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MATTEL, INC.
PERSONAL INVESTMENT PLAN
APRIL 1, 1997 RESTATEMENT
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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.
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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.
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"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.
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"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.
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"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.
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"Committee" shall mean the Committee described in Article IX hereof.
2.12 Company.
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"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.
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"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.
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"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.
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"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.
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"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.
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"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.
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"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.
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"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.
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(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.
---------------
(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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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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(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.
-------------------------------
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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.
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<PAGE>
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
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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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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(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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
(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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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(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.
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<PAGE>
(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
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<PAGE>
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-
<PAGE>
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
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<PAGE>
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-
<PAGE>
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
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<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
(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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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-
<PAGE>
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
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<PAGE>
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.
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<PAGE>
(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.
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<PAGE>
(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
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<PAGE>
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.
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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:
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(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
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accordance with the general concepts of the Plan and the provisions of this
Article VII.
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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:
<TABLE>
<CAPTION>
Number of Vesting
Years of Service Percentage
---------------- ----------
<S> <C>
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
</TABLE>
(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
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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
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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
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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.
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(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).
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8.5 Termination of Employment Prior to Normal Retirement Date.
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(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.
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(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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