, such disbursement shall be made ratably from such investment
funds or investment vehicles in which such Participant's Accounts affected
by such disbursement are invested.
(c) Effective April 1, 1997, a Participant who terminates
employment on or after his Normal Retirement Date, Early Retirement Date or
by reason of Total and Permanent Disability may elect to receive his
benefit in installments payable monthly, quarterly or annually for a period
of five, ten or fifteen years (but not longer than the Participant's life
expectancy determined as of his Benefit Starting Date). The installments
for each year shall not be less than the annual installment determined
under the requirements of Section 401(a)(9) of the Code. All such
installments shall be paid in cash or Company Stock
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and the installment or installments for the year in which the Participant
attains age 70-1/2 and all subsequent years shall be paid to the
Participant on or before December 31 of such year.
8.8 Election for Direct Rollover of Distributable Benefit to Eligible
-----------------------------------------------------------------
Retirement Plan.
---------------
(a) 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 of the eligible retirement plan selected by the Participant, and
such additional information as the
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Committee deems necessary or appropriate in order to implement the
election. It shall be the Participant's responsibility to confirm that the
eligible retirement plan designated in his direct rollover election will
accept the direct rollover of his Distributable Benefit. The Committee
shall be entitled to direct the rollover based on its reasonable reliance
on information provided by the Participant, and shall be not required to
independently verify such information, unless it is clearly unreasonable
not to do so.
(c) At least thirty (30) days, but not more than ninety (90)
days, prior to the date a Participant's Distributable Benefit becomes
payable, the Participant shall be given written notice of any right he may
have to elect a direct rollover of the taxable portion of his Distributable
Benefit to an eligible retirement plan. Notwithstanding the foregoing, a
direct rollover of the Participant's Distributable Benefit may be made less
than thirty (30) days after receipt of the notice, provided that the Plan
Administrator clearly informs the Participant that the Participant has a
right to a period of at least thirty (30) days after receiving the notice
to consider the decision of whether or not to elect a direct rollover and
the Participant, after receiving the notice, affirmatively elects a direct
rollover.
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(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.
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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 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:
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(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
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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.
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
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and receipts as the Committee or Trustee may determine necessary or
appropriate in order to establish the fact of death of the deceased
Participant and of the right and identity of any Beneficiary or other
person or persons claiming any benefits under this Article VIII.
(b) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Committee or Trustee,
or both, may deem appropriate as protection against possible liability for
state or federal death taxes attributable to any death benefits.
8.13 Company Stock Distribution.
--------------------------
Except in the case of a withdrawal in accordance with Section 8.6,
payment of any portion of a Participant's Distributable Benefit held in his
Company Stock subaccount shall be paid in cash, unless the Participant elects in
writing in accordance with procedures established by the Committee that payment
shall be made in Company Stock in lieu of cash (which election may apply to a
payment to the trustee of an "eligible retirement plan" in accordance with
Section 8.8). Within a reasonable period of time prior to the date such
Participant's Distributable Benefit is to be paid, the Committee shall notify
the Participant of his right to elect to have payment of the value of his
Company Stock subaccount made in the form of a cash distribution in lieu of a
Company Stock distribution. Upon being
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so notified, the Participant shall have a reasonable time (at least thirty (30)
days) in which to file a written election to have such payment made in cash. Any
such election shall be irrevocable and shall operate to require the Trustee to
value such Company Stock as of the immediately following Valuation Date at the
then prevailing purchase price. Neither the Company, the Committee, nor the
Trustee shall be required to time the distribution or sale of Company Stock to
anticipate fluctuations in the purchase price. If a Participant fails to file a
written election to receive an in kind payment of the value of the portion of
his Distributable Benefit attributable to his Company Stock subaccount within
thirty (30) days of receiving notification, payment shall be made in cash.
8.14 Valuation of Accounts.
---------------------
(a) For purposes of determining a Participant's Distributable
Benefit under this Plan, the value of a Participant's Accounts shall be
determined in accordance with rules prescribed by the Committee, subject,
however, to the following provisions:
(i) Unless the provisions of (ii) below apply, if a
Participant's employment terminates for any reason other than death, the value
of a Participant's Accounts shall be determined as of the Valuation Date
coinciding with or next following the date on which a properly completed
application for payment or transfer of the Participant's Distributable Benefit,
and such other forms as may be required by the Committee in order
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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
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
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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.
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8.15 Forfeitures; Repayment.
----------------------
(a) Amounts forfeited in accordance with Section 8.5(d) shall be
applied as soon as practicable to reduce future Company contributions.
(b) A Participant who elects to receive a distribution pursuant
to Subsection 8.5(b) may, in the case of his reemployment as an Eligible
Employee, repay the total amount distributed and shall in such case be
fully restored in amounts forfeited in accordance with Section 8.5(d);
provided, however, that no such repayment shall be permitted unless such
repayment is made prior to the date the Participant incurs five (5)
consecutive one-year Periods of Severance and prior to the second
anniversary of his Employment Commencement Date following the Period of
Severance.
8.16 Loans.
-----
(a) From time to time, the Committee may adopt procedures whereby
a Participant may borrow from his Accounts under the Plan. In no event may
any amount be borrowed by a Participant after he ceases to be an Eligible
Employee. In addition to such other requirements as may be imposed by
applicable law, any such loan shall bear a reasonable rate of interest,
shall be adequately secured by proper collateral, and shall be repaid
within a specified period of time according to a written repayment schedule
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that calls for substantially level amortization over the term of the loan.
(b) In connection with the requirements set forth in Subsection
(a) above, the Committee shall establish the applicable interest rate,
which shall be reasonably equivalent to interest rates available
commercially with respect to similar loans. Without prejudice to the right
of any Participant and the Trustee to enter into other appropriate
arrangements to secure repayment of a loan pursuant to this Section 8.16, a
loan to a Participant hereunder may be secured by an interest in the
Participant's vested interest in his Accounts under this Plan. Any loan
shall by its terms require repayment within five (5) years in substantially
level payments made no less frequently than quarterly, except that the
repayment period may be up to a maximum of fifteen (15) years in the case
of a loan certified by the Participant to be used to acquire any dwelling
unit which within a reasonable time is to be used (determined at the time
the loan is made) as a principal residence of the Participant.
(c) In no event shall the principal amount of a loan hereunder,
at the time the loan is made, together with the outstanding balance of all
other loans to the Participant under this Plan, exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's
vested interest in his Accounts under this Plan
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(provided, however, for loans granted or renewed prior to October 19, 1989, the
amount determined under this Subsection 8.16(c)(i) shall not be less than the
lesser of ten thousand dollars ($10,000) or the full value of all such Accounts
of the Participant where such value is less than twenty thousand dollars
($20,000)), or
(ii) fifty thousand dollars ($50,000), reduced by the
highest outstanding loan balance of the Participant from the Plan during the 1-
year period ending on the day before the date on which such loan was made.
No loan less than two thousand dollars ($2,000) will be made. Unless
otherwise determined by the Committee, no Participant may have more than
one loan outstanding under this Plan on any date; provided, however, that a
Participant who was a participant in the F-P Savings Plan on March 31, 1997
may apply for one additional loan on or before December 31, 1997, even if
he then has one or more loans outstanding.
(d) Each Participant desiring to enter into a loan arrangement
pursuant to this Section 8.16 shall apply for a loan by submitting a loan
request in form satisfactory to the Committee. The Committee shall notify
the Participant within a reasonable time whether the request is approved or
denied. Upon approval of the request by the Committee, the Participant
shall enter into a loan agreement with the Trustee. Such a Participant
shall execute such further written agreements as may be necessary or
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appropriate to establish a bona fide debtor-creditor relationship between
such Participant and the Trustee and to protect against the impairment of
any security for said loan.
(e) Any loan made to a Participant shall be secured by a pro rata
portion of his vested investment fund subaccounts, including any Company
Stock subaccount. Repayments of a loan by a Participant shall be invested
among the Participant's investment fund subaccounts in accordance with the
Participant's investment election then in effect under Section 6.6(a)(i).
(f) Loans shall be repaid in accordance with the repayment
schedule provided under the terms of the loan agreement. Notwithstanding
the repayment schedule provided in a loan agreement, however, the amount of
any outstanding loan shall be due and payable on the earlier to occur of
(a) the date on which distribution is made or commences to be made of the
participant's vested interest under the Plan or (b) the expiration of one
hundred eighty (180) days following the date the Participant ceases to be
an Employee. Following a Participant's Severance Date, any outstanding
loan amount which has become due and payable under the foregoing rule or
otherwise, and which is secured by the Participant's vested interest in his
Accounts, shall be treated as distributed from the Plan to the Participant.
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(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
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by reason of disability, and who has not subsequently resumed the active
performance of such services.
(b) In the case of a Participant to whom this Section 8.17(b)
applies, so long as such Participant continues to receive Compensation from
a Participating Company, but in no event for longer than a period of six
(6) months commencing with the date of such Participant's cessation of
active service, such Participant may continue to participate in this Plan
in the same manner as any other Participant.
(c) In the case of a Participant to whom this Section 8.17
applied by reason of a disability prior to January 1, 1989 and who, on or
after expiration of the period described in Section 8.17(b) above,
commences to receive payments under the long term disability benefit
coverage provided by a Participating Company and who also is determined to
be suffering from a Total and Permanent Disability, contributions shall be
made by the Participating Company pursuant to Section 6.1(a) (relating to
contributions 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
-94-
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
-95-
exceed the Participant's wage or salary rate paid immediately before becoming
disabled to an extent constituting a Total and Permanent Disability; and
(iii) the Participant's accounts under the Plan, to the
extent attributable to contributions made during a period of Total and Permanent
Disability shall be nonforfeitable.
(e) For purposes of this Plan, a Participant shall not be deemed
to have terminated employment prior to his ceasing to be eligible for
contributions under this Section 8.17, and upon such cessation of
eligibility shall be deemed to have terminated employment only if he did
not then begin or recommence employment for the Company or an Affiliated
Company.
8.18 Election for Fully Vested Employees Transferred to Fisher-Price, Inc.
--------------------------------------------------------------------
A fully vested Participant who prior to April 1, 1997 transfers
employment from the Company (or other Participating Company) to Fisher-Price,
Inc. and who is eligible to participate in the Fisher-Price, Inc. Matching
Savings Plan may elect to transfer his entire vested account balance in the Plan
to the Fisher-Price, Inc. Matching Savings Plan by filing an election form at
the time and in the manner prescribed by the Committee. The transfer must be
made in cash except that any promissory note evidencing an outstanding loan to
the Participant from the Plan may be transferred in kind. Any transferred
promissory note
-96-
shall thereafter be repayable by the Participant to the Fisher-Price, Inc.
Matching Savings Plan in accordance with its terms.
8.19 Provision for Small Benefits.
----------------------------
Notwithstanding anything in this Article to the contrary, a
Participant who terminates employment with the Company and all Affiliated
Companies shall receive a distribution of his Distributable Benefit in a single
lump sum payment no later than sixty (60) days after the close of the Plan Year
in which the Participant's termination of employment occurs to the extent
administratively feasible, provided that the value of such Distributable Benefit
is equal to or less than $3,500, determined as of the Valuation Date coincident
with or immediately preceding his termination of employment.
-97-
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.
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9.2 Committee Powers.
----------------
The Committee shall have all powers and discretion necessary to
supervise the administration of the Plan and control its operations. In
addition to any powers and authority conferred on the Committee elsewhere in the
Plan or by law, the Committee shall have, by way of illustration but not by way
of limitation, the following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one or more
other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
9.2(a) shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in 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,
-99-
including one or more persons to render advice with regard to any
responsibility any Named Fiduciary or any other fiduciary may have under
the Plan.
(d) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration and effectuation
of this Plan.
(e) To administer, interpret, construe and apply this Plan in its
discretion and to decide all questions which may arise or which may be
raised under this Plan by any Employee, Participant, former Participant,
Beneficiary or other person whatsoever, including but not limited to all
questions relating to eligibility to participate in the Plan, the amount of
service of any Participant, and the amount of benefits to which any
Participant or his Beneficiary may be entitled by reason of his service
prior to or after the Effective Date hereof.
(f) To determine the manner in which the assets of this Plan, or
any part thereof, shall be disbursed.
(g) To direct the Trustee, in writing, from time to time, to
invest and reinvest the Trust Fund, or any part thereof, or to purchase,
exchange, or lease any property, real or personal, which the Committee may
designate. This shall include the right to direct the investment of all or
any part of the Trust in any one security or any one type of securities
permitted hereunder. Among the securities which the Committee may direct
the Trustee to purchase are
-100-
"employer securities" as defined in Code Section 409(1) or any successor
statute thereto.
(h) To perform or cause to be performed such further acts as it
may deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
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
-101-
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 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
-102-
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.
-103-
(b) Notice of appointment of a successor member shall be given by
the Secretary of the Company in writing to the Trustee and to the members
of the Committee.
(c) Upon termination, for any reason, of a Committee member's
status as a member of the Committee, the member's status as a Named
Fiduciary shall concurrently 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"),
-104-
shall be entitled to rely upon any tables, valuations, computations,
estimates, certificates and reports furnished by any consultant, or firm or
corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee.
The members of the Committee, the Board of Directors, the Company and any
delegated fiduciary shall be fully protected and shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance
upon any such consultant or firm or corporation which employs one or more
consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered by
the Committee, the Board of Directors, the Company and any delegated
fiduciary shall be conclusive and binding on all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise
provided by law.
(c) The Committee and any delegated fiduciary may, but are not
required to, rely upon all records of the Company with respect to any
matter or thing whatsoever, and may likewise treat those records as
conclusive with respect to all Employees, Participants, Beneficiaries, and
any other persons whomsoever, except as otherwise provided by law.
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
-105-
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.
-106-
(c) No action or responsibility shall be deemed to be a fiduciary
action or responsibility except to the extent required by ERISA.
9.15 Indemnification.
---------------
(a) To the extent permitted by law, the Company shall indemnify
each member of the Board of Directors and the Committee, and any other
Employee of the Company with duties under the Plan, against expenses
(including any amount paid in settlement) reasonably incurred by him in
connection with any claims against him by reason of his conduct in the
performance of his duties under the Plan, except in relation to 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
-107-
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.
(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
-108-
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.
-109-
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.
-110-
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.
-111-
10.2 Valuation of Company Securities.
-------------------------------
When it is necessary to value Company Stock held by the Plan, the
value will be the current fair market value of the Company Stock, determined in
accordance with applicable legal requirements.
If the Company Stock is publicly traded, fair market value will be
based on the most recent closing price in public trading, as reported in The
---
Wall Street Journal or any other publication of general circulation designated
- -------------------
by the Committee, unless another method of valuation is required by the
standards applicable to prudent fiduciaries.
If the Company Stock cannot be valued on the basis of its closing
price in recent public trading, fair market value will be determined by the
Company in good faith based on all relevant factors for determining the fair
market value of securities. Relevant factors include an independent appraisal
by a person who customarily makes such appraisals, if an appraisal of the fair
market value of the Company Stock as of the relevant date was obtained.
In the case of a transaction between the Plan and a party in interest,
the fair market value of the Company Stock must be determined as of the date of
the transaction rather than as of some other Valuation Date occurring before or
after the transaction. In other cases, the fair market value of the Company
Stock will be determined as of the most recent Valuation Date.
-112-
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.
-113-
(a) Each Participant shall be entitled to direct the Trustee as
to the voting of all Company Stock allocated and credited to his Account.
(b) All Participants entitled to direct such voting shall be
notified by the Company, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Company or any other party regarding the exercise of such
rights. If a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under any Company Stock credited to his
Accounts, or if any Company Stock held in the Plan has not been allocated
to Participants' Accounts, the Trustee shall not be required to vote such
Company Stock except as otherwise required by applicable law. The Trustee
shall maintain confidentiality with respect to the voting directions of all
Participants.
(c) Each Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for which
he has the right to direct the voting under the Plan but solely for the
purpose of exercising voting rights pursuant to this Section 10.5.
-114-
10.6 Confidentiality Procedures.
--------------------------
The Committee shall establish procedures intended to ensure the
confidentiality of information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and similar rights. The
Committee shall also be responsible for ensuring the adequacy of the
confidentiality procedures and monitoring compliance with such procedures. The
Committee may, in its sole discretion, appoint an independent fiduciary to carry
out any activities that it determines involve a potential for undue Company
influence on Participants with respect to the exercise of their rights as
shareholders.
10.7 Securities Law Limitation.
-------------------------
Neither the Committee nor the Trustee shall be required to engage in
any transaction, including, without limitation, directing the purchase or sale
of Company Stock, which it determines in its sole discretion might tend to
subject itself, its members, the Plan, the Company, or any Participant or
Beneficiary to a liability under federal or state securities laws.
-115-
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).
-116-
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
-117-
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 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
-118-
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.
-119-
(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 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
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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
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(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his
application for benefits or to contest the amount of benefits payable to
him shall follow the procedures for an appeal of benefits as set forth in
Section 13.3 below, and shall exhaust such administrative procedures prior
to seeking any other form of relief.
13.3 Appeals.
-------
(a) (i) A claimant who does not agree with the decision rendered
with respect to his application may appeal the decision to the Committee.
(ii) The appeal shall be made, in writing, within sixty days
after the date of notice of the decision with respect to the application.
(iii) If the application has neither been approved nor denied
within the ninety day period provided in Section 13.2 above, then the appeal
shall be made within sixty days after the expiration of the ninety day period.
(b) The claimant may request that his application be given full and
fair review by the Committee. The claimant may review all pertinent
documents and submit issues and comments in writing in connection with the
appeal.
(c) The decision of the Committee shall be made promptly, and not
later than sixty days after the Committee's receipt of a request for
review, unless special
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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 such greater
amount as may be in effect for the Limitation Year under Section 415(c)(1)(A)
and 415(d) of the Code; 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
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(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(k) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 14.1.
14.4 Combined Plan Limitation (Defined Benefit Plan).
-----------------------------------------------
In the event a Participant hereunder also is a participant in any
qualified defined benefit plan (within the meaning of Section 415(k) of the
Code) of the Company or an Affiliated Company, then the benefit payable under
such other defined benefit plan, or any of them, shall be reduced for so long
and to the extent necessary to provide that the sum of the "defined benefit
fraction" and the "defined contribution fraction," for any Limitation Year, as
defined in Section 415(e) of the Code, shall not exceed one (1).
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
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defined in Code Section 414(j)) maintained by the Company or an Affiliated
Company will be determined so as to avoid Annual Additions in excess of the
limitations set forth in Sections 14.1 through 14.4. However, if as a result of
an administrative error, the Annual Additions to a Participant's Accounts under
this Plan (after giving effect to the maximum permissible adjustments under the
other plans) would exceed the applicable limitations described in Sections 14.1
through 14.4, the excess amount shall be subject to this Section 14.5.
(a) For Plan Years commencing prior to January 1, 1993, the
following rules shall apply:
(i) If the Participant made any after-tax contributions to
any defined contribution plan that is maintained by the Company or an Affiliated
Company, which after-tax contributions were not matched by matching
contributions, these contributions shall be returned to the Participant to the
extent of any excess Annual Additions arising under Section 14.1(a)(ii).
(ii) If excess Annual Additions remain after the application
of the above rule, such excess amounts (if any) allocated to the Participant's
Company Contributions Account shall be reduced to the extent necessary to
eliminate (if possible) any remaining excess Annual Additions.
(iii) If excess Annual Additions remain after the application
of (i) and (ii) above, such excess amounts (if any) allocated to the
Participant's Company Matching
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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.
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(iii) If excess Annual Additions remain after the application
of the above rule, if the Participant made any after-tax contributions for the
Plan Year to this or any other defined contribution plan that is maintained by
the Company or an Affiliated Company, which after-tax contributions were matched
by matching contributions, within the meaning of Code Section 401(m), any such
after-tax contributions and any earnings thereon shall be returned to the
Participant and any matching contributions attributable thereto shall be reduced
to the extent necessary to eliminate any remaining excess Annual Additions.
(iv) If excess Annual Additions remain after the application
of the above rule, if the Participant made any Before-Tax Contributions for the
Plan Year to this or any other defined contribution plan that is maintained by
the Company or an Affiliated Company, which Before-Tax Contributions were
matched by matching contributions, within the meaning of Code Section 401(m),
any such Before-Tax Contributions and any earnings thereon shall be returned to
the Participant and any matching contributions attributable thereto shall be
reduced to the extent necessary to eliminate any remaining excess Annual
Additions.
(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.
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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).
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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,
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cost or expense incurred as a result of disregarding or of acting in
disregard of that action.
(c) The preceding provisions of this Section 15.1 shall be
interpreted and applied by the Committee in accordance with the
requirements of Code Section 401(a)(13) as construed and interpreted by
authoritative judicial and administrative rulings and regulations.
(d) The provisions of Subsections 15.1(a) and 15.1(b) are
expressly subject to qualified domestic relations orders, as provided in
Code Section 401(a)(13)(B).
15.2 Nonconforming Distributions Under Court Order.
---------------------------------------------
(a) In the event that a court with jurisdiction over the Plan and
the Trust Fund shall issue an order or render a judgment requiring that all
or part of a Participant's interest under the Plan and in the Trust Fund be
paid to a spouse, former spouse and/or children of the Participant by
reason of or in connection with the marital dissolution and/or marital
separation of the Participant and the spouse, and/or some other similar
proceeding involving marital rights and property interests, then
notwithstanding the provisions of Section 15.1 the Committee may, in its
absolute discretion, direct the applicable Trustee to comply with that
court order or judgment and distribute assets of the Trust Fund in
accordance therewith. Pending distribution to an alternate payee of any
portion of a Participant's vested interest in the Trust Fund, pursuant to
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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
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court order or judgment. The Committee may, if in its absolute discretion
it deems it to be in the best interests of the Plan and the Participants,
determine that any such court order or judgment shall be resisted by means
of judicial appeal or other available judicial remedy, and in that event
the Trustee shall act in accordance with the Committee's directions.
(e) The Committee shall adopt procedures and provide
notifications to a Participant and alternate payees in connection with a
qualified domestic relations order, to the extent required under Code
Section 414(p).
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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.
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16.2 Retroactive Amendments.
----------------------
Notwithstanding any provisions of this Article XVI to the contrary,
the Plan may be amended prospectively or retroactively (as provided in Section
401(b) of the Code) to make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or any regulation under
either.
16.3 Amendment of Vesting Provisions.
-------------------------------
Effective January 1, 1989, if the Plan is amended in any way that
directly or indirectly affects the computation of a Participant's vested
interest in his Accounts, each Participant who has completed at least three (3)
Years of Service may elect, within a reasonable time after the adoption of the
amendment, to continue to have his vested interest computed under the Plan
without regard to such amendment. The period during which the election may be
made shall commence when the date of the amendment is adopted and shall end on
the latest of: (i) 60 days after the amendment is adopted; (ii) 60 days after
the amendment is effective; or (iii) 60 days after the Participant is issued
written notice of the amendment.
In the event that the Plan's vesting schedule is amended, the
nonforfeitable percentage of every Employee who is a Participant on the date the
amendment is adopted, or the date the amendment is effective, if later, in his
Company Matching Account and/or Company Contributions Account shall be not less
than his
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percentage computed under the Plan without regard to the amendment.
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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
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$200,000, as that amount is adjusted each year by the Secretary of the Treasury.
In the event a Participant is covered by both a defined contribution
and a defined benefit plan maintained by the Company, both of which are
determined to be Top-Heavy Plans, the defined benefit minimum, offset by the
benefits provided under the defined contribution plan, shall be provided under
the defined benefit plan.
17.2 Compensation.
------------
For the purpose of calculating Company contributions to be made to a
Participant for Plan Years commencing prior to January 1, 1989, the annual
Compensation taken into account for any Employee shall not exceed $200,000
(increased by any adjustments made pursuant to Section 416(d)(2) of the Code or
regulations thereunder) if the Plan is deemed a Top-Heavy Plan with respect to
any Plan Year.
17.3 Top-Heavy Determination.
-----------------------
This Plan shall be deemed a Top-Heavy Plan with respect to any Plan
Year in which, as of the Determination Date: (a) the aggregate of the Accounts
of Key Employees under the Plan exceeds 60% of the aggregate of the Accounts of
all Employees; or (b) the aggregate of the Accounts of Key Employees under all
defined contribution plans and the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans includable in an
Aggregation Group exceed 60% of a similar sum for all employees in such group.
As used above, the term
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"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.
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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 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.
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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.
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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.
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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 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
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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 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:
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(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.
-147-
18.3 Addresses.
---------
Each Participant shall be responsible for furnishing the Committee
with his correct current address and the correct current name and address of his
Beneficiary or Beneficiaries.
18.4 Notices and Communications.
--------------------------
(a) All applications, notices, designations, elections, and other
communications from Participants shall be in writing, on forms prescribed
by the Committee and shall be mailed or delivered to the office designated
by the Committee, and shall be deemed to have been given when received by
that office.
(b) Each notice, report, remittance, statement and other
communication directed to a Participant or Beneficiary shall be in writing
and may be delivered in person or by mail. An item shall be deemed to have
been delivered and received by the Participant when it is deposited in the
United States Mail with postage prepaid, addressed to the Participant or
Beneficiary at his last address of record with the Committee.
18.5 Reporting and Disclosure.
------------------------
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
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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
(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
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(the "Exchange Act"), may be conditioned upon such restrictions as are necessary
or appropriate to qualify for an applicable exemption under Section 16(b) of the
Exchange Act, or any rule promulgated thereunder. To the extent required by
Section 401(a)(4) of the Code, the rules under this Section 18.8 shall be
administered in a non-discriminatory manner.
18.9 Withholding for Taxes.
---------------------
Any payments out of the Trust Fund may be subject to withholding for
taxes as may be required by any applicable federal or state law.
18.10 Limitation on Company; Committee and Trustee Liability.
------------------------------------------------------
Any benefits payable under this Plan shall be paid or provided for
solely from the Trust Fund and neither the Company, the Committee nor the
Trustee assume any responsibility for the sufficiency of the assets of the Trust
to provide the benefits payable hereunder.
18.11 Successors and Assigns.
----------------------
This Plan and the Trust established hereunder shall inure to the
benefit or, and be binding upon, the parties hereto and their successors and
assigns.
18.12 Counterparts.
------------
This Plan document may be executed in any number of identical
counterparts, each of which shall be deemed a complete original in itself and
may be introduced in evidence or used for any other purpose without the
production of any other counterparts.
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IN WITNESS WHEREOF, in order to record the adoption of this Plan,
Mattel, Inc. has caused this instrument to be executed by its duly authorized
officers this 29th day of April 1998,
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effective, however, as of April 1, 1997, except as otherwise expressly provided
herein.
MATTEL, INC.
By: /s/ Alan Kaye
----------------------
Alan Kaye
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