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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended NOVEMBER 28, 1993 Commission file number: 33-762
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LEVI STRAUSS ASSOCIATES INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2973849
(State or other jurisdiction (I.R.S Employer
of incorporation or organization) Identification Number)
1155 Battery Street, San Francisco, California 94111
(Address of principal executive offices)
Registrant's telephone number, including area code (415) 544-6000
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
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The aggregate value of the registrant's voting stock held by non-affiliates, at
$114 per share (based on the latest independent valuation), was approximately
$32.0 million at January 10, 1994.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
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OUTSTANDING AT
CLASS OF COMMON STOCK JANUARY 10, 1994
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Class E common stock, $.10 par value 1,193,413 shares
Class L common stock, $.10 par value 51,410,950 shares
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Documents incorporated by reference: None
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FORM 10-K
TABLE OF CONTENTS
PAGE
PART I
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Item 1. Business.......................................... 3
Item 2. Properties........................................ 22
Item 3. Legal Proceedings................................. 23
Item 4. Submission of Matters to a Vote of Security
Holders (in the 1993 fourth quarter).............. 23
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters....................... 24
Item 6. Selected Financial Data........................... 25
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 26
Item 8. Financial Statements and Supplementary Data....... 36
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............... 72
PART III
Item 10. Directors and Executive Officers of the
Registrant........................................ 73
Item 11. Director and Executive Compensation............... 79
Item 12. Security Ownership of Certain Beneficial Owners
and Management.................................... 88
Item 13. Certain Relationships and Related Transactions.... 91
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................... 92
SIGNATURES................................................... 97
Financial Statement Schedules................................ 100
Supplemental Information..................................... 104
Corporate Directory.......................................... 105
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All percentage changes in this report are based on unrounded amounts.
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PART I
ITEM 1. BUSINESS
OVERVIEW
Levi Strauss Associates Inc. (the Company) acquired Levi Strauss & Co. (LS&CO.)
in 1985 and is the world's largest brand-name apparel manufacturer. It designs,
manufactures and markets apparel for men, women and children, including jeans,
slacks, shirts, jackets, skirts and fleece. Most of its products are marketed
under the Levi's(R) and Dockers(R) trademarks and are sold in the United States
and in many other locations throughout North and South America, Europe, Asia and
Oceania. These products are produced by the Company worldwide at owned and
operated facilities or by independent contractors.
The Company's revenues are derived mostly from the sale of jeans and jeans-
related products. Jeans include pants that usually have five pockets and are
made of denim, corduroy, twill and other fabrics. These and other jeans-related
products generated approximately 71 percent of the Company's total sales in 1993
($4.2 billion of $5.9 billion) and are the mainstays of the Company's
profitability. Casual products (mostly pants and tops marketed under the
Dockers(R) brand that are not jeans or jeans-related products) are increasingly
becoming an important source of revenues in the U.S. The non-U.S. businesses
generate higher gross profit as a percent of sales than U.S. businesses and are
an important source of cash flows.
The worldwide apparel market is characterized by constant change and diversity.
It is affected by demographic fluctuations in the consumer population, frequent
shifts in prevailing fashions and styles, international trade and economic
developments, and retailer practices.
The Company has historically enjoyed its largest brand share and customer base
for jeans among men, especially those aged 15-24 years old, and, to a lesser
extent, those aged 25 and over. The demographics of the U.S. and other
industrialized countries outside the U.S. reflect aging populations and
declining target markets. The demographics of less industrialized countries
indicate growing younger populations and increasing target markets for the
Company's jeans and jeans-related products.
The Company's market success is dependent on the Company's ability to quickly
and effectively respond to changes in market trends and other consumer
preferences, especially now that U.S. and Canada consumers are more price and
value conscious and many competitors are offering lower priced and innovative
products. This increasing price consciousness is putting pressure on brand and
product loyalty. The ongoing competitive nature of the apparel industry and
market trends present a continuous risk that new products or market segments may
emerge and compete with the Company's existing products and/or markets.
The Company's business is also dependent on the quality of service the Company
provides to its customers. Retailers are striving to maintain lower inventory
positions and place orders closer in time to requested delivery dates. As a
result, the Company has faced increasing pressure from U.S. retailers to improve
its product support and delivery performance. Additionally, the U.S. retail
market has changed in recent years, resulting in more centralized
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buying practices and potentially greater credit exposures from customers.
Outside the U.S., customer service and product support demands from large
retailers are also increasing.
ORGANIZATION STRUCTURE
The Company's current operating structure consists of two principal
organizations: Levi Strauss North America (LSNA) and Levi Strauss International
(LSI).
LSNA encompasses the Company's businesses in the U.S., Canada and Mexico. The
LSNA operating structure currently consists of seven principal marketing and/or
operating divisions: Men's Jeans, Youthwear, Menswear, Womenswear, Canada,
Mexico and Brittania Sportswear Ltd. Jeans and jeans-related products marketed
by Men's Jeans and Dockers(R) products marketed by Menswear are the Company's
most important source of U.S. sales and earnings. The Womenswear, Youthwear and
Canada divisions also market jeans, jeans-related products and casual products,
including Dockers(R) products. The Mexico division markets mostly jeans, jeans-
related products and Dockers(R) products. Brittania Sportswear Ltd. markets the
Brittania(R) line of men's and women's jeans, tops and casual sportswear in the
U.S. As part of a strategic initiative, the Company is aligning its U.S.
marketing divisions according to the Company's Levi's(R), Dockers(R) and
Brittania(R) brands (SEE STRATEGIC INITIATIVES SECTION).
LSI markets jeans and related apparel outside North America and is a major
source of operating income for the Company. Its sourcing methods include owned
and operated facilities in certain countries and independent contractors. LSI
is organized along geographic lines consisting of the Europe, Latin America and
Asia Pacific divisions. Europe is the largest LSI division in terms of sales
and profits. Asia Pacific is the second largest LSI division, principally due
to the performance of its Japanese operations in recent years.
The Company continually evaluates the profitability and cash flow of its global
operations. The following table presents U.S. and non-U.S. sales for 1993, 1992
and 1991.
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1993 1992 1991
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(In Millions)
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U.S. operations $3,715 $3,483 $2,997
Non-U.S. operations 2,177 2,087 1,906
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$5,892 $5,570 $4,903
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For additional financial information concerning the U.S. and non-U.S. operations
of the Company, SEE NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
STRATEGIC INITIATIVES
The Company is in the process of examining and re-engineering various aspects of
its brand marketing, customer service and operations/distribution strategies in
response to current market and economic trends and in accordance with its
Business Vision (SEE BUSINESS VISION SECTION). The Company believes its
initiatives are essential to staying competitive and meeting the changing
competitive needs of its customers. Summaries of these initiatives are as
follows:
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GLOBAL BRAND ALIGNMENT
The Company's strategy, as outlined in its Business Vision, is to position its
brands to ensure consistency of image and values to consumers around the world.
The Company is taking the following actions to implement this strategy:
The Company is aligning its U.S. marketing divisions according to the
Company's Levi's(R), Dockers(R) and Brittania(R) brands.
The Company is analyzing its customer base and product distribution in all
markets to ensure that its retail distribution is consistent with its brand
image.
The Company is entering into a joint venture to build and operate, in the
U.S., stores selling only Levi's(R) jeans and jeans-related products (SEE
RETAIL JOINT VENTURE CAPTION).
The Company's trademarks and brands differentiate its products from those of
competitors. Due to the increasingly global nature of the marketplace, brands
that are marketed in divergent distribution channels in different countries may
confuse retailers and customers and dilute the Company's brand image. To align
its brand image, the Company may alter its distribution and marketing
procedures. Retailers may react adversely to changes in product distribution,
service levels or other aspects of their customer relationship with the Company.
However, the Company believes that consistent brand image, on a global basis, is
essential to long-term success and attainment of overall objectives.
CUSTOMER SERVICE
The Company believes that retailer expectations for service from manufacturers
are increasing in both the North American and European markets. These
expectations and requirements relate to all aspects of the relationship between
the manufacturer and retailer. Retailers want manufacturers to develop, deliver
and replenish products faster, deliver retail floor-ready merchandise,
participate in retail floor product presentation and provide ongoing support for
the products on the retail floor. Additionally, manufacturers are expected to
establish information systems that would be compatible with retailer systems and
to adjust invoicing and payment methods, accordingly. The Company believes that
superior customer service, as well as its product development and marketing
ability, will be an essential element of competitive strength in the coming
years.
The Company is engaged in various customer service initiatives in the U.S. and
in certain non-U.S. businesses. It is reorganizing and re-engineering its
entire U.S. operations to improve customer service, forge stronger relationships
with its retail customers and reduce the time it takes to develop products and
fill customer orders. The reorganization will affect the Company's entire U.S.
supply chain, including product development, production and sourcing, sales and
distribution processes, and its information resource systems.
The Company expects to upgrade its national distribution network and regionally
link manufacturing, finishing and distribution facilities. This will entail the
modernization, reconfiguration and expansion of facilities, including purchases
of new facilities and equipment. The Company plans to utilize several regional
customer service centers to carry core products
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and replenishable seasonal products of each brand for each consumer segment.
The Company intends to use a national center to store one-time seasonal
products.
Additionally, the Company's initiatives will require information system changes
to support the changes in its business processes and distribution network.
Common data and on-line access for all parts of the supply chain are critical to
reducing leadtimes and building alliances with customers and suppliers.
Although key elements of the organizational realignment and distribution system
changes are not yet determined, the Company expects to complete this
reorganization within the next few years. The Company expects to make capital
expenditures of over $300 million during the next few years to support the new
distribution network, expanded systems plans, and organization and manufacturing
changes. Additionally, the Company expects to spend approximately $200 million
for transitional expenses, including software costs, possible write-offs of
existing facilities and equipment, training costs and other related expenses.
All of these costs may be recognized throughout the implementation period and/or
as expenditures occur, depending on the nature of the cost and the decisions
made related to this initiative.
The LSI initiative to improve customer service will be consistent with the U.S.
initiative framework, but modified based on local analysis of customer service
requirements in each market.
ALTERNATIVE MANUFACTURING SYSTEMS
Alternative Manufacturing Systems (AMS) have been implemented in most of the
Company's U.S. sewing plants. Similar programs have been implemented in the
Company's Canada and Brazil facilities. AMS is a team-based approach to
manufacturing, replacing the traditional assembly line. Team-based
manufacturing is intended to improve quality, increase flexibility and shorten
leadtimes, thus enabling the Company to respond more quickly to its retail
accounts. However, the continuing conversion to and success of team-based
manufacturing will require major education and training support for the next
several years.
Additionally, the Company is implementing a new program ("F.A.S.T.") in the U.S.
to link specific sewing plants to certain finishing centers and customer service
centers to cut leadtimes and decrease the response time in filling customer
orders. Traditionally, the U.S. sewing plants shipped products to a variety of
finishing centers. The new processing program and the AMS are consistent with
the Company's desire to reduce production leadtime and become more responsive to
product changes and customer demands.
RETAIL JOINT VENTURE
As part of its efforts to create consistent brand image, the Company continues
to explore and consider dedicated distribution channels, such as joint-venture
stores in the U.S. that sell only Levi's(R) brand products. The Company
currently has numerous franchised retail operations outside the U.S. that sell
only Levi's(R) products. Unlike the non-U.S. franchise operations, the Company
will have an equity interest in the U.S. joint ventures (SEE OPERATIONS OUTSIDE
THE U.S. SECTION). During 1993, the Company entered into an agreement in
principle with Designs, Inc., to form a joint venture that will own and operate
stores, in the northeastern U.S., selling only Levi's(R) jeans and jeans-related
products. The agreement is subject to negotiation of
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definitive agreements and final terms and regulatory approvals. The Company
will hold a 30 percent interest in this joint venture and will participate in
decisions about product presentation and similar image-related matters.
The joint ventures will also provide a vehicle for the Company to communicate
the benefits of its products to retail customers and consumers, especially since
consumers are more price conscious and value-oriented. The Company has very
limited experience in operating retail stores in the U.S., therefore it is the
Company's intent that its retail partners will have the primary responsibility
for day-to-day operations.
RISKS OF STRATEGIC INITIATIVES
The Company is assuming substantial risks in undertaking these initiatives. For
example, it faces disruption of its ongoing business operations during
implementation. Management, other personnel and job definition changes may
distract employees and adversely affect employee morale. The Company may incur
unplanned additional implementation costs, with a resulting impact on cash flow
and earnings.
The Company may face difficulties in developing the information systems
necessary to support new business processes and customer service requirements.
If the initiatives are adopted, the Company also may rely on new materials
handling technologies in the new customer service centers, and must successfully
integrate the software that operates the equipment with its business systems.
The Company must also successfully manage the transition of employees to new
positions and train them to meet the requirements of those positions, including
operating effectively in a more team-based and technology-oriented environment.
It will be doing so at the same time it is rolling-out a new compensation-based
program that is intended to align employee efforts with overall Company
strategies.
More broadly, these initiatives involve fundamental changes in the way the
Company operates its business. There are numerous commercial, operating,
financial, legal and other risks and uncertainties presented by the design and
implementation of such programs. Furthermore, the Company is not aware of
undertakings of comparable magnitude in the apparel industry, and cannot predict
with certainty the outcome of these initiatives. Although there can be no
assurance that the Company will successfully design and implement these new
business processes, or that the costs of these initiatives will not exceed
estimates, the Company believes that the re-engineering initiative is essential
to maintain its competitive position. Additionally, the Company believes it is
important to implement these initiatives at a time when the Company's market and
financial performance is strong.
U.S. OPERATIONS
The Company's U.S. operations are currently composed of the Men's Jeans,
Youthwear, Menswear, Womenswear and Brittania Sportswear Ltd. marketing
divisions that, along with Canada and Mexico, constitute the LSNA organization.
Each U.S. division maintains its own merchandising, sales and advertising staff.
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MARKETS
The Company's current U.S. apparel market is directly affected by consumer
spending, the retail environment and competition. The U.S. economic environment
is experiencing moderate inflation growth, low consumer confidence and a
stagnant labor market. Consumer spending is low and consumers remain price
sensitive. Retailers are responsive to consumer spending patterns and are
offering more private label products and demanding higher levels of service and
support from their vendors. Additionally, competitors are also becoming more
aggressive by offering lower priced and innovative products.
The Company's strategy in responding to current market conditions focuses on
sensitivity to fashion changes and consumer preferences, brand enhancement,
timely product development, innovative marketing activities and enhanced
relations with retailers and suppliers. As previously described, superior
customer service and efficient product manufacturing is an integral element of
the Company's business strategy.
The U.S. jeans market in 1993 declined from 1992 levels, with no growth expected
in 1994. However, the Company continues to hold a significant market share in
the young men's market. Demand for finished jeans products (garments that have
been laundered or otherwise treated after assembly), including stonewashed and
other wet-processed garments, continues to increase. Over the years, jeans
demand by the male consumer has shifted toward substitute products such as
casual slacks, shorts and fleecewear. The Company believes that these trends
are in part a function of the broad demographic changes described earlier. The
women's jeans market tends to be more fragmented among major competitors than
jeans for men.
In recognition of the ongoing changes in the jeans market, the Company continues
to add new designs, finishes, fabrications and colors to its traditional product
lines. Ongoing efforts are placed on coordinating with laundry contractors,
textile producers and other companies throughout the world to develop concepts
and processes to promote finishing development leadership and finished product
shade consistency. The growth in new product lines is reflected by the fact
that in 1993 traditional "rigid denim" products sold by the Men's Jeans and
Youthwear divisions provided 6 percent of total unit sales of those divisions,
compared to 68 percent in 1985.
The casual sportswear market is dynamic, characterized by continuous product
innovation and lower margins than those prevailing in the young men's jeans
market due to higher labor content. The sportswear market, like the jeans
market, is affected by demographic changes and changes in consumer lifestyles
and buying habits. Market research indicates that the maturing male consumer is
less brand conscious and brand loyal, and more price conscious and value-
oriented, than the female consumer or the younger male consumer.
PRODUCTS AND STRATEGY
The Company manufactures and markets basic jeans, branded casual products and
jeans-related products in a wide range of moderately-priced apparel categories.
The 501(R) family of jeans, other basic denim jeans and related jeans products
have traditionally been the Company's key products. In addition to the 501(R)
products, the Men's Jeans division also markets the Red Tab(TM), Orange Tab(TM)
and silverTab(TM) product lines. The Menswear division manufactures and markets
men's casual and dress slacks and branded men's knit and woven shirts, including
Dockers(R) and
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Levi's(R) Action product lines. The Womenswear division markets jeans and
casual sportswear products for the 501(R), Red Tab(TM), silverTab(TM), 900(R)
series and Dockers(R) product lines. The Youthwear division markets jeans and
casual youthwear products for the 501(R), Dockers(R) and Little Levi's(TM)
product lines. Brittania Sportswear Ltd. manufactures and markets men's and
women's jeans, tops and casual sportswear under the Brittania(R) and
Brittgear(TM) labels.
U.S. sales of the 501(R) family of jeans amounted to 26 million units, 33
million units and 37 million units in 1993, 1992 and 1991, respectively. The
decrease in unit sales for the 501(R) family of jeans is related to price
increases, various counter-diversion tactics (SEE RISKS OF NON-U.S. OPERATIONS
CAPTION) and the success of other Company jeans products, such as Orange Tab(TM)
and other Red Tab(TM) products. The Company's 1993 market share of the
challenging U.S. jeans market remained relatively stable with the previous
year. The Company's unit sales for total U.S. jeans offerings totaled
approximately 151 million units.
The Company launched an advertising campaign late in 1993 that will extend to
1994, to revitalize consumer interest in the 501(R) family of jeans. However,
the Company still expects 1994 sales of the 501(R) family of products to
decrease slightly. Additionally, the Company expects 1994 unit sales of
silverTab(TM) products to decline due to the repositioning of this product line.
Lower unit sales for the 501(R) family of jeans and silverTab(TM) products is
expected to be partially offset by increased unit sales of lower margin Orange
Tab(TM) products.
The Dockers(R) product line has been one of the most rapidly growing and
successful lines in the U.S. apparel industry. Sales of Dockers(R) products
totaled 64 million units, 67 million units and 57 million units in 1993, 1992
and 1991, respectively. The decline in unit sales is mainly attributable to
increased competition and market saturation. The Company expects that sales of
Dockers(R) products will be flat for the 1994 fiscal year. The Company's 1993
market share of the U.S. casual market was relatively flat with the previous
year.
The Company's Dockers(R) men's product line and loose-fitting men's jeans
represents a response to demographic and fashion changes. The Company continues
to expand the Dockers(R) product line and is constantly adding new colors,
fabrications and designs to the line. In 1993, the Company introduced a premium
line of Dockers(R) casual pants and shirts products, Dockers(R) Authentics,
which are intended to meet the demand for casual office-dress apparel.
Additionally, the Company plans to introduce a complete line of wrinkle-
resistant Dockers(R) products in fiscal 1994. An initial limited release of
these products for the 1993 Holiday season indicated positive retail results,
however the lack of availability of certain processing equipment utilized in the
finishing cycle could have a temporary effect of delaying the availability of
these products. Also, there is no assurance that this product will be
successful considering the intensity of competition (SEE COMPETITION CAPTION).
Levi's(R) jeans for women will continue to be updated with new colors and cuts
in 1994. However, the women's Dockers(R) product line has not been received as
well as the men's Dockers(R) product line and is gradually being repositioned as
an upgraded casual sportswear line. Unit sales for women's Dockers(R) products
are expected to decrease in 1994 due to the repositioning. Once repositioned,
these Dockers(R) products will feature better quality
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construction and fabrics. Both the Levi's(R) jeans for women and the women's
Dockers(R) product lines will be supported by new advertising campaigns.
The Company's Youthwear division primarily markets products to the boy's and
girl's markets. Colored denim and loose silhouettes were prominent products
sold by the Youthwear division during 1993.
Dollar sales of Men's Jeans products accounted for 33 percent, 31 percent and 29
percent of the worldwide sales of the Company in 1993, 1992 and 1991,
respectively. U.S. sales of non-jeans-related casual apparel products
represented 19 percent, 21 percent and 24 percent of worldwide dollar sales in
those years. For additional financial information on U.S. operations, SEE NOTE
2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
The Brittania(R) brand represents the Company's presence in the growing mass
merchant channel, which currently comprises nearly half of the jeans market.
Brittania Sportswear Ltd. offers low-priced, high quality products to major mass
merchant accounts and is a component of the overall U.S. marketing strategy.
During 1993, the Company decided to operate the Brittania business as an
independent business unit within LSNA and to move its headquarters to Seattle,
Washington. This decision is intended to lower costs and strengthen the brand's
competitive position in its marketplace.
COMPETITION
The Company and its largest competitor in the U.S. jeans market, VF Corporation,
account for approximately one-half of the units sold in the U.S. jeans market.
The Company believes that the combined brand share of its Levi's(R) and
Brittania(R) products in the U.S. jeans market is second only to the combined
share of VF Corporation's three principal brands, Wrangler(R), Lee(R) and
Rustler(R).
The casual apparel market for men and women is characterized by intense
competition, among manufacturers and retailers, and ease of entry for new
producers. Import competition is more prevalent in the casual apparel market
than in the jeans market. Apparel imports have generally lower labor costs and
may exert downward pressure on prices of casual wear products. This situation
is limited by U.S. trade policies that restrict apparel imports through quotas
and tariffs (SEE GLOBAL SOURCING SECTION).
Cotton wrinkle-resistant slacks were introduced by competitors in 1993 and are
gaining in popularity. Competitors are now applying the wrinkle-resistant
process to other apparel items including shirts and sleepwear. These wrinkle-
resistant slacks are in direct competition with the Company's existing
Dockers(R) products. The Company plans to introduce a complete line of wrinkle-
resistant Dockers(R) products in 1994 (SEE PRODUCTS AND STRATEGY CAPTION).
Based on the current U.S. economy, the retail environment, increased competition
and increases in prices of the Company's jeans products over the last few years,
the Company is expecting its U.S. unit sales in 1994 to be slightly lower than
1993.
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DISTRIBUTION
The Company distributes its products through retail stores that satisfy its
account selection criteria and sell directly to the retail consumer. The Company
does not sell its first quality "in season" products to wholesalers, jobbers or
distributors, and maintains a compliance program to enforce its distribution
policy and to control unauthorized diversionary sales of its products (SEE RISKS
OF NON-U.S. OPERATIONS CAPTION). The principal channels of distribution of the
Company's products are department stores, specialty stores and national chains,
including J.C. Penney Company, Inc., Sears Roebuck & Co. and Mervyn's Inc. The
Company believes that industry leadership and brand strength of the Company's
core products are maintained through the use of traditional distribution
channels. U.S. sales to the Company's top 5 accounts represented 38 percent of
total 1993 U.S. dollar sales. The Company's top 25 customers accounted for
approximately 64 percent of the Company's total U.S. dollar sales. The Company
has no long-term contracts or commitments with any of its customers. The loss
of any of these customers could have an adverse effect on the Company's results
and operations. Retail accounts are currently serviced by approximately 395
sales representatives for the U.S. divisions.
The Company continues to explore and consider dedicated U.S. distribution
channels, such as stores that sell only Levi's(R) brand products (SEE STRATEGIC
INITIATIVES SECTION) and in-store shops at retailer locations, consistent with
its Business Vision (SEE BUSINESS VISION SECTION).
The Company distributes Brittania(R) products principally through mass merchant
channels, including Kmart Corporation, Target Stores and Wal-Mart Stores, Inc.
These three customers represent approximately 79 percent of Brittania Sportswear
Ltd. total sales. The loss of any of these customers could have an adverse
effect on Brittania Sportswear Ltd.'s results and operations, but not a material
effect on the Company's total results. Brittania Sportswear Ltd. has no long-
term contracts or commitments with any of its customers. Mass merchandisers
comprise approximately 5 percent of the Company's U.S. unit sales for jeans.
ADVERTISING/MARKETING
The Company devotes substantial resources to advertising and marketing programs.
In the United States, the Company advertises extensively on radio and television
and in national publications as well as on billboards and other outdoor
displays. It also participates in local co-operative advertising and visual
merchandising programs under which the Company shares advertising costs with
retailers.
In 1993, the Company continued several advertising campaigns that were launched
in 1992, including a Men's Jeans and Youthwear campaign for loose-fitting jeans.
The Company also initiated new advertising campaigns for women's, men's and
boys' products. Additionally, the Company was named "Advertiser of the Year" at
the 40th Annual Cannes International Advertising Festival in recognition of
three decades of advertising excellence. In 1993, U.S. advertising expense was
$246 million, a 7 percent increase from 1992.
The Company is increasing its use of sell-through presentation in which the
Company influences the way its products are presented at the retail level. The
Company assists retailers in displaying products in a manner intended to enhance
the product's image and promote its quality.
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OPERATIONS OUTSIDE THE U.S.
ORGANIZATION AND PRODUCTS
Operations outside the U.S. were the Company's most profitable businesses on a
per unit basis in 1993. Generally, businesses outside the U.S. record higher
gross profit as a percent of sales than businesses in the U.S., mostly due to
higher overall average unit selling prices. These operations are generally
organized by country, and manufacture and market jeans and related products
outside the U.S.
Each country's operations within the European division are generally responsible
for certain marketing activities, sales, distribution, finance and information
systems. The European headquarters coordinates production, advertising and
merchandising activities for core jeans products and also manages certain
information systems development activities. Merchandising activities for tops
are decentralized and located in various individual countries. With few
exceptions, Canada, Mexico (both included in the LSNA organization), and the
Latin America and Asia Pacific divisions are staffed with their own
merchandising, sourcing, sales and finance personnel.
Sales for operations outside the U.S. are derived primarily from basic lines of
jeans (particularly the 501(R) product line and other Red Tab(TM) products),
tops and other denim apparel. These operations mainly sell directly to
retailers in established markets. Retail accounts are currently serviced by
approximately 360 sales representatives and 50 independent sales agents. Also,
in 1993, the Company successfully tested the Dockers(R) line of products in
Sweden.
Manufacturing and distribution activities for non-U.S. marketing divisions are
independent of the Company's U.S. operations. However, in 1993 non-U.S.
operations purchased $164 million of products from the Company's U.S. divisions.
This amount is expected to remain stable in 1994.
The Company explores and evaluates new markets on an ongoing basis. In addition
to its involvement in eastern Europe (including Hungary and Poland), in 1993,
the Company commenced operations in Korea and Taiwan and plans to establish
operations in India.
In 1993, net sales from non-U.S. operations were $2.2 billion compared to $2.1
billion in 1992. The Company believes its success in these markets reflects the
Company's brand image and reputation, the continuing focus on core jeans
products and the quality of its retail distribution, including stores that sell
only Levi's(R) products. Considering the continuous changing needs of customers
and consumers, and economic and trade developments (SEE GLOBAL SOURCING
SECTION), among other things, there can be no long-term assurances that the
Company will maintain such profitability in these markets. For additional
financial information about non-U.S. operations SEE NOTE 2 TO THE CONSOLIDATED
FINANCIAL STATEMENTS.
THE MARKETS, COMPETITION AND STRATEGY
The Company markets products in over 40 countries. As in the U.S., demand for
jeans outside the U.S. is affected by a variety of factors that vary in
importance in different countries, including socio-economic and political
conditions such as consumer spending rates, unemployment, fiscal policies and
inflation. In many countries, jeans are generally perceived as a fashion item
rather than a basic, functional product and, like most apparel items, are
higher-
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<PAGE>
priced relative to the U.S. The non-U.S. jeans markets are more sensitive to
fashion trends than the U.S. market.
Additionally, the retail industry differs from country to country. Some of the
Company's retail customers in certain countries are large "chain" retailers with
centralized buying power. In other countries, the retail industry is comprised
of numerous smaller, less centralized shops. Some non-U.S. customers are stores
that sell only the Company's products and are independent of the Company. The
Company distributes to 900 stores outside the U.S. that sell only Levi's(R)
brand products. These stores are strategically positioned in prime locations
around the world and offer a broad selection of premium Levi's(R) products using
state-of-the-art retail fixtures and visual merchandising. Considering the
increasingly competitive retail environment, the Company believes these stores
are of strategic importance in enhancing the brand image of Levi's(R) products.
Other general factors, including the relative strength or weakness of the U.S.
dollar and competition from local manufacturers, also affect the Company's
financial results in markets outside the U.S. The Company has the largest brand
share and strongest brand image in virtually all of its established non-U.S.
markets. There are numerous local competitors of varying strengths in most of
the Company's principal markets outside the U.S., but there is no single
competitor with a comparable global market presence. However, VF Corporation is
increasing its activity in markets outside the U.S. and is becoming a more
important competitor, particularly in Europe.
In Europe, consumer demand has been less affected by demographic changes
compared to the U.S. Core denim jeans, especially the 501(R) family of
products, continue as key products in Europe and Canada. However, to meet the
service commitments the Company makes to its customers around the world, and
consistent with the customer service initiative in the U.S., the Company is
launching a customer service initiative for the non-U.S. divisions.
Sales growth in the Asia Pacific division, particularly in Japan, has slowed
during the current year. The Levi's(R) brand continues to be the market share
leader in Mexico. The Company's Latin America division activities are mainly in
Brazil.
Outside the U.S., advertising themes and strategies vary by country depending on
the culture in each country, while maintaining consistency with the global
positioning of the Levi's(R) brand. Advertising expenditures for non-U.S.
operations were $130 million in 1993, a 12 percent increase from 1992.
RISKS OF NON-U.S. OPERATIONS
The Company's non-U.S. operations, including its use of non-U.S. manufacturing
sources (SEE GLOBAL SOURCING SECTION), are subject to the usual risks of doing
business outside the U.S. These risks include adverse fluctuations in currency
exchange rates, changes in import duties or quotas, disruptions or delays in
shipments and transportation, labor disputes, socio-economic and political
instability. The occurrence of any of these events or circumstances could
adversely affect the Company's operations and results. The Company evaluates
the risk of non-U.S. operations when considering capital and reinvestment
alternatives. The Company also uses various currency hedging strategies to
mitigate the effects of currency fluctuations. In addition,
13
<PAGE>
it is not possible to accurately predict the effect that changing political and
economic conditions in Russia and Eastern Europe will have on the Company's
ability to develop operations there.
In many non-U.S. countries, the appeal of Levi's(R) products, particularly the
501(R) family of products, has propelled prices and profit margins far above
those in the U.S., which encourages diversion of Levi's(R) products.
Accumulators usually buy products in the U.S. at retail prices, or less, and
ship them to non-U.S. countries for sale at a higher price, but lower than the
retail prices charged by authorized retailers in those countries. Diverters
usually procure products in the U.S. at wholesale costs and ship them to other
countries for sale at a profit. These diversion tactics reduce the availability
of products for U.S. consumers and negatively affect the Company's and
retailers' results outside the U.S.
Higher average unit selling prices in the U.S. for certain products have
narrowed the pricing gap between certain U.S. and non-U.S. jeans products, thus
discouraging diversion. However, the risks of increasing prices in the U.S. for
certain products include retailer and consumer resistance to pricing that
exceeds their perception of the value of the Company's products. This is of
particular concern in an environment characterized by difficult economic
conditions and, in the U.S., increasing acceptance of lower priced or private
label products. Also, the Company's distribution policy requires retailers to
limit the number of certain jean products a customer can purchase in U.S.
metropolitan-area stores. The Company ceases business relations with retailers
known to cooperate with diverters.
Additionally, sales of counterfeit Levi's(R) products, mostly made in the
People's Republic of China, occur in key markets on a regular basis. The
Company is concerned about the loss of its reputation with consumers, who may
unknowingly buy counterfeit products, and damage to its business in those
markets. The Company actively searches for and investigates counterfeit
products. It aggressively seeks to protect its trademarks and has filed
numerous legal actions against counterfeiters.
GLOBAL SOURCING
Apparel manufacturing in less-developed countries continues to affect global
apparel markets, including the U.S. market. These less-developed countries have
lower labor costs and, in some cases, such as in the production of shirts,
access to less expensive fabrics. Despite a growth in workers' health and
safety and other costs in the U.S., the Company's U.S. owned and operated
manufacturing base is trying to stay competitive in jeans production by
achieving shorter leadtimes and meeting production requirements through AMS (SEE
ALTERNATIVE MANUFACTURING SYSTEMS CAPTION).
The Company's imports into the U.S. have significantly increased in the past six
years in response to overall sales growth in casual wear apparel. These casual
wear products require more sewing and construction time and are, therefore, not
as cost competitive when sourced from the Company's U.S. owned and operated
facilities.
The Company has increased its use of, and has become more reliant upon,
independent contractors for product sewing and finishing functions because of
the continued growth in recent years in demand for more casual wear products.
However, due to excess capacity at its U.S. owned and operated facilities, the
Company plans to source more of its 1994 U.S. products
14
<PAGE>
through its facilities, as opposed to independent contractors and locations
outside the U.S. Therefore, the Company's use of independent contractors is
expected to decrease in 1994. The excess capacity is due to lower production
requirements that resulted from the build-up of basic jeans products during 1993
(SEE UNSHIPPED ORDERS AND INVENTORIES SECTION). Additionally, the Company has
shifted some of its owned and operated production from basic jeans products to
other products due to the high basic jeans inventory and order cancellation
levels during the year. This shift in sourcing operations could impact gross
margin (SEE MANAGEMENT DISCUSSION AND ANALYSIS SECTION, UNDER ITEM 7, FOR
ADDITIONAL INFORMATION).
In 1993 and 1992, approximately 54 percent of the apparel production units of
the Company's U.S. operations were manufactured by independent contractors.
Approximately 49 percent of non-U.S. products in 1993 were manufactured by
independent contractors, compared to 48 percent in 1992. In 1993 and 1992,
independent contractors were used for the finishing process for approximately 72
percent and 69 percent, respectively, of the finished units of U.S. operations.
Approximately 55 percent of the finishing process for non-U.S. finished units in
1993 and 1992 was performed by independent contractors.
The Company has no long-term contracts with its manufacturing sources and
competes with other companies for production facilities and import quota
capacity. Although the Company believes that it has established close
relationships with its manufacturing sources, the Company's future success will
depend in some measure upon its ability to maintain such relationships and, more
broadly, to develop and implement a long-term sourcing plan.
The Company established its Global Sourcing Guidelines (GSG) to provide
direction for selecting contractors and suppliers that provide labor and/or
material utilized in the manufacture and finishing of its products. These
guidelines address issues that contractors and suppliers can control, for
example, sharing the Company's ethical standards and commitment to the
environment, providing workers with a safe and healthy work environment,
maintaining fair employment practices and complying with legal requirements.
The GSG also prohibits operating in countries that would have an adverse effect
on global brand image or trademarks, expose employees or representatives to
unreasonable risks, violate basic human rights, or threaten the Company's
commercial interests due to political or social turmoil. The GSG possibly
limits some of the Company's sourcing options as well as its access to certain
lower cost production.
Textile trade policy of developed countries has increased the cost of importing
apparel products produced in countries with lower labor costs through quotas and
high tariffs. However, this protection of apparel manufacturers in developed
countries, particularly the U.S., Canada, Australia, the European Free Trade
Association countries and the European Economic Community (EEC), is gradually
being reduced.
The North American Free Trade Agreement (NAFTA) was effective January 1, 1994.
Quotas and tariffs will be phased out on specific goods of North American origin
over a six-to-seven year period. The effect of NAFTA on the sourcing of goods
to and from Mexico will have the most immediate impact on the Company. Once
NAFTA is fully phased-in, the impact on the Company will be an approximate 5
percent reduction of tariffs on apparel imports from Mexico, and a 5 percent
reduction in tariffs on Mexico imports from the U.S.
15
<PAGE>
The member-countries of the international trade organization, the General
Agreement on Tariffs and Trade (GATT), have negotiated a proposed agreement to
complete the Uruguay Round agreement. The agreement must be approved by the
U.S. Congress and the governments of all the member-countries. If approved, the
pact would be implemented on January 1, 1995 and phased in over 10 years. The
major provision of the draft agreement that would effect the Company is the
phase out of the quota system. Therefore, the proposed GATT agreement could
have an impact on the Company's sourcing strategy, once the multifiber agreement
under GATT phases out. The Company cannot accurately assess at this time how
the GATT agreement will affect its financial results and operations.
RAW MATERIALS
The Company's primary raw materials include fabrics made from cotton.
Synthetics and blends of synthetics with cotton or wool are used in certain
product lines. Fabric is purchased mostly from U.S. textile producers for U.S.
operations, and from both U.S. and non-U.S. textile producers for operations
outside the U.S. Cone Mills Corp. and Burlington Industries supplied
approximately 26 percent and 14 percent, respectively, of the total volume of
fabrics purchased by the Company for U.S. operations in 1993. Cone Mills Corp.
and Dominion Textiles Incorporated (including Swift Manufacturing Co., its
wholly-owned subsidiary) supplied approximately 26 percent and 13 percent,
respectively, of the Company's fabric purchases for non-U.S. operations in 1993.
Cone Mills Corp. is the sole supplier of 01 denim, the fabric used in
manufacturing 501(R) jeans.
The Company has not recently experienced and does not expect any substantial
difficulty in obtaining raw materials. Its only long-term raw materials
contract with a principal supplier is with Cone Mills Corp. The loss of one or
more of the Company's principal suppliers could have an adverse effect on the
Company's results and operations. As part of its U.S. re-engineering effort,
the Company is rationalizing its supplier base to reduce the number of suppliers
it uses for certain fabrics. The Company also purchases large quantities of
thread and trim (buttons, zippers, snaps, etc.) but is not dependent on any one
supplier for such items.
UNSHIPPED ORDERS AND INVENTORIES
As of November 28, 1993, the Company's unshipped order position for all products
was approximately 95 million units, representing a decrease of approximately 13
percent over the comparable date last year. The decrease in unshipped orders
was primarily attributable to the U.S. marketing divisions, as a result of
retailers' reluctance to commit to orders as far in advance. This reduction was
also partially attributable to a timing change in the Men's Jeans division from
3 booking seasons in 1992 to 2 booking seasons in 1993. The unshipped orders
position for non-U.S. products was relatively flat compared with the previous
year, reflecting the continued demand for the Company's products.
The Company's finished goods inventory was approximately 45 million units at
year-end 1993, which was flat with the prior year's level. Production downtime
late in the year reduced a build-up in the Men's Jeans division. The build-up
resulted from consumer resistance to higher average unit selling prices and a
general decline in consumer spending.
Additionally, retailers are keeping less inventory on hand and have been relying
on suppliers to provide products on a more timely basis. This practice resulted
in a high number of order
16
<PAGE>
cancellations in 1993. The 1993 unit cancellations increased 30 percent from
1992, mostly due to higher unit cancellations in the Men's Jeans division. The
Men's Jeans division, whose inventory consists primarily of first quality
saleable basic core products, is reducing some of its future production. Some
of the excess production capacity is being shifted to other products (SEE GLOBAL
SOURCING SECTION).
The Company is making an effort to create the optimal balance between the cost
of maintaining current inventory levels with excess production capacity costs
and customer service. The need to accommodate shorter delivery dates results in
higher inventory levels, which increase the costs of warehousing and the risks
of markdowns. Working capital requirements for ongoing operations and other
needs were not materially affected by the high inventory unit levels during the
year. The Company is in the process of re-engineering its North American
operations to reduce the time it takes to develop products and fill customer
orders (SEE STRATEGIC INITIATIVES SECTION).
TRADEMARKS AND LICENSING AGREEMENTS
The Company has a general program concerning the protection and enforcement of
its trademark rights. The Company has registered the Levi's(R) trademark, one
of its most valuable assets, in over 150 countries. The Company owns and has
widely registered other trademarks that it uses in marketing jeans and other
products, the most important of which in terms of product sales are the 501(R),
Dockers(R), Pocket "TAB" Device and ARCUATE Design trademarks. The Company
vigorously defends its trademarks against infringement, including initiating
litigation to protect such trademarks when necessary.
The Company has licensing agreements permitting third parties to manufacture and
market Levi's(R) branded products in countries where the Company has elected not
to, or is unable to, manufacture or market on a direct basis. Additionally, it
has agreements permitting third parties to manufacture and distribute certain
other products, such as shoes, socks and belts, under the Levi's(R), Dockers(R)
and Brittania(R) trademarks.
SEASONALITY
The apparel industry in the United States generally has four selling seasons--
Spring, Summer, Fall and Holiday. New styles, fabrics and colors are introduced
on a regular basis, based on anticipated consumer preferences, and are timed to
coincide with these retail selling seasons. Historically, seasonal selling
schedules to retailers have preceded the related retail season by two to eight
months. Outside the U.S., the apparel industry typically has two seasons--
Spring and Fall. The Company's business is impacted by the general seasonal
trends that are characteristic of the apparel industry.
EMPLOYEES
The Company employs approximately 36,400 people, a majority of whom are
production workers. A substantial number of production workers are employed in
plants where the Company has collective bargaining agreements with recognized
labor unions. The Company considers its employees to be an important asset of
the Company and believes that its relationships with employees are satisfactory.
17
<PAGE>
SOCIAL RESPONSIBILITY
Social responsibility is a matter of strong conviction on the part of the
Company. The Company has a longstanding commitment to equal employment
opportunity, affirmative action and minority purchasing programs. The Company
seeks to be an active corporate citizen in the communities in which it operates
and maintains a Worldwide Code of Business Ethics.
The Company has traditionally supported charitable social investment programs
and intends to maintain its historical practice of charitable giving. During
1993, the Company's donations included $15.5 million to the Levi Strauss
Foundation. The Company also contributed $.3 million to support matching gifts
to the Red Tab Foundation, which was established to provide emergency financial
assistance to the Company's employees and retirees in the United States. The
Red Tab Foundation is currently in the process of expanding to non-U.S.
affiliates.
The Levi Strauss Foundation made grants and contributions totaling approximately
$7.9 million in 1993 and the Company made additional contributions of $3.8
million, primarily for international programs. These include grants in three
community partnership giving (or staff-directed) areas: AIDS and Disease
Prevention, economic development (projects which seek to enhance the economic
options and opportunities of low-income individuals) and race relations (Project
Change, a program in three U.S. communities). Also included are grants through
the Community Involvement Team program (in which groups of employees or retirees
volunteer their time to review local community needs and then develop and
implement projects to meet those needs), the Corporate Childcare Fund and the
employee matching gift and volunteer service program. Contributions by the Levi
Strauss Foundation have averaged over $7.0 million for each of the last three
years.
BUSINESS VISION
The Company developed its Business Vision to identify its goals and provide
direction for prioritizing all its initiatives and strategies. The Business
Vision is as follows:
We will strive to achieve responsible commercial success in the eyes of our
constituencies, which include stockholders, employees, consumers,
customers, suppliers and communities. Our success will be measured not
only by growth in shareholder value, but also by our reputation, the
quality of our constituency relationships, and our commitment to social
responsibility. As a global company, our businesses in every country will
contribute to our overall success. We will leverage our knowledge of local
markets to take advantage of the global positioning of our brands, our
product and market strengths, our resources and our cultural diversity. We
will balance local market requirements with a global perspective. We will
make decisions which will benefit the Company as a whole rather than any
one component. We will strive to be cost effective in everything we do and
will manage our resources to meet our constituencies' needs. The strong
heritage and values of the Company as expressed through our Mission and
Aspiration Statements will guide all of our efforts. The quality of our
products, services and people is critical to the realization of our
business vision.
We will market value-added, branded casual apparel with Levi's(R) branded
jeans continuing to be the cornerstone of our business. Our brands will be
positioned
18
<PAGE>
to ensure consistency of image and values to our consumers around the
world. Our channels of distribution will support this effort and will
emphasize the value-added aspect of our products. To preserve and enhance
consumers' impressions of our brands, the majority of our products will be
sold through dedicated distribution, such as Levi's(R) Only-Stores and in-
store shops. We will manage our products for profitability, not volume,
generating levels of return that meet our financial goals.
We will meet the service commitments that we make to our customers. We
will strive to become both the "Supplier of Choice" and "Customer of
Choice" by building business relationships that are increasingly
interdependent. These relationships will be based upon a commitment to
mutual success and collaboration in fulfilling our customers' and
suppliers' requirements. All business processes in our supply chain--from
product design through sourcing and distribution--will be aligned to meet
these commitments. Our sourcing strategies will support and add value to
our marketing and service objectives. Our worldwide owned and operated
manufacturing resources will provide significant competitive advantage in
meeting our service and quality commitments. Every decision within our
supply chain will balance cost, customer requirements, and protection of
our brands, while reflecting our corporate values.
The Company will be the "Employer of Choice" by providing a workplace that
is safe, challenging, productive, rewarding and fun. Our global work force
will embrace a culture that promotes innovation and continuous improvement
in all areas, including job skills, products and services, business
processes, and Aspirational behaviors. The Company will support each
employee's responsibility to acquire new skills and knowledge in order to
meet the changing needs of our business. All employees will share in the
Company's success and commitment to its overall business goals, values and
operating principles. Our organization will be flexible and adaptive,
anticipating and leading change. Teamwork and collaboration will
characterize how we address issues to improve business results.
STATEMENT OF COMPANY MISSION AND ASPIRATIONS
The Company believes that shared goals are as critical to the Company's success
as providing quality products and service and being a leader in the apparel
industry. In order to identify and focus these shared goals, the Company
adopted the following "Statement of Mission and Aspirations":
MISSION STATEMENT
The mission of the Company is to sustain responsible commercial success as
a global marketing company of branded casual apparel. We must balance
goals of superior profitability and return on investment, leadership market
positions, and superior products and service. We will conduct our business
ethically and demonstrate leadership in satisfying our responsibilities to
our communities and to society. Our work environment will be safe and
productive and characterized
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by fair treatment, teamwork, open communications, personal accountability
and opportunities for growth and development.
ASPIRATIONS FOR THE COMPANY
We want a Company that our people are proud of and committed to, where all
employees have an opportunity to contribute, learn, grow and advance based
on merit, not politics or background. We want our people to feel
respected, treated fairly, listened to and involved. Above all, we want
satisfaction from accomplishments and friendships, balanced personal and
professional lives, and to have fun in our endeavors.
When we describe the kind of company we want in the future what we are
talking about is building on the foundation we have inherited: affirming
the best of our Company's traditions, closing gaps that may exist between
principles and practices and updating some of our values to reflect
contemporary circumstances. In order to make our aspirations a reality, we
need:
NEW BEHAVIORS: Leadership that exemplifies directness, openness to
influence, commitment to the success of others, willingness to
acknowledge our own contributions to problems, personal accountability,
teamwork and trust. Not only must we model these behaviors but we must
coach others to adopt them.
DIVERSITY: Leadership that values a diverse workforce (age, sex,
ethnic group, etc.) at all levels of the organization, diversity in
experience and a diversity in perspectives. We are committed to taking
full advantage of the rich backgrounds and abilities of all our people
and to promote a greater diversity in positions of influence.
Differing points of view will be sought; diversity will be valued and
honesty rewarded, not suppressed.
RECOGNITION: Leadership that provides greater recognition--both
financial and psychic--for individuals and teams that contribute to our
success. Recognition must be given to all who contribute: those who
create and innovate and also those who continually support the day-to-
day business requirements.
ETHICAL MANAGEMENT PRACTICES: Leadership that epitomizes the stated
standards of ethical behavior. We must provide clarity about our
expectations and must enforce these standards throughout the
corporation.
COMMUNICATION: Leadership that is clear about Company, unit, and
individual goals and performance. People must know what is expected of
them and receive timely, honest feedback on their performance and
career aspirations.
EMPOWERMENT: Leadership that increases the authority and
responsibility of those closest to our products and customers. By
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actively pushing responsibility, trust and recognition into the
organization we can harness and release the capabilities of all our
people.
The Company is providing Aspirations training to employees and holds managers
and employees accountable for behaviors that are in accordance with these
objectives through its employee performance review process.
Consistent with the Company's Mission and Aspirations, the Company sets high
goals for responsible environmental stewardship and encourages business partners
to do the same.
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<PAGE>
ITEM 2. PROPERTIES
The Company's headquarters are located at Levi's Plaza in San Francisco,
California. It currently leases approximately 681,000 square feet, of which
127,000 square feet is subleased to others. The Company owns approximately
204,000 square feet of office space adjacent to Levi's Plaza, commonly known as
the Icehouse Building. Currently 195,000 square feet of this office space is
used by the Company and approximately 9,000 square feet is being leased to
others. The Company also leases 137,000 square feet in other locations in San
Francisco and surrounding areas and 15,000 square feet in Florida.
The Company owns or leases 93 manufacturing, warehousing and distribution
facilities, aggregating to approximately 11,031,400 square feet, as shown in the
following table:
<TABLE>
<CAPTION>
Owned(1) Leased Total
--------------------- -------------------- ----------------------
Number Number Number
of Square of Square of Square
Facilities Feet Facilities Feet Facilities Feet
---------- --------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Manufacturing and
Warehousing:
U.S. 27 2,976,496 17 1,004,700 44 3,981,196
Non-U.S. 14 1,359,000 8 527,100 22 1,886,100
-- --------- -- --------- -- ----------
41 4,335,496 25 1,531,800 66 5,867,296
Distribution:
U.S. 6 3,179,946 2 442,950 8 3,622,896
Non-U.S. 3 520,700 16 1,020,500 19 1,541,200
-- --------- -- --------- -- ----------
9 3,700,646 18 1,463,450 27 5,164,096
Total 50 8,036,142 43 2,995,250 93 11,031,392
== ========= == ========= == ==========
</TABLE>
- -----------------
(1) Includes properties under capital lease.
The Company believes that its existing facilities are in good operating
condition. The amounts shown in the table include approximately 406,200 square
feet of manufacturing capacity and 1,651,200 square feet of distribution
capacity currently subleased to others or not in use. SEE NOTE 9 TO THE
CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION ABOUT MATERIAL
LEASES.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company does not consider any pending legal proceeding to be material. In
the ordinary course of its business the Company has pending, various cases
involving contractual matters, employee-related matters, distribution questions,
product liability claims, trademark infringement and other matters. The Company
believes that these cases are not material in the aggregate in light of the
strength of its legal positions in such matters, its accrued reserves and
insurance.
The Company evaluates environmental liabilities on an ongoing basis and, based
on currently available information, does not consider any environmental exposure
to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None, during the 1993 fourth quarter.
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<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's outstanding Class L common stock is held primarily by members of
the families of certain descendants of the Company's founder and certain members
of the Company's management. Class E common stock is currently held by the
trustee for the Employee Investment Plan of Levi Strauss Associates Inc.
("EIP"), the Levi Strauss Associates Inc. Employee Long Term Investment and
Savings Plan ("ELTIS") and employees who purchased stock through the Employee
Stock Purchase and Stock Award Plan of Levi Strauss Associates Inc. (ESAP) (SEE
NOTE 12 TO THE CONSOLIDATED FINANCIAL STATEMENTS). There is no established
public trading market for either class of common stock and no shares of common
stock are convertible into shares of any other classes of stock or other
securities. All holders of Class L common stock are parties to, and bound by,
an agreement restricting transfer of the Class L common stock. The outstanding
shares of Class E common stock are subject to restrictions on transfer imposed
by the EIP, ELTIS and ESAP. On January 10, 1994, there were approximately 191
Class L stockholders and 1,107 Class E stockholders.
SEE NOTE 19 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR STOCK VALUATION AND
DIVIDEND INFORMATION.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table presents historical income statement data and balance sheet
data of the Company for the past five fiscal years. This data has been derived
from the consolidated financial statements of the Company, which have been
audited by Arthur Andersen & Co., independent public accountants. Unless
otherwise indicated, references to years in this Form 10-K refer to the fiscal
years of the Company. Unless otherwise stated, the Company's common share
amounts, per share data and other financial information appearing in this Form
10-K have been adjusted to reflect the exchange of Class F common stock for
Class L common stock during 1991 as part of the recapitalization (SEE NOTE 20 TO
THE CONSOLIDATED FINANCIAL STATEMENTS) as well as the two-for-one stock split of
Class F common stock, which was effective on November 30, 1989.
<TABLE>
<CAPTION>
Fiscal Year(1)
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(Dollars in Millions Except Per Share Data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA:
Net sales $5,892.5 $5,570.3 $4,902.9 $4,247.2 $3,627.9
Stock option charge -- 158.0 -- -- --
Operating income(2) 851.7 677.4 750.0 622.3 533.6
Interest expense 37.1 53.3 71.4 83.0 127.8
Income before
extraordinary loss 492.4 362.4 366.5 264.9 272.3
Net income 492.4 360.8 356.7 251.2 272.3
Income available to
common stockholders 492.4 358.9 345.1 243.3 263.3
Net income per common
share before extraordinary
loss 9.38 6.94 6.44 4.28 4.34
Net income per common
share 9.38 6.91 6.26 4.05 4.34
Cash dividends declared
per common share 1.10 3.40 .20 .70 .175
BALANCE SHEET
DATA:
Total assets 3,108.7 2,880.7 2,633.4 2,389.9 2,020.0
Long-term debt and
capital lease obligations 93.1 262.0 432.7 158.7 406.8
Redeemable Series A
preferred stock -- -- 82.0 81.9 81.9
Employee Stock Purchase
and Award Plan common
stock 33.5 16.4 -- -- --
Stockholders' equity 1,251.0 768.2 558.3 641.3 394.5
- ---------------
</TABLE>
(1) Fiscal year 1993 contained 52 weeks and ended on November 28, 1993. Fiscal
year 1992 contained 53 weeks and ended on November 29, 1992. Fiscal years
1991, 1990 and 1989 each contained 52 weeks and ended on November 24, 1991,
November 25, 1990 and November 26, 1989, respectively.
(2) Fiscal years before 1993 were restated to reflect certain amendments and
reclassifications of amounts related to the 1992 stock option charge,
amortization of goodwill and intangibles, losses related to property, plant
and equipment and certain operations-related items to operating income.
SEE NOTE 1 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
INFORMATION.
25
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following summary of results of operations, financial condition and
liquidity discusses data contained in the Consolidated Financial Statements of
the Company. The discussion focuses on 1993, 1992, and 1991 comparisons and
includes analyses of major components of net income, specific balance sheet
items, liquidity and capital resources. (Fiscal years 1993 and 1991 each
contained 52 weeks, while fiscal year 1992 contained 53 weeks.)
During 1993, the Company filed with the Securities and Exchange Commission an
amendment to its 1992 Form 10-K under the cover of Form 10-K/A. The Form 10-K
amendments were to reclassify the 1992 stock option charge as an operating
expense and to reclassify amounts related to the amortization of goodwill and
intangibles and certain losses related to property, plant and equipment from
other income, net to marketing, general and administrative expenses on the
Consolidated Statements of Income. These reclassifications did not affect net
income (SEE NOTE 1 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
INFORMATION).
Additionally in 1993, a new line item, other operating (income) expense, net was
created for the Consolidated Statements of Income. This new line includes
certain operations related items that were previously classified as other
income, net or marketing, general and administrative expenses. Certain 1992 and
1991 items have been reclassified to conform to the 1993 presentation format.
(SEE NOTE 1 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
INFORMATION.)
RESULTS OF OPERATIONS
SUMMARY
The Company achieved a net income record of $492.4 million in 1993. Net income
for 1993 increased $131.6 million from the previous 1992 record mostly due to a
stock option charge that negatively affected 1992 net income (SEE STOCK OPTION
CHARGE CAPTION). Excluding the 1992 stock option charge effect, current year
net income would have increased $16.6 million from 1992, due to higher 1993
sales volume, a lower effective tax rate and lower interest expense. This net
income increase was partially offset by lower other operating (income) expense,
net. Cost of goods sold and marketing, general and administrative expenses for
1993 were flat with 1992, as a percent of sales.
Net income in 1992 of $360.8 million was slightly higher than 1991 net income of
$356.7 million. Excluding the effects of the stock option charge, 1992 net
income would have been $475.8 million (33 percent above 1991 net income) due to
increased 1992 sales volume, a lower effective tax rate and lower interest
expense.
In connection with a major initiative to align its U.S. marketing divisions by
its Levi's(R), Dockers(R) and Brittania(R) brands and greatly improve customer
service, the Company is reorganizing and re-engineering its U.S. operations.
This will result in significant capital investments, costs and risks (SEE
ADDITIONAL INFORMATION SECTION).
Net income for full year 1994 is expected to be significantly lower than 1993
mostly due to the effects of adopting Statement of Financial Accounting
Standards (SFAS) No. 106 "Employers'
26
<PAGE>
Accounting for Postretirement Benefits Other Than Pensions", slightly offset by
the effects of adopting SFAS No. 109 "Accounting for Income Taxes," in 1994 (SEE
BENEFIT PLANS SECTION AND PROVISION FOR TAXES CAPTION).
Additionally, the Company expects dollar sales in 1994 to increase only slightly
due to weak global economic conditions and cautious consumer spending. The
results of the past three years indicate that certain operating expenses have
been growing at a faster rate than sales. The Company has not been able to pass
along all of its higher costs through price increases, thus lowering operating
income margins. Operating costs associated with the Company's initiative to
improve customer service and lower profit margins are also expected to
negatively impact 1994 net income.
NET SALES
Record dollar sales for 1993 of $5.9 billion increased 6 percent over the prior
year amount of $5.6 billion due to record unit sales and higher average unit
selling prices. Unit sales and average unit selling prices for 1993 increased 3
percent over 1992. Sales in 1992 increased 14 percent over 1991 sales of $4.9
billion for the same reasons. Additionally, although fiscal year 1993 contained
52 weeks compared to 53 weeks in 1992, 1993 average weekly sales were
approximately 8 percent higher than 1992 sales.
U.S. dollar sales of $3.7 billion for 1993 increased 7 percent over the previous
year amount of $3.5 billion mostly due to a 5 percent increase in average unit
selling prices. However, higher order cancellations caused by the slow retail
environment, increased prices on certain Company offerings and product
competition (particularly private label and casual products), resulted in higher
inventory levels of certain products during the year (SEE TRADE RECEIVABLES AND
INVENTORIES CAPTION). These factors contributed to the decrease in U.S. dollar
and unit sales for Dockers(R) products and the 501(R) family of products
compared to 1992. In the U.S., the Company's top 25 retail customers currently
account for approximately 64 percent of dollar sales, which was unchanged from
the previous two years.
U.S. dollar sales for 1994 are expected to decrease slightly from the 1993
amount due to anticipated decreases in unit sales of basic high margin products,
based on current forecasts of the Company's markets, competition and consumer
spending trends.
Record dollar sales outside the U.S. of $2.2 billion for 1993 increased 4
percent over the 1992 amount of $2.1 billion due to record unit sales, which
increased 8 percent from 1992. The Company's Europe division reported record
unit sales, however, dollar sales were negatively impacted by the effects of
unfavorable translation rates of certain European currencies to the U.S. Dollar
for 1993 versus 1992. The Company's Asia Pacific division experienced record
1993 dollar sales due to record unit sales and favorable currency translation
rates, compared to the previous year. The results in Europe and Asia Pacific
reflect the continuing demand for the Company's basic denim products
(particularly the 501(R) family of products). Overall dollar sales outside the
U.S. are expected to grow in 1994. However, dollar sales may be adversely
affected if the value of the U.S. Dollar versus European currencies strengthens,
and by the weak economic conditions in many of the Company's markets.
27
<PAGE>
Total Company dollar sales for 1994 are expected to increase slightly from 1993,
mostly due to non-U.S. dollar sales increases. However, overall unit sales are
expected to decrease due to the projected lower U.S. unit sales results, which
will more than offset increases in non-U.S. unit sales.
GROSS PROFIT
As a percent of sales, the 1993 gross profit percentage of 38 percent was flat
with 1992 and 1991. In dollars, 1993 gross profit increased 5 percent compared
to the prior year period, despite the continuing growth of product costs and the
negative effects of certain foreign currency translation rates. The gross
profit increase was primarily attributable to higher unit selling prices and
unit sales. Gross profit for 1992, in dollars, increased 14 percent from 1991
due to higher average unit selling prices and higher unit sales that more than
offset higher product costs.
Generally, businesses outside the U.S. record higher gross profit as a percent
of sales than businesses in the U.S., mostly due to higher overall average unit
selling prices. The businesses outside the U.S. contributed 37 percent of total
Company dollar sales and represented 54 percent of the Company's 1993 profit
contribution before corporate expenses and taxes, compared to 53 percent in 1992
and 55 percent in 1991.
Although average unit selling prices in the U.S. increased over the last year,
1993 U.S. gross profit margins were adversely affected by higher product costs
for certain products. Overall production requirements in the U.S. were reduced
late in the year due to high inventory levels of basic jeans products (SEE TRADE
RECEIVABLES AND INVENTORIES CAPTION). To reduce and align inventory levels with
projected sales, the Company incurred some excess production capacity costs at
certain U.S. owned and operated plants.
Consequently, the Company will produce a greater proportion of certain U.S.
products at its owned and operated plants, as opposed to contractor production,
in 1994 to mitigate the downtime at those plants. This change in production
sourcing will negatively impact certain gross profits per unit. Additionally,
expenses related to the continuing transition to team-based manufacturing and
increases in U.S. sales of lower margin products, as opposed to higher margin
products, will also impact gross profit.
MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Marketing, general and administrative expenses, as a percentage of sales, for
1993 were even with 1992 at 24 percent and one percentage point higher than
1991. Marketing, general and administrative expenses, in dollars, for 1993
increased 6 percent over 1992. This increase was mostly due to higher
advertising, administrative, marketing and information resource expenses.
Marketing, general and administrative expenses in 1992 increased 14 percent over
1991 for the same reasons.
Advertising expense for 1993 increased 8 percent over 1992. This increase was
substantially due to new U.S. and Europe advertising campaigns and increased
point-of-sale and media advertising in Europe. Advertising expense in 1992
increased 22 percent over 1991 mostly due to Men's Jeans, Menswear and Youthwear
campaigns. (SEE BUSINESS SECTION, UNDER ITEM 1, FOR ADDITIONAL INFORMATION.)
28
<PAGE>
Administrative expense for 1993 increased 8 percent from prior year. This
increase was mostly due to expenses for new business development in Europe and
Asia Pacific and higher office facility costs. Administrative expenses in 1992
increased 3 percent over 1991 mostly due to higher incentive compensation costs
and non-U.S. business development costs that were partially offset by lower
leverage buyout amortization expense (related to the 1985 acquisition of Levi
Strauss & Co.).
Marketing expense increased 7 percent from prior year, primarily due to
additional U.S. merchandising personnel and higher costs associated with the use
of sample products in the U.S. The Company also incurred costs associated with
promoting higher visibility of its products at the retail level. Outside the
U.S., particularly in Europe, costs increased proportionately with increases in
unit sales. Marketing expense increased 33 percent in 1992 over 1991 mostly due
to costs related to the use of more sample products and increases in retail
coordinators in the U.S.
Information resource expense for 1993 increased 8 percent from 1992 due to
higher lease costs related to certain telecommunications equipment and
depreciation related to new mainframe computer equipment. Additionally, higher
programming and restructuring costs contributed to the 1993 increase.
Information resource expense for 1992 increased 32 percent over 1991 due to
increases in systems support, equipment acquisitions and rentals and development
costs. Systems and software costs related to the Company's strategic initiative
to increase customer service are expected to increase information resource
expenses in 1994 (SEE ADDITIONAL INFORMATION SECTION).
OTHER OPERATING (INCOME) EXPENSE, NET
Other operating (income) expense, net for 1993 decreased $14.3 million from 1992
mostly due to anticipated costs related to the Company's initiative to improve
customer service (which included potential losses for existing capital assets;
SEE ADDITIONAL INFORMATION SECTION), costs related to idle facilities,
relocating certain operations and establishing new operations outside the U.S.
Other operating (income) expense, net for 1992 decreased $13.0 million from 1991
primarily due to higher licensee expenses and costs associated with idle
facilities, which were partially offset by increased royalty income.
Total operating expenses are expected to increase in 1994 due to continuing
costs related to the Company's initiative on customer service (SEE ADDITIONAL
INFORMATION SECTION). (SEE NOTE 1 TO CONSOLIDATED FINANCIAL STATEMENTS
REGARDING THE RECLASSIFICATION OF CERTAIN 1992 AND 1991 AMOUNTS TO OTHER
OPERATING (INCOME) EXPENSE, NET.)
STOCK OPTION CHARGE
During 1992, the Company offered a special payment arrangement under the 1985
Stock Option Plan to facilitate the exercise by optionholders of their
outstanding options. Holders of 65 percent of all outstanding options
participated in this arrangement.
As a result of this arrangement, the Company recognized a pre-tax stock option
charge of $158.0 million for all outstanding options during 1992. Separately,
the Company also recorded compensation expense for related exercise bonuses and
the accelerated use of presently non-vested options. Additionally, the Company
disbursed $41.9 million to pay related withholding
29
<PAGE>
taxes for optionholders and $4.4 million for related exercise bonuses. A total
of 532,368 shares of Class L treasury shares were reissued and 392,755 shares of
treasury stock were retired. There are 499,749 options still outstanding and
exercisable.
The net change in Stockholders' Equity in 1992 due to these stock option
transactions (including the after-tax effect of the stock option charge) was an
increase of $9.2 million.
INTEREST EXPENSE
Interest expense decreased 30 percent from 1992 primarily due to lower 1993
average debt balances. Interest expense in 1992 was 25 percent lower than 1991
due to lower interest rates and lower average debt balances. Cash flows from
operations were used to reduce debt levels over the last two years, resulting in
the lower average debt balances.
During 1993, the Company repaid debt on its primary and amended credit agreement
and repaid and cancelled its outstanding Japanese Yen loan amounts.
Additionally, the Company issued four series of notes payable to Class L
stockholders in payment of dividends declared during the fourth quarter of 1992.
The first series of notes were repaid during 1993. The interest associated with
these notes has and is expected to have a minimal impact on interest expense.
(SEE LIQUIDITY AND CAPITAL RESOURCES CAPTION.)
During 1992, the Company repaid debt on its then primary credit agreement and
redeemed and cancelled the remaining balance outstanding of its 14.45%
Subordinated Notes due 2000.
The average interest rate in 1993 was approximately 9 percent compared to 10
percent in 1992 and 1991. This decrease over the last year reflects the lower
market for interest rates. The average interest rate also reflects the
Company's use of interest rate swap transactions to hedge interest rate
fluctuations. (SEE NOTE 6 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)
The Company expects 1994 interest expense related to borrowings to be lower than
1993 due to anticipated lower 1994 average debt levels (SEE LIQUIDITY AND
CAPITAL RESOURCES CAPTION).
OTHER INCOME, NET
Other income, net increased $6.7 million in 1993 from the prior year period
primarily due to lower interest rate swap termination costs and fewer
terminations of lease agreements with tenants. This increase was partially
offset by lower interest income on investments. (SEE NOTE 1 TO THE CONSOLIDATED
FINANCIAL STATEMENTS REGARDING THE RECLASSIFICATION OF CERTAIN OTHER INCOME, NET
AMOUNTS.)
The $2.7 million decrease in other income, net for 1992 compared to 1991 was
primarily attributable to losses incurred for the termination of several
interest rate swap agreements. These swap agreements were terminated as a
result of lower average debt levels. Lower interest income on investments in
1992, partially offset by lower net losses on foreign currency transactions,
also contributed to the decrease.
PROVISION FOR TAXES
The increase in the 1993 provision for taxes compared to 1992 was substantially
due to lower 1992 earnings caused by the stock option charge. The 1993
effective tax rate was 41 percent
30
<PAGE>
compared to 43 percent in 1992 and 47 percent in 1991. The reduction in the
1993 effective tax rate from 1992 was primarily due to the mix of non-U.S. and
U.S. earnings and the negative effects of the one time stock option charge in
1992. The stock option charge produced a tax benefit of only 27 percent because
of its negative impact on the utilization of foreign tax credits in 1992. In
addition, the 1993 effective tax rate would have been lower, except for the 1993
U.S. tax bill that increased the U.S. statutory tax rate to 35 percent from 34
percent and, therefore, resulted in a 1 percent increase to the Company's 1993
full year effective tax rate.
The reduction in the 1992 rate from 1991 reflected positive changes in the mix
of non-U.S. and U.S. earnings. Additionally, the 1992 rate was favorably
affected by a settlement reached with the Internal Revenue Service concerning
transfer pricing issues, partially offset by the lower tax benefit provided by
the stock option charge.
The Company will comply in fiscal 1994 with the provisions of SFAS No. 109,
which requires an asset and liability approach for financial accounting and
reporting of income taxes. The Company will recognize a positive adjustment of
$11.4 million upon adoption that will be recorded as a cumulative effect of a
change in accounting principles on the Consolidated Statements of Income. (SEE
NOTE 3 TO CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION.)
EXTRAORDINARY ITEM - LOSS FROM EARLY EXTINGUISHMENT OF DEBT
In 1992, the Company used cash generated from operations to purchase on the open
market and subsequently cancel all remaining, $33.6 million, 14.45% Subordinated
Notes due 2000. In 1991, the Company purchased and subsequently cancelled an
aggregate of $97.1 million of the same notes either on the open market or in
connection with a recapitalization plan (SEE NOTE 20 TO THE CONSOLIDATED
FINANCIAL STATEMENTS). These transactions resulted in an extraordinary loss of
$1.6 million in 1992 and $9.9 million in 1991, net of applicable income tax
benefits. These losses also reflected accelerated amortization of previously
capitalized issuance fees.
FINANCIAL CONDITION AND LIQUIDITY
The following discussion compares the liquidity position and certain balance
sheet items of the Company as of year-end 1993 and 1992.
TRADE RECEIVABLES AND INVENTORIES
Trade receivables increased 18 percent from 1992 reflecting the 1993 dollar and
unit sales records. The increase in trade receivables was also attributable to
an increase in U.S. product pre-shipments to retailers during the fourth quarter
of 1993. Additionally, the 1993 allowance for doubtful accounts, as a percent
of receivables, was 13 percent lower than the 1992 percentage due to a higher
number of account bankruptcies and credit failures in 1992.
Inventories at year-end 1993 were 9 percent above prior year, mostly due to the
build-up of U.S. basic core inventories. This build-up of inventory was
primarily attributable to production planning that was based on strong sale
results during the first quarter of 1993. However, as the year progressed,
sales were not consistently strong and did not match the production output.
Additionally, inventory levels increased due to slow 1993 Back-to-School and
Holiday seasons, for most marketing divisions, and increased order
cancellations. The higher order cancellations reflected the effects of the
Company's higher selling prices for certain products and existing
31
<PAGE>
inventories at retailers due to a slow retail market. Also, retailers have been
keeping less inventory on-hand and relying on suppliers to provide products on a
more timely basis. In an effort to partially reduce the high inventory levels
during the year, the Company incurred production downtime late in the year.
At year-end 1993, unshipped orders were 13 percent below the previous year and
order cancellations increased 30 percent, both due to the businesses in the U.S.
These results reflect the reluctance of retailers to commit to orders far in
advance. Additionally, lower consumer spending is expected to continue into
1994. The Company is currently evaluating its sourcing needs and plans to
adjust future production accordingly.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net for 1993 increased 9 percent from year-end
1992. The increase in property, plant and equipment was due to capital
expenditures that more than offset depreciation expense and retirements during
the period. U.S. capital expenditures were related to office renovations,
purchases of main-frame data processing equipment, and automation and ergonomic
upgrades for the Company's U.S. production facilities. Outside the U.S., the
Company upgraded and expanded several of its finishing and distribution
facilities in Europe.
Capital expenditures were $143.2 million in 1993 and $146.2 million in 1992.
Approximately $15.0 million of 1993 capital expenditures related to the
Company's initiative on customer service. At year-end 1993, the Company had
capital expenditure purchase commitments outstanding of approximately $32.6
million. Approximately 67 percent of these commitments were for distribution
center and equipment needs in Europe and approximately 13 percent were for
equipment needs in North America. The remaining commitments are for general
office and information system needs.
The Company monitors the efficiencies of its facilities on an ongoing basis in
conjunction with production requirements. The Company modernizes facilities and
equipment as necessary and anticipates authorizations for capital expenditures
of approximately $196.0 million for new 1994 projects, which does not include
estimates related to the Company's initiative on customer service. Currently,
actual spending on projects during the 1994 year is expected to be $165.0
million, not including spending related to the Company's initiative on customer
service. Certain expenditures may be carried over to the following fiscal year
based on timing of completion and spending limitations. Additionally, the
Company expects to spend over $300.0 million during the next several years in
connection with its initiative on customer service (SEE ADDITIONAL INFORMATION
SECTION).
WORKING CAPITAL
Working capital of $1.0 billion at year-end 1993 increased $407.6 million from
year-end 1992 and the current ratio increased to 1.9 from 1.5, respectively.
The increase in working capital was mostly due to lower dividends payable,
short-term borrowings and taxes payable and higher trade receivables and
inventories. The increase in working capital was partially offset by increases
in salaries, wages and employee benefits, mostly due to higher workers'
compensation claims, and current maturities of a portion of dividend notes (SEE
LIQUIDITY AND CAPITAL RESOURCES CAPTION). Working capital requirements for
operations and other needs were
32
<PAGE>
minimally impacted by the higher inventory levels during the year (SEE TRADE
RECEIVABLES AND INVENTORIES CAPTION).
LIQUIDITY AND CAPITAL RESOURCES
The increase of $15.0 million in cash and cash equivalents from year-end 1992
was primarily due to cash provided by operations. Cash provided by operations
was mainly used for the net repayment of debt, capital expenditures and the
payment of dividends. At year-end 1993, the Company's total outstanding debt
balance was $145.8 million, 63 percent lower than year-end 1992.
In the first quarter of 1993, the Company renegotiated, amended and restated its
primary credit agreement to provide for a $500.0 million unsecured working
capital facility. Under the amended credit agreement, the Company no longer
pledges as collateral the outstanding shares of common stock of its subsidiaries
and its trademarks. This credit agreement will expire in 1997, but is renewable
by the Company, with the consent of the lending banks. Commitment fees are paid
on the unused portion of the amounts available for borrowing. Under the amended
credit agreement the interest rates and commitment fees on the working capital
facility are lower and the financial and operating covenants are less stringent
compared to the prior credit agreement. At the time the amended agreement was
established, the Company had repaid all amounts outstanding ($195.0 million) on
its prior credit agreement and subsequently borrowed $125.0 million on the
amended credit agreement. Since that time, net repayments on the amended credit
agreement have resulted in an outstanding balance of $50.0 million at year-end
1993.
Additionally, the Company repaid all its outstanding 4.8 billion Japanese Yen
loan amounts (U.S. dollar equivalent of $38.6 million) and cancelled the related
credit line agreements during the first quarter of 1993.
Partially offsetting the 1993 debt reductions were the issuance in December 1992
of four series of notes payable to Class L stockholders for partial payment of a
dividend declared in November 1992. These notes are payable in four semi-annual
installments commencing June 15, 1993 and collectively total $77.1 million.
These notes bear an interest rate incrementally above the six-month Treasury
Bill rate. At year-end 1993 the Company had repaid the first series of dividend
notes payable to Class L stockholders for an aggregate amount of $18.0 million,
plus accrued interest of $.4 million. Subsequent to year-end, the Company
repaid the second series of dividend notes payable to Class L stockholders for
an aggregate amount of $18.0 million, plus accrued interest of $.7 million (SEE
NOTES 6 AND 22 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
INFORMATION).
The Company expects 1994 debt levels to be lower than 1993. The Company plans
to use a portion of cash generated from operations during 1994 for costs
relating to the Company's initiative to improve customer service and for
investments in retail joint ventures (SEE ADDITIONAL INFORMATION SECTION).
The Company also has interest rate swap transactions. The net amounts paid or
received under interest rate swap contracts is recognized as interest expense.
Several interest rate swap transactions were cancelled during 1993 and 1992 due
to lower average debt levels. The gains
33
<PAGE>
and losses recognized from these cancellations were recorded as other income,
net. (SEE NOTE 6 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)
The Company uses forward and option currency contracts to reduce the risks of
foreign currency fluctuations on its non-U.S. dollar denominated operations.
The Company's market risk is directly related to fluctuations in the currency
exchange rates. The Company's credit risk is limited to the currency rate
differential for each agreement if a counterparty failed to meet the terms of
the contract. The Company does not anticipate nonperformance by any
counterparties. (SEE NOTES 1 AND 6 TO 8 TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR ADDITIONAL INFORMATION.)
For information regarding the sale of Class E common stock to the Company's
employee investment plans, SEE NOTE 12 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
PAYMENT OF DIVIDENDS ON CLASS E STOCK
In June 1993, the Board of Directors declared a dividend of $.55 per share
(totaling $.7 million), which was paid on August 27, 1993 to Class E
stockholders of record on July 30, 1993. On November 18, 1993, the Board of
Directors declared a dividend of $.55 per share (totaling $.7 million), which
was paid on December 15, 1993 to Class E stockholders of record on December 1,
1993. There were no dividends declared on Class L common stock during the year.
(SEE NOTES 19 AND 22 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
INFORMATION.)
OTHER LIABILITIES
Other liabilities increased $85.7 million primarily due to increases in workers'
compensation projections and certain pension and benefit plan estimates (SEE
NOTE 17 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION).
BENEFIT PLANS
POSTRETIREMENT BENEFIT PLANS
The Company will adopt SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" in fiscal 1994. Upon adoption of SFAS No. 106,
the Company will recognize an expense to establish a "transition obligation,"
representing the value at the beginning of the year of the postretirement
benefit obligation earned by employees and retirees in prior periods. Based on
an actuarial valuation, the transition obligation is estimated to be $402.3
million before taxes and $248.4 million after taxes, when the Company adopts
SFAS No. 106 at the beginning of fiscal 1994. The Company will recognize the
entire transition obligation in 1994. This transaction will be recorded as a
cumulative effect of a change in accounting principles, net of income taxes, on
the Consolidated Statements of Income. Additionally, the Company will record an
expense for 1994 service and interest costs, which is currently estimated to be
$43.0 million. (SEE NOTE 11 TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
ADDITIONAL INFORMATION.)
34
<PAGE>
HEALTH PLANS
During 1993, a number of major proposals for U.S. health care reform
legislation, including the Clinton Administration proposal, were introduced and
are being considered by the U.S. Congress. Presently, the Company cannot
accurately assess how these or similar legislation might financially impact the
Company. The Company currently provides health and welfare benefits to its
employees.
ADDITIONAL INFORMATION
STRATEGIC INITIATIVES
The Company is in the process of examining and re-engineering various aspects of
its brand marketing, customer service and operations/distribution strategies.
These initiatives include: aligning the Company's U.S. marketing divisions
according to its Levi's(R), Dockers(R) and Brittania(R) brands, developing a
customer base and product distribution system that is consistent with its brand
image, reconfiguring the organization from a functional to a process
orientation, implementing a team-based approach to manufacturing, and investing
in retail joint ventures.
More broadly, the initiative involves fundamental changes in the way the Company
operates its business. There are numerous commercial, operating, financial,
legal and other risks and uncertainties presented by the design and
implementation of such a program. Furthermore, the Company is not aware of
undertakings of comparable magnitude in the apparel industry, and cannot predict
with certainty the outcome of the initiative. Although there can be no
assurance that the Company will successfully design and implement these new
business processes, or that the costs of the initiative will not exceed
estimates, the Company believes that the re-engineering initiative is essential
to maintain and expand its business.
Although many details and decisions regarding the organizational realignment and
distribution system changes are currently being analyzed, the Company expects to
complete this reorganization within the next few years. The Company expects to
make capital expenditures of over $300.0 million during the next few years to
support a new U.S. distribution network, expanded systems plans, organization
and manufacturing changes. Additionally, the Company expects to spend
approximately $200.0 million for transitional expenses, including software
costs, possible impairment costs of existing facilities and equipment, training
costs and other related expenses. All of these costs may be recognized ratably
throughout the implementation period and/or as expenditures occur, depending on
the nature of the cost and the decisions made related to this initiative. (SEE
STRATEGIC INITIATIVES CAPTION OF THE BUSINESS SECTION, UNDER ITEM 1, FOR
ADDITIONAL INFORMATION.)
35
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item and not presented on the following pages is
contained in the SUPPLEMENTAL FINANCIAL SCHEDULES that are included in this Form
10-K.
36
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
For the Years Ended November 28, 1993, November 29, 1992 and November 24, 1991
37
<PAGE>
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 28, 1993(1) November 29, 1992(1) November 24, 1991(1)
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Net sales $ 5,892,479 $ 5,570,290 $ 4,902,882
Cost of goods sold 3,638,152 3,431,469 3,024,330
----------- ----------- -----------
Gross profit 2,254,327 2,138,821 1,878,552
Marketing, general and
administrative expenses 1,394,170 1,309,352 1,147,465
Stock option charge - 157,964 -
Other operating (income) expense, net 8,418 (5,882) (18,888)
----------- ----------- -----------
Operating income 851,739 677,387 749,975
Interest expense 37,144 53,303 71,384
Other income, net 16,718 10,037 12,762
----------- ----------- -----------
Income before taxes and
extraordinary loss 831,313 634,121 691,353
Provision for taxes 338,902 271,673 324,812
----------- ----------- -----------
Income before extraordinary loss 492,411 362,448 366,541
Extraordinary loss:
Loss from early extinguishment
of debt, net of applicable income
tax benefits(2) - 1,611 9,875
----------- ----------- -----------
Net income 492,411 360,837 356,666
Dividends on preferred stock - 1,895 11,570
----------- ----------- -----------
Net income available for
common stockholders $ 492,411 $ 358,942 $ 345,096
=========== =========== ===========
Income per common share:
Income before extraordinary loss $ 9.38 $ 6.94 $ 6.44
Extraordinary loss - .03 .18
----------- ----------- -----------
Net income $ 9.38 $ 6.91 $ 6.26
=========== =========== ===========
Average common shares
outstanding 52,513,160 51,928,655 55,136,212
=========== =========== ===========
</TABLE>
(1) Fiscal years 1993 and 1991 each contained 52 weeks. Fiscal year 1992
contained 53 weeks.
(2) Applicable income tax benefits for fiscal years 1992 and 1991 are $947
and $5,799, respectively.
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
Page 1 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
November 28, November 29,
1993 1992
----------- ------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 252,673 $ 237,702
Trade receivables (less allowance for doubtful
accounts: 1993 - $28,551; 1992 - $27,806) 858,117 725,798
Inventories:
Raw materials 109,289 106,949
Work-in-process 135,797 128,677
Finished goods 546,754 493,296
Other current assets 187,794 186,205
---------- ----------
Total current assets 2,090,424 1,878,627
Property, plant and equipment (less accumulated
depreciation: 1993-$364,830; 1992-$300,281) 594,592 546,320
Goodwill and other intangibles (less accumulated
amortization: 1993-$175,538; 1992-$187,759) 361,936 383,369
Other assets 61,708 72,385
---------- ----------
$3,108,660 $2,880,701
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt and
capital lease obligations $ 42,695 $ 7,794
Short-term borrowings 10,094 121,105
Accounts payable 259,747 238,570
Accrued liabilities 370,094 361,661
Salaries, wages and employee benefits 250,291 201,886
Taxes payable 139,641 180,940
Dividends payable 688 157,141
---------- ----------
Total current liabilities 1,073,250 1,269,097
---------- ----------
Long-Term Debt and Capital Lease Obligations-
Less current maturities 93,050 261,993
---------- ----------
Other Liabilities 627,774 542,042
---------- ----------
Minority Interest 30,047 22,983
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
Page 2 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
November 28, November 29,
1993 1992
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (continued)
Common Stock-Employee Stock Purchase and
Award Plan:
Class E common stock-$.10 par value;
issued: 1993-300,848 shares; 1992-169,101 shares
(Redemption value $34,297) $ 30 $ 17
Additional paid-in capital, common 33,475 16,336
---------- ----------
Total common stock-employee stock purchase
and award plan 33,505 16,353
---------- ----------
Stockholders' Equity:
Class E common stock-$.10 par value; authorized
100,000,000 shares; issued and outstanding:
1993-894,172 shares; 1992-794,122 shares 89 79
Class L common stock-$.10 par value; authorized
170,000,000 shares; issued: 1993 and
1992-51,910,699 shares 5,191 5,191
Additional paid-in capital, common 242,572 230,222
Retained earnings 990,130 499,043
Translation adjustment 48,322 57,427
Pension liability (16,574) (5,060)
Treasury stock, at cost-Class E: 1993-1,379 shares;
1992-1,333 shares; Class L: 1993 and
1992-499,749 shares (18,696) (18,669)
---------- ----------
Total stockholders' equity 1,251,034 768,233
---------- ----------
$3,108,660 $2,880,701
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
Page 1 of 3
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additional Additional
Series B Paid-in Class E Class F Class L Paid-in
Preferred Capital Common Common Common Capital
Stock (Preferred) Stock Stock Stock (Common)
--------- ----------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE NOVEMBER 25, 1990 $ -- $ -- $ 25 $ 6,860 $ -- $ 92,360
Exercise of Class F common stock
options (719,431 shares) 71 18,815
Purchase of treasury stock
(Class F) (8,333,330 shares)
Exchange of Class F common stock
for Series B preferred
(1,416,623 shares) and for
Class L common stock
(50,878,582 shares) 1,417 75,081 (5,229) 5,088 (4,817)
Conversion of Class F treasury stock
to Class L treasury stock
(17,020,424 shares) (1,702) 1,702 --
Retirement of treasury stock
(15,595,552 shares) (1,560) (22,216)
Sale and Company contribution of
Class E common stock to qualified
employee plans (411,756 shares) 42 30,429
Dividends on preferred and
common stock
Net income
Loss on sale of subsidiary's
treasury stock
Translation adjustment --------- ----------- ------- -------- -------- ---------
BALANCE NOVEMBER 24, 1991 1,417 75,081 67 -- 5,230 114,571
</TABLE>
<TABLE>
<CAPTION>
Total
Retained Translation Pension Treasury Stockholders'
Earnings Adjustment Liability Stock Equity
--------- ----------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE NOVEMBER 25, 1990 $ 625,385 $ 96,460 $ -- $ (179,832) $ 641,258
Exercise of Class F common stock
options (719,431 shares) 18,886
Purchase of treasury stock
(Class F)(8,333,330 shares) (450,448) (450,448)
Exchange of Class F common stock
for Series B preferred
(1,416,623 shares) and for
Class L common stock
(50,878,582 shares) (74,357) (2,817)
Conversion of Class F treasury stock
to Class L treasury stock
(17,020,424 shares) -- --
Retirement of treasury stock
(15,595,552 shares) (553,740) 577,516 --
Sale and Company contribution of
Class E common stock to qualified
employee plans (411,756 shares) 30,471
Dividends on preferred and
common stock (21,879) (21,879)
Net income 356,666 356,666
Loss on sale of subsidiary's
treasury stock (69) (69)
Translation adjustment (13,765) (13,765)
--------- ----------- -------- ---------- ---------
BALANCE NOVEMBER 24, 1991 332,006 82,695 -- (52,764) 558,303
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
Page 2 of 3
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additional Additional
Series B Paid-in Class E Class F Class L Paid-in
Preferred Capital Common Common Common Capital
Stock (Preferred) Stock Stock Stock (Common)
--------- ----------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE NOVEMBER 24, 1991 1,417 75,081 67 -- 5,230 114,571
Redemption of Series E preferred
stock (1,416,623 shares) (1,417) (75,081)
Reissuance of Class L treasury stock
(532,368 shares) for stock option
exercises 45,235
Retirement of Class L treasury stock
(392,755 shares) for stock options
surrendered (39) (559)
Increase to additional paid-in capital for
unexercised Class L common stock
options 59,220
Sale and Company contribution of Class E
common stock and Class E treasury
stock to qualified employee plans
(128,147 shares) 12 11,755
Purchase of Class E treasury stock
(1,786 shares) from ESAP participants
Dividends on preferred and common stock
Net income
Net gain on sale and purchase of subsi-
diary's treasury stock
Translation adjustment
Pension liability
--------- ---------- ------- -------- -------- ----------
BALANCE NOVEMBER 29, 1992 -- -- 79 -- 5,191 230,222
</TABLE>
<TABLE>
Total
Retained Translation Pension Treasury Stockholders'
Earnings Adjustment Liability Stock Equity
-------- ----------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE NOVEMBER 24, 1991 332,006 82,695 -- (52,764) 558,303
Redemption of Series E preferred
stock (1,416,623 shares) (76,498)
Reissuance of Class L treasury stock
(532,368 shares) for stock option
exercises 19,715 64,950
Retirement of Class L treasury stock
(392,755 shares) for stock options
surrendered (13,945) 14,543 --
Increase to additional paid-in capital
for unexercised Class L common
stock options 59,220
Sale and Company contribution of Class E
common stock and Class E
treasury stock to qualified
employee plans (128,147 shares) 38 11,805
Purchase of Class E treasury
stock (1,786 shares) from ESAP
participants (201) (201)
Dividends on preferred and
common stock (179,963) (179,963)
Net income 360,837 360,837
Net gain on sale and purchase of
subsidiary's treasury stock 108 108
Translation adjustment (25,268) (25,268)
Pension liability (5,060) (5,060)
-------- ----------- --------- -------- --------
BALANCE NOVEMBER 29, 1992 499,043 57,427 (5,060) (18,669) 768,233
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
Page 3 of 3
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additional Additional
Series B Paid-in Class E Class F Class L Paid-in
Preferred Capital Common Common Common Capital
Stock (Preferred) Stock Stock Stock (Common)
-------- ----------- ------- ------- ------- ---------
<C> <C> <C> <C> <C> <C>
<S>
BALANCE NOVEMBER 29, 1992 -- -- 79 -- 5,191 230,222
Sale and Company contribution of Class E
common stock and Class E treasury stock to
qualified employee plans (104,642 shares) 10 12,350
Purchase of Class E treasury stock (4,638 shares)
from ESAP participants
Dividends on common stock
Net income
Net loss on sale and purchase of subsidiary's
treasury stock
Translation adjustment
Pension liability
-------- ----------- ------- ------- ------- ----------
BALANCE NOVEMBER 28, 1993 $ -- $ -- $ 89 $ -- $ 5,191 $ 242,572
======== =========== ======= ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
Total
Retained Translation Pension Treasury Stockholders'
Earnings Adjustment Liability Stock Equity
-------- ----------- --------- --------- -------------
<C> <C> <C> <C> <C>
<S>
BALANCE NOVEMBER 29, 1992 499,043 57,427 (5,060) (18,669) 768,233
Sale and Company contribution of Class E
common stock and Class E treasury stock to
qualified employee plans (104,642 shares) 536 12,896
Purchase of Class E treasury stock (4,638 shares)
from ESAP participants (563) (563)
Dividends on common stock (1,314) (1,314)
Net income 492,411 492,411
Net loss on sale and purchase of subsidiary's
treasury stock (10) (10)
Translation adjustment (9,105) (9,105)
Pension liability (11,514) (11,514)
-------- ----------- --------- --------- ------------
BALANCE NOVEMBER 28, 1993 $990,130 $ 48,322 $ (16,574) $ (18,696) $ 1,251,034
======== =========== ========= ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statement.
43
<PAGE>
Page 1 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 28, November 29, November 24,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Income before extraordinary loss $ 492,411 $ 362,448 $ 366,541
Adjustments to arrive at net cash
provided by operating activities:
Depreciation and amortization 111,818 97,394 103,580
Foreign exchange (gains) losses (3,511) (5,367) 624
Provision for deferred employee
benefits 35,115 209,902 38,612
Payment of deferred employee
benefits (25,436) (21,367) (10,305)
Provision for workers'
compensation claims 102,428 95,608 91,203
Payment of workers'
compensation claims (58,665) (53,819) (29,674)
Increase in trade receivables (139,329) (75,940) (49,958)
Increase in inventories (67,428) (85,981) (62,101)
(Increase) decrease in other
current assets (11,732) (28,754) 626
Increase in accounts payable and
accrued liabilities 56,603 34,173 135,260
Increase in salaries, wages and
employee benefits 41,376 51,725 26,005
Decrease in deferred taxes (30,380) (37,191) (61,627)
Increase (decrease) in taxes
payable (33,789) (62,743) 55,609
Increase in other liabilities 45,517 25,468 19,768
Other, net (19,323) (19,627) (19,809)
--------- --------- ---------
Net cash provided by operating
activities 495,675 485,929 604,354
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant and
equipment (142,841) (145,619) (109,468)
Increase (decrease) of net
investment hedge 32,757 (9,362) 23,007
Other, net 6,290 (5,089) 3,126
--------- --------- ---------
Net cash used for investing
activities (103,794) (160,070) (83,335)
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
Page 2 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 28, November 29, November 24,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (415,716) (512,230) (986,301)
Proceeds from issuance of long-term debt 227,952 327,799 1,278,798
Redemption of preferred stock -- (158,778) --
Net increase (decrease) in short-term borrowings (128,792) 68,438 (210,116)
Payment of optionholders' taxes relating to
stock option charge -- (41,866) --
Dividends paid (82,210) (40,259) (41,695)
Proceeds from sale of common stock to
employee plans 29,512 14,543 16,174
Purchase of treasury stock and related fees (27) (201) (450,448)
Proceeds from exercise of stock options -- 4 18,886
Other, net (4,866) (1,314) (4,739)
--------- ---------- -----------
Net cash used for financing activities (374,147) (343,864) (379,441)
--------- ---------- -----------
Effect of exchange rate changes on cash (2,763) 144 (52,401)
--------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 14,971 (17,861) 89,177
Beginning cash and cash equivalents 237,702 255,563 166,386
--------- --------- -----------
Ending cash and cash equivalents $ 252,673 $ 237,702 $ 255,563
========= ========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 36,787 $ 55,543 $ 67,863
Income taxes 364,064 311,972 313,680
Non-cash investing and financing activities:
Capital lease obligations incurred 409 606 617
Dividends declared, but not yet paid-
Common stock 688 157,141 10,309
Preferred stock -- -- 5,631
Reissuance/retirement of Class L treasury stock -- 34,258 577,516
Increase in Class L common stock due to
stock option charge and reissuance of
Class L treasury stock -- 103,853 --
Exchange of Class F common stock for
Series B preferred stock -- -- 76,498
Exchange of Class F common stock for
Class L common stock -- -- 79,539
Conversion of Class F treasury stock to
Class L treasury stock -- -- 629,832
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Levi Strauss
Associates Inc. (LSAI or the Company) and all subsidiaries. All significant
intercompany items have been eliminated.
DEPRECIATION AND AMORTIZATION METHODS
Property, plant and equipment is carried at cost, less accumulated depreciation.
Depreciation and amortization are computed on a straight-line basis over the
estimated useful lives of the related assets. In the case of certain property
under capital lease, depreciation is computed over the lesser of the useful life
or the lease term.
INCOME TAXES
Deferred income taxes result from timing differences in the recognition of
revenue, expense and credits for income tax and financial statement purposes.
U.S. Federal income tax and foreign withholding taxes are provided on the
undistributed earnings of non-U.S. subsidiaries to the extent that taxes on the
distribution of such earnings would not be offset by tax credits.
Effective November 29, 1993, the Company will adopt Statement of Financial
Accounting Standards (SFAS) No. 109. This statement requires a change from the
deferral method of accounting for income taxes under Accounting Principles Board
Opinion No. 11 to the asset and liability method of accounting for income taxes.
Under SFAS No. 109, deferred tax assets and liabilities are established at the
balance sheet date in amounts that are expected to be recoverable or payable
when the difference in the tax bases and financial statement carrying amounts of
assets and liabilities ("temporary differences") reverse. The 1994 adoption
will be recorded as a cumulative effect of a change in accounting principles on
the Consolidated Statements of Income.
POSTRETIREMENT BENEFIT PLANS
The Company will adopt SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" at the beginning of fiscal 1994. Upon adoption of
SFAS No. 106, the Company will recognize an expense to establish a "transition
obligation", representing the value at the beginning of the year of the
postretirement benefit obligation earned by employees and retirees in prior
periods. This transaction will be recorded as a cumulative effect of a change
in accounting principles, net of income taxes, on the Consolidated Statements of
Income. Additionally, the Company will record an expense for 1994 service and
interest costs.
INCOME PER COMMON SHARE
Income per common share is computed by dividing income (after deducting
dividends on preferred stock) by the average number of common shares outstanding
for the period.
CASH EQUIVALENTS
All highly liquid investments with an original maturity of three months or less
are included as cash equivalents.
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 (CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES
INVENTORY VALUATION
Inventories are valued at the lower of average cost or market and include
materials, labor and manufacturing overhead. Market is calculated on the basis
of anticipated selling price less allowances to maintain the normal gross margin
for each product.
TRANSLATION ADJUSTMENT
The functional currency for most of the Company's foreign operations is the
applicable local currency. For those operations, assets and liabilities are
translated into U.S. dollars at period-end exchange rates, and income and
expense accounts are translated at average monthly exchange rates. Net exchange
gains or losses resulting from such translation are accumulated as a separate
component of stockholders' equity. The U.S. dollar is the functional currency
for foreign operations in countries with highly inflationary economies, for
which both translation adjustments and gains and losses on foreign currency
transactions are included in other income, net.
FOREIGN EXCHANGE CONTRACTS
The Company enters into foreign exchange contracts to hedge against known
foreign currency denominated exposures, particularly dividends and intracompany
royalties from its foreign affiliates and licensees. Market value gains and
losses on hedge instruments are recognized and offset foreign exchange gains or
losses on existing exposures. The effects of exchange rate changes on
transactions designated as hedges of net investments are included in the
separate component of stockholders' equity. At November 28, 1993, the net
effect of exchange rate changes due to net investment hedge transactions was a
$9.1 million increase to translation adjustment.
AMENDMENTS AND RECLASSIFICATIONS
During 1993, the Company filed with the Securities and Exchange Commission an
amendment to its 1992 Form 10-K, under the cover of Form 10-K/A. The Form 10-K
amendments reclassified the 1992 stock option charge as an operating expense and
reclassified amounts related to the amortization of goodwill and intangibles and
losses related to property, plant and equipment from other income, net to
marketing, general and administrative expenses on the Consolidated Statements of
Income. These reclassifications did not affect net income.
Separately, a new line item, other operating (income) expense, net was created
for the 1993 Consolidated Statements of Income. This new line includes certain
operations-related items that were classified as other income, net or marketing,
general and administrative expenses. The other operating (income) expense, net
line represents operating income or expense items that are not related to
marketing, general and administrative expenses. Certain 1992 and 1991 items
have been reclassified to conform to the 1993 presentation format.
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2
OPERATIONS
The following table presents information concerning U.S. and non-U.S.
operations (all in the apparel industry).
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
(000's)
NET SALES TO UNAFFILIATED CUSTOMERS:
United States $3,715,054 $3,482,927 $2,997,144
Europe 1,332,433 1,367,783 1,209,428
Other non-U.S. 844,992 719,580 696,310
---------- ---------- ----------
$5,892,479 $5,570,290 $4,902,882
========== ========== ==========
SALES BETWEEN OPERATIONS:
United States $ 163,627 $ 139,652 $ 111,742
Europe 32 28 67
Other non-U.S. 36,730 34,467 9,842
---------- ---------- ----------
$ 200,389 $ 174,147 $ 121,651
========== ========== ==========
TOTAL SALES:
United States $3,878,681 $3,622,579 $3,108,886
Europe 1,332,465 1,367,811 1,209,495
Other non-U.S. 881,722 754,047 706,152
Eliminations (200,389) (174,147) (121,651)
---------- ---------- ----------
$5,892,479 $5,570,290 $4,902,882
========== ========== ==========
CONTRIBUTION TO INCOME BEFORE OTHER
CHARGES:
United States $ 465,889 $ 460,218 $ 390,468
Europe 365,821 362,174 334,220
Other non-U.S. 171,440 151,644 137,359
---------- ---------- ----------
1,003,150 974,036 862,047
OTHER CHARGES:
Stock option charge -- 157,964 --
Corporate expenses, net 134,693 128,648 99,310
Interest expense 37,144 53,303 71,384
---------- ---------- ----------
INCOME BEFORE TAXES AND
EXTRAORDINARY LOSS: $ 831,313 $ 634,121 $ 691,353
========== ========== ==========
ASSETS:
United States $1,643,230 $1,480,527 $1,346,033
Europe 490,904 491,491 400,197
Other non-U.S. 361,361 273,355 317,284
Corporate 613,165 635,328 569,870
---------- ---------- ----------
$3,108,660 $2,880,701 $2,633,384
========== ========== ==========
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 (CONTINUED)
OPERATIONS
Gains or losses resulting from certain foreign currency hedge transactions are
included in other income, net, and amounted to losses of $10.0 million, $10.2
million and $19.7 million for 1993, 1992 and 1991, respectively.
NOTE 3
INCOME TAXES
The U.S. and non-U.S. components of income before taxes and extraordinary loss
are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(000's)
<S> <C> <C> <C>
U.S. $474,895 $307,702 $295,553
Non-U.S. 356,418 326,419 395,800
-------- -------- --------
$831,313 $634,121 $691,353
======== ======== ========
</TABLE>
The provision for taxes consists of the following:
<TABLE>
<CAPTION>
FEDERAL STATE NON-U.S. TOTAL
-------- ------- -------- --------
(000's)
<S> <C> <C> <C> <C>
1993
- ----
Current $177,651 $37,578 $157,537 $372,766
Deferred (25,548) (3,350) (4,966) (33,864)
-------- ------- -------- --------
$152,103 $34,228 $152,571 $338,902
======== ======= ======== ========
1992
- ----
Current $121,175 $45,938 $161,683 $328,796
Deferred (43,597) (9,145) (4,381) (57,123)
-------- ------- -------- --------
$ 77,578 $36,793 $157,302 $271,673
======== ======= ======== ========
1991
- ----
Current $163,945 $32,095 $185,107 $381,147
Deferred (34,743) (3,260) (18,332) (56,335)
-------- ------- -------- --------
$129,202 $28,835 $166,775 $324,812
======== ======= ======== ========
</TABLE>
- -----------------
Components of the prior year income tax provision have been reclassified from
current to deferred to conform to the current year's presentation.
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 (CONTINUED)
INCOME TAXES
At November 28, 1993, cumulative non-U.S. operating losses of $9.7 million
generated by the Company are available to reduce future taxable income primarily
between the years 1995 and 1998. The Company has utilized all of its remaining
foreign tax credit carryforwards in 1993.
Income tax expense (benefit) included in translation adjustment was $(0.1)
million, $(8.1) million and $(2.8) million for 1993, 1992 and 1991,
respectively.
The approximate tax effects of timing differences giving rise to deferred income
tax expense (benefit) result from:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(000's)
<S> <C> <C> <C>
Inventory capitalization and adjustments $ 6,008 $ 2,186 $ (2,508)
Accrued strategic organization costs (9,888) (6,122) 1,727
Depreciation and amortization 228 (1,836) (1,074)
Employee compensation and benefits (24,739) (50,648) (34,727)
Undistributed non-U.S. earnings (8,221) 9,729 (14,148)
Other 2,748 (10,432) (5,605)
-------- -------- --------
$(33,864) $(57,123) $(56,335)
======== ======== ========
</TABLE>
The Company's effective income tax rate in 1993, 1992 and 1991 differs from the
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Statutory rate 35.0% 34.0% 34.0%
Changes resulting from:
Non-U.S. earnings taxed at different rates,
including withholding taxes 2.2 1.3 6.1
State income taxes, net of federal income tax benefit 2.7 4.4 2.8
Acquisition-related book and tax bases differences 1.3 2.2 2.8
Stock option charge(1) -- 1.7 --
Other, net (0.4) (0.8) 1.3
---- ---- ----
Effective rate 40.8% 42.8% 47.0%
==== ==== ====
- -----------------
</TABLE>
(1) The stock option charge, which occurred during the third quarter of 1992,
produced a tax benefit of only 27.2 percent in 1992 because of its negative
impact on the current utilization of foreign tax credits.
50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 (CONTINUED)
INCOME TAXES
In February 1992, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes," which requires an asset and liability approach for financial
accounting and reporting of income taxes. The Company will comply with the
provisions of SFAS No. 109 during the first quarter of fiscal 1994. Preliminary
review indicates that adoption will result in a $11.4 million credit to net
income. The adoption will be recorded as a cumulative effect of a change in
accounting principles on the Consolidated Statements of Income.
The Company does not expect the tax aspects of the Omnibus Budget Reconciliation
Act of 1993 that was signed into law by President Clinton on August 10, 1993 to
materially affect the Company's future tax expense. The primary impact of the
new tax law is a one percent increase in the statutory tax rate.
The U.S. consolidated tax returns of the Company for 1983 through 1985 are under
examination by the Internal Revenue Service (IRS). The audit includes the
review of certain transactions of the 1985 leveraged buyout. The Company
believes it has made adequate provision for income taxes and interest, which may
become payable upon settlement. The IRS has not yet concluded its audit and a
settlement has not been negotiated.
NOTE 4
PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment, including both leased and owned
assets stated at cost, are as follows:
<TABLE>
<CAPTION>
1993 1992
-------------------- -------------------
Owned Leased Owned Leased
--------- -------- --------- --------
<S> <C> <C> <C> <C>
(000's)
Land $ 41,260 $ 5,134 $ 35,219 $ 5,134
Buildings and leasehold
improvements 347,641 26,276 315,925 26,278
Machinery and equipment 503,501 7,453 430,456 8,094
Construction in progress 28,157 -- 25,495 --
--------- -------- --------- --------
920,559 38,863 807,095 39,506
Accumulated depreciation (347,690) (17,140) (284,570) (15,711)
--------- -------- --------- --------
$ 572,869 $ 21,723 $ 522,525 $ 23,795
========= ======== ========= ========
</TABLE>
The Company has idle facilities and equipment (all in the U.S.), including
closed plants and certain other properties, that are not being depreciated. The
book value of these idle facilities and equipment was $30.6 million at November
28, 1993 and November 29, 1992. The carrying values of idle facilities and
equipment are not in excess of net realizable value. These facilities are being
offered for sale or lease.
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Depreciation expense for 1993, 1992 and 1991 was $85.5 million, $73.1 million
and $59.2 million, respectively.
The Company plans to spend over $300.0 million for capital expenditures over the
next few years in conjunction with its initiative to improve customer service.
(SEE BUSINESS SECTION, UNDER ITEM 1, FOR ADDITIONAL INFORMATION.)
NOTE 5
INTANGIBLE ASSETS
The components of intangible assets are as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Goodwill $ 351,722 $ 351,722
Acquisition intangibles 82,714 103,053
Tradenames 77,139 75,671
Intangible pension asset 4,858 3,767
Other intangibles 21,041 36,915
--------- ---------
537,474 571,128
Accumulated amortization related to goodwill (72,590) (63,803)
Other accumulated amortization (102,948) (123,956)
--------- ---------
$ 361,936 $ 383,369
========= =========
</TABLE>
Goodwill, resulting from the 1985 acquisition of Levi Strauss & Co. by Levi
Strauss Associates Inc., is being amortized through the year 2025. Acquisition
intangibles include trained workforce, leasehold interest, research and
development, and licenses that were valued as a result of the acquisition.
Tradenames were also valued as a result of the acquisition.
Intangible pension asset is not amortized, but is adjusted each year to
correspond to changes in the amount of minimum pension liability.
Amortization expense for 1993, 1992 and 1991 was $24.0 million, $24.0 million
and $47.8 million, respectively.
52
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6
DEBT AND LINES OF CREDIT
Debt and unused lines of credit are summarized below:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
(000's)
LONG-TERM DEBT:
Unsecured:
Borrowings against working capital facility
at variable interest rates, due in 1997 $ 50,000 $ --
Dividend notes payable 59,123 --
Japanese Yen credit line agreements, at
variable interest rates -- 38,710
Other unsecured indebtedness 2,352 2,538
-------- --------
111,475 41,248
Secured:
Borrowings against working capital line at
variable interest rates -- 195,000
Notes payable, at various rates, due in
installments through 1997 11,183 16,066
-------- --------
122,658 252,314
Current maturities (42,122) (3,246)
-------- --------
$ 80,536 $249,068
======== ========
UNUSED LINES OF CREDIT:
Long-term (all U.S.): $450,000 $321,532
Short-term:
U.S. 272,029 323,152
Non-U.S. 308,422 186,337
</TABLE>
PRIMARY CREDIT AGREEMENT
During 1993, the Company renegotiated, amended and restated its primary credit
agreement to provide for a $500.0 million unsecured working capital facility.
Under the amended credit agreement, the Company no longer pledges as collateral
the outstanding shares of common stock of its subsidiaries and its trademarks.
This credit agreement will expire in 1997, but is renewable by the Company with
the consent of the lending banks. Commitment fees are paid on the unused
portion of the amounts available for borrowing. Under the amended credit
agreement, the interest rates and commitment fees are lower than the prior
credit agreement.
53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 (CONTINUED)
DEBT AND LINES OF CREDIT
PRIMARY CREDIT AGREEMENT (CONTINUED)
The primary credit agreement requires the Company to maintain minimum levels of
working capital, net worth, interest coverage and other ratios. Additionally,
the net worth ratio takes into account the effects of SFAS No. 106 on the
Consolidated Financial Statements (SEE NOTE 11). All borrowings under the
primary credit agreement bear interest based on either the lending banks' base
rate, the certificate of deposit rate or the LIBOR rate (at the Company's
option) plus an incremental percentage. Interest rates on borrowings related to
the primary credit agreement ranged from 3.6 percent to 6.0 percent during 1993.
The Company's prior primary credit agreement provided a $500.0 million working
capital line. The borrowings against the Company's working capital line were
secured by the outstanding shares of common stock of its principal subsidiary,
Levi Strauss & Co. and a wholly owned subsidiary, Brittania Sportswear Ltd., and
by its United States and Canadian trademarks.
JAPANESE YEN CREDIT LINE AGREEMENTS
In 1993 the Company repaid all its outstanding 4.8 billion Japanese Yen loan
amounts (U.S. dollar equivalent of $38.6 million at the time of repayment) and
subsequently cancelled its two unsecured line of credit agreements with two
Japanese banks for a total of 6.9 billion Japanese Yen.
OTHER DEBT
During 1993, the Company issued four series of notes payable collectively
totaling $77.1 million to Class L stockholders in partial payment of a dividend
declared in November 1992. These notes are payable in four semi-annual
installments commencing June 15, 1993 and bear an interest rate incrementally
above the six-month Treasury Bill rate. On June 15, 1993, the Company repaid
the first series of dividend notes to Class L stockholders for an aggregate
amount of $18.0 million, plus accrued interest of $.4 million. Subsequent to
year-end on December 15, 1993, the Company repaid the second series of dividend
notes to Class L stockholders for an aggregate amount of $18.0 million, plus
accrued interest of $.7 million.
PRINCIPAL DEBT PAYMENTS
The required aggregate long-term debt principal payments, excluding capitalized
leases, for the next five years are as follows:
<TABLE>
<CAPTION>
YEAR PRINCIPAL PAYMENTS
---- ------------------
(000's)
<S> <C>
1994 $42,122
1995 73,065
1996 7,297
1997 74
1998 --
</TABLE>
54
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 (CONTINUED)
DEBT AND LINES OF CREDIT
SHORT-TERM CREDIT LINES AND STAND-BY LETTERS OF CREDIT
The Company has unsecured and uncommitted short-term credit lines available at
various interest rates from various U.S. and non-U.S. banks. These credit
arrangements may be cancelled by the lenders upon notice and generally have no
compensating balance requirements or commitment fees.
The Company has $98.2 million of funds available through standby letters of
credit with various international banks. The majority of these agreements serve
as guarantees by the creditor banks to cover workers' compensation claims. The
Company pays fees on the standby letters of credit and any borrowings against
the letters of credit are subject to interest at various rates.
INTEREST RATE SWAPS
The Company enters into interest rate swap transactions to hedge existing
floating-rate or fixed-rate liabilities for fixed rates or floating rates. The
net interest to be received or paid on the transactions is recorded as an
adjustment to interest expense.
In 1993, due to lower average debt levels, the Company terminated $100.0 million
of interest rate swap agreements and assigned to a third party a $50.0 million
interest rate swap agreement that hedged fixed-rate liabilities for floating
rates. Additionally, the Company terminated $50.0 million and assigned to a
third party $50.0 million of interest rate swap agreements that hedge floating-
rate liabilities for fixed rates. This assignment became effective during the
fourth quarter of 1993. The Company also terminated a $25.0 million one-way
floating-rate swap transaction. These 1993 transactions resulted in a net gain
of $.4 million that was classified as other income, net. At year-end 1993, the
Company had $100.0 million of interest rate swaps that hedge floating-rate
liabilities for fixed rates.
In 1992, the Company entered into swap transactions to hedge $50.0 million of
existing floating-rate liabilities for fixed rates, swap transactions to hedge
$200.0 million of fixed-rate liabilities for floating rates and a one-way
floating-rate swap transaction to hedge $25.0 million of floating-rate
liabilities. The 1992 swap transactions ranged in maturity from two to four
years and were entered into to offset previous existing swap transactions and
take advantage of lower interest rates. Due to lower average debt levels in the
latter part of the 1992 fiscal year, the Company terminated $150.0 million of
swap agreements for a net loss of $5.6 million, included in other income, net.
The Company is subject to credit risk exposure from nonperformance of the
counterparties to the swap agreements. However, these counterparties are
credit-worthy financial institutions and the Company does not anticipate
nonperformance.
55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7
COMMITMENTS AND CONTINGENCIES
The Company has forward currency contracts to buy the aggregate equivalent of
$192.3 million of the following foreign currencies: Japanese Yen, Spanish
Pesetas, Netherlands Guilders, Italian Lire, British Pounds, Finnish Markkaa,
German Marks, Swiss Francs and Belgian Francs. The Company has forward currency
contracts to sell the aggregate equivalent of $962.1 million of the following
foreign currencies: Japanese Yen, Swedish Kroner, Spanish Pesetas, Norwegian
Kroner, Netherlands Guilders, Italian Lire, British Pounds, Finnish Markkaa,
French Francs, Danish Kroner, German Marks, Swiss Francs and Belgian Francs.
These contracts are at various exchange rates and expire at various dates
through 1996. The Company's market risk is directly related to fluctuations in
the currency exchange rates.
In addition, the Company has the right to sell Japanese Yen for $10.0 million.
This contract expires in March 1995. The Company's credit risk is limited to
the currency rate differential for each agreement, if a counterparty failed to
meet the terms of the contract. These instruments are executed with credit
worthy financial institutions and the Company does not anticipate nonperformance
by the counterparties. SEE NOTE 8 FOR ADDITIONAL INFORMATION.
The Company evaluates environmental liabilities on an ongoing basis and, based
on currently available information, does not consider any environmental exposure
to be material. Additionally, the Company does not consider any pending legal
proceedings to be material.
NOTE 8
FAIR VALUE OF FINANCIAL INSTRUMENTS
In 1993, the Company adopted SFAS No. 107 "Disclosures About Fair Value of
Financial Instruments." This statement requires companies to disclose the fair
value of certain financial instruments, as well as the methods and assumptions
used to estimate the fair value.
The estimated fair value amounts have been determined by the Company, using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
The carrying amount and estimated fair value of the Company's financial
instruments, on the balance sheet, at November 28, 1993 are as follows:
56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
----------- ----------
<S> <C> <C>
(000's)
Long-term debt $80,536 $ 80,536
Common stock - Employee Stock
Purchase and Award Plan (ESAP) 33,505 34,297
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:
Interest rate swap agreements (loss position) -- 9,729
Foreign exchange forward contracts (gain position) -- (20,133)
Foreign exchange option contracts (gain position) -- (293)
</TABLE>
Quoted market prices or dealer quotes are used to determine the estimated fair
value of the majority of interest rate swap agreements, forward exchange
contracts and option contracts. Other techniques, such as the discounted value
of future cash flows, replacement cost, and termination cost have been used to
determine the estimated fair value for long term debt and the remaining
financial instruments. The estimated fair value of the ESAP common stock is
based on the latest valuation of Class E common stock.
The carrying values of cash and cash equivalents, trade receivables, current
assets, current maturities of long-term debt, short-term borrowings, taxes and
dividends payable are assumed to approximate fair value. All investments mature
in 90 days or less, therefore the carrying values are considered to approximate
market value.
The fair value estimates presented herein are based on pertinent information
available to the Company as of November 28, 1993. Although the Company is not
aware of any factors that would substantially affect the estimated fair value
amounts, such amounts have not been updated since that date and, therefore, the
current estimates of fair value at dates subsequent to November 28, 1993 may
differ substantially from these amounts. Additionally, the aggregation of the
fair value calculations presented herein do not represent, and should not be
construed to represent, the underlying value of the Company.
57
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9
LEASES
The Company is obligated under both capital and operating leases for facilities,
office space and equipment.
At November 28, 1993, obligations under long-term leases are as follows:
<TABLE>
<CAPTION>
TYPE OF LEASE
-----------------------
CAPITAL OPERATING
-------- ---------
(000's)
<S> <C> <C>
MINIMUM LEASE PAYMENTS:
1994 $ 1,489 $ 38,978
1995 3,142 29,924
1996 519 27,035
1997 486 25,344
1998 483 20,964
Remaining years 15,181 20,963
------- --------
Total minimum lease payments 21,300 $163,208
------- ========
Net minimum lease payments 21,300
Amount representing interest (8,213)
-------
Present value of net minimum lease payments 13,087
Current maturities (573)
-------
$12,514
=======
</TABLE>
The total minimum lease payments on capital and operating leases have not been
reduced by estimated future income of $19.3 million from noncancelable
subleases.
In general, leases relating to real estate include renewal options of up to 20
years. Some leases contain escalation clauses relating to increases in
executory costs. Certain operating leases provide the Company with an option to
purchase the property after the initial lease term at the then-prevailing market
value. Rental expense for 1993, 1992 and 1991 was $75.1 million, $67.1 million
and $60.4 million, respectively.
NOTE 10
RETIREMENT PLANS
The Company has numerous non-contributory defined benefit retirement plans
covering substantially all employees. It is the Company's policy to fund its
retirement plans based on actuarial recommendations consistent with applicable
laws and income tax regulations. Plan assets are invested in a diversified
portfolio of securities including stocks, bonds, real estate
58
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 (CONTINUED)
RETIREMENT PLANS
investment funds and cash equivalents. The weighted average expected long-term
rate of return on assets is 9.0 percent. Benefits payable under the plans are
based on either years of service or final average compensation.
The funded status of the plans, as of November 28, 1993 and November 29, 1992,
reconciles with amounts recognized on the balance sheet as follows:
<TABLE>
<CAPTION>
Plans in Which Plans in Which Assets
Accumulated Benefits Exceed Accumulated
Exceed Assets Benefits
-------------------- ---------------------
1993 1992 1993 1992
--------- -------- ------- -------
(000's)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 173,279 $108,273 $15,563 $12,787
Non-vested benefits 10,115 5,827 505 434
--------- -------- ------- -------
Accumulated benefit obligation 183,394 114,100 16,068 13,221
Impact of future salary increases 114,476 103,747 3,602 4,351
--------- -------- ------- -------
Projected benefit obligation 297,870 217,847 19,670 17,572
Less: Plan assets at fair value 158,073 111,085 27,546 22,414
--------- -------- ------- -------
Plan assets less than (in excess of)
projected benefit obligation 139,797 106,762 (7,876) (4,842)
Unrecognized net gain (loss) from
plan experience (100,590) (70,014) 1,074 (2,062)
Unrecognized prior service cost (4,310) (5,014) (242) (272)
Unrecognized net asset (liability)
at transition (13,514) (14,990) 5,278 5,910
Adjustment required to recognize
minimum liability 21,432 8,825 -- --
--------- -------- ------- -------
Accrued (prepaid) pension cost $ 42,815 $ 25,569 $(1,766) $(1,266)
========= ======== ======= =======
</TABLE>
The unrecognized net liability at transition (established 1988) is being
amortized primarily on a straight-line basis over 15 years. Past service costs
are amortized on a straight line basis over the average remaining service period
of employees expected to receive benefits.
The weighted average discount rate and the rate of increase in future
compensation levels used to determine the actuarial present value of the
projected benefit obligations for the plans were 6.6 percent and 6.0 percent,
respectively, for 1993, 7.6 percent and 7.0 percent, respectively,
59
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 (Continued)
RETIREMENT PLANS
for 1992 and 8.1 percent and 7.0 percent, respectively, for 1991. Changes in
the discount rate and the rate of increase in future compensation levels used to
measure the 1993 pension obligations resulted in increases to those obligations
as compared to the prior year.
During 1993, the Company recorded minimum liabilities of $21.4 million for three
of its pension plans. The Company also recorded a corresponding intangible
asset of $4.8 million and, for two of its pension plans where the required
intangible asset exceeded its related prior service costs, an adjustment to
stockholders' equity of $16.6 million.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- --------
(000's)
<S> <C> <C> <C>
Service cost of benefits earned during the period $ 29,225 $25,031 $ 17,960
Interest cost on the projected benefit obligations 18,722 14,673 10,235
Gain on plan assets (22,046) (8,974) (14,951)
Net amortization and deferrals 15,162 3,875 10,549
-------- ------- --------
Net pension expense $ 41,063 $34,605 $ 23,793
======== ======= ========
</TABLE>
NOTE 11
POSTRETIREMENT BENEFIT PLANS
Currently, the Company provides certain health care and life insurance benefits
for substantially all active and retired employees through both insured and
self-insured programs. The Company recognizes the cost of providing these
benefits by charging to expense the annual self-insured claims and insurance
premiums amounting to $80.3 million, $71.7 million and $59.9 million in 1993,
1992 and 1991, respectively. The cost of providing these benefits for retirees
(approximately 9.3 percent of the total receiving these benefits) is not readily
separable from the cost of providing benefits for active employees.
During 1993, a number of major proposals for U.S. health care reform
legislation, including the Clinton administration proposal, were introduced and
are being considered by the U.S. Congress. Presently, the Company cannot
accurately assess how these or similar legislation might financially impact the
Company.
The Company will adopt SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" effective November 29, 1993. This statement
requires the Company to accrue postretirement benefits (other than pensions),
including health care and life insurance benefits for retired employees over the
period that an employee becomes fully eligible for benefits. Currently, the
Company uses a "pay-as-you-go" method whereby expenses are recorded as claims
are incurred.
60
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 (Continued)
POSTRETIREMENT BENEFIT PLANS
Upon adoption of SFAS No. 106, the Company will record a one-time, non-cash
charge against earnings of $402.3 million before taxes and $248.4 million after
taxes. This transition obligation represents the actuarially determined value
at November 29, 1993 of the present value of the postretirement benefit
obligation earned by employees and retirees in prior periods. The transition
obligation will be recorded in 1994 as a cumulative effect of a change in
accounting principles, net of income tax effects, on the Consolidated Statements
of Income. Also, the change in accounting will result in an additional annual
expense for service and interest cost, which is currently estimated to be $43.0
million for 1994.
NOTE 12
EMPLOYEE INVESTMENT PLANS
The Company maintains three employee investment plans. The Employee Stock
Purchase and Stock Award Plan of Levi Strauss Associates Inc. (ESAP) is a non-
qualified employee equity program for highly compensated (as defined by the
Internal Revenue Code) employees. The Employee Investment Plan of Levi Strauss
Associates Inc. (EIP) and the Levi Strauss Associates Inc. Employee Long-Term
Investment and Savings Plan (ELTIS) are two qualified plans that cover non-
highly compensated Home Office employees and U.S. field employees.
ESAP
Under the ESAP, eligible employees may invest up to 10 percent of their annual
compensation, through payroll deductions, to directly purchase and hold shares
of Class E common stock. Employee contributions are made on an after-tax basis.
The Company may match 75 percent of the contributions made by employees in
stock. Employees are always 100 percent vested in the Company match. Employees
may elect to have their withholding taxes deducted from their match shares
contributed by the Company. There are various put, call and first refusal
rights associated with Class E common stock obtained through the ESAP. The ESAP
generally prohibits all transfers of shares other than to the Company. Put
rights associated with ESAP entitle participants to sell shares back to the
Company in specified circumstances subject to certain restrictions and
penalties. It also entitles the Company to buy back shares upon termination of
the participant's employment. In all cases, shares are repurchased at the
current appraised value of the shares during the semi-annual employee purchase
periods. The intent of ESAP is to be a long-term investment plan and therefore
the Company does not expect to repurchase large amounts of ESAP shares at any
given time. SEE NOTE 19 FOR STOCK VALUATION INFORMATION.
Shares held by participants of the ESAP are classified outside stockholders'
equity due to the put rights attached to Class E common stock sold through the
ESAP. There were no Class E common stock shares offered for purchase to ESAP
participants prior to 1992. The redemption value at the time of repurchase
would be based on the latest valuation of Class E common stock. In 1991, the
Company registered 5,000,000 additional shares of Class E common stock under the
Securities Act of 1933 for sale by the Company under the ESAP. This plan was
adopted as part of the 1991 recapitalization (SEE NOTE 20).
61
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 12 (Continued)
EMPLOYEE INVESTMENT PLANS
ESAP (Continued)
The following summary presents ESAP activity for the years ended November 28,
1993, November 29, 1992 and November 24, 1991:
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK PAID-IN CAPITAL TOTAL
------ --------------- -----------
(000's)
<S> <C> <C> <C>
Balance at November 24, 1991 $-- $ -- $ --
Sale of Class E stock to ESAP
(67,771 shares at $84 per share;
34,166 shares at $122 per share) 10 9,851 9,861
Company contribution of Class E stock
to ESAP (44,802 shares at $84 per share;
22,362 shares at $122 per share) 7 6,485 6,492
--- ------- -------
Balance at November 29, 1992 17 16,336 16,353
Sale of Class E stock to ESAP
(27,797 shares at $116 per share;
51,614 shares at $138 per share)(1) 8 10,331 10,339
Company contribution of Class E stock
to ESAP (18,578 shares at
$116 per share; 33,758 shares at
$138 per share) 5 6,808 6,813
--- ------- -------
Balance at November 28, 1993 $30 $33,475 $33,505
=== ======= =======
- --------------------------
</TABLE>
(1) includes adjustment due to the reissuance of treasury stock purchased in
1992
On January 12, 1994, employees under ESAP purchased 31,840 shares of Class E
common stock from the Company, also at $114 per share. The Company contributed
approximately 19,512 matching shares before taxes to these employees at a cost
of approximately $2.2 million, which is mostly included in fiscal 1993
compensation expense.
EIP/ELTIS
Under the qualified plans, eligible employees may contribute up to 10 percent of
their annual compensation to various investment funds, including a fund that
invests in Class E common stock. The Company may match 50 percent of the
contributions made by employees to the fund that invests in Class E common
stock. Effective for fiscal 1994 contributions, the Company may match 50
percent of the contributions made by employees to all funds maintained under the
qualified plans. The additional compensation expense associated with this
change is expected to be minimal.
62
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 12 (Continued)
EMPLOYEE INVESTMENT PLANS
EIP/ELTIS (Continued)
Employees are always 100 percent vested in the Company match. The ELTIS also
includes a company profit sharing provision with payments made at the sole
discretion of the Board of Directors. The EIP allows employees a choice of
either pre-tax or after-tax contributions. Employee contributions under the
ELTIS are on a pre-tax basis only.
During 1993, the qualified plans collectively purchased 47,351 shares and 14,436
shares at $116 and $138 per share, respectively, as determined by the valuation
of an independent investment banking firm at the time of purchase (the $116
price was based on the independent valuation of $119 per share, less a $3 per
share dividend paid after the valuation was issued but before the stock
purchase). In addition, the Company contributed 38,263 shares to these plans.
During 1992, the qualified plans purchased 35,997 shares and 13,283 shares at
$84 and $122 per share, respectively, and the Company contributed 78,867
matching shares; during 1991, the qualified plans purchased 218,563 shares at
$74 per share and the Company contributed 193,193 matching shares (which
included a special additional match).
It is the Company's intent to have semi-annual sales of Class E common stock to
the EIP, ELTIS and ESAP. However, the frequency of these sales may be dependent
upon business and economic conditions.
On January 12, 1994, EIP and ELTIS purchased 10,208 shares of Class E common
stock from the Company at $114 per share as determined by the valuation of an
independent investment banking firm. In addition, the Company contributed
16,937 shares (which included a portion related to ELTIS profit sharing) to
these plans at a cost of $1.9 million, which is mostly included in fiscal 1993
compensation expense.
OTHER PLANS
The Company has an Interim Cash Performance Sharing Plan for Home Office payroll
employees and a Field Profit Sharing Award Plan for U.S. field employees. These
cash plans pay out a percentage of covered compensation based on certain Company
earnings criteria as approved by the Board of Directors.
The aggregate cost of providing all aspects of these plans, along with other
savings and compensation plans in 1993, 1992 and 1991 were $45.4 million, $46.0
million and $53.0 million, respectively.
NOTE 13
MANAGEMENT INCENTIVE PLAN
The Company's Management Incentive Plan ("MIP") provides selected employees with
incentive compensation and provides a tool for recruiting and retaining selected
employees. Under the MIP, the Personnel Committee of the Board of Directors, as
administrator of the MIP, may
63
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 (Continued)
MANAGEMENT INCENTIVE PLAN
award discretionary cash payments to selected employees. Such awards are made on
the basis of various factors, including profit levels, return on investment,
salary grade and individual performance. The amounts charged to expense for the
MIP in 1993, 1992 and 1991 were $13.8 million, $12.8 million and $11.9 million,
respectively.
NOTE 14
LONG-TERM PERFORMANCE PLAN
The Company has a Long-Term Performance Plan ("LTPP"), to provide incentive and
reward performance over time and potential future contributions, for certain
directors, officers and key employees. Under this plan, a number of performance
units are granted to each participant. The value assigned to each unit is based
on the Company achieving a target performance measure over a three-year period,
as determined by a committee of the Board of Directors. Awards are paid in one-
third increments on the third, fourth and fifth anniversaries of the date of the
grant. The amounts charged to expense for the plan in 1993, 1992 and 1991 were
$25.7 million, $27.9 million and $22.1 million, respectively.
NOTE 15
EXECUTIVE STOCK APPRECIATION RIGHTS PLAN
During 1992, the Board of Directors approved the Levi Strauss Associates Inc.
Executive Stock Appreciation Rights Plan. A total of 114,000 stock appreciation
rights (SARs) were granted in 1992 to certain executives at an initial grant
value of $84 per SAR. These SARs vest over several years and become exercisable
commencing in 1995. The amounts charged to expense for the plan in 1993 and
1992 were $.9 million and $.5 million, respectively.
NOTE 16
STOCK OPTION PLAN
The Company has a 1985 Stock Option Plan (the "Plan") for Class L common stock
(previously Class F common stock, SEE NOTE 20) under which options are granted
at an exercise price determined on the date of grant by a committee of the Board
of Directors. Options under the Plan expire ten years from the date of grant
and become exercisable as determined by the committee.
In 1992, the Board of Directors approved a special payment arrangement under the
Plan to facilitate the exercise by optionholders of their outstanding options.
This arrangement accelerated vesting on all non-vested options and allowed each
optionholder to exercise outstanding options by surrendering a portion of these
outstanding options in full payment of the exercise price and related tax
obligations. Holders of 65 percent of all outstanding options participated in
this arrangement. The special arrangement required the recognition of a fiscal
1992 pre-tax stock option charge of $158.0 million for all outstanding options
(the amount equal to the difference between the fair market value of the
underlying shares at the exercise date and at the grant date). Separately, the
Company also recognized compensation expense for related exercise bonuses and
the accelerated use of presently non-vested options. The Company
64
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 (CONTINUED)
STOCK OPTION PLAN
disbursed $41.9 million to pay related withholding taxes for optionholders (in
exchange for an equal amount of surrendered options) and $4.4 million for
related exercise bonuses. The optionholders participating in this arrangement
exercised 925,123 options resulting in 532,368 reissued treasury shares of Class
L common stock. The Company also retired 392,755 shares of treasury stock,
which was equal to the number of options surrendered. The net change in
Stockholders' Equity (including the after-tax effect of the stock option charge)
was an increase of $9.2 million.
During 1991, non-vested options were accelerated to attain immediate 50 percent
vesting. Also, during 1991, cash bonuses totaling $1.6 million were paid on the
exercise of options that were granted in 1985 and 1987.
The following summary presents stock option activity for the years ended
November 24, 1991, November 29, 1992 and November 28, 1993:
<TABLE>
<CAPTION>
OPTIONS EXERCISE/SURRENDER
OUTSTANDING PRICE
----------- ------------------
<S> <C> <C>
Outstanding at November 25, 1990 2,144,303 $3.50 - 20.20
Exercised (719,431) $3.50 - 20.20
--------- -------------
Outstanding at November 24, 1991 1,424,872 $3.50 - 20.20
Exercised (532,368) $3.50 - 20.20
Surrendered (392,755) $3.50 - 20.20
--------- -------------
Outstanding and exercisable at November 29, 1992 499,749 $ 3.50
--------- -------------
No activity during 1993 -- $ --
--------- -------------
Outstanding and exercisable at November 28, 1993 499,749 $ 3.50
========= =============
</TABLE>
NOTE 17
OTHER LIABILITIES
The components of other liabilities are as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(000's)
<S> <C> <C>
Taxes $334,627 $302,321
Workers' Health and Safety 158,009 123,111
Deferred Employee Benefits 132,124 115,111
Other 3,014 1,499
-------- --------
$627,774 $542,042
======== ========
</TABLE>
65
<PAGE>
NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)
NOTE 17 (CONTINUED)
OTHER LIABILITIES
Accrued workers compensation expense and accrued expenses related to the
Company's program that provides for early identification and treatment of
employee injuries are included in Workers' Health and Safety. Deferred employee
benefits include accrued liabilities for the Company's long-term performance
plan, deferred compensation, benefit restoration, pension and other plans.
NOTE 18
SERIES A PREFERRED STOCK
At November 28, 1993, there were no shares of Series A preferred stock
outstanding. During 1992, the Company redeemed for cash and permanently retired
all outstanding shares of Series A preferred stock at $170 per share, for an
aggregate of $82.3 million, plus accrued and unpaid dividends of $1.1 million.
The Company used cash from operations to purchase the shares. Dividend
distributions of $4.3 million and $7.5 million were paid in 1992 and 1991,
respectively.
NOTE 19
COMMON STOCK
RESTATED CERTIFICATE OF INCORPORATION
During 1993, holders of a majority of outstanding shares (approximately 60
percent) of the Company approved, by written consent, an amendment and
restatement of the Company's Certificate of Incorporation (the "Restatement").
The Restatement simplifies and shortens the capital stock provisions of the
Certificate of Incorporation. It removes the Company's authority to issue, and
eliminates all references to, Class F common stock, Series A preferred stock and
Series B preferred stock. It does not affect any provisions relating to Class E
common stock or Class L common stock, or make any other changes in the
Certificate of Incorporation.
Currently, the Company has an authorized capital structure consisting of:
270,000,000 shares of common stock, par value $.10 per share, of which
100,000,000 shares are designated Class E common stock and 170,000,000 shares
are designated Class L common stock; plus 10,000,000 shares of preferred stock,
par value $1.00 per share. Class L common stock is subject to a stockholders'
agreement (expiring in April 2001), which limits transfers of the shares. The
outstanding shares of Class E common stock are subject to restrictions on
transfer imposed by the EIP, ELTIS and ESAP.
DIVIDENDS
During 1993, there were no dividends declared on Class L common stock. On
November 18, 1993, the Board of Directors declared a dividend of $.55 per share
(totaling $.7 million), which was paid on December 15, 1993 to Class E
stockholders of record on December 1, 1993. In June 1993, the Board of
Directors declared a dividend of $.55 per share, for an aggregate of $.7
million, which was paid on August 27, 1993 to Class E stockholders of record on
July 30, 1993.
66
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19 (CONTINUED)
COMMON STOCK
DIVIDENDS (CONTINUED)
In November 1992, the Board of Directors declared a dividend of $3.00 per share
(totaling $2.9 million), which was paid on December 15, 1992, to Class E
stockholders of record on December 1, 1992. Also in November 1992, the Board of
Directors declared a dividend of $3.00 per share to Class L stockholders of
record on December 1, 1992, $1.50 of which (totaling $77.1 million) was paid on
December 15, 1992 and $1.50 of which (totaling $77.1 million) is payable in four
semi-annual installments commencing June 15, 1993. The notes issued for these
dividends bear an interest rate incrementally above the six-month Treasury Bill
rate.
In June 1992, the Board of Directors declared a common stock dividend of $.40
per share (totaling $21.0 million), which was paid on August 14, 1992, to Class
E and Class L stockholders of record on July 31, 1992.
In November 1991, the Board of Directors declared a dividend of $.20 per share
(totaling $10.3 million) on both Class E and Class L common shares to
stockholders of record on December 2, 1991, which was paid on December 16, 1991.
In November 1990, a $.525 per share dividend (totaling $31.6 million) was
declared on both Class E and Class F common shares to stockholders of record on
November 30, 1990, which was paid on December 14, 1990.
The declaration of future dividends on Class E and Class L common stock is
within the discretion of the Board of Directors of the Company and will depend
upon business conditions, earnings, the financial condition of the Company and
other factors. It is the Company's intent to not pay another Class L dividend
until after the Class L dividend notes have been repaid.
TREASURY STOCK REISSUANCE/RETIREMENT
As a result of the special payment arrangement under the 1985 Stock Option Plan
(SEE NOTE 16), 532,368 shares of Class L treasury stock were reissued and
392,755 shares of Class L treasury stock were retired during 1992. The net
change in Stockholders' Equity (including the after-tax effect of the stock
option charge) was an increase of $9.2 million.
The Company permanently retired 15,595,552 shares of Class L treasury stock
during 1991, which resulted in a $553.7 million charge to retained earnings;
however, the retirement of treasury stock had no effect on total stockholders'
equity.
COMMON STOCK - EMPLOYEE INVESTMENT PLANS
Class E common stock held by participants of the ESAP (SEE NOTE 12) are
classified outside stockholders' equity due to the put rights attached to ESAP
Class E common stock sold. There were no Class E common shares offered for
purchase to ESAP participants prior to 1992. The redemption amount of common
stock sold through the ESAP represents the latest independent valuation of $114
per share.
67
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19 (CONTINUED)
COMMON STOCK
COMMON STOCK - EMPLOYEE INVESTMENT PLANS (CONTINUED)
Class E common stock is appraised, usually twice a year, by an independent
investment banking firm. The latest appraised value of Class E common stock is
used as the price for selling or repurchasing Class E common stock from the EIP
and ELTIS trustee and ESAP participants. The latest appraised value of Class E
common stock is also used as the value for Class L common stock. The investment
firm is instructed to value stock as though there had been a public trading
market for the stock on the valuation date, and to not give consideration to an
acquisition or control premium, or to a private market discount. There is,
however, no assurance that the Company's stock would trade at the price
determined through the independent investing banking firm valuation had there
been a public trading market for the shares on the valuation date.
NOTE 20
RECAPITALIZATION
In 1991, the Company completed a series of transactions in accordance with a
recapitalization plan. These transactions included, among other things,
substantial new borrowings and financial arrangements and the exchange and
repurchase of certain capital stock. The purpose of this recapitalization plan
was to facilitate the Company's ability to remain independent, thereby
eliminating the pressures that may be created by public ownership to focus on
short-term rather than long-term performance, and to preserve family control and
ownership.
Summary descriptions of various transactions completed in 1991 as part of the
recapitalization are as follows:
The Company repurchased $84.8 million in principal amount (or approximately 71
percent of $118.7 million) of the Company's then outstanding 14.45%
Subordinated Notes due 2000. Tendering note holders consented to an amendment
to the indenture governing the notes, thereby eliminating a covenant
restriction on dividend payments, stock repurchases and other distributions to
stockholders. The transaction also involved payments totaling $.4 million to
non-tendering holders who consented to the indenture amendment, which deletes
restrictions on dividends and distributions. In 1991, an additional $12.3
million of these notes were repurchased on the open market. The 1991 premiums
paid and a pro rata portion of the associated unamortized costs of $9.9
million, net of applicable income tax benefits, were reported as an
extraordinary loss on early extinguishment of debt. During 1992, all
remaining amounts, of $33.6 million, of these notes were repurchased or
redeemed and cancelled by the Company. The premiums paid and a pro rata
portion of the associated unamortized costs of $1.6 million, net of the
applicable income tax benefits, were reported as an extraordinary loss on
early extinguishment of debt.
The Company entered into a new primary credit agreement which provided for a
$300.0 million term loan to be repaid over six years and a working capital
line of credit of $500.0 million. This primary credit agreement required the
Company to pledge certain of
68
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 20 (CONTINUED)
RECAPITALIZATION
its assets, including its material trademarks, and contains certain financial
and operating restrictions. During 1993, the primary credit agreement was
replaced with a new reducing revolving line of credit (SEE NOTE 6).
The Company repurchased 8,333,330 shares of Class F common stock (or
approximately 14 percent of the total outstanding common shares) at $54 per
share, for an aggregate purchase price of $450.0 million.
The Company issued 1,416,623 shares of Series B preferred stock at $54 per
share in exchange for the same number of shares of Class F common stock.
Subsequent to the recapitalization, all shares of Series B preferred stock
were redeemed and permanently retired during 1992 at $54 per share for an
aggregate of $76.5 million, plus accrued and unpaid dividends of $3.2 million.
Dividend distributions of $3.2 million and $1.5 million were paid in 1992 and
1991, respectively.
The Company issued shares of Class L common stock in exchange for all of the
remaining shares of Class F common stock. The Class L common stock is subject
to a new stockholders' agreement limiting transfers of the shares. The
agreement expires in April 2001.
The Company adopted a new non-qualified employee equity program (SEE NOTE 12).
The Company amended its Certificate of Incorporation (SEE NOTE 19).
NOTE 21
RELATED PARTIES
See Item 13, Other Transactions, for related parties information.
NOTE 22
SUBSEQUENT EVENTS
The Company adopted SFAS No. 106 and recorded a one-time, non-cash charge
against earnings of $402.3 million before taxes and $248.4 million after taxes
in the first quarter of 1994. (SEE NOTE 11 FOR ADDITIONAL INFORMATION.)
The Company adopted SFAS No. 109 and recorded a $11.4 million credit to net
income in the first quarter of 1994. (SEE NOTE 3 FOR ADDITIONAL INFORMATION.)
On December 15, 1993, the Company repaid its second series of dividend notes to
Class L stockholders for an aggregate amount of $18.0 million, plus interest
accrued of $.7 million. (SEE NOTE 6 FOR ADDITIONAL INFORMATION.)
69
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22 (CONTINUED)
SUBSEQUENT EVENTS
On December 15, 1993, the Company paid to Class E stockholders of record
dividends of $.55 per share, for an aggregate of $.7 million. (SEE NOTE 19 FOR
ADDITIONAL INFORMATION.)
During January 1994, the Company's employee investment plans, collectively,
purchased 42,048 shares of Class E common stock from the Company and the Company
contributed 36,449 matching shares before taxes to these plans. (SEE NOTE 12
FOR ADDITIONAL INFORMATION.)
70
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Levi Strauss Associates Inc.:
We have audited the accompanying consolidated balance sheets of Levi Strauss
Associates Inc. (a Delaware corporation) and Subsidiaries as of November 28,
1993 and November 29, 1992, and the related consolidated statements of income,
stockholders' equity and cash flows for the years ended November 28, 1993,
November 29, 1992 and November 24, 1991. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Levi Strauss Associates Inc.
and Subsidiaries as of November 28, 1993 and November 29, 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended November 28, 1993, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN & CO.
San Francisco, California,
January 20, 1994
71
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
72
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The table below identifies the current directors and executive officers of the
Company, along with their offices, positions and ages.
<TABLE>
<CAPTION>
NAME AGE OFFICE AND POSITION
- ---- --- -------------------
<S> <C> <C>
Walter A. Haas, Jr.(1)(2)...... 78 Director, Honorary Chairman of the
Board of Directors
Peter E. Haas, Sr.(1)(2)....... 75 Director, Chairman of the Executive
Committee of the Board of Directors
Robert D. Haas(1)(2)........... 51 Director, Chairman of the Board of
Directors and Chief Executive Officer
Thomas W. Tusher(2)............ 52 Director, President and Chief Operating
Officer
Angela Glover Blackwell(2)(3).. 48 Director (Effective February 9, 1994)
Tully M. Friedman(2)(3)........ 52 Director
James C. Gaither(2)(4)......... 56 Director
Rhoda H. Goldman(1)(2)(4)...... 69 Director
Peter E. Haas, Jr.(1)(2)....... 46 Director
F. Warren Hellman(3)(4)........ 59 Director
James M. Koshland(2)(3)........ 42 Director
Patricia Salas Pineda(3)(4).... 42 Director
Thomas J. Bauch................ 50 Senior Vice President, General Counsel
and Secretary
R. William Eaton, Jr........... 50 Senior Vice President, Chief Information
Officer
Donna J. Goya................. 46 Senior Vice President, Human Resources
Peter A. Jacobi............... 50 Senior Vice President, President of
Levi Strauss International
George B. James................ 56 Senior Vice President, Chief Financial
Officer
Robert D. Rockey, Jr.......... 52 Senior Vice President, President of
Levi Strauss North America
- ----------------
</TABLE>
(1) Robert D. Haas is the son of Walter A. Haas, Jr.; Walter A. Haas, Jr. is
the brother of Peter E. Haas, Sr. and Rhoda H. Goldman, and the uncle of
Peter E. Haas, Jr.
(2) Member, Corporate Ethics and Social Responsibility Committee
(3) Member, Audit Committee
(4) Member, Personnel Committee
Note: John F. Kilmartin retired December 5, 1993 and was replaced by Angela
Glover Blackwell.
Directors are divided into three classes of equal number. All directors are and
will be elected by holders of a majority of the outstanding shares of the
Company entitled to vote in the election of directors. Stockholders vote
separately for the election of directors in each class. The first class of
directors consists of Mr. R. D. Haas, Mrs. Goldman, Ms. Blackwell and Mr.
Friedman and the term of office expires at the 1996 annual meeting. The second
class consists of Mr. P.E. Haas, Jr., Mr. W. A. Haas, Jr., Mr. Hellman and Ms.
Pineda and the term of office expires at the 1994 annual meeting. The third
class consists of Mr. Tusher, Mr. P. E. Haas,
73
<PAGE>
Sr., Mr. Gaither and Mr. Koshland and the term of office expires at the 1995
annual meeting of stockholders.
Directors who are elected at an annual meeting of stockholders to succeed those
whose terms then expire will be identified as being directors of the same class
as those they succeed. Staggered board provisions result in the election of
only one-third of the Board at each annual meeting. This arrangement limits the
ability of a person holding enough stock to control the election process from
effecting a rapid change in board composition and therefore may have the effect
of delaying, deferring or preventing a change in control of the Company.
Executive officers serve at the discretion of the Board of Directors.
All members of the Haas family and Mrs. Goldman are direct descendants of the
founder of LS&CO., Levi Strauss.
WALTER A. HAAS, JR. became Honorary Chairman of the Board of LS&CO. and the
Company in 1985. He joined LS&CO. in 1939 and held the positions of President
from 1958 to 1970 and Chief Executive Officer from 1958 to 1976. He served as
Chairman of the Board from 1970 to 1981 and Chairman of the Executive Committee
from 1976 until 1985.
Mr. W.A. Haas, Jr. is a director of the National Parks Foundation and a trustee
of the Business Enterprise Trust. He was formerly a director of UAL, Inc.,
United Airlines, Inc., BankAmerica Corporation and Bank of America, NT & SA. He
was appointed to the National Commission on Public Service, is a former member
of the Citizens Commission on Private Philanthropy and Public Need, a former
member of the Trilateral Commission, a former trustee of the Ford Foundation and
has served on the Presidential Advisory Council for Minority Enterprise. Mr.
Haas is also owner and Managing General Partner of the Oakland Athletics.
PETER E. HAAS, SR. assumed his present position as Chairman of the Executive
Committee of the Board of Directors in March 1989 after serving as Chairman of
the Board of LS&CO. since 1981, and of the Company since 1985. He joined LS&CO.
in 1945 and became President in 1970 and Chief Executive Officer in 1976. He
has served on the Board of LS&CO. since 1948 and has been a director of the
Company since its inception in 1985.
Mr. P.E. Haas, Sr. is an Associate of the Smithsonian National Board and a
trustee and former Chairman of the Board of Trustees of the San Francisco
Foundation. He is a former director of the Northern California Grantmakers,
Crocker National Corporation and Crocker National Bank, and American Telephone
and Telegraph Co. He is a former President of the United Way of the Bay Area,
the Jewish Community Federation, Aid to Retarded Citizens and the Rosenberg
Foundation and a former member of the Board of Governors of the United Way of
America.
ROBERT D. HAAS assumed his present position as Chairman of the Board of
Directors of the Company and LS&CO. in March 1989. Since 1984, he has served as
Chief Executive Officer of the Company and LS&CO., and was President of the
Company from its inception in 1985 to March 1989. Since he joined LS&CO. in
1973, Mr. Haas served in a number of positions, including Marketing Director and
Group Vice President of LSI, Director of Corporate Marketing Development, Senior
Vice President of Corporate Planning and Policy and President of the New
Business Group. He became President of the Operating Groups in 1980 and was
named
74
<PAGE>
Executive Vice President and Chief Operating Officer in 1981. He was elected to
the LS&CO. Board of Directors in 1980 and has been a director of the Company
since its inception in 1985.
Mr. R.D. Haas is an active participant in business and community organizations
and is currently Chairman of the Board of Directors of the Levi Strauss
Foundation, a trustee of the Ford Foundation, an honorary trustee of the
Brookings Institution and an honorary director of the San Francisco AIDS
Foundation. He is also a member of the Conference Board, the Council on Foreign
Relations, the Trilateral Commission, the Bay Area Council and the California
Business Roundtable.
THOMAS W. TUSHER, President and Chief Operating Officer, joined LS&CO. in 1969,
was elected Executive Vice President and Chief Operating Officer in 1984 and
became President and a director of the Company in March 1989. He previously
served as President of the Europe Division, Executive Vice President of the
International Group and was appointed President of LSI in 1980. He was elected
a Vice President of LS&CO. in 1976 and a Senior Vice President in 1977 and was a
director of LS&CO. from 1979 until 1985.
Mr. Tusher is a director of Cakebread Cellars and a former director of Great
Western Financial Corporation and the San Francisco Chamber of Commerce. He is
a member and former Chairman of the Walter A. Haas School of Business Advisory
Board, University of California, Berkeley, a member of the Bay Area Sports Hall
of Fame Committee and a member of the Board of Trustees of the World Affairs
Council.
ANGELA GLOVER BLACKWELL, elected to the Board in February 1994, is the founder
and executive director of Urban Strategies Council, established in 1987.
Previously, she served as staff attorney and managing attorney for Public
Advocates, Inc. Ms. Blackwell serves on the boards of the James Irvine
Foundation, Children Now, the Center on Budget and Policy Priorities,
Public/Private Ventures and Common Cause, the Foundation for Child Development
and the Urban Institute. She also co-chairs the Commission for Positive Change
in the Oakland Public Schools.
TULLY M. FRIEDMAN, a director since 1985, has been a managing partner of the
private investment firm of Hellman & Friedman since its inception in 1984. From
1979 until 1984, he was a general partner and, later, managing director of
Salomon Brothers Inc. Currently, he is a director of Mattel, Inc., McKesson
Corporation and General Cellular Corporation. He is a member of the Advisory
Committee of Falcon Cable TV, a trustee and member of the Executive Committee of
the American Enterprise Institute, a director of Stanford Management Company,
and a member of the Presidio Advisory Council. He is a former President of the
San Francisco Opera Association and a former Chairman of Mount Zion Hospital and
Medical Center.
JAMES C. GAITHER, a director since April 1988, is a partner of the law firm of
Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, California. Prior to
beginning his law practice with the firm in 1969, he served as law clerk to the
Honorable Earl Warren, Chief Justice of the United States, Special Assistant to
the Assistant Attorney General in the U.S. Department of Justice and Staff
Assistant to the President of the United States, Lyndon B. Johnson. Mr. Gaither
is the former President of the Board of Trustees at Stanford University and is a
member of the Board of Trustees and executive committees for the Carnegie
75
<PAGE>
Endowment for International Peace and for The RAND Corporation. He was formerly
Chairman of the Board of Trustees for the Center for Biotechnology Research and
has served as Chairman of the Board of many educational and philanthropic
organizations in the San Francisco Bay Area. Mr. Gaither is currently a
director of Basic American Inc., the James Irvine Foundation and has served as a
director of several other public and private companies.
RHODA H. GOLDMAN, a director since 1985, devotes substantial time to public
service. She is a current director of Mount Zion Health Systems and a former
trustee of Mount Zion Medical Center of the University of California, San
Francisco, a member of the Board of Directors of the San Francisco Symphony, the
Goldman Environmental Foundation, the Walter A. Haas School of Business Advisory
Board, University of California, Berkeley, the ARCS Foundation and the Levi
Strauss Foundation. She is past President of Congregation Emanu-El, San
Francisco. Additionally, she is Chairperson of the Stern Grove Festival
Association and has served as Chairperson of the Distribution Committee of the
San Francisco Foundation and the Mayor's Holocaust Memorial Committee.
PETER E. HAAS, JR., a director since 1985, joined LS&CO. in 1972 as Director of
the Minority Purchasing Program. He later transferred to LSI, where he held the
positions of Manager of Financial Analysis, Inventory Planning Manager and
General Merchandising Manager. He became a Vice President and General Manager
in the Menswear Division in 1980, Director of Materials Management for Levi
Strauss USA in 1982 and was Director of Product Integrity of The Jeans Company
from 1984 to February 1989. Mr. P.E. Haas, Jr. is President of the Board of
Trustees of Marin Academy and President of the Board of Directors of the Red Tab
Foundation. Additionally, he is director of the following Boards: Vassar
College, Levi Strauss Foundation, Novato Youth Center (former President) and
North Bay Bancorp.
F. WARREN HELLMAN, a director since 1985, has been a general partner of the
private investment firm of Hellman & Friedman since its inception in 1984.
Previously, he was Managing Director of Lehman Brothers Kuhn Loeb, Inc. Mr.
Hellman is currently a director of American President Companies, Ltd., Williams-
Sonoma, Inc., Franklin Resources, Inc., Il Fornaio America Corporation, DN&E
Walter Co., Children Now, Eagle Industries, Inc., Great America Management &
Investment, Inc., Basic American Inc., The California Higher Education Policy
Center and University of California San Francisco (UCSF) Foundation. He is a
trustee of the Brookings Institution, a member of the University of California
Berkeley Foundation and Honorary Lifetime Trustee of Mills College.
JAMES M. KOSHLAND, a director since 1985, is a partner of the law firm of Gray
Cary Ware & Freidenrich, a Professional Corporation, Palo Alto, California, with
which he has been associated since 1978. He is also a director of the Giarretto
Institute, the Newhouse Foundation and the Senior Coordinating Council of the
Palo Alto area.
PATRICIA SALAS PINEDA, a director since 1991, is General Counsel and Assistant
Corporate Secretary of New United Motor Manufacturing, Inc., with which she has
been associated since 1984. She is currently a trustee of Mills College and a
former trustee of the San Francisco Ballet Association. She was formerly a
member and served as President of the Port of Oakland Commission and was a
former member of the KQED, Inc. Board of Directors and Alameda County Hazardous
Waste Authority Committee.
76
<PAGE>
THOMAS J. BAUCH, Senior Vice President, General Counsel and Secretary, joined
LS&CO. in 1977. He was named General Counsel in 1981, elected a Vice President
of LS&CO. in 1982 and assumed his current position as Senior Vice President in
1985. Mr. Bauch serves on the Board of Governors of the Commonwealth Club and
the Board of Visitors of the University of Wisconsin Law School. He has served
on the Board of Directors of the Urban School of San Francisco and as a legal
advisor to the City of Belvedere. He is a member of various bar and legal
associations.
R. WILLIAM EATON, JR., Senior Vice President and Chief Information Officer,
joined LS&CO. in 1978. He became Vice President for Information Resources of
LSI in 1983, was elected a Vice President of LS&CO. in 1986, was named Chief
Information Officer in 1988 and assumed his current position of Senior Vice
President in February 1989. Mr. Eaton is a member of the Commonwealth Club and
the King's Mountain Community Association.
DONNA J. GOYA, Senior Vice President, Human Resources, joined LS&CO. in 1970 and
became the Director of Equal Employment Opportunity and Personnel Policy in
1980. She became Director of Employee Relations and Policy in 1983 and Vice
President of Corporate Personnel in 1984. She was elected a Senior Vice
President in 1986. Ms. Goya is a director of the Federated Employers
Association of the Bay Area and of INROADS and is a member of the Human
Resources Roundtable.
PETER A. JACOBI, President of Levi Strauss International, joined the Company in
1970 and was named President of the Youthwear Division in 1981. In 1984, he
became Executive Vice President of the Jeans Company and was subsequently named
President of the Men's Jeans Division. Mr. Jacobi became President of the
European Division of LSI in 1988. In 1991, he assumed the position of President
of Global Sourcing and was elected Senior Vice President. In 1993, he assumed
his current position. Mr. Jacobi is past President of the South-West Apparel
and Textile Manufacturers Association and also served on the Board of Directors
for the Men's Fashion Association. He is a member of the Board of Directors of
the Textile/Clothing Technology Corporation.
GEORGE B. JAMES, Senior Vice President and Chief Financial Officer, joined the
Company and LS&CO. in 1985. From 1984 to 1985, he was Executive Vice President
and Group President of Crown Zellerbach Corporation and from 1982 to 1984, he
held the position of Executive Vice President and Chief Financial Officer of
Crown Zellerbach Corporation. From 1972 to 1982, he was Senior Vice President
and Chief Financial Officer of Arcata Corporation. Mr. James is a director of
Basic Vegetable Products, Inc., Fiberboard Corp., the Stanford University
Hospital and the San Francisco Chamber of Commerce. In addition, he is a
trustee of the San Francisco Ballet Association and serves as trustee for the
Stern Grove Festival Association and the Zellerbach Family Fund.
ROBERT D. ROCKEY, JR., President of Levi Strauss North America, joined LS&CO. in
1979 and became President of the Womenswear Division in 1983. In 1984, he was
named President of the Europe Division of LSI and, in 1988, he was appointed
President of the Men's Jeans Division. During 1991, Mr. Rockey became President
of U.S. Marketing Divisions and later was elected Senior Vice President. In
1992, he assumed the position of President of Levi
77
<PAGE>
Strauss North America. Mr. Rockey is a director and former President of the
South-West Apparel and Textile Manufacturers Association.
INSIDER REPORT FILINGS
The Company's executive officers and directors are not obligated, under Section
16(a) of the Securities Exchange Act of 1934, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission.
78
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ITEM 11. DIRECTOR AND EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors of the Company who are also stockholders or employees of the Company
do not receive any additional compensation for their services as director.
Directors who are not stockholders or employees [Messrs. Kilmartin (before his
retirement effective December 5, 1993) and Gaither and Mss. Blackwell and
Pineda] receive approximately $36,000 in annual compensation during each of
their first five years of service and, beginning in their sixth year of service,
are expected to receive annual compensation of approximately $42,000. Such
payments include an annual cash retainer of $30,000 for each of the first three
years, $20,000 for the fourth year, $10,000 for the fifth year, and $6,000
thereafter, fees of $500 per Board and Board committee meeting attended and
award payments under the Company's Long-Term Performance Plan ("LTPP"). The
amount of each type of payment varies depending on the year of service and the
actual value of the LTPP units. Messrs. Gaither and Kilmartin and Ms. Pineda
each received grants of 350 performance units under the LTPP in 1993. In 1993,
Messrs. Gaither and Kilmartin each received payments under the LTPP of $98,913.
Directors who are not employees or stockholders also receive travel accident
insurance while on Company business and are eligible to participate in a
deferred compensation plan. (SEE LTPP AND DEFERRED COMPENSATION PLAN CAPTIONS.)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
F. Warren Hellman and Tully M. Friedman, directors of the Company, are general
partners of Hellman & Friedman, an investment banking firm. Hellman & Friedman
provides financial advisory services to the Company and received $300,205 for
such services in 1993. At November 28, 1993 Messrs. Hellman and Friedman and
their families and other partners of Hellman & Friedman beneficially owned an
aggregate of 1,081,442 shares of Class L common stock. See Item 12, Security
Ownership of Certain Beneficial Owners and Management, for additional
information concerning Mr. Hellman's and Mr. Friedman's beneficial ownership of
Class L common stock.
79
<PAGE>
SUMMARY COMPENSATION TABLE FOR EXECUTIVE OFFICERS
The following table sets forth summary compensation information for 1993, 1992
and 1991 for each of the five most highly compensated executive officers of the
Company:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------- ---------- ------------
SECURITIES
OTHER UNDERLYING ALL
NAME AND ANNUAL SARS LTIP OTHER
PRINCIPAL POSITION YEAR(1) SALARY BONUS(2) COMPENSATION(3) (#)(4) PAYOUTS(5) COMPENSATION(6)
- ---------------------------- --------- -------- ---------- ----------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Haas 1993 $998,460 $1,162,795 $ -- -- $506,667 $871,060
Chairman of the Board and 1992 938,278 1,082,711 1,866,375 -- -- 625,014
Chief Executive Officer 1991 833,666 976,693 185,638 -- -- 272,200
Thomas W. Tusher 1993 680,056 677,063 -- -- 944,985 624,510
President, Chief Operating 1992 647,093 642,003 -- -- 626,970 480,384
Officer 1991 588,467 609,677 126,253 -- 287,188 217,861
George B. James 1993 369,292 313,231 -- -- 481,539 160,633
Senior Vice President, 1992 352,463 287,650 965,538 -- 355,935 107,172
Chief Financial Officer 1991 328,745 268,006 212,100 -- 183,053 30,487
Robert D. Rockey, Jr. 1993 354,959 317,724 -- -- 432,805 179,570
Senior Vice President, 1992 314,149 297,493 156,539 25,000 368,571 135,028
President of Levi Strauss 1991 265,827 240,724 66,761 -- 209,576 44,169
North America
Peter A. Jacobi 1993 311,692 281,413 -- -- 453,071 163,712
Senior Vice President, 1992 296,593 251,797 179,883 25,000 368,571 138,755
President of Levi Strauss 1991 265,457 225,664 -- -- 209,576 52,415
International
- --------------------
</TABLE>
(1) Fiscal 1993 and 1991 each contained 52 weeks. Fiscal year 1992 contained
53 weeks.
(2) Bonuses are paid pursuant to the Company's Management Incentive Plan
("MIP") and Interim Cash Performance Sharing Plan. The bonuses include
amounts based upon 1993, 1992 and 1991 performance that will be or were paid
in 1994, 1993 and 1992, respectively (SEE MANAGEMENT INCENTIVE PLAN AND HOME
OFFICE CASH PERFORMANCE SHARING PLAN CAPTIONS). Amounts paid to Mr. Haas
relating to MIP bonuses were $1,010,000, $935,000 and $850,000 for 1993,
1992 and 1991, respectively. Amounts paid to Mr. Haas relating to Interim
Cash bonuses were $152,795, $147,711 and $126,693 for 1993, 1992 and 1991,
respectively. Amounts paid to Mr. Tusher relating to MIP bonuses were
$580,000, $545,000, and $525,000 for 1993, 1992 and 1991, respectively.
Amounts paid to Mr. Tusher relating to Interim Cash bonuses were $97,063,
$97,003 and $84,677 for 1993, 1992 and 1991, respectively. Amounts paid to
Mr. James relating to MIP bonuses were $265,000, $240,000 and $225,000 for
1993, 1992 and 1991, respectively. Amounts paid to Mr. James relating to
Interim Cash bonuses were $48,231, $47,650 and $43,006 for 1993, 1992 and
1991, respectively. Amounts paid to Mr. Rockey, Jr. relating to MIP bonuses
were $271,188, $254,651 and $209,241 for 1993, 1992 and 1991, respectively.
Amounts paid to Mr. Rockey, Jr. relating to Interim Cash bonuses were
$46,536, $42,842 and $31,483 for 1993, 1992 and 1991, respectively. Amounts
paid to Mr. Jacobi relating to MIP bonuses were $240,043, $211,449 and
$190,828 for 1993, 1992 and 1991, respectively. Amounts paid to Mr. Jacobi
relating to Interim Cash bonuses were $41,370, $40,348 and $34,836 for 1993,
1992 and 1991, respectively.
(3) Other annual compensation represents partial tax reimbursement cash
bonuses related to certain stock option exercises under the 1985 Stock
Option Plan (SEE 1985 STOCK OPTION PLAN CAPTION).
(4) See detail table under 1992 Stock Appreciation Rights Plan section.
(5) Amounts are paid pursuant to the Company's Long-Term Performance Plan
("LTPP"). The LTPP amounts shown in the table include amounts based on LTPP
units granted in 1988, 1989 and 1990 that were paid in 1991, 1992 and 1993
or deferred to later years (SEE LTPP CAPTION).
80
<PAGE>
(6) All other compensation consists of amounts contributed under employee
investment plans (ESAP in 1993 and 1992 and EIP in 1991 - SEE EMPLOYEE
INVESTMENT PLAN CAPTION) and amounts contributed under the Company's Benefit
Restoration Plan (BRP). The Internal Revenue Code (the "Code") limits the
amount of benefits that may be paid under plans qualified by the Code. The
BRP will pay any benefits that exceed such limitations. Amounts contributed
to Mr. Haas relating to ESAP/EIP were $155,958, $148,646 and $0 for 1993,
1992 and 1991, respectively. Amounts contributed to Mr. Haas relating to
BRP were $715,102, $476,368 and $272,200 for 1993, 1992 and 1991,
respectively. Amounts contributed to Mr. Tusher relating to ESAP/EIP were
$99,054, $108,868 and $0 for 1993, 1992 and 1991, respectively. Amounts
contributed to Mr. Tusher relating to BRP were $525,456, $371,516 and
$217,861 for 1993, 1992 and 1991, respectively. Amounts contributed to Mr.
James relating to ESAP/EIP were $49,140, $54,876 and $0 for 1993, 1992 and
1991, respectively. Amounts contributed to Mr. James relating to BRP were
$111,493, $52,296 and $30,487 for 1993, 1992 and 1991, respectively.
Amounts contributed to Mr. Rockey, Jr. relating to ESAP/EIP were $47,424,
$47,420 and $0 for 1993, 1992 and 1991, respectively. Amounts contributed
to Mr. Rockey, Jr. relating to BRP were $132,146, $87,608 and $44,169 for
1993, 1992 and 1991, respectively. Amounts contributed to Mr. Jacobi
relating to ESAP/EIP were $42,072, $34,746 and $0 for 1993, 1992 and 1991,
respectively. Amounts contributed to Mr. Jacobi relating to BRP were
$121,640, $104,009 and $52,415 for 1993, 1992 and 1991, respectively.
STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1985 STOCK OPTION PLAN
In 1985, the Board of Directors of the Company adopted the 1985 Stock Option
Plan (the "1985 Plan"). The 1985 Plan is administered by the Personnel
Committee of the Board of Directors (the "Administrator"). A total of 5,000,000
shares of Class L common stock (previously Class F common stock, SEE NOTE 20 TO
THE CONSOLIDATED FINANCIAL STATEMENTS) may be issued upon exercise of options
under the 1985 Plan to eligible employees or non-employee directors of the
Company selected by the Board. Options granted under the 1985 Plan are non-
qualified stock options and expire ten years from the date of grant. The Board
or the Administrator determines the exercise price, exercise schedule, the
manner in which payment occurs and any provision for a cash bonus to be paid at
or about the time of exercise of the option. In addition the administrator
retains discretion, subject to plan limits, to modify the terms (e.g.,
acceleration or elimination of vesting requirements of outstanding options).
There were no option grants during 1993.
In 1992, the Board of Directors approved a special payment arrangement under the
Plan to facilitate the exercise by optionholders of their outstanding options.
This arrangement accelerated vesting on all non-vested options and allowed each
optionholder to exercise outstanding options by surrendering a portion of these
outstanding options in full payment of the exercise price and related tax
obligations. Holders of 65 percent of all outstanding options participated in
this arrangement. The special arrangement required the recognition of a fiscal
1992 pre-tax stock option charge of $158.0 million for all outstanding options
(the amount equal to the difference between the fair market value of the
underlying shares at the exercise date and at the grant date). Separately, the
Company also recognized compensation expense for related exercise bonuses and
the accelerated use of presently non-vested options. The Company disbursed
$41.9 million to pay related withholding taxes for optionholders (in exchange
for an equal amount of surrendered options) and $4.4 million for related
exercise bonuses. The optionholders participating in this arrangement exercised
925,123 options resulting in 532,368 reissued treasury shares of Class L common
stock. The Company also retired 392,755 shares of treasury stock, which was
equal to the number of options surrendered. The net change in Stockholders'
Equity (including the after-tax effect of the stock option charge) was an
increase of $9.2 million. SEE NOTE 16 TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR ADDITIONAL STOCK OPTION PLAN INFORMATION.
81
<PAGE>
1992 STOCK APPRECIATION RIGHTS PLAN
In 1992, the Board of Directors of the Company adopted the 1992 Executive Stock
Appreciation Rights Plan of Levi Strauss Associates Inc. The purpose of the
1992 Executive Stock Appreciation Rights Plan is to attract, retain, motivate
and reward certain executives by giving them an opportunity to participate in
the future success of the Company. The "stock appreciation rights" (SARs), are
tied to and based on changes in the value of the Company's Class E common stock
(Class E common stock is appraised, usually twice a year, by an independent
investment banking firm). Upon exercise, the holder is entitled to receive a
cash payment from the Company equal to the difference in the fair market value
of stock on grant date and exercise date, less related tax withholding. A total
of 500,000 rights may be granted under this plan. SARs awarded under the
Company's plan may not be transferred.
The plan is administered by a committee of at least two members of the Board of
Directors of the Company who are disinterested persons. The administrative
committee for SARs determines the initial values of the SARs, the exercise
schedule and any other terms or conditions applicable to the SARs that may be
appropriate. In addition, the administrative committee retains discretion,
subject to plan limits, to modify the terms (e.g., acceleration or elimination
of vesting requirements) of SARs.
The 1992 grant of SARs vest and become exercisable over several years commencing
in 1995. One-third of these SARs will be exercisable in 1995, one-third in 1996
and the remaining third in 1997. There were no SAR grants during 1993.
82
<PAGE>
The following table presents information for the year ended November 28, 1993
regarding aggregated options/SARs of executive officers of the Company listed in
the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------
NUMBER OF DOLLAR VALUE
SECURITIES OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
NUMBER OF AT YEAR-END AT YEAR-END
SHARES ------------- ---------------
NAME AND ACQUIRED DOLLAR VALUE EXERCISABLE/ EXERCISABLE/
PRINCIPAL POSITION ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Robert D. Haas -- -- -- --
Chairman of the Board and
Chief Executive Officer
Thomas W. Tusher -- -- 499,749/ -- $55,222,265/ --
President, Chief Operating
Officer
George B. James -- -- -- --
Senior Vice President,
Chief Financial Officer
Robert D. Rockey, Jr. -- -- -- /25,000 -- /$750,000
Senior Vice President,
President of Levi Strauss
North America
Peter A. Jacobi -- -- -- /25,000 -- /$750,000
Senior Vice President,
President of Levi Strauss
International
</TABLE>
LONG-TERM PERFORMANCE PLAN
The Company has a Long-Term Performance Plan ("LTPP") for outside directors,
officers and other key employees, under which performance units are granted to
each participant. The value assigned to each unit is determined at the
discretion of the Personnel Committee of the Board of Directors. The
performance unit value guidelines selected by the Personnel Committee with
respect to existing grants are based on the Company's three-year cumulative net
earnings before tax. Under such guidelines (which are subject to change by the
Personnel Committee), the current forecast value of the units granted in 1993,
1992 and 1991 is $128, $144 and $292 per unit, respectively. The units vest and
are paid in cash in one-third increments on the third, fourth and fifth
anniversaries of the date of grant or the amounts can be deferred at the
election of the participant.
83
<PAGE>
The following table sets forth information relating to Long-Term Performance
Plan units granted in 1993 for the executive officers of the Company listed in
the Summary Compensation Table:
<TABLE>
<CAPTION>
LONG-TERM PERFORMANCE PLAN - AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------
ESTIMATED FUTURE
PAYMENTS
UNDER NON-STOCK
PRICE-BASED PLANS(3)(4)
-----------------------
PERFORMANCE OR
NUMBER OTHER PERIOD
NAME AND OF UNITS UNTIL MATURATION DOLLAR DOLLAR
PRINCIPAL POSITION GRANTED(1) OR PAYOUT(2) THRESHOLD TARGET
- ----------------------------- ------------ ---------------- --------- ----------
<S> <C> <C> <C> <C>
Robert D. Haas 11,800 3-5 years $0 $1,180,000
Chairman of the Board and
Chief Executive Officer
Thomas W. Tusher 6,675 3-5 years 0 667,500
President, Chief Operating
Officer
George B. James 2,450 3-5 years 0 245,000
Senior Vice President,
Chief Financial Officer
Robert D. Rockey, Jr. 2,700 3-5 years 0 270,000
Senior Vice President,
President of Levi Strauss
North America
Peter A. Jacobi 2,500 3-5 years 0 250,000
Senior Vice President,
President of Levi Strauss
International
</TABLE>
_________________
(1) The basis for measuring long-term performance is a corporate three-year
cumulative earnings performance calculation (e.g., an internal calculation
of earnings from operations).
(2) The units vest in three years and are paid out in cash in one-third
increments payable in June 1996, June 1997 and June 1998.
(3) Each LTPP unit is valued at $100.00 if the Company achieves a target level
of corporate earnings performance over a three-year period. Performance
above target levels will produce increases in award values. There is no
cap on the award value; however, the award formula is directly related to
the Company's earnings performance.
(4) Under the terms of the Company's LTPP, the Personnel Committee retains
discretion, subject to plan limits, to modify the terms of outstanding
awards to take into account the effect of unforeseen or extraordinary
events and accounting changes.
MANAGEMENT INCENTIVE PLAN
The Company's Management Incentive Plan ("MIP") provides selected employees with
incentive compensation and provides a tool for recruiting and retaining selected
employees. Under the MIP, the Personnel Committee of the Board of Directors, as
administrator of the MIP, may
84
<PAGE>
award discretionary cash payments to selected employees. Such awards are made on
the basis of various factors, including profit levels, return on investment,
salary grade and individual performance.
HOME OFFICE INTERIM CASH PERFORMANCE SHARING PLAN
The Company has an Interim Cash Performance Sharing Plan for all Home Office
payroll employees that pays out based on a percentage of base salary and certain
Company earnings criteria. This interim cash plan was a transition program for
1991 and 1992 and has been extended to 1994. Participants in the MIP can
receive up to 8 percent, while other Home Office employees can receive up to 12
percent, of their covered compensation (fiscal year salary and non-LTPP bonus)
under the plan.
DEFERRED COMPENSATION PLAN
The Company has an unfunded Deferred Compensation Plan under which a selected
group of employees may elect to defer receipt until termination of employment of
up to 33 percent of their base salary and 100 percent of their bonus. The
amounts deferred under this plan, plus interest, may be paid prior to
termination in certain circumstances specified in the plan. When electing to
defer a bonus, eligible employees in certain salary grades may also elect to
receive in-service payments of the deferred bonus in five annual installments.
The Company also maintains a similar deferred compensation plan for outside
directors.
BENEFIT PLANS
HOME OFFICE PENSION PLAN
Generally, all Home Office payroll employees, including executive officers,
participate in the Company's Home Office Pension Plan (the "Pension Plan") after
completing one year of service. The Pension Plan, subject to Internal Revenue
Service (IRS) limitations, provides pension benefits based on an individual's
years of service and final average covered compensation (generally, base salary
plus bonuses awarded, not exceeding one half of salary, for the five consecutive
fiscal years out of the individual's last ten years of service that produces the
highest average). Contributions by the Company to the Pension Plan cannot be
separately calculated for individual executive officers.
85
<PAGE>
The following table shows the estimated annual benefits payable upon retirement
under the Pension Plan and the Benefit Restoration Plan to persons in various
compensation and years-of-service classifications prior to mandatory offset of
Social Security benefits:
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
YEARS OF SERVICE
------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 525,000 $157,500 $210,000 $ 262,500 $ 269,063 $ 275,625
600,000 180,000 240,000 300,000 307,500 315,000
675,000 202,500 270,000 337,500 345,938 354,375
750,000 225,000 300,000 375,000 384,375 393,750
825,000 247,500 330,000 412,500 422,813 433,125
900,000 270,000 360,000 450,000 461,250 472,500
975,000 292,500 390,000 487,500 499,688 511,875
1,050,000 315,000 420,000 525,000 538,125 551,250
1,125,000 337,500 450,000 562,500 576,563 590,625
1,200,000 360,000 480,000 600,000 615,000 630,000
1,275,000 382,500 510,000 637,500 653,438 669,375
1,350,000 405,000 540,000 675,000 691,875 708,750
1,425,000 427,500 570,000 712,500 730,313 748,125
1,500,000 450,000 600,000 750,000 768,750 787,500
1,575,000 472,500 630,000 787,500 807,188 826,875
1,650,000 495,000 660,000 825,000 845,625 866,250
1,725,000 517,500 690,000 862,500 884,063 905,625
1,800,000 540,000 720,000 900,000 922,500 945,000
1,875,000 562,500 750,000 937,500 960,938 984,375
1,950,000 585,000 780,000 975,000 999,375 1,023,750
2,025,000 607,500 810,000 1,012,500 1,037,813 1,063,125
2,100,000 630,000 840,000 1,050,000 1,076,250 1,102,500
2,175,000 652,500 870,000 1,087,500 1,114,688 1,141,875
- ------------------
</TABLE>
The preceding table assumes retirement at the age of 65, with payment to the
employee in the form of a single-life annuity. As of year-end 1993, the
credited years of service for Messrs. R.D. Haas, Tusher, James, Rockey, Jr. and
Jacobi were 20, 24, 8, 14 and 23, respectively. The 1993 compensation covered
by the Pension Plan for Messrs. R.D. Haas, Tusher, James, Rockey, Jr. and Jacobi
was $2,081,171, $1,113,938, $535,880, $633,849, and $563,489, respectively. The
1993 compensation covered by the Pension Plan consists of fiscal year 1993 cash
salary and bonus (not including LTPP). These amounts do not correspond to the
amounts on the Summary Compensation table because the covered compensation
amounts are based on actual cash paid during 1993 and do not include deferred
salary (SEE SUMMARY COMPENSATION TABLE CAPTION).
The Code limits the amount of pension benefits that may be paid under plans
qualified under the Code such as the Pension Plan. The Company maintains a
separate unfunded Benefit Restoration Plan (SEE THE BENEFIT RESTORATION PLAN
CAPTION) that will pay any retirement benefits under the Pension Plan that
exceed such limitations. The five individuals named in the Summary Compensation
Table are participants in the Benefit Restoration Plan.
The Company has unfunded supplemental pension agreements with Messrs. Tusher and
James which provide specific benefits upon retirement. The cost to the Company
in 1993 of the agreements for Messrs. Tusher and James was $359,200 and $27,600,
respectively.
86
<PAGE>
BENEFIT RESTORATION PLAN
The Company has an unfunded Benefit Restoration Plan (the "BRP") that provides
eligible employees with benefits that would have been payable from tax-qualified
plans of the Company except for limitations imposed on such benefits under the
Internal Revenue Code (the "Code"). The BRP also provides for the deferral of
an eligible employee's current compensation to the extent that such compensation
cannot be contributed to the Company's investment plans, due to these
limitations, and the restoration of Company matching contributions that could
not be credited under those plans as a result. All employees who are subject to
such limitations are eligible to participate in the BRP. The BRP is
administered by the Administrative Committee of the Retirement Plans.
EMPLOYEE INVESTMENT PLANS
The Company maintains three employee investment plans. Two of these plans, the
Employee Investment Plan of Levi Strauss Associates Inc. (EIP) and the Levi
Strauss Associates Inc. Employee Long-Term Investment and Savings Plan (ELTIS),
are qualified plans that cover Home Office employees and U.S. field employees,
respectively. The third plan, the Employee Stock Purchase and Stock Award Plan
of Levi Strauss Associates Inc. (ESAP) is a non-qualified employee equity
program for highly compensated (as defined by the Code) Home Office employees.
Effective December 1990, highly compensated employees were no longer eligible to
contribute to the EIP due to amendments to the EIP, which were made to comply
with certain changes to the Code. The ESAP commenced in 1992 to allow highly
compensated employees to participate in equity ownership.
The ESAP is administered by the Personnel Committee of the Board of Directors.
The Pension Plan and the EIP are administered by the Administrative Committee of
the Retirement Plans of the Company. The Personnel Committee has delegated most
of its routine administrative functions to the Administrative Committee and to
the Employee Benefits Department. The Administrative Committee is appointed by
the Board of Directors and has the general responsibility for the administration
and operation of the plans, including compliance with reporting and disclosure
requirements, establishing and maintaining plan records and determining and
authorizing payments of benefits under the plans.
The qualified plans also established an Investment Committee appointed by the
Board of Directors. The Investment Committee's duties and responsibilities
include (i) reviewing the performance of the trustee under the plans; (ii)
appointing, removing and reviewing the performance of investment managers who
may be delegated the authority to manage plan assets; (iii) establishing
investment standards and policies based upon the objectives of the plans as
communicated by the Administrative Committee; and (iv) performing such other
functions as are specifically assigned to the Investment Committee under the
plans.
The foregoing descriptions of the Company's benefit plans and agreements are
only summaries and are qualified in their entirety by reference to such
agreements and plans.
ADDITIONAL INFORMATION ABOUT CERTAIN COMPANY EMPLOYEE PLANS IS CONTAINED IN
NOTES 12 THROUGH 16 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
87
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 10, 1994, certain information with
regard to the beneficial ownership of Class L common stock and Class E common
stock by each person who beneficially owns more than 5 percent of these
outstanding shares, each of the directors, each of the five most highly
compensated executive officers and all directors and executive officers of the
Company as a group. The business address of all persons listed is 1155 Battery
Street, San Francisco, California 94111.
<TABLE>
<CAPTION>
ADDITIONAL NUMBER
OF SHARES IN WHICH
VOTING RIGHTS OR
NAME OF INDIVIDUAL INVESTMENT POWERS PERCENTAGE
OR NUMBER OF NUMBER OF EXIST OR MAY BE OF SHARES
PERSONS IN GROUP SHARES OWNED DEEMED TO EXIST TOTAL OUTSTANDING(1)
- ------------------------ ------------ ------------------ ---------- ---------------
<S> <C> <C> <C> <C>
Robert D. Haas 3,807,182(2) 390,130(3) 4,197,312 7.98
Thomas W. Tusher 95,305(4) 499,749(5) 595,054 1.13
Peter E. Haas, Sr. 8,754,426(6) 2,961,967(7) 11,716,393 22.27
Walter A. Haas, Jr. 3,743,444 600,000(8) 4,343,444 8.26
Tully M. Friedman 352,100(9) 90,000(10) 442,100 --
James C. Gaither -- -- -- --
Rhoda H. Goldman 3,740,257(11) -- 3,740,257 7.11
Peter E. Haas, Jr. 4,493,448(12) 11,709(13) 4,505,157 8.56
F. Warren Hellman 574,742(14) 402,000(15) 976,742 1.86
John F. Kilmartin(16) -- -- -- --
James M. Koshland(17) 45,000 96,000(18) 141,000 --
Patricia S. Pineda -- -- -- --
Frances K. Geballe 2,746,960(19) -- 2,746,960 5.22
Josephine B. Haas 3,467,424(20) 2,225,534(21) 5,692,958 10.82
Miriam L. Haas 3,000,200(22) -- 3,000,200 5.70
Margaret E. Jones 2,895,710(23) -- 2,895,710 5.50
Daniel E. Koshland, Jr. 2,865,744 152(24) 2,865,896 5.45
Peter A. Jacobi 29,518 -- 29,518 --
George B. James 97,910 -- 97,910 --
Robert D. Rockey, Jr. 17,283 -- 17,283 --
Directors and executive
officers of the
Company as a group
(18 persons)(25) 25,887,145 5,051,555 30,938,780 58.81
- -----------
</TABLE>
Note: Class E common stock represents 2 percent of all outstanding common stock.
Employees of the Company may invest in Class E common stock under the
Company's employee investment plans. The Boston Safe Deposit and Trust
Company, trustee for the Company's qualified stock investment plans, holds
approximately 75 percent of all outstanding Class E common stock. The
business address for the Boston Safe Deposit and Trust Company is 1 Cabot
Road, Mail Zone WTO4G, Medford, Massachusetts, 02155-5158. SEE EMPLOYEE
INVESTMENT PLAN CAPTION UNDER ITEM 11.
(1) The percentage of shares outstanding is not shown for those amounting to
less than one percent.
(2) Includes 526,286 shares owned by the spouse and daughter of Mr. Haas and
by trusts for the benefit of his daughter. Mr. Haas disclaims beneficial
ownership of such shares.
88
<PAGE>
(3) Mr. Haas, as trustee, has sole voting and investing power with respect to
these shares. These shares are held by a trust for the benefit of Mr.
Haas' nieces and nephews. Mr. Haas disclaims beneficial ownership of such
shares.
(4) Does not include 158,996 shares held by a trust for the benefit of the sons
of Mr. Tusher. Mr. Tusher has neither voting nor investing powers with
respect to such shares.
(5) Represents shares subject to presently exercisable options.
(6) Does not include 3,000,200 shares owned by Miriam L. Haas, the spouse of
Mr. Haas. Mr. Haas disclaims beneficial ownership of such shares.
(7) Includes 2,903,167 shares in which Mrs. Josephine B. Haas has sole
investing power and Mr. Haas has sole voting rights; and 58,800 shares held
in trusts for the benefit of his grandnieces and grand nephew in which Mr.
Haas has sole voting and investing power. Mr. Haas disclaims beneficial
ownership of such shares.
(8) Represents shares owned by the Evelyn and Walter Haas, Jr. Fund in which
Mr. Haas has shared voting and investing powers.
(9) Does not include 4,600 shares held by a trust for the benefit of Mr.
Friedman's stepson. Mr. Friedman does not have voting or investing powers
with respect to such shares and disclaims beneficial ownership of such
shares.
(10) Represents shares in which Mr. Friedman has sole voting and investing
powers. These shares are held by the Friedman Family Partnership for the
benefit of Mr. Friedman's daughter and stepson and Cherry Street Partners
for the benefit of Mr. Friedman's former spouse. Mr. Friedman disclaims
beneficial ownership of such shares.
(11) Includes 1,000,000 shares owned by Mrs. Goldman's spouse. Mrs. Goldman
disclaims beneficial ownership of such shares. Does not include 2,886,207
shares held by trusts for the benefit of Mrs. Goldman's grandchildren.
Mrs. Goldman neither has voting nor investing rights with respect to such
shares.
(12) Includes 2,368,785 shares held by trusts for the benefit of Mr. Haas'
children and 150,000 shares held by Peter E. Haas and Joanne C. Haas
Charitable Annuity Lead Trust and 1,086 shares by the spouse of Mr. Haas.
Mr. Haas disclaims beneficial ownership of such shares.
(13) Represents shares held by a trust for the benefit of Michael S. Haas in
which Mr. Haas has sole voting and investing powers. Mr. Haas disclaims
beneficial ownership of such shares.
(14) Mr. Hellman's shares are held in his family investment partnership.
(15) Mr. Hellman has voting and investing powers with respect to these shares
which are held by a trust for the benefit of the daughter of Robert D.
Haas. Mr. Hellman disclaims beneficial ownership of such shares.
(16) Mr. Kilmartin retired from the Board of Directors on December 5, 1993.
(17) James M. Koshland is the son of Daniel E. Koshland, Jr.
(18) Represents shares held by trusts for the benefit of James M. Koshland's
children. Mr. Koshland disclaims beneficial ownership of such shares.
(19) Includes 333,000 shares owned by the spouse of Mrs. Geballe. Mrs.
Geballe disclaims beneficial ownership of such shares.
(20) Includes 2,903,167 shares in which Mrs. Haas has sole investing powers
and Mr. Peter E. Haas, Sr. has sole voting rights.
(21) Includes 1,447,855 shares in which Mrs. Haas has shared voting and
investing powers and 777,679 shares in which Mrs. Haas has sole voting and
investing powers. These shares are held by trusts for the benefit of the
son and daughter of Mrs. Haas. Mrs. Haas disclaims beneficial ownership
of such shares.
(22) Does not include 8,754,426 shares owned by Peter E. Haas, Sr., the spouse
of Mrs. Haas. Mrs. Haas disclaims beneficial ownership of such shares.
(23) Margaret E. Jones is the daughter of Peter E. Haas, Sr.
(24) Represents shares owned by The Koshland Foundation in which Mr. Koshland
has sole voting rights.
(25) Includes 499,749 shares subject to presently exercisable options. As of
January 10, 1994, the Company has 191 and 1,107 record owners of Class L
and Class E common stock, respectively.
HOLDERS OF AND TRANSFER RESTRICTIONS ON COMMON STOCK.
There is no trading market for outstanding shares of Class E and Class L common
stock. The outstanding shares of Class E common stock are currently held by the
trustee of the ELTIS and EIP and by certain employees under the ESAP. Class E
common stock is subject to certain restrictions on transfer as provided in the
various employee plans. SEE THE EMPLOYEE
89
<PAGE>
INVESTMENT PLANS CAPTION UNDER ITEM 11 FOR ADDITIONAL INFORMATION. Class L
common stock is primarily held by members of the families of certain descendants
of the Company's founder and certain members of the Company's Board of Directors
and management. Under a stockholder agreement that expires in April 2001,
transfer of Class L common stock is prohibited except to certain transferees,
specified members of the stockholder's family, trusts, charities or other Class
L stockholders.
90
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ESTATE TAX REPURCHASE POLICY
The Board of Directors has a policy under which the Company will, subject to
certain conditions, offer to repurchase a portion of the shares of Class L
common stock held by the estate of a deceased stockholder in order to assist the
estate in meeting estate tax liabilities. The purchase price will be based on
periodic valuations of Class L common stock conducted by an investment banking
or appraisal firm (SEE NOTE 19 TO THE CONSOLIDATED FINANCIAL STATEMENTS).
Purchases will be made at a discount price reflecting the non-liquidity of large
blocks of stock; the discount will be established by the investment banking or
appraisal firm. Estate repurchase transactions will be subject to, among other
things, compliance with applicable laws governing stock repurchases,
satisfaction of certain financial ratios specified in the resolutions adopting
the policy, and compliance with any limitations on stock repurchases contained
in the Company's credit agreements.
OTHER TRANSACTIONS
Rhoda H. Goldman is a director of the Company; her son, John Goldman, is the
controlling person of Richard N. Goldman and Company (RNG), which acts as an
insurance broker for the Company. In 1993, the Company paid RNG approximately
$380,245 in fees and commissions for the placement of insurance programs. RNG's
insurance programs represent approximately 80 percent of worldwide annual
premiums paid by the Company for 1993 property casualty coverage, not including
workers' compensation coverage. The Company believes the premiums paid to RNG
are competitive. At November 28, 1993, Rhoda H. Goldman had no equity interest
in RNG and beneficially owned 3,765,257 shares of the Company's Class L common
stock.
SEE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION UNDER ITEM 11
FOR ADDITIONAL INFORMATION.
91
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
Consolidated Statements of Income, Years Ended November 28, 1993,
November 29, 1992 and November 24, 1991.
Consolidated Balance Sheets, November 28, 1993 and November 29, 1992
Consolidated Statements of Stockholders' Equity, Years Ended November 28,
1993, November 29, 1992 and November 24, 1991
Consolidated Statements of Cash Flows, Years Ended November 28, 1993,
November 29, 1992 and November 24, 1991
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(2) FINANCIAL STATEMENT SCHEDULES
VIII Reserves
IX Short-Term Borrowings
X Supplementary Income Statement Information
All other schedules have been omitted because they are inapplicable, not
required or the information is included in the financial statements or
notes thereto.
(3) MANAGEMENT CONTRACTS AND COMPENSATORY ARRANGEMENTS
1985 Stock Option Plan and forms of related agreements, exhibit 10a.
1985 Stock Option Plan Notice to Optionholders, exhibit 10b.
Long Term Performance Plan, exhibit 10c.
Management Incentive Plan, exhibit 10d.
Levi Strauss Associates Inc. Excess Benefit Restoration Plan, exhibit
10e.
Levi Strauss Associates Inc. Supplemental Benefit Restoration Plan,
exhibit 10f.
Amendment dated February 9, 1993 to the Levi Strauss Associates Inc.
Excess Benefit Restoration Plan and Levi Strauss Associates Inc.
Supplemental Benefits Restoration Plan, exhibit 10g.
Levi Strauss Associates Inc. Deferred Compensation Plan for Executives
(as adopted in 1971 and as amended through January 1, 1992), exhibit 10h.
Revised Home Office Pension Plan of Levi Strauss Associates Inc., exhibit
10j.
Revised Employment Retirement Plan and December 20, 1991 Amendment
thereto, exhibit 10k.
92
<PAGE>
Employee Stock Purchase and Stock Award Plan of Levi Strauss Associates
Inc., exhibit 10n.
Amendments dated August 5, 1992, March 31, 1992 and January 1, 1992 to
the Employee Stock Purchase and Stock Award Plan of Levi Strauss
Associates Inc., exhibit 10o.
Amendment dated February 9, 1993 to the Employee Stock Purchase and Stock
Award Plan of Levi Strauss Associates Inc., exhibit 10p.
Amendment effective as of March 1, 1993 to the Employee Stock Purchase
and Stock Award Plan of Levi Strauss Associates Inc., exhibit 10q.
Supplemental Pension Agreement dated April 16, 1985 between Levi Strauss
& Co. and Thomas W. Tusher, exhibit 10v.
Supplemental Pension Agreement dated November 12, 1985 between Levi
Strauss & Co. and George B. James, exhibit 10w.
Letter Agreement dated August 29, 1985 between the Company and Thomas W.
Tusher, exhibit 10x.
Home Office Interim Cash Performance Sharing Plan of Levi Strauss
Associates Inc., exhibit 10z.
Levi Strauss Associates Inc. 1992 Executive Stock Appreciation Rights
Plan, exhibit 10bb.
(4) EXHIBITS
3a Restated Certificate of Incorporation, incorporated by reference
from Exhibit 4 of Form 10-Q filed with the Securities and Exchange
Commission on April 13, 1993.
3b Amended By-Laws of the Company, incorporated by reference from
Exhibit 3b of Form 10-K filed with the Securities and Exchange
Commission on February 20, 1992.
4a Form of Series B dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4b of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993.
4b Form of Series C dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4c of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993.
4c Form of Series D dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4d of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993.
4d Form of Class L Stockholders' Agreement, incorporated by reference
from Exhibit (c)(5) of the Company's Issuer Tender Offer Statement
on Schedule 13E-4, including all amendments thereto, initially
filed with the Securities and Exchange Commission on March 4, 1991.
93
<PAGE>
4e Credit Agreement, dated as of January 21, 1993, among the Company,
Levi Strauss & Co., Bank of America N.T. & S.A. and other financial
institutions named therein, incorporated by reference from Exhibit
4k of Form 10-K filed with the Securities and Exchange Commission
on February 25, 1993.
4f Amended and Restated Agreement of Master Trust effective as of May
1, 1989 between Levi Strauss Associates Inc. and Boston Safe
Deposit and Trust Company, incorporated by reference from Exhibit
4.6 to the Company's Registration Statement on Form S-1, filed with
the Securities and Exchange Commission on March 9, 1989 (Reg. No.
33-27465).
10a 1985 Stock Option Plan and forms of related agreements,
incorporated by reference from Exhibit 10.4 to the Company's
Registration Statement on Form S-1, filed with the Securities and
Exchange Commission on March 9, 1989 (Reg. No. 33-27465).
10b 1985 Stock Option Plan Notice to Optionholders, incorporated by
reference from Exhibit 10b of Form 10-K filed with the Securities
and Exchange Commission on February 20, 1992.
10c Long Term Performance Plan, incorporated by reference from Exhibit
10.7 to the Company's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on March 9, 1989 (Reg.
No. 33-27465).
10d Management Incentive Plan, incorporated by reference from Exhibit
10.12 to the Company's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on March 9, 1989 (Reg.
No. 33-27465).
10e Levi Strauss Associates Inc. Excess Benefit Restoration Plan,
incorporated by reference from Exhibit 10e of Form 10-K filed with
the Securities and Exchange Commission on February 20, 1992.
10f Levi Strauss Associates Inc. Supplemental Benefit Restoration Plan,
incorporated by reference from Exhibit 10f of Form 10-K filed with
the Securities and Exchange Commission on February 20, 1992.
10g Amendment dated February 9, 1993 to the Levi Strauss Associates
Inc. Excess Benefit Restoration Plan and Levi Strauss Associates
Inc. Supplemental Benefits Restoration Plan, incorporated by
reference from Exhibit 10d of Form 10-Q filed with the Securities
and Exchange Commission on July 13, 1993.
10h Levi Strauss Associates Inc. Deferred Compensation Plan for
Executives (as adopted in 1971 and as amended through January 1,
1992).
10i Deferred Compensation Plan for Outside Directors, incorporated by
reference from Exhibit 10.9 to the Company's Registration Statement
on Form S-1, filed with the Securities and Exchange Commission on
March 9, 1989 (Reg. No. 33-27465).
10j Revised Home Office Pension Plan of Levi Strauss Associates Inc.
10k Revised Employment Retirement Plan.
94
<PAGE>
10l Levi Strauss Associates Inc. Retirement Plan for Over the Road
Truck Drivers and Dispatchers.
10m Levi Strauss & Co. Supplemental Unemployment Benefit Plan and
related amendments.
10n Employee Stock Purchase and Stock Award Plan of Levi Strauss
Associates Inc., incorporated by reference from Exhibit 4.2 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on June 24, 1991 (Reg. No.
33-41332).
10o Amendments dated August 5, 1992, March 31, 1992 and January 1, 1992
to the Employee Stock Purchase and Stock Award Plan of Levi Strauss
Associates Inc., incorporated by reference from Exhibit 10q of Form
10-K filed with the Securities and Exchange Commission on February
25, 1993.
10p Amendment dated February 9, 1993 to the Employee Stock Purchase and
Stock Award Plan of Levi Strauss Associates Inc., incorporated by
reference from Exhibit 10a of Form 10-Q filed with the Securities
and Exchange Commission on July 13, 1993.
10q Amendment effective as of March 1, 1993 to the Employee Stock
Purchase and Stock Award Plan of Levi Strauss Associates Inc.,
incorporated by reference from Exhibit 10e of Form 10-Q filed with
the Securities and Exchange Commission on July 13, 1993.
10r Levi Strauss Associates Inc. Employee Long-Term Investment and
Savings Plan, incorporated by reference from Exhibit 4.2 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on February 9, 1990 (Reg. No.
33-33415), with amendments incorporated by reference from Exhibit
4.2 to the Company's Registration Statement on Form S-8, filed with
the Securities and Exchange Commission on May 31, 1991 (Reg. No.
33-40947).
10s Amendments dated July 21, 1992 and March 31, 1992 to the Levi
Strauss Associates Inc. Employee Long-Term Investment and Savings
Plan, incorporated by reference from Exhibit 10s of Form 10-K filed
with the Securities and Exchange Commission on February 25, 1993.
10t Amendment dated February 9, 1993 to the Levi Strauss Associates
Inc. Employee Long-Term Investment and Savings Plan, incorporated
by reference from Exhibit 10c of Form 10-Q filed with the
Securities and Exchange Commission on July 13, 1993.
10u Employee Investment Plan of Levi Strauss Associates Inc.,
incorporated by reference from Exhibit 4.3 to the Company's
Registration Statement on Form S-8, filed with the Securities and
Exchange Commission on February 9, 1990 (Reg. No. 33-33415) with
amendments incorporated by reference from Exhibit 4.3 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on May 31, 1991 (Reg. No.
33-40947).
95
<PAGE>
10v Supplemental Pension Agreement dated April 16, 1985 between Levi
Strauss & Co. and Thomas W. Tusher, incorporated by reference from
Exhibit 10.13 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465).
10w Supplemental Pension Agreement dated November 12, 1985 between Levi
Strauss & Co. and George B. James, incorporated by reference from
Exhibit 10.14 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465).
10x Letter Agreement dated August 29, 1985 between the Company and
Thomas W. Tusher, incorporated by reference from Exhibit 10.15 to
the Company's Registration Statement on Form S-1, filed with the
Securities and Exchange Commission on March 9, 1989 (Reg. No.
33-27465).
10y Agreement dated as of May 1, 1989 between the Company and Boston
Safe Deposit and Trust Company, incorporated by reference from
Exhibit 10.17 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465).
10z Home Office Interim Cash Performance Sharing Plan of Levi Strauss
Associates Inc.
10aa Field Profit Sharing Award Plan of Levi Strauss Associates Inc.
10bb Levi Strauss Associates Inc. 1992 Executive Stock Appreciation
Rights Plan, incorporated by reference from Exhibit 10aa of Form
10-K filed with the Securities and Exchange Commission on February
25, 1993.
10cc Supply Agreement dated as of March 30, 1992, between Levi Strauss &
Co. and Cone Mills Corporation, incorporated by reference from
Exhibit 10bb of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993.
10dd First Amendment to Supply Agreement dated as of March 30, 1992,
between Levi Strauss & Co. and Cone Mills Corporation.
21 Subsidiaries of Levi Strauss Associates Inc.
23 Consent of Independent Public Accountants.
(b) REPORTS ON FORM 8-K
There were no Reports on Form 8-K filed with the Commission during the
fourth quarter of 1993.
96
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN
FRANCISCO, STATE OF CALIFORNIA, ON FEBRUARY 10, 1994.
LEVI STRAUSS ASSOCIATES INC.
By Robert D. Haas
-------------------------
Robert D. Haas
Chairman of the Board and
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON
BEHALF OF THE REGISTRANT AND IN THE FOLLOWING CAPACITIES ON FEBRUARY 10, 1994.
Signature Title
--------- -----
Director,
Honorary Chairman of the Board of
Walter A. Haas, Jr. Directors
____________________________________
(Walter A. Haas, Jr.)
Director,
Peter E. Haas, Sr. Chairman of the Executive Committee
____________________________________
(Peter E. Haas, Sr.)
Director,
Chairman of the Board of Directors and
Robert D. Haas Chief Executive Officer
____________________________________
(Robert D. Haas)
97
<PAGE>
Signature Title
--------- -----
Angela G. Blackwell Director
_____________________________________
(Angela G. Blackwell)
Tully M. Friedman Director
_____________________________________
(Tully M. Friedman)
James C. Gaither Director
_____________________________________
(James C. Gaither)
Rhoda H. Goldman Director
_____________________________________
(Rhoda H. Goldman)
Peter E. Haas, Jr. Director
_____________________________________
(Peter E. Haas, Jr.)
F. Warren Hellman Director
_____________________________________
(F. Warren Hellman)
98
<PAGE>
Signature Title
--------- -----
Patricia S. Pineda Director
_____________________________________
(Patricia S. Pineda)
James M. Koshland Director
_____________________________________
(James M. Koshland)
Director,
Thomas W. Tusher President and Chief Operating Officer
_____________________________________
(Thomas W. Tusher)
Senior Vice President and
George B. James Chief Financial Officer
_____________________________________
(George B. James)
Vice President, Controller and
Richard D. Murphy Chief Accounting Officer
_____________________________________
(Richard D. Murphy)
99
<PAGE>
SCHEDULE VIII
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
RESERVES
(In Thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ---------- ---------- ---------- ---------- ----------
Additions
Balance at Charged to Deductions Balance at
Beginning Costs and From End of
Allowance for Doubtful Accounts of Period Expenses Reserve Period
- ------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended November 28, 1993: $27,806 $ 5,032 $ 4,287 $28,551
======= ======= ======= =======
Year ended November 29, 1992: $31,333 $ 5,424 $ 8,951 $27,806
======= ======= ======= =======
Year ended November 24, 1991: $21,539 $21,279 $11,485 $31,333
======= ======= ======= =======
</TABLE>
100
<PAGE>
SCHEDULE IX
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
(In Thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- ---------- --------- ---------------- ------------------- -------------------- -------------------
Category of Balance Weighted Maximum Average Weighted
Aggregate at Average Amount Amount Average
Short-Term End Interest Rate at Outstanding Outstanding Interest Rate
Borrowings of Period End of Period(1) During the Period(2) During the Period(3) During the Period(4)
- ---------- --------- ---------------- ------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Year ended November 28, 1993:
Payable to banks $ 10,094 20.4% $153,814 $105,787 5.1%
======== ==== ======== ======== ====
Year ended November 29, 1992:
Payable to banks $121,105 6.3% $139,637 $118,569 6.7%
======== ==== ======== ======== ====
Year ended November 24, 1991:
Payable to banks $ 58,185 25.3% $401,148 $200,713 10.2%
======== ==== ======== ======== ====
</TABLE>
(1) This was relatively high in 1993 as approximately 69 percent of the balance
outstanding at the end of 1993 was related to borrowings in Eastern Europe
where the average interest rate was substantially higher than other Company
borrowings in 1993. In addition, this was relatively high in 1991 as
approximately 6 percent of the balance outstanding at the end of 1991 was
related to borrowings in Latin America where the average interest rate was
substantially higher than other Company borrowings in 1991.
(2) The maximum amount outstanding during the period is based on month-end
balances.
(3) The average amount outstanding during the period is computed based on
average daily borrowings.
(4) The weighted average interest rate during the period is an annual rate,
calculated by dividing the short-term interest expense by the average
borrowings. The weighted average interest rate during 1993 would have been
3.7 percent excluding the Eastern European borrowings. The 1992 and 1991
weighted average interest rate would have been 5.4 percent and 7.6 percent,
respectively, excluding the Latin American borrowings.
101
<PAGE>
SCHEDULE X
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In Thousands)
<TABLE>
<CAPTION>
COL. A COL. B
- ----------- ---------------------------------------------------------------
Charged to Costs and Expenses
---------------------------------------------------------------
Year Ended Year Ended Year Ended
Item November 28, 1993 November 29, 1992 November 24, 1991
- ----------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
Advertising $375,583 $346,654 $284,022
======== ======== ========
</TABLE>
Items required in this schedule but not shown were omitted as they did not
exceed one percent of net sales or are shown elsewhere in the consolidated
Financial Statements of Levi Strauss Associates Inc. and Subsidiaries.
102
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Levi Strauss Associates Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements of Levi Strauss Associates Inc. included in this Form 10-K
and have issued our report thereon dated January 20, 1994. Our audit was made
for the purpose of forming an opinion on those statements taken as a whole.
Schedules VIII, IX and X are the responsibility of the Company's management and
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
San Francisco, California,
January 20, 1994
103
<PAGE>
SUPPLEMENTAL INFORMATION
The 1994 Proxy will be furnished to security holders subsequent to this filing.
104
<PAGE>
CORPORATE DIRECTORY
EXECUTIVE OFFICE
Robert D. Haas, Chairman of the Board of Directors and Chief Executive Officer
Thomas W. Tusher, President and Chief Operating Officer
HONORARY CHAIRMAN OF THE BOARD OF DIRECTORS
Walter A. Haas, Jr.
CHAIRMAN OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
Peter E. Haas, Sr.
CORPORATE EXECUTIVE OFFICERS
Thomas J. Bauch -- Senior Vice President, General Counsel & Secretary
R. William Eaton, Jr. -- Senior Vice President, Chief Information Officer
Donna J. Goya -- Senior Vice President, Human Resources
George B. James -- Senior Vice President, Chief Financial Officer
Robert D. Rockey, Jr. -- Senior Vice President, President of Levi Strauss North
America
Peter A. Jacobi -- Senior Vice President, President of Levi Strauss
International
DIRECTORS
Angela Glover Blackwell -- Executive Director, Urban Strategies Council(1,3)
Tully M. Friedman -- General Partner, Hellman & Friedman(1,3)
James C. Gaither -- Partner, Cooley, Godward, Castro, Huddleson & Tatum(2,3)
Rhoda H. Goldman -- Director, Mount Zion Health Systems(2,3)
Peter E. Haas, Sr.(3)
Peter E. Haas, Jr.(3)
Robert D. Haas(3)
Walter A. Haas, Jr.(3)
F. Warren Hellman -- General Partner, Hellman & Friedman(1,2)
James M. Koshland -- Partner, Ware & Freidenrich(1,3)
Patricia Salas Pineda -- General Counsel, New United Motor Manufacturing,
Inc.(1,2)
Thomas W. Tusher(3)
(1) Member, Audit Committee
(2) Member, Personnel Committee
(3) Member, Corporate Ethics and Social Responsibility Committee
EXECUTIVE OFFICES:
Levi's Plaza
1155 Battery Street
San Francisco, California 94111
(415) 544-6000
Questions and communications regarding employee investments should be sent to
the Director of Employee Benefits at the above address.
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen & Co.
105
<PAGE>
EXHIBIT INDEX
3a Restated Certificate of Incorporation, incorporated by reference
from Exhibit 4 of Form 10-Q filed with the Securities and Exchange
Commission on April 13, 1993. --
3b Amended By-Laws of the Company, incorporated by reference from
Exhibit 3b of Form 10-K filed with the Securities and Exchange
Commission on February 20, 1992. --
4a Form of Series B dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4b of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993. --
4b Form of Series C dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4c of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993. --
4c Form of Series D dividend note, dated as of December 15, 1992,
among the Company and note holders, incorporated by reference from
Exhibit 4d of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993. --
4d Form of Class L Stockholders' Agreement, incorporated by reference
from Exhibit (c)(5) of the Company's Issuer Tender Offer Statement
on Schedule 13E-4, including all amendments thereto, initially
filed with the Securities and Exchange Commission on March 4,
1991. --
4e Credit Agreement, dated as of January 21, 1993, among the Company,
Levi Strauss & Co., Bank of America N.T. & S.A. and other financial
institutions named therein, incorporated by reference from Exhibit
4k of Form 10-K filed with the Securities and Exchange Commission
on February 25, 1993. --
4f Amended and Restated Agreement of Master Trust effective as of May
1, 1989 between Levi Strauss Associates Inc. and Boston Safe
Deposit and Trust Company, incorporated by reference from Exhibit
4.6 to the Company's Registration Statement on Form S-1, filed with
the Securities and Exchange Commission on March 9, 1989 (Reg. No.
33-27465). --
10a 1985 Stock Option Plan and forms of related agreements,
incorporated by reference from Exhibit 10.4 to the Company's
Registration Statement on Form S-1, filed with the Securities and
Exchange Commission on March 9, 1989 (Reg. No. 33-27465). --
10b 1985 Stock Option Plan Notice to Optionholders, incorporated by
reference from Exhibit 10b of Form 10-K filed with the Securities
and Exchange Commission on February 20, 1992. --
10c Long Term Performance Plan, incorporated by reference from Exhibit
10.7 to the Company's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on March 9, 1989 (Reg.
No. 33-27465). --
10d Management Incentive Plan, incorporated by reference from Exhibit
10.12 to the Company's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on March 9, 1989 (Reg.
No. 33-27465). --
10e Levi Strauss Associates Inc. Excess Benefit Restoration Plan,
incorporated by reference from Exhibit 10e of Form 10-K filed with
the Securities and Exchange Commission on February 20, 1992. --
10f Levi Strauss Associates Inc. Supplemental Benefit Restoration Plan,
incorporated by reference from Exhibit 10f of Form 10-K filed with
the Securities and Exchange Commission on February 20, 1992. --
10g Amendment dated February 9, 1993 to the Levi Strauss Associates
Inc. Excess Benefit Restoration Plan and Levi Strauss Associates
Inc. Supplemental Benefits Restoration Plan, incorporated by
reference from Exhibit 10d of Form 10-Q filed with the Securities
and Exchange Commission on July 13, 1993. --
10h Levi Strauss Associates Inc. Deferred Compensation Plan for
Executives (as adopted in 1971 and as amended through January 1,
1992). 111
10i Deferred Compensation Plan for Outside Directors, incorporated by
reference from Exhibit 10.9 to the Company's Registration Statement
on Form S-1, filed with the Securities and Exchange Commission on
March 9, 1989 (Reg. No. 33-27465). --
10j Revised Home Office Pension Plan of Levi Strauss Associates Inc. 146
10k Revised Employment Retirement Plan. 235
10l Levi Strauss Associates Inc. Retirement Plan for Over the Road
Truck Drivers and Dispatchers. 337
10m Levi Strauss & Co. Supplemental Unemployment Benefit Plan and
related amendments. 421
10n Employee Stock Purchase and Stock Award Plan of Levi Strauss
Associates Inc., incorporated by reference from Exhibit 4.2 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on June 24, 1991 (Reg. No. 33-
41332). --
10o Amendments dated August 5, 1992, March 31, 1992 and January 1, 1992
to the Employee Stock Purchase and Stock Award Plan of Levi Strauss
Associates Inc., incorporated by reference from Exhibit 10q of Form
10-K filed with the Securities and Exchange Commission on February
25, 1993. --
10p Amendment dated February 9, 1993 to the Employee Stock Purchase and
Stock Award Plan of Levi Strauss Associates Inc., incorporated by
reference from Exhibit 10a of Form 10-Q filed with the Securities
and Exchange Commission on July 13, 1993. --
10q Amendment effective as of March 1, 1993 to the Employee Stock
Purchase and Stock Award Plan of Levi Strauss Associates Inc.,
incorporated by reference from Exhibit 10e of Form 10-Q filed with
the Securities and Exchange Commission on July 13, 1993. --
10r Levi Strauss Associates Inc. Employee Long-Term Investment and
Savings Plan, incorporated by reference from Exhibit 4.2 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on February 9, 1990 (Reg. No.
33-33415), with amendments incorporated by reference from Exhibit
4.2 to the Company's Registration Statement on Form S-8, filed with
the Securities and Exchange Commission on May 31, 1991 (Reg. No.
33-40947). --
10s Amendments dated July 21, 1992 and March 31, 1992 to the Levi
Strauss Associates Inc. Employee Long-Term Investment and Savings
Plan, incorporated by reference from Exhibit 10s of Form 10-K filed
with the Securities and Exchange Commission on February 25,
1993. --
10t Amendment dated February 9, 1993 to the Levi Strauss Associates
Inc. Employee Long-Term Investment and Savings Plan, incorporated
by reference from Exhibit 10c of Form 10-Q filed with the
Securities and Exchange Commission on July 13, 1993. --
10u Employee Investment Plan of Levi Strauss Associates Inc.,
incorporated by reference from Exhibit 4.3 to the Company's
Registration Statement on Form S-8, filed with the Securities and
Exchange Commission on February 9, 1990 (Reg. No. 33-33415) with
amendments incorporated by reference from Exhibit 4.3 to the
Company's Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on May 31, 1991 (Reg. No. 33-
40947). --
10v Supplemental Pension Agreement dated April 16, 1985 between Levi
Strauss & Co. and Thomas W. Tusher, incorporated by reference from
Exhibit 10.13 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465). --
10w Supplemental Pension Agreement dated November 12, 1985 between Levi
Strauss & Co. and George B. James, incorporated by reference from
Exhibit 10.14 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465). --
10x Letter Agreement dated August 29, 1985 between the Company and
Thomas W. Tusher, incorporated by reference from Exhibit 10.15 to
the Company's Registration Statement on Form S-1, filed with the
Securities and Exchange Commission on March 9, 1989 (Reg. No. 33-
27465). --
10y Agreement dated as of May 1, 1989 between the Company and Boston
Safe Deposit and Trust Company, incorporated by reference from
Exhibit 10.17 to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on March 9, 1989
(Reg. No. 33-27465). --
10z Home Office Interim Cash Performance Sharing Plan of Levi Strauss
Associates Inc. 460
10aa Field Profit Sharing Award Plan of Levi Strauss Associates Inc. 461
10bb Levi Strauss Associates Inc. 1992 Executive Stock Appreciation
Rights Plan, incorporated by reference from Exhibit 10aa of Form
10-K filed with the Securities and Exchange Commission on February
25, 1993. --
10cc Supply Agreement dated as of March 30, 1992, between Levi Strauss
& Co. and Cone Mills Corporation, incorporated by reference from
Exhibit 10bb of Form 10-K filed with the Securities and Exchange
Commission on February 25, 1993. --
10dd First Amendment to Supply Agreement dated as of March 30, 1992,
between Levi Strauss & Co. and Cone Mills Corporation. 462
21 Subsidiaries of Levi Strauss Associates Inc. 464
23 Consent of Independent Public Accountants. 468<PAGE>
<PAGE>
Exhibit 10h
-----------
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
(As adopted in 1971 and as amended through January 1, 1992)
ARTICLE 1 EFFECTIVE DATE
- --------------------------
The Levi Strauss Associates Inc. Deferred Compensation Plan for
Executives (hereinafter the "Plan") became effective upon approval by the
Executive Committee of the Board of Directors of Levi Strauss & Co. in
1971. The Plan was amended on October 25, 1973; November 23, 1976;
November 1, 1977; December 15, 1977; November 6, 1979; October 20, 1980;
November 12, 1982; October 26, 1983; November 22, 1984 and August 16, 1985,
such amendments having been approved by the Executive Committee of the
Board of Directors of Levi Strauss & Co. or its delegate and amended and
restated on November 14, 1986 by the delegates of the Board of Directors of
Levi Strauss Associates Inc. (the "Company").
ARTICLE 2 ELIGIBILITY
- -----------------------
(a) General Rule. Any employee of the Company or a participating
domestic subsidiary (including a wholly-owned subsidiary of a wholly-owned
subsidiary of the Company and, effective December 1, 1980, Battery Street
Enterprises, Inc. or any subsidiary thereof), who (i) is customarily
employed 30 or more hours per week by the Company or such subsidiary, (ii)
is employed within the United States or is a designated participant in the
Levi Strauss & Co. Home Office Pension Plan, and (iii) is compensated on a
salary basis (hereinafter the "Eligible Employee") shall be eligible to
participate in the Plan during a calendar year; provided that, either (i)
the grade for the employee is equivalent to Home Office grade 9 or above,
or (ii) the employee has an undistributed balance of Deferred Compensation.
Notwithstanding the aforesaid, no employee shall be eligible to participate
in the Plan if said employee has entered into an employment agreement with
the Company or a subsidiary thereof which precludes the employee from
participating in a deferred compensation plan offered by the Company.
(b) Exclusions. A salesman employed on a commission basis shall
not be eligible to participate in the Plan.
ARTICLE 3 DEFINITION OF COMPENSATION
- --------------------------------------
For all purposes under the Plan: (a) "total compensation" shall
mean base salary, but shall not include any payments under or contributions
to the Company's Long Term Disability Plan or other group insurance or any
employee benefit plan maintained by the Company; (b) "total bonuses" shall
mean payments made under the Company's Management Incentive Plan
(hereinafter "MIP") or under any regularly paid bonus program other than
the Long Term Performance Plan, and any non-recurring special bonus which
is designated as being part of "total bonuses" in writing by the
Administrator; and (c) for individuals on expatriate assignment, "total
compensation" shall be defined as base salary adjusted by appropriate
expatriate-related deductions and allowances as determined by the
Administrator.
ARTICLE 4 ADDITIONAL DEFERRED COMPENSATION
- --------------------------------------------
When an Eligible Employee elects that a portion of his total
compensation or total bonus for a calendar year shall be payable as
Deferred Compensation under the Plan, there shall also be credited as
Additional Deferred Compensation for such calendar year an amount equal to
the difference between (a) the aggregate amount of contributions by the
Company which would have been allocated in respect of such Eligible
Employee under the Profit Sharing Plan of Levi Strauss & Co. (hereinafter
the "Profit Sharing Plan") and the Employee Savings Plan of Levi Strauss &
Co. (hereinafter the "Employee Savings Plan") if such Eligible Employee has
not made such election under this Plan, and (b) the actual aggregate amount
of contributions by the Company so allocated in respect of such Eligible
Employees for said plans for such calendar year. The Additional Deferred
Compensation which is attributable to the difference between the actual
Profit Sharing Plan allocation and the Profit Sharing Plan allocation which
would have been allocated if the Eligible Employee had not elected to
participate in this Plan shall be credited during the next following
calendar year and shall coincide with the time that allocations are made to
participants in the Profit Sharing Plan. The Additional Deferred
Compensation which is attributable to the difference between the actual
Company contributions which would have been made under the Employees
Savings Plan if the Eligible Employee had not elected to participate in
this Plan shall be credited at the same time that Company contributions are
made to the Employee Savings Plan.
ARTICLE 5 ELECTION TO DEFER COMPENSATION
- ------------------------------------------
(a) Total Compensation Eligible for Deferral. Any Eligible
Employee may elect that a portion not to exceed one-third (1/3) of his
total compensation shall be payable only as Deferred Compensation under
this Plan. Effective for elections for calendar year 1983 and later,
amounts of total compensation deferred by an Eligible Employee shall not be
less than five percent (5%) of his total base salary.
(b) Total Bonuses Eligible for deferral. Any Eligible Employee
may elect that a portion or all of his total bonuses shall be payable only
as Deferred Compensation under this Plan. Effective for elections for
calendar year 1987 and later, amounts of total bonuses deferred by an
Eligible Employee shall not be less than the greater of (i) $5,000 or (ii)
five percent (5%) of his total bonuses.
(c) Time for Filing Elections. A deferral election shall be made
in writing to the Administrator (i) in the case of base salary or non-
recurring special bonuses or a regularly paid bonus program other than MIP
at least two weeks prior to the commencement of the first payroll period
ending in the calendar year in which payment otherwise would have been
made; or (ii) in the case of amounts payable under MIP prior to May 15.
All elections are irrevocable once the final date for elections has passed.
(d) First Year of Employment. An Eligible Employee may also make
an election during the first year of employment with respect to his base
salary for services performed after the effective day of the election.
Such election shall be made in writing to the Administrator within 30 days
after commencement of employment with the Company or a Participating
Subsidiary and at least two weeks prior to commencement of the first
payroll period with respect to which the election is to be effective, but
no such election shall be permitted after November 15 of any calendar year.
(e) Effect on Other Plans. Compensation deferred under this Plan
shall not be included in "covered compensation" for crediting benefits or
contributions to any qualified retirement, profit-sharing, stock purchase
plan, employee saving plan or employee stock ownership plan. Other benefit
plans shall not be affected by a deferral of compensation under this Plan.
ARTICLE 6 INTEREST CREDIT
- ---------------------------
Beginning on January 1, 1980, interest shall be computed monthly
as of the last day of each calendar month on the undistributed balance of
each Eligible Employee's Deferred Compensation at the end of such calendar
month. For amounts deferred pursuant to an election prior to January 1,
1983, interest shall be computed at a monthly interest rate equal to the
sum of (i) one-twelfth (1/12) of the annual interest rate charged for
commercial loans to most credit-worthy customers, as most recently
announced by Bank of America in San Francisco, California, effective as of
the last day of the calendar month on which such interest is computed, plus
(ii) one-twelfth (1/12) of two percent (2%) per annum; except that for any
calendar year beginning prior to January 1, 1980, interest shall be
credited in accordance with the procedures specified in the Plan as then in
effect.
Except as provided below, for amounts deferred pursuant to an
election after January 1, 1983, interest shall be computed at a monthly
interest rate equal to one-twelfth (1/12) of the annual rate charged for
commercial loans to most credit-worthy customers, as most recently
announced by Bank of America in San Francisco, California, effective as of
the last day for the calendar month on which such interest is computed.
For amounts deferred by an Eligible Employee whose grade is
equivalent to Home Office grade 9 or above representing a 1985 bonus
payable under the MIP or his total base salary for calendar year 1986,
interest shall be computed at a monthly interest rate equal to one-twelfth
(1/12) or (i) the annual rate charged for commercial loans to most credit-
worthy customers, as most recently announced by Bank of America in San
Francisco, California, effective as of the last day of the calendar month
in which such interest is computed, plus (ii) two percent (2%) for the
period through December 31, 1990, and thereafter such amount, if any, as
the Board of Directors of the Company or its delegates shall determine in
its sole discretion.
Such interest shall be credited to the account of each
participant on the books for the Company or Participating Subsidiary as of
December 31 of such calendar year. An example of this computation is
attached as part of this Plan document.
For retired participants, the interest credit as described above
shall be effective for calendar years beginning January 1, 1979, and after.
ARTICLE 7 PAYMENT OF DEFERRED COMPENSATION
- --------------------------------------------
All Deferred Compensation under the Plan shall be payable as
follows:
(a) Termination for Any Reason Other Than Death or Involuntary
Discharge. In the event that the Eligible Employee's employment shall be
terminated by reason o disability, retirement, voluntary termination, bona
fide job elimination or for any other reason other than his death or other
involuntary discharge, the amount of his Deferred Compensation Plan shall
be paid to him over a ten (10) year period in one hundred twenty (120)
ratable monthly installments commencing on the first day of the calendar
month following the later of the Eligible Employee's attainment of age
seventy and one-half (70-1/2) or the date of the Eligible Employee's
termination of employment. An Eligible Employee may, however, at the time
he notifies the Administrator of his election to have a portion of his
total compensation for a given calendar year payable as Deferred
Compensation under the Plan:
(i) Specify a date for a lump sum payment of a period longer
than five (5) years, but not to exceed ten (10) years, over which his
Deferred Compensation for such year shall be paid; and/or
(ii) Specify that such monthly installments commence on
other than the date of retirement but not later than his attainment of age
seventy and one-half (70-1/2).
(b) Termination of Employment by Death. In the event that the
Eligible Employee's employment is terminated by death, or in the event of
an Eligible Employee's death after termination of employment, and payments
have not commenced, the unpaid balance of his Deferred Compensation shall
be paid to his Beneficiary over a ten (10) year period in one hundred and
twenty (120) ratable monthly installments commencing on the first day of
the calendar month following the later of (i) the month in which the
Eligible Employee died, or (ii) the month in which the Eligible Employee
would have attained age seventy and one-half (70-1/2); except that at the
time an Eligible Employee notifies the Administrator of his election to
have a portion of his total compensation for a given calendar year payable
as Deferred Compensation under the Plan, such Eligible Employee may elect
that such unpaid balance be paid in a lump sum at a designated time within
the five (5) year period following his death or in ratable monthly
installments over a five (5) year period or a specified longer period not
to exceed ten (10) years.
(c) Termination of Employment by Involuntary Discharge. In the
event that an Eligible Employee's employment is terminated by involuntary
termination other than death or disability, the amount of his Deferred
Compensation shall be paid in a lump sum within thirty (30) days after his
termination of employment.
(d) Acceleration of Payments. An Eligible Employee or, in the
case of the death of an Eligible Employee prior to the commencement of
payment of Deferred Compensation for any year, the Eligible Employee's
Beneficiary, may file a petition to accelerate payment of Deferred
Compensation for which no effective election as to time and method of
payment has been filed. The Personnel Committee of the Board of Directors
of the Company shall appoint an Outside Director to consider and act upon
such petitions. The Outside Director shall have sole discretion to approve
or disapprove such petitions. In the petition the Eligible Employee shall
with respect to the Deferred Compensation specify a date for lump sum
payment or a period to commence not later than the Eligible Employee's
attainment of age seventy and one-half (70-1/2) or actual retirement,
whichever is later, and not to end later than one hundred and twenty (120)
months after the Eligible Employee would attain age seventy and one-half
(70-1/2).
(e) In-Service Payments. In the case of an Eligible Employee
whose grade is equivalent to Home Office grade 9 or above, at the time he
notifies the Administrator of his election to have amounts deferred
representing a bonus payable under MIP for calendar year 1987 or later, in
lieu of the provisions for payment of deferred compensation set forth
Subsections (a), (b), (c) and (d) above, he may elect payment to be made as
follows: Twenty percent (20%) of the MIP bonus to be paid as soon as
practical after the amounts have been determined by the awarding company;
thereafter in ratable annual installments in January of each of the
following four years.
(f) Hardship. Upon a showing of financial hardship, the
Administrative Committee for the Retirement Plans of Levi Strauss & Co., in
its sole discretion, may direct the Company or Participating Subsidiary to
pay to an Eligible Employee (or, in the event of death, to an Eligible
Employee's Beneficiary) in one lump sum a portion or all of the unpaid
balance of such Eligible Employee's Deferred Compensation to the extent
necessary to alleviate the hardship. A "hardship" is an emergency beyond
the control of the Eligible Employee (or his Beneficiary).
(g) Minimum Balance. Notwithstanding the aforesaid, in the event
that an Eligible Employee's employment is terminated for any reason other
than retirement and his undistributed balance (including accrued interest)
under the Plan is $50,000 or less, without regard to any balance to which
in-service payment has been elected, on the last day of the full payroll
period immediately prior to his termination, the amount of his Deferred
Compensation, without regard to any balance to which in-service payment has
been elected, shall be paid in a lump sum within thirty (30) days after his
termination of employment. Nothing herein shall require the payment of
Deferred Compensation for which an election was made prior to January 1,
1983, and reaffirmed prior to June 15, 1985.
(h) Elections. An Eligible Employee who, on October 1, 1985, is
employed by the Company or a wholly-owned Participating Subsidiary of the
Company may, prior to October 1, 1985, file with the Administrator a
confirmation of each prior election. If such Eligible Employee fails to
file a confirmation in a timely manner, then the election which is not so
confirmed shall be null and void and deemed not to have been filed. Any
Deferred Compensation with respect to a participant in the Plan who is not
employed by the Company or by a wholly-owned Participating Subsidiary of
the Company on October 1, 1985, will be paid according to the participant's
election or, if no election was made, according to the provisions of the
Plan in effect at the time of deferral.
ARTICLE 8 SOURCE OF PAYMENT
- -----------------------------
All payments of Deferred Compensation hereunder shall be paid in
cash from the general funds of the Company or the Participating Subsidiary,
whichever was the employer at the time of the deferral, and no special or
separate fund shall be established or other segregation of assets made to
assure such payments; provided, however, that the Company or the
Participating Subsidiary, as the case may be, may establish a bookkeeping
reserve to meet its obligation hereunder. Nothing contained in the Plan
and no action taken pursuant to the provisions for the Plan shall create or
be construed to create a trust of any kind or a fiduciary relationship
between the Company or the Participating Subsidiary or the Administrator
and any employee or other person. To the extent that any person acquires a
right to receive payments from the Company or the Participating Subsidiary
under the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company or the Participating Subsidiary.
ARTICLE 9 DESIGNATION OF BENEFICIARIES
- ----------------------------------------
(a) Designation by Eligible Employee. Each Eligible Employee
shall file with the Administrator a written designation of one or more
persons as the "Beneficiary" who shall be entitled to receive the amount,
if any, payable under the Plan upon his death. An eligible Employee may
from time to time revoke or change his beneficiary designation without the
consent of any prior Beneficiary by filing a new designation with the
Administrator. The last such designation received by the Administrator
shall be controlling; provided, however, that no designation, or chance or
revocation thereof, shall be effective unless received by the Administrator
prior to the Eligible Employee's death, and in no event shall it be
effective as of a date prior to such receipt.
(b) Lack of Designation. If no beneficiary designation is in
effect at the time of an Eligible Employee's death, if no designated
Beneficiary survives the Eligible employee or if such designation conflicts
with law, then the Eligible employee's estate shall be the Beneficiary
entitled to receive the amount. The Administrator may direct the Company
or participating Subsidiary to retain such amount, without liability for
any interest thereon, until the rights thereto are determined, or he may
direct the Company or Participating Subsidiary to pay such amount into any
court of appropriate jurisdiction, and such payment shall be complete
discharge of the liability of the Plan, the Company and Participating
Subsidiary therefor.
ARTICLE 10 ADMINISTRATION OF PLAN
- -----------------------------------
For the purposes of this Plan, the ":Administrator" shall be the
Director of Employee Benefits or such other person as the President of the
Company may designate from time to time. The Plan, except for Sections
(7(d) and 7(f)), shall be administrated by the Administrator, who shall
have full power, discretion and authority to interpret, construe and
administer the Plan and any part thereof. The administrator's
interpretations and constructions of the Plan and actions thereunder shall,
except as otherwise determined by the Board of Directors of the Company or
the Executive Committee thereof, be binding and conclusive on all persons
for all purposes.
ARTICLE 11 AMENDMENT
- ----------------------
The Plan may be amended, suspended or terminated, in whole or in
part, by the Board of Directors of the Company or the Personnel Committee
thereof, or the delegate of either, but no such action shall retroactively
impair or otherwise adversely affect the rights of any person to payment of
Deferred Compensation under the Plan which has accrued prior to the date of
such action, as determined by the Administrator.
ARTICLE 12 GENERAL PROVISIONS
- -------------------------------
(a) No Assignment. The right of any Eligible Employee or other
person to the payment of Deferred Compensation under the plan shall not be
assigned, transferred, pledged or encumbered, either voluntarily or by
operation of law, except as provided in Section 9 with respect to
designations of Beneficiaries hereunder or as may otherwise be required by
law. If any person shall attempt to, or shall assign, transfer, pledge or
encumber any amount payable hereunder, or if by reason of his bankruptcy or
other event happening at any time any such payment would be made subject to
his debts or liabilities or would otherwise devolve upon anyone else and
not be enjoyed by him or his Beneficiary, the Administrator may, in his
sole discretion, terminate such person's interest in any such payment and
direct that the same be held and applied to or for the benefit of such
person, his spouse, children or other dependents, or any other persons
deemed to be the natural objects of his bounty, or any of them, in such
manner as the Administrator may deem proper.
(b) Incapacity, If the Administrator shall find that any person
to whom any payment if payable under the Plan is unable to care for his
affairs because of illness or accident or is a minor, then any payment due
(unless a prior claim therefor shall have been made by a duly appointed
guardian, committee or other legal representative) may be paid to his
spouse, a child, a parent or a brother or sister, or any other person
deemed by the Administrator to have incurred expenses for such person
otherwise entitled to payment, in such manner and proportions as the
Administrator may determine. Any such payment shall be a complete
discharge of the liabilities of the Company or Participating Subsidiary
under the Plan.
(c) Information Required. Each Eligible Employee shall file with
the Administrator such pertinent information concerning himself and his
Beneficiary as the Administrator may specify, and no Eligible Employee or
Beneficiary or other person shall have any rights or be entitled to any
benefits under the Plan unless such information is filed by or with respect
to him.
(d) Election by Employee. All elections, designation, requests,
notices, instructions and other communications from an Eligible Employee,
Beneficiary or other person to the Administrator required or permitted
under the Plan shall be in such form as is prescribed from time to time by
the Administrator, shall be mailed by first-class mail or delivered to such
location as shall be specified by the Administrator and shall be deemed to
have been given and delivered only upon actual receipt thereof by the
Administrator at such location.
(e) Notices by Company. All notices, statements, reports and
other communications from the Administrator to any employee, Eligible
Employee, Beneficiary or other person required or permitted under the Plan
shall be deemed to have been duly given when delivered to, or when mailed
first-class mail, postage prepaid and addressed to, such employee, Eligible
Employee, Beneficiary or other person at his address last appearing on the
records of the Company.
(f) No Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving to any employee the right to be
retained in the employ of the Company or Participating Subsidiary or as
affecting the right of the Company or Participating Subsidiary to dismiss
any employee at any time, with or without cause.
(g) Captions. The captions preceding the sections and
subsections hereof have been inserted solely as a matter of convenience and
in no way define or limit the scope or intent of any provisions thereof.
(h) Choice of Law. The Plan and all rights thereunder shall be
governed by and construed in accordance with the laws of the State of
California.<PAGE>
<TABLE>
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN STATEMENT OF ACCOUNT
Name: I am Deferred Account No.: 501
<CAPTION>
ESP
Date Credits Credit Withdrawals Accrual Rate Balance
- -------- ---------- ------ ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
12-31-85 $ $00.00 .00 $ .00 .000 $10,000.00
1-19-86 288.46 14.42 .00 .00 .000 10,302.88
1-31-86 288.46 14.42 .00 .00 .000 10,605.76
1-31-86 000.00 .00 .00 101.64 .1150 10,707.40
2-07-86 1,000.00 50.00 .00 .00 .000 11,757.40
2-10-86 425.00 .00 .00 .00 .000 12,182.40
2-11-86 288.46 14.42 .00 .00 .00 12,485.28
2-25-86 288.46 14.42 .00 .00 .00 12,788.16
2-28-86 .00 .00 .00 122.55 .1150 12,910.71
</TABLE>
Assumptions:
(1) I am Deferred will earn $75,000 in basic compensation in 1986,
and will receive a 1985 MIP award of $10,000 in February 1986.
His balance at the end of 1985 was $10,000.
(2) I am Deferred elected to defer 10% of his 1986 basic compensation
and had elected to defer 10% of his 1985 MIP award, which will be
payable in February 1986.
(3) I am Deferred contributes 10% to Account C of the Employee
Savings Plan of Levi Strauss & Co. (the "ESP").
(4) The 1985 contribution to the Profit Sharing Plan of Levi Strauss
& Co. was 5% of his covered earnings of $85,000 in 1985 and the
allocation was made in February 1986.<PAGE>
SUPPLEMENT TO THE LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
STOCK OPTION SURRENDER DEFERRALS
--------------------------------
ARTICLE 1 PURPOSE
- -------------------
This Supplement is part of the Levi Strauss Associates Inc.
Deferred Compensation Plan for Executives (the "Plan"), and except as
provided herein all of the terms of the Plan shall apply to the benefits
provided by this Supplement.
ARTICLE 2 ELIGIBILITY
- -----------------------
Any employee of the Company or a subsidiary thereof whose Company
stock options are cancelled in connection with the merger following the
close of the leveraged buyout of the Company shall be eligible to
participate in this Supplement to the Plan if the amount of consideration
to be paid by his or her employer for such cancellation equals or exceeds
$30,000. Such participation shall be permitted only with respect to the
amount of such consideration.
ARTICLE 3 DEFINITION OF COMPENSATION
- --------------------------------------
For the purposes of this Supplement, "compensation" shall be
limited to the amount paid by an employee's employer in consideration of
the cancellation of such employee's Company stock options in connection
with the merger following the close of the leveraged buyout of the Company.
An Employee who participates in this Supplement shall not be
entitled to any additional Deferred Compensation with respect to the
compensation described in this Section 3 of the Supplement.
ARTICLE 4 ELECTION TO DEFER
- -----------------------------
At the time he offers to surrender his Company stock options for
cancellation an optionee who meets the eligibility requirements set forth
in Section 3 of this Supplement may elect to defer all or a portion of the
consideration to be paid by his or her employer for such cancellation as
follows:
(a) One hundred percent (100%) to be paid as described in Section
7(e) of the Plan; or
(b) Sixty-six and two-thirds percent (66-2/3%) to be paid as
described in Section 7(e) of the Plan and thirty-three and one-third
percent (33-1/3%) to be paid as described in Sections 7(a), (b) and (c) of
the Plan; provided, however, that an election to defer hereunder shall be
valid only if the total amount deferred equals or exceeds $30,000.
ARTICLE 5 INTEREST CREDIT
- ---------------------------
Amounts deferred pursuant to this Supplement shall be credited
with interest calculated in the manner described in the third paragraph of
Section 6 of the Plan.
1986 SUPPLEMENT TO THE LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
ARTICLE 1 PURPOSE
- -------------------
This Supplement is part of the Levi Strauss Associates Inc.
Deferred Compensation Plan for Executives (the "Plan"), and except as
provided herein all of the terms of the Plan shall apply to the benefits
provided by this Supplement.
ARTICLE 2 DEFINITION OF COMPENSATION
- --------------------------------------
For years ending prior to January 1, 1987, "total compensation"
shall mean base salary and payments made under the MIP, or any other
regularly paid bonus program as designated in writing by the Administrator
and any non-recurring special bonuses, but shall not include any payments
under or contributions to the Company's Long Term Disability Plan or other
group insurance or any employee benefit plan maintained by the Company. An
election to defer compensation under the Plan may exclude or include any
MIP bonus attributable to the year of election even though actual payment
may occur in a subsequent year.
ARTICLE 3 ELECTION TO DEFER COMPENSATION
- ------------------------------------------
For years beginning prior to January 2, 1987, any Eligible
Employee may elect that (a) a portion or all of his total base salary, or
(b) a portion or all of the amounts otherwise payable to him under the MIP,
or any other regularly paid bonus designated in writing by the
Administrator, or as non-recurring special bonuses shall be payable only as
Deferred Compensation under the Plan. The amounts so deferred, however,
shall not exceed one-third (1/3) of his total compensation paid during any
full calendar year; provided, however, that such limitation shall not apply
to the election of an Eligible Employee with respect to his election to
defer a portion or all of his 1985 and 1986 bonus payable under the MIP or
his total base salary for calendar year 1986 and/or up to fifty percent
(50%) of his total base salary for calendar year 1987. Effective for
elections for calendar year 1983 and later, the amounts so deferred shall
not be less than five percent (5%) of total base salary. Such election
shall be made in writing to the administrator (a) in the case of base
salary or a non-recurring special bonus at least two (2) weeks prior to the
commencement of the first payroll period ending in such calendar year;
provided, however, that an Eligible Employee may elect to defer a portion
or all of his total base salary for October, November and December 1985 (or
increase a prior election to defer 1985 base salary) subject to the
deferral limitation of one-third (1/3) of total compensation set forth
above, by filing an election on or before September 13, 1985; provided,
however, that an Eligible Employee may elect to defer a portion up to
ninety percent (90%) of his total base salary for October, November and
december 1986 (or increase a prior election to defer 1986 base salary) by
filing an election at least two (2) weeks prior to the commencement of the
pay period to which the deferred election applies; and (b) in the case of
amounts payable under the MIP or any other regularly paid bonus, prior to
May 15; provided, however, that with respect to calendar year 1985 and 1986
respectively, an election shall be made no later than October 1, 1985 or
October 1, 1986 respectively.
ARTICLE 4 IN-SERVICE PAYMENTS
- -------------------------------
(i) In the case of an Eligible Employee whose grade is equivalent
to Home Office grade 9 or above, at the time he notifies the Administrator
of his election to have amounts deferred representing a 1985 bonus payable
under MIP or all or any portion of his total base salary for calendar year
1986, in lieu of the provisions for payment of deferred compensation set
forth in Article 6 Subsections 9(a), (b) and (c) of the Plan, he may
specify that payment shall be made in January of any year between 1987 and
1991, with the last payment made no later than January 1991.
(ii) In the case of an Eligible Employee whose grade is
equivalent to Home Office grade 9 or above, at the time he notifies the
Administrator of his election to have amounts deferred representing a 1986
and/or 1987 bonus payable under the MIP or a portion up to ninety percent
(90%) of his total base salary for October, November and December of 1986
(or increase a prior election to defer 1986 base salary) or a portion up to
fifty percent (50%) of his total base salary for calendar year 1987, in
lieu of the provisions for payment of deferred compensation set forth in
Section 6(a), (b) (c) and (d) above, he may elect payment to be made in
January of 1988.
====================
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted
the Levi Strauss Associates Inc. Deferred Compensation Plan for Executives
(the "Plan");
WHEREAS, pursuant to Article 11 of the Plan, the Board of
Directors of the Company or its delegatee is authorized to amend the Plan;
WHEREAS, the Company desires to amend the Plan;
WHEREAS, by resolutions duly adopted on June 22, 1989 and not
amended, rescinded or superseded as of the date hereof, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board
and Chief Executive Officer, to adopt certain amendments to the Plan and to
delegate to any other officer of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on October 20, 1989, Robert D. Haas delegated to Donna
J. Goya, Senior Vice President, the authority to amend the Plan subject to
specified limits, and such delegation has not been amended, rescinded or
superseded as of the date hereof; and
WHEREAS, the amendments herein are within the delegated authority
of Donna J. Goya;
NOW, THEREFORE, the Company hereby amends the Plan as set forth
below:
1. Article 1 is hereby amended in its entirety to read as
follows:
The Levi Strauss Associates Inc. Deferred Compensation Plan
for Executives (hereinafter the "Plan") became effective upon approval by
the Executive Committee of the Board of Directors of Levi Strauss & Co. in
1971. The Plan was amended on October 25, 1973; November 23, 1976;
November 1, 1977; December 15, 1977; November 6, 1979; October 20, 1980;
November 12, 1982; October 26, 1983; November 22, 1984 and August 16, 1985,
such amendments having been approved by the Executive Committee of the
Board of Directors of Levi Strauss & Co. or its delegatee. The Plan also
was amended and restated on November 14, 1986 and amended effective as of
August 1, 1989 by the delegatee of the Board of Directors of Levi Strauss
Associates Inc. (the "Company").
2. Article 4 is hereby amended in its entirety to read as
follows:
When an Eligible Employee elects that a portion of his total
compensation or total bonus for a calendar year shall be payable as
Deferred Compensation under the Plan, there shall also be credited as
Additional Deferred Compensation for such calendar year an amount equal to
the difference between (a) the aggregate amount of contributions by the
Company which would have been allocated in respect of such Eligible
Employee under the Employee Investment Plan of Levi Strauss Associates Inc.
(hereinafter the "EIP") if such Eligible Employee had not made such
election under this Plan, and (b) the actual aggregate amount of
contributions by the Company so allocated in respect of such Eligible
Employee under the EIP for such calendar year. The Additional Deferred
Compensation which is attributable to the difference between the actual
Profit Sharing Contribution allocation under the EIP and the Profit Sharing
Contribution allocation which would have been allocated if the Eligible
Employee had not elected to participate in this Plan shall be credited
during the next following calendar year and shall coincide with the time
that Profit Sharing Contribution allocations are made to participants in
the EIP. The Additional Deferred Compensation which is attributable to the
difference between the actual Company Matching Contributions which would
have been made under the EIP if the Eligible Employee had not elected to
participate in this Plan shall be credited at the same time that Company
Matching Contributions are made to the EIP.
3. Article 7(g) is amended in its entirety to read as follows:
(g) Minimum Balance. Notwithstanding the aforesaid, in the
event that an Eligible Employee's employment is terminated for any reason
other than retirement and his undistributed balance (including accrued
interest) under the Plan is $50,000 or less, without regard to any balance
to which in-service payment has been elected, on the last day of the full
payroll period immediately prior to his termination, the amount of his
Deferred Compensation shall be paid in a lump sum within thirty (30) days
after his termination of employment. Nothing herein shall require the
payment of Deferred Compensation for which an election was made prior to
January 1, 1983, and reaffirmed prior to June 15, 1985.
4. The amendments contained herein shall be effective as of
August 1, 1989.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on
November 17, 1989.
--------------------------------------------
Donna J. Goya
Senior Vice President
====================
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted
the Levi Strauss Associates Inc. Deferred Compensation Plan For Executives
(the "Plan");
WHEREAS, pursuant to Article 11 of the Plan, the Board of
Directors of the Company or its delegatee is authorized to amend the Plan;
WHEREAS, the Company desires to amend the Plan;
WHEREAS, by resolutions duly adopted on June 22, 1989 and not
amended, rescinded or superseded as of the date hereof, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board
and Chief Executive Officer, to adopt certain amendments to the Plan and to
delegate to any other officer of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on October 20, 1989, Robert D. Haas delegated to Donna
J. Goya, Senior Vice President, the authority to amend the Plan subject to
specified limits, and such delegation has not been amended, rescinded or
superseded as of the date hereof; and
WHEREAS, the amendments herein are within the delegated authority
of Donna J. Goya;
NOW, THEREFORE, the Company hereby amends the Plan as set forth
below;
1. Article 1 is hereby amended in its entirety to read as
follows:
The Levi Strauss Associates Inc. Deferred Compensation Plan
for executives (hereinafter the "Plan") became effective upon approval by
the Executive Committee of the Board of Directors of Levi Strauss & Co. in
1971. The Plan was amended on October 25, 1973; November 23, 1976;
November 1, 1977; December 15, 1977; November 6, 1979; October 20, 1980;
November 12, 1982; October 26, 1983; November 22, 1984 and August 16, 1985,
such amendments having been approved by the Executive Committee of the
Board of Directors of Levi Strauss & Co. or its delegatee. The Plan also
was amended and restated on November 14, 1986 and amended effective as of
August 1, 1989 and November 8, 1990 by the delegatee of the Board of
Directors of Levi Strauss Associates Inc. (the "Company").
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on
November 8, 1990.
--------------------------------------------
Donna J. Goya
Senior Vice President
====================
The Deferred Compensation Plan for Executives does not restore Home Office
Pension Plan benefits lost because of the deferral of pay. You asked that
we review that phase of the deferred comp plan and if appropriate amend it
to restore any lost pension benefits.
Background
- ----------
The deferred comp plan has not restored lost HOPP benefits primarily
because the tracking issue is cumbersome. However, there is no reason why
the plan cannot restore the HOPP benefits just as it did the lost profit
sharing and employer match contributions. I have checked with Scott
Galloway about the best way to handle the restoration: Through this plan
or through the existing benefit restoration plan or the supplemental plan
(used for restoring benefits due tot he $200,000 pay cap).
Scott said that the deferred comp plan would probably be the better choice.
We had agreed earlier that to keep our "section 415" excess plan as "pure"
as possible we would isolate the 415 excess benefits from the $200,000
excess benefits. The same reasoning follows.
Restoring benefits where they are lost is now how we are designing our
plans. For example, the new stock purchase plan for the highly compensated
employees puts all employee deductions into that plan even if they defer
comp and/or if they exceed the 415 limits.
Approval Requested
- ------------------
This is a no cost item as the "expense" will be shifted from either the
existing HOPP, benefit restoration plan, or supplemental plan to the
deferred comp plan.
Therefore, should you agree with this proposal, I ask that you review it
with Donna and obtain her approval if she concurs.
Approved: February 28, 1991 Donna J. Goya
====================
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted
the Levi Strauss Associates Inc. Deferred Compensation Plan For Executives
(the "Plan");
WHEREAS, pursuant to Article 11 of the Plan, the Board of
Directors of the Company or its delegatee is authorized to amend the Plan;
WHEREAS, the Company desires to amend the Plan;
WHEREAS, by resolutions duly adopted on June 22, 1989 and not
amended, rescinded or superseded as of the date hereof, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board
and Chief Executive Officer, to adopt certain amendments to the Plan and to
delegate to any other officer of the Company the authority to adopt certain
amendments to the Plan;
WHEREAS, on October 20, 1989, Robert D. Haas delegated to Donna
J. Goya, Senior Vice President, the authority to amend the Plan subject to
specified limits, and such delegation has not been amended, rescinded or
superseded as of the date hereof; and
WHEREAS, the amendment herein is within the delegated authority
of Donna J. Goya;
NOW, THEREFORE, the company hereby amends the Plan as set forth
below:
1. Article 7(d) is hereby amended in its entirety to read as
follows:
(d) Change in Timing or Manner of Payment. With respect to
Deferred Compensation for which no effective election as to time and method
of payment has been filed,
(i)the Eligible Employee or,
in the case of the death of the
Eligible Employee prior to the
commencement of payment of Deferred
Compensation for any year, the
Eligible Employee's Beneficiary,
may file a petition to accelerate
payment of such Deferred
Compensation. Such petition shall
specify a date for lump sum payment
or a period for payment which
commences not later than the
Eligible Employee's attainment of
age seventy and one-half (70-1/2)
or actual retirement, whichever is
later, and ends no later than one
hundred and twenty (120) months
after the Eligible Employee would
attain age seventy and one-half
(70-1/2).
(ii)The Eligible Employee or,
in the case of the death of the
Eligible Employee prior to the
commencement of payment of Deferred
Compensation for any year, the
Eligible Employee's surviving
spouse if such spouse is the
Eligible Employee's Beneficiary,
may file a petition to have the
Deferred Compensation applied
towards the purchase of an annuity
contract which satisfies the
criteria set forth herein; provided
that the amount of Deferred
Compensation available for such
purchase equals or exceeds $50,000.
Such annuity contract shall be
purchased with a single premium,
owned by the Company, have an
annuity starting date within one
(1) year from the date of purchase
and provide for substantially equal
periodic payments during the
annuity period. The petition for
purchase of an annuity shall
specify whether the annuity period
is to be over the life of the
Eligible Employee, the joint lives
of the Eligible Employee and the
Eligible Employee's spouse, or over
the life of the Eligible Employee's
spouse. The petition also shall
specify an annuity starting date,
which shall not be later than the
later of the Eligible Employee's
retirement date or the Eligible
Employee's attainment of age
seventy and one-half (70-1/2).
The Personnel Committee of the Board of Directors of the Company
shall appoint an Outside Director to consider and act upon such petitions.
The Outside Director shall have sole discretion to approve or disapprove
such petitions.
2. The amendments contained herein shall be effective as of
January 1, 1992.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as
of November 9, 1992.
--------------------------------------------
Donna J. Goya
Senior Vice President <PAGE>
<PAGE>
Exhibit 10j
-----------
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
As Amended and Restated
Effective November 27, 1989<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
As Amended and Restated
Effective November 27, 1989
TABLE OF CONTENTS
Page
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES . . . . . . . 1
1.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Persons to Whom Plan Applies. . . . . . . . . . . . . . . . 2
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 "Actuary" . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 "Administrative Committee". . . . . . . . . . . . . . . . . 3
2.4 "Affiliated Company". . . . . . . . . . . . . . . . . . . . 3
2.5 "Alternate Payee" . . . . . . . . . . . . . . . . . . . . . 3
2.6 "Annuity Contract". . . . . . . . . . . . . . . . . . . . . 3
2.7 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . 3
2.8 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 "Benefit Service" . . . . . . . . . . . . . . . . . . . . . 4
2.10 "Board of Directors". . . . . . . . . . . . . . . . . . . . 5
2.11 "Break in Service". . . . . . . . . . . . . . . . . . . . . 5
2.12 "Casual Employee" . . . . . . . . . . . . . . . . . . . . . 5
2.13 "Code". . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 "Common-Law Spouse" . . . . . . . . . . . . . . . . . . . . 5
2.16 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 "Compensation". . . . . . . . . . . . . . . . . . . . . . . 5
2.18 "Deferred Retirement Benefit" . . . . . . . . . . . . . . . 7
2.19 "Deferred Retirement Date" or "Deferred Retirement" . . . . 7
2.20 "Disability Retirement Service" . . . . . . . . . . . . . . 7
2.21 "Domestic Partner". . . . . . . . . . . . . . . . . . . . . 8
2.22 "Domestic Relations Order". . . . . . . . . . . . . . . . . 8
2.23 "Early Retirement Benefit". . . . . . . . . . . . . . . . . 8
2.24 "Early Retirement Date" or "Early Retirement" . . . . . . . 8
2.25 "Effective Date". . . . . . . . . . . . . . . . . . . . . . 8
2.26 "Employee". . . . . . . . . . . . . . . . . . . . . . . . . 8
2.27 "Equivalent Actuarial Value". . . . . . . . . . . . . . . . 10
2.28 "Final Average Compensation". . . . . . . . . . . . . . . . 10
2.29 "High-3 Year Average Compensation". . . . . . . . . . . . . 10
2.30 "Highly Compensated Employee" . . . . . . . . . . . . . . . 12
2.31 "Highly Compensated Former Employee". . . . . . . . . . . . 14
2.32 "Home Office Salary Grade". . . . . . . . . . . . . . . . . 15
2.33 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . 15
2.34 "Investment Committee". . . . . . . . . . . . . . . . . . . 15
2.35 "Investment Manager". . . . . . . . . . . . . . . . . . . . 15
2.36 "IRS" . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.37 "Labor Department". . . . . . . . . . . . . . . . . . . . . 15
2.38 "Legally Married" . . . . . . . . . . . . . . . . . . . . . 15
2.39 "LS&CO.". . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.40 "Member". . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.41 "Membership Date" . . . . . . . . . . . . . . . . . . . . . 15
2.42 "Misconduct". . . . . . . . . . . . . . . . . . . . . . . . 15
2.43 "Normal Retirement Age" . . . . . . . . . . . . . . . . . . 16
2.44 "Normal Retirement Benefit" . . . . . . . . . . . . . . . . 16
2.45 "Normal Retirement Date" or "Normal Retirement" . . . . . . 16
2.46 "Participating Company" . . . . . . . . . . . . . . . . . . 16
2.47 "PBGC". . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.48 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.49 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . 17
2.50 "Qualified Domestic Relations Order". . . . . . . . . . . . 17
2.51 "Qualified Joint and Survivor Annuity". . . . . . . . . . . 17
2.52 "Regulations" . . . . . . . . . . . . . . . . . . . . . . . 17
2.53 "Rehire Anniversary Year" . . . . . . . . . . . . . . . . . 17
2.54 "Required Beginning Date" . . . . . . . . . . . . . . . . . 17
2.55 "Retiree Coordinator" . . . . . . . . . . . . . . . . . . . 17
2.56 "Retirement Benefit". . . . . . . . . . . . . . . . . . . . 18
2.57 "Retirement Date" . . . . . . . . . . . . . . . . . . . . . 18
2.58 "Service" . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.59 "Social Security Benefit" . . . . . . . . . . . . . . . . . 20
2.60 "Social Security Retirement Age". . . . . . . . . . . . . . 20
2.61 "Straight Life Annuity" . . . . . . . . . . . . . . . . . . 20
2.62 "Surviving Spouse". . . . . . . . . . . . . . . . . . . . . 20
2.63 "Survivor Annuity". . . . . . . . . . . . . . . . . . . . . 21
2.64 "Terminated Plan" . . . . . . . . . . . . . . . . . . . . . 21
2.65 "Totally and Permanently Disabled" or "Total and
Permanent Disability" . . . . . . . . . . . . . . . . . . 21
2.66 "Trust Agreement" . . . . . . . . . . . . . . . . . . . . . 21
2.67 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . . 21
2.68 "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.69 "Unmarried Partner" . . . . . . . . . . . . . . . . . . . . 21
2.70 "Vested Retirement Benefit" . . . . . . . . . . . . . . . . 22
2.71 "Vested Retirement Benefit Payment Date". . . . . . . . . . 22
2.72 "Year of Service" . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3 MEMBERSHIP AND TRANSFERS. . . . . . . . . . . . . . . . . . 24
3.1 Commencement of Membership. . . . . . . . . . . . . . . . . 24
3.2 Termination of Membership . . . . . . . . . . . . . . . . . 24
3.3 Rehired Members . . . . . . . . . . . . . . . . . . . . . . 24
3.4 Rehired Employees.. . . . . . . . . . . . . . . . . . . . . 25
SECTION 4 RETIREMENT DATE . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Normal Retirement Date. . . . . . . . . . . . . . . . . . . 26
4.2 Early Retirement Date . . . . . . . . . . . . . . . . . . . 26
4.3 Deferred Retirement Date. . . . . . . . . . . . . . . . . . 26
4.4 Postponement of Retirement Benefits . . . . . . . . . . . . 26
SECTION 5 RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . . . . 28
5.1 Basic Retirement Benefit. . . . . . . . . . . . . . . . . . 28
5.2 Coordination of Retirement Benefits . . . . . . . . . . . . 28
5.3 Reduction of Retirement Benefit . . . . . . . . . . . . . . 28
5.4 Retirement Benefit of Certain Reemployed Members. . . . . . 28
SECTION 6 NORMAL RETIREMENT BENEFIT . . . . . . . . . . . . . . . . . 30
6.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 30
6.2 Termination of Employment after Normal Retirement Age . . . 30
SECTION 7 EARLY RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . 31
7.1 Payment of Early Retirement Benefit . . . . . . . . . . . . 31
7.2 Postponement of Early Retirement Benefit. . . . . . . . . . 31
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT. . . . . . . . . . 33
8.1 Payment of Vested Retirement Benefits . . . . . . . . . . . 33
8.2 Early Payment of Vested Retirement Benefits . . . . . . . . 33
8.3 Death Before the Payment of Vested Retirement Benefits. . . 34
8.4 Limitation on Vested Retirement Benefit Eligibility . . . . 34
SECTION 9 DISABILITY BEFORE RETIREMENT. . . . . . . . . . . . . . . . 35
9.1 Eligibility for Disability Service. . . . . . . . . . . . . 35
9.2 Forfeiture of Disability Service. . . . . . . . . . . . . . 36
SECTION 10 DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 37
10.1 Survivor Annuity. . . . . . . . . . . . . . . . . . . . . . 37
10.2 Amount of Survivor Annuity. . . . . . . . . . . . . . . . . 37
10.3 Entitlement to Death Benefit. . . . . . . . . . . . . . . . 38
SECTION 11 METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . . . 39
11.1 Normal Form of Benefit for Married Members. . . . . . . . . 39
11.2 Normal Form of Benefit for Single Members . . . . . . . . . 39
11.3 Optional Forms of Benefit . . . . . . . . . . . . . . . . . 39
11.4 Limitation on Optional Forms of Benefit . . . . . . . . . . 41
11.5 Mandatory Cash Out of Benefits Less than $3,500 . . . . . . 41
11.6 Reduction of Benefits . . . . . . . . . . . . . . . . . . . 41
SECTION 12 BENEFIT ELECTIONS . . . . . . . . . . . . . . . . . . . . . 42
12.1 Election of Optional Forms of Benefits. . . . . . . . . . . 42
12.2 Written Explanation and Election Form . . . . . . . . . . . 42
12.3 Applicable Election Period and Form of Election . . . . . . 43
12.4 Special Circumstances Governing Elections . . . . . . . . . 44
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS. . . . . . . . . . . . . 47
13.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 47
13.2 Suspension of Benefits. . . . . . . . . . . . . . . . . . . 48
SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT. . . . . . . . . . . . 50
14.1 Scope of Limitations on Benefits. . . . . . . . . . . . . . 50
14.2 Basic Limitations on Benefits . . . . . . . . . . . . . . . 50
14.3 Adjustments to Limitations. . . . . . . . . . . . . . . . . 50
14.4 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . 51
14.5 TRA 86 Protected Benefits . . . . . . . . . . . . . . . . . 52
14.6 Multiple Plans. . . . . . . . . . . . . . . . . . . . . . . 52
14.7 Special Limitations on Benefits . . . . . . . . . . . . . . 52
SECTION 15 BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 16 FUNDING AND CONTRIBUTIONS . . . . . . . . . . . . . . . . . 55
16.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . 55
16.2 Actuarial Assumptions . . . . . . . . . . . . . . . . . . . 55
16.3 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . 55
16.4 Expenses of the Plan. . . . . . . . . . . . . . . . . . . . 55
SECTION 17 ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . 57
17.1 Administrative Committee. . . . . . . . . . . . . . . . . . 57
17.2 Control and Management of Plan Assets . . . . . . . . . . . 57
17.3 Trustees and Investment Managers. . . . . . . . . . . . . . 58
17.4 Committee Membership. . . . . . . . . . . . . . . . . . . . 58
17.5 Reports to Board of Directors . . . . . . . . . . . . . . . 59
17.6 Employment of Advisers. . . . . . . . . . . . . . . . . . . 59
17.7 Limitations on Committee Actions. . . . . . . . . . . . . . 59
17.8 Committee Meetings. . . . . . . . . . . . . . . . . . . . . 59
17.9 Accounting and Disbursement of Plan Assets. . . . . . . . . 60
SECTION 18 CLAIMS AND REVIEW PROCEDURES. . . . . . . . . . . . . . . . 61
18.1 Applications for Benefits . . . . . . . . . . . . . . . . . 61
18.2 Denial of Applications. . . . . . . . . . . . . . . . . . . 61
18.3 Requests for Review . . . . . . . . . . . . . . . . . . . . 61
18.4 Decisions on Review . . . . . . . . . . . . . . . . . . . . 62
18.5 Exhaustion of Administrative Remedies . . . . . . . . . . . 62
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION . . . . . . . . . . . 63
19.1 Termination by Participating Company. . . . . . . . . . . . 63
19.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 63
19.3 IRS Termination Procedure . . . . . . . . . . . . . . . . . 64
19.4 PBGC Termination Procedure. . . . . . . . . . . . . . . . . 64
19.5 Termination of the Plan . . . . . . . . . . . . . . . . . . 65
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST. . . 66
20.1 Right to Amend. . . . . . . . . . . . . . . . . . . . . . . 66
20.2 Plan Merger or Consolidation. . . . . . . . . . . . . . . . 66
20.3 Termination of the Plan . . . . . . . . . . . . . . . . . . 66
20.4 Partial Termination of the Plan . . . . . . . . . . . . . . 67
20.5 Manner of Distribution. . . . . . . . . . . . . . . . . . . 67
SECTION 21 INALIENABILITY OF BENEFITS. . . . . . . . . . . . . . . . . 68
21.1 No Assignment Permitted . . . . . . . . . . . . . . . . . . 68
21.2 Return of Contributions . . . . . . . . . . . . . . . . . . 69
21.3 Qualified Domestic Relations Orders . . . . . . . . . . . . 69
SECTION 22 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF BATTERY
STREET ENTERPRISES, INC. OR ANY OF ITS SUBSIDIARIES . . . 72
SECTION 23 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN
MANUFACTURING COMPANY, TOP-NOTCH MANUFACTURING COMPANY,
INCORPORATED AND MILLER BELTS LTD., INC.. . . . . . . . . 73
SECTION 24 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN FORMER
EMPLOYEES OF ASIAN PACIFIC INDUSTRIES, INC. . . . . . . . 74
SECTION 25 ACTUARIAL EQUIVALENCE FACTORS . . . . . . . . . . . . . . . 75
SECTION 26 TOP HEAVY BENEFITS. . . . . . . . . . . . . . . . . . . . . 77
SECTION 27 GENERAL LIMITATIONS AND PROVISIONS. . . . . . . . . . . . . 80
27.1 No Employment Right . . . . . . . . . . . . . . . . . . . . 80
27.2 Payments from the Trust Fund. . . . . . . . . . . . . . . . 80
27.3 Payments to Minors or Incompetents. . . . . . . . . . . . . 80
27.4 Lost Members or Beneficiaries . . . . . . . . . . . . . . . 80
27.5 Personal Data to the Administrative Committee . . . . . . . 81
27.6 Insurance Contracts . . . . . . . . . . . . . . . . . . . . 81
27.7 Notice to the Administrative Committee. . . . . . . . . . . 81
27.8 Notices to Members and Beneficiaries. . . . . . . . . . . . 81
27.9 Word Usage. . . . . . . . . . . . . . . . . . . . . . . . . 81
27.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 82
27.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 82
27.12 Heirs and Successors. . . . . . . . . . . . . . . . . . . . 82
27.13 Withholding . . . . . . . . . . . . . . . . . . . . . . . . 82<PAGE>
REVISED HOME OFFICE PENSION PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
----------------------------
As Amended and Restated
Effective November 27, 1989
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
- --------- ---------------------------------------------
1.1 Introduction. On November 27, 1953, the Revised Home Office
Pension Plan of Levi Strauss & Co. was adopted. It was amended and
terminated effective December 31, 1985, and it was renamed the Terminated
Home Office Pension Plan of Levi Strauss & Co. (the "Terminated Plan") for
those in benefit pay status. This Revised Home Office Pension Plan of Levi
Strauss Associates Inc. (originally named the Revised Home Office Pension
Plan of Levi Strauss & Co.) (the "Plan") was adopted effective December 30,
1985. Each employee who was a Member of the Terminated Plan on December 30,
1985, and who was not receiving benefits on that date or scheduled to receive
benefits no later than January 31, 1986, from the Terminated Plan was
transferred to this Plan as of December 30, 1985. This Plan was established
to maintain retirement benefits and certain other benefits for those who are
transferred from the Terminated Plan and for others who have or may have
rights to benefits under the Terminated Plan as of December 30, 1985, but who
are not receiving benefits on that date or scheduled to receive benefits no
later than January 31, 1986, from the Terminated Plan. This Plan was also
established to provide such benefits to eligible employees ("Employees") of
Levi Strauss & Co. and other Participating Companies (collectively referred
to as the "Company"), or to the beneficiaries of Employees, and thereby to
encourage Employees to make and continue careers with the Company, as
described in this Plan document and in the Trust Agreement adopted as a part
of this Plan. The Plan was amended and restated effective November 28, 1988.
By this instrument Levi Strauss Associates Inc. amends and restates the
Plan to comply with the Tax Reform Act of 1986, as amended, and related
legislation. The provisions of this amended and restated Plan will generally
be effective November 27, 1989, except as specifically stated otherwise in
this document (the "Effective Date"). Levi Strauss Associates Inc. intends
that the Plan as so amended and restated and the Trust Fund established under
the Plan, will continue to qualify as a plan and trust which meet the
requirements of sections 401(a) and 501(a), respectively, of the Internal
Revenue Code of 1986, as amended.
Persons to Whom Plan Applies. This Plan document is not a new Plan
which succeeds the Plan as previously in effect, but is an amendment and
restatement of the Plan as in effect before the Effective Date. The amount,
right to and form of any benefits under the Plan, of each Member who is an
Employee on and after the Effective Date, or of persons who are claiming
through such a Member, will be determined under this Plan. The amount, right
to and form of any benefits under this Plan, of each Member who has separated
from Service with the Company before the Effective Date, or of persons who
are claiming benefits through such a Member, will be determined in accordance
with the provisions of the Plan in effect on the date of the Member's
separation from Service, except as may otherwise be expressly provided under
this Plan, unless the Member again becomes an Employee on or after the
Effective Date. This amended and restated Plan will not reduce any Member's
Retirement Benefit under the Plan, as determined on the date immediately
preceding the Effective Date, and this Plan will be construed accordingly.<PAGE>
SECTION 2 DEFINITIONS.
- --------- -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Act" means the Employee Retirement Income Security Act of 1974,
as amended, and any Regulations or rulings issued under the Act.
2.2 "Actuary" means the enrolled actuary (within the meaning of the
Act) engaged by the Administrative Committee.
2.3 "Administrative Committee" means the committee appointed to
administer the Plan as described in Section 17.1.
2.4 "Affiliated Company" means:
(a) A corporation that is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes Levi
Strauss Associates Inc.;
(b) Any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with Levi Strauss
Associates Inc.;
(c) An organization (whether or not incorporated) that is a member
of an affiliated service group (as defined in section 414(m) of the Code)
which includes Levi Strauss Associates Inc.;
(d) Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; and
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
2.5 "Alternate Payee" means the spouse, former spouse, child or other
dependent of a Member who is recognized by a Qualified Domestic Relations
Order as having the right to receive all, or a portion of, the Member's
Retirement Benefit.
2.6 "Annuity Contract" means the annuity contract purchased from
Transamerica Occidental Life Insurance Company with respect to the Revised
Home Office Pension Plan upon the termination of the Terminated Plan on
December 30, 1985.
2.7 "Annuity Starting Date" means the first day of the first month for
which an amount is payable to a Member as an annuity. The Annuity Starting
Date for a Member who elects (with the consent of his or her spouse if the
Member is legally married) to receive his or her Retirement Benefit in a form
other than an annuity in accordance with Section 11.3 is the first day on
which all events (including the passing of the day on which benefit payments
are scheduled to begin) have occurred which entitle the Member to receive his
or her first benefit payment from the Plan.
2.8 "Beneficiary" means the beneficiary or beneficiaries designated by
a Member or otherwise under Section 11.3 and Section 15 (or any other person
or persons designated as such under applicable law) to receive the amount, if
any, payable under the Plan upon the Member's death.
2.9 "Benefit Service" means the number of Years of Service and
fractions of such years before a Member's Retirement Date during which the
Member was an Employee. For this purpose, a Member will accrue a full month
of Benefit Service for every calendar month in which he or she is credited
with at least 1 Hour of Service or in which he or she otherwise has Service.
Years of Service and fractions of such years will be determined by the
Administrative Committee based on such months of Benefit Service.
Benefit Service with respect to a Member who is Totally and Permanently
Disabled, will include any additional Benefit Service credited under Section
9.1.
Benefit Service with respect to a Member who is on a military leave of
absence will include any Benefit Service required to be credited under the
Military Selective Services Act, as amended, or any other federal law of
similar import. If a Member who is on a military leave of absence becomes
Totally and Permanently Disabled, Benefit Service with respect to the Member
will include any additional Benefit Service the Member receives under Section
9.1.
Benefit Service with respect to a Member who is reemployed by the
Company as an Employee or a Casual Employee after his or her Vested
Retirement Benefit Payment Date, Early Retirement Date, Normal Retirement
Date, or Deferred Retirement Date, will mean the number of Years of Service
and fractions of such years during which the Member is so reemployed,
determined under Section 13.2 of the Plan. Years of Service will be
determined by the Administrative Committee based on such months of Benefit
Service. Such additional Benefit Service will be added to the Member's
Benefit Service earned before his or her Vested Retirement Benefit Payment
Date, Early Retirement Date, Normal Retirement Date, or Deferred Retirement
Date as provided in Section 5.4. A Member who retires and is reemployed by
the Company as a Retiree Coordinator will not resume membership in the Plan
or accrue additional Benefit Service under this Section 2.9 or Section 13.2.
2.10 "Board of Directors" means the Board of Directors of Levi Strauss
Associates Inc. The Board of Directors may delegate to any committee,
subcommittee or any of its members, or to any agent, its authority to perform
any act under the Plan, including without limitation those matters involving
the exercise of discretion. Any such delegation of discretion will be
subject to revocation at any time at the discretion of the Board of
Directors. Any reference to the Board of Directors in connection with such
delegated authority will be deemed a reference to the delegate or delegates.
2.11 "Break in Service" means a period of at least 12 consecutive
calendar months, beginning on the date Service ends, during which a person
has not performed 1 Hour of Service (or been treated as performing Service)
under Section 2.58, as determined by the Administrative Committee.
2.12 "Casual Employee" means a Member who is rehired by the Company on
or after his or her Early Retirement Date or Normal Retirement Date on a
temporary basis. Any Benefit Service earned by a Member who returns to
Service as a Casual Employee will be determined under Section 2.9 and Section
13.2. Any Benefit Service earned by the Member as a Casual Employee will be
added to the Member's Benefit Service earned before his or her Early
Retirement Date or Normal Retirement Date, as provided in Section 5.4.
2.13 "Code" means the Internal Revenue Code of 1986, as amended, and
any Regulations or rulings issued under the Code.
2.14 "Committee" means the Administrative Committee or Investment
Committee, as applicable.
2.15 "Common-Law Spouse" means the spouse of a Member under a common-
law marriage that is recognized under the law of the state where the Member
resides. The determination of whether a person is a Common-Law Spouse will
be made by the Administrative Committee, in its sole and absolute discretion.
2.16 "Company" means Levi Strauss Associates Inc., LS&CO. and each
other Participating Company or any of them.
2.17 "Compensation" means for each Plan Year of the Plan or of the
Terminated Plan all compensation reported on an employee's Form W-2 (or any
replacement form issued by the IRS) for the Plan Year which is actually paid
to the employee plus any tax deferred contributions made on behalf of an
employee to the Employee Investment Plan of Levi Strauss Associates Inc. and
any amounts contributed by an employee to a cafeteria plan maintained by the
Company under section 125 of the Code. Back pay awards will be included in
"Compensation" only for the Plan Year in which the back pay award is made and
the amount to be included will be limited to the amount attributable to that
Plan Year, regardless of mitigation of damages.
If an employee is a sales representative, account manager or account
executive, or any of the 3, for the entire Plan Year (or the portion of the
Plan Year during which he or she is a Member), his or her Compensation will
not exceed the following limits, as determined by the Committee:
(a) A sales representative's Compensation will not exceed the
maximum for the LS&CO. Home Office Salary Grade 5 salary range in effect at
the end of such Plan Year; and
(b) An account manager's Compensation will not exceed the maximum
for the LS&CO. Home Office Salary Grade 6 salary range in effect at the end
of such Plan Year; and
(c) Effective on and after November 26, 1990, an account
executive's Compensation will not exceed the maximum for the LS&CO. Home
Office Salary Grade 7 salary range in effect at the end of such Plan Year.
Prior to November 26, 1990, an account executive's Compensation will not
exceed the maximum for the Home Office Salary Grade 6 in effect at the end of
such Plan Year.
In the case of an Employee who is working abroad or who is working for a
foreign subsidiary of the Company, but continues to be paid from the home
office of the Company, Compensation will be the amount determined by the
Administrative Committee to be the amount which would have been paid to the
employee if he or she had been on the domestic service payroll of the
Company.
The term "Compensation" will not include:
(a) Amounts paid or contributed to any group insurance plan or
other employee benefit plan established or maintained by the Company or an
Affiliated Company, except as provided above;
(b) Relocation expenses;
(c) Any ordinary income recognized by the employee related to the
exercise of any right granted by any stock option plan maintained by the
Company or an Affiliated Company;
(d) Payments under the Company's long-term performance plan;
(e) Any severance payments;
(f) Payments from the Company's Long Term Disability Plan;
(g) "Imputed Income;" or
(h) Perks.
"Imputed Income" means the amount of income recognized by a Member who
receives Company paid life insurance in excess of $50,000 and such other
amounts the Administrative Committee determines to be imputed income to the
Member under the Code. "Perks" include, but are not limited to, Company paid
parking, Company provided car allowances, and flexible perk allowances
provided to certain Members which may be used by the Member for financial
counseling or planning; tax preparation or advice; excess medical expenses;
physical examinations; additional life insurance, disability insurance,
accidental death and dismemberment insurance or liability insurance; business
lunch club dues or legal expenses.
For Plan Years beginning on and after the Effective Date, Compensation
for any Plan Year in excess of $200,000 or any successor limitation as
provided for the Plan Year in section 401(a)17 of the Code (as adjusted as
provided under section 401(a)(17) of the Code) will be disregarded. For Plan
Years beginning in and after 1991, the $200,000 Compensation adjustment that
takes effect on January 1 of each year is effective for the Plan Year
beginning in that year. For the 1989 and 1990 Plan Years, the $200,000
Compensation adjustment that is effective January 1 of 1989 and 1990 will be
used for the Plan Year that ends in each of such years. In determining the
Compensation of an Employee, the family aggregation rules of section
414(q)(6) of the Code will apply, except that in applying those rules, the
term "family" will include only the spouse of the Employee and any lineal
descendants of the Employee who have not reached age 19 before the close of
the Plan Year.
A Member's Compensation will be determined by the Administrative
Committee and such determination will be conclusive and binding on all
persons.
2.18 "Deferred Retirement Benefit" means the deferred retirement
benefit payable to a Member under Section 4.3.
2.19 "Deferred Retirement Date" or "Deferred Retirement" means the date
a Member is entitled to receive a Deferred Retirement Benefit under
Section 4.3.
2.20 "Disability Retirement Service" means the Service credited to a
Member who is Totally and Permanently Disabled under Section 9.1.
2.21 "Domestic Partner" means the Common-Law Spouse or Unmarried
Partner of a Member who is entitled to receive a Survivor Annuity under
Section 10.
2.22 "Domestic Relations Order" means any judgment, decree, or order
(including an order approving a property settlement agreement) that:
(a) Relates to the provision of child support, alimony, or marital
property rights to a spouse, child, or other dependent of a Member; and
(b) Is entered or made under the domestic relations or community
property laws of any state.
2.23 "Early Retirement Benefit" means the early retirement benefit
payable to a Member under Section 4.2.
2.24 "Early Retirement Date" or "Early Retirement" means the date a
Member has reached age 55 and completed 15 Years of Service and is entitled
to receive an Early Retirement Benefit under Section 4.2.
2.25 "Effective Date" means November 27, 1989, except as expressly
provided otherwise in this document or as required by the Tax Reform Act of
1986, as amended, or other applicable legislation.
2.26 "Employee" means any person who is employed by the Company
excluding:
(a) Any employee of LS&CO. who is not paid from the home office of
Levi Strauss Associates Inc.;
(b) Any employee of a Participating Company other than LS&CO. who
is not paid on a salary or commission basis;
(c) Any stocktaker, service representative, Retiree Coordinator or
"Temporary Employee;"
(d) Any employee who is not employed in a state or territory of
the United States or who receives no remuneration from the Company that
constitutes income from sources within the United States (within the meaning
of section 861(a)(3) of the Code);
(e) Any alien who:
(i) Receives remuneration from the Company that constitutes
income from sources within the United States (within the meaning of
section 861(a)(3) of the Code); and
(ii) Has been transferred by the Company from a job outside
the United States to a job within the United States, during any period
with respect to which the alien is benefiting (by reason of accruing a
benefit or making or having contributions made on the alien's behalf)
under:
(A) A retirement plan established or maintained outside the
United States by a foreign subsidiary (including a domestic subsidiary
operating abroad) or a foreign division of the Company; or
(B) The Levi Strauss International Retirement Plan for Third
Country National Employees or any successor or similar plan maintained
by the Company or an Affiliated Company;
(f) A United States citizen locally hired by a foreign subsidiary
(including a domestic subsidiary operating abroad) or a foreign division of
a Participating Company;
(g) Any employee who is included in a unit of employees covered by
a negotiated collective bargaining agreement which does not provide for his
or her membership in the Plan;
(h) A "leased employee" (as defined in section 414(n) or section
414(o) of the Code) who is providing services to the Company or an Affiliated
Company;
(i) Any employee who is covered by an personal employment contract
that expressly provides he or she will not be eligible for membership in the
Plan; or
(j) An employee who is included in a group or classification of
employees on a payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan.
A member of the board of directors of the Company is not eligible for
membership in the Plan unless he or she is also an Employee of the Company.
The Board of Directors may on a nondiscriminatory basis, designate as an
Employee a person described in (c), (d), (f) or (j) above. Such designation
must be made in writing after receiving the advice of counsel.
Any "Temporary Employee" and any stocktaker employed by the Company will
not be treated as an Employee, except for the purposes of and in accordance
with receiving benefits computed under the Terminated Plan. A "Temporary
Employee" means a person who:
(i) Is hired to fill, for a period not to exceed 6 calendar
months, a position which arises from either an emergency situation or
the temporary absence of an Employee; and
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time.
A person's status as an Employee will be determined by the
Administrative Committee and such determination will be conclusive and
binding on all persons.
2.27 "Equivalent Actuarial Value" means a benefit of equivalent value
when computed on the basis of the factors specified in Section 25.
2.28 "Final Average Compensation" means a Member's highest average
annual Compensation, as determined by the Administrative Committee, for the
5 consecutive full Plan Years out of the 10 full Plan Years of Service
performed by the Member immediately before his or her Retirement Date or the
date of his or her earlier termination of Service. If a Member has less than
10 Plan Years of Service on such date, his or her Final Average Compensation
will be computed on the basis of his or her full Plan Years of Service not in
excess of his or her highest paid 5 consecutive Plan Years of Service. For
this purpose, Plan Years will include Plan Years of this Plan and of the
Terminated Plan. In the case of a Member with less than 5 consecutive full
Plan Years of Service as of November 28, 1988, the Member's Final Average
Compensation will in no event be less than the Member's Final Average
Compensation determined under the Plan as in effect on November 27, 1988.
2.29 "High-3 Year Average Compensation" means a Member's average annual
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member
has not been employed with the Company or an Affiliated Company for 3
Consecutive Plan Years, "High-3 Year Average Compensation" will mean the
Member's average annual compensation for the actual number of consecutive
Plan Years with the Company or an Affiliated Company during which his or her
compensation was the highest.
"Compensation" includes the Member's wages, salaries, fees for
professional services and other amounts received (without regard to whether
an amount is paid in cash) for personal services actually performed in the
course of employment with the Company or an Affiliated Company to the extent
that the amounts are includable in gross income (including but not limited to
commissions paid sales representatives, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements or expenses under a nonaccountable
plan (as defined in section 1.62(c) of the Code)) determined without regard
to the exclusions from gross income under sections 931 and 939 of the Code.
"Compensation" will also include:
(a) In the case of a Member who is an employee within the meaning
of section 401(c) of the Code, the Member's earned income (as described under
section 401(c)(2) of the Code) determined without regard to the exclusions
from gross income similar to those in sections 931 and 939 of the Code;
(b) Any foreign earned income as defined under section 911(b) of
the Code, regardless of whether such income is excludable from the gross
income of the Employee under section 911 of the Code;
(c) Amounts described in sections 104(a)(3), 105(a) and 105(b) of
the Code, but only to the extent that such amounts are includable in the
gross income of the Employee;
(d) Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Employee, but only to the extent
that such amounts are not deductible by the Employee under section 217 of the
Code;
(e) The value of a nonqualified stock option granted to the
Employee by the Company or an Affiliated Company, but only to the extent that
the value of the option is includable in the gross income of the Employee for
the taxable year when granted; and
(f) The amount includable in the gross income of the Employee upon
making an election described in section 83(b) of the Code.
"Compensation" will not include:
(a) Company contributions to a deferred compensation plan that
before application of the limitations of section 415 of the Code are not
includable in the Employee's gross income for federal income tax purposes in
the taxable year of the Employee in which the contributions are made;
(b) Company contributions to a simplified employee pension plan
described in section 408(k) of the Code to the extent that such contributions
are not considered as compensation for the taxable year in which contributed;
(c) Any distributions from a deferred compensation plan
regardless of whether such amounts are includable in gross income of the
Employee for federal income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock
option;
(e) Amounts realized when restricted stock or property becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(f) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(g) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are excludable from gross income of the Employee); Company
contributions to a cafeteria plan described in section 125 of the Code, or
Company contributions (whether or not under a salary reduction arrangement)
towards the purchase of an annuity contract described in section 403(b) of
the Code (whether or not the contributions are excludable from the gross
income of the Employee).
In determining the High-3 Year Average Compensation for each Plan Year
beginning on or after the Effective Date, compensation for any Plan Year in
excess of $200,000, or any successor limitation as provided for the Plan Year
in section 401(a)(17) of the Code (as adjusted as provided under section
401(a)(17) of the Code) (the "401(a)(17) limitation"), will be disregarded.
For Plan Years beginning in and after 1991, the adjustment to the 401(a)(17)
limitation that takes effect on January 1 of each year is effective for the
Plan Year beginning in that year. For the 1989 and 1990 Plan Years, the
adjustment to the 401(a)(17) limitation that is effective January 1 of 1989
and 1990 will be used for the Plan Year that ends in each of such years. In
determining the compensation of an Employee, the family aggregation rules of
section 414(q)(6) of the Code will apply, except that in applying those
rules, the term "family" will include only the spouse of the Employee and any
lineal descendants of the Employee who have not reached age 19 before the
close of the Plan Year.
2.30 "Highly Compensated Employee" means an Employee of the Company or
an Affiliated Company who:
(a) During the preceding Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or an
Affiliated Company in excess of $75,000 (as adjusted under Regulations
or rulings issued by the IRS);
(iii) Received "compensation" from the Company or an
Affiliated Company in excess of $50,000 (as adjusted under Regulations
or rulings issued by the IRS) and was in the top 20% of employees of the
Company and all Affiliated Companies when ranked on the basis of
"compensation" paid during such Plan Year (referred to as the "Top Paid
Group" under IRS Regulations); or
(iv) Was at any time an officer of the Company or an
Affiliated Company and received "compensation" greater than 50% of the
amount in effect under section 415(b)(1)(A) of the Code; or
(b) During the Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code); or
(ii) Satisfies the requirements of paragraphs (ii), (iii), or
(iv) of Section 2.30(a) and is a member of the group consisting of the
100 employees of the Company and all Affiliated Companies paid the
greatest "compensation" during the Plan Year.
For purposes of determining the number of employees in the Top
Paid Group under Section 2.30(a)(iii) for a Plan Year, the following
employees, as described in sections 414(q)(8) and (11) of the Code, will
be excluded:
(i) Those who have not completed 6 months of Service;
(ii) Those who normally work less than 17-1/2 hours per week;
(iii) Those who normally work less than 6 months during any
year;
(iv) Those who have not attained age 21;
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administrative Committee will determine whether an employee is an
officer based on the responsibilities of the employee with the Company or an
Affiliated Company. Of those employees determined to be officers, no more
than 50 employees (or, if less, the greater of 3 employees or 10% of the
employees, excluding all employees described in sections 414(q)(8) and (11)
of the Code) will be treated as officers. Further, if no officer receives
the level of "compensation" described in Section 2.30(a)(iv), the highest
paid officer of the Company and all Affiliated Companies will be treated as
a Highly Compensated Employee described in Section 2.30(a)(iv).
For purposes of determining whether an employee is a Highly Compensated
Employee only, any person who is a member of the family of a 5% owner or of
a Highly Compensated Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest compensation during the Plan Year:
(i) Will not be considered a separate employee; and
(ii) Any "compensation" paid to such person and the Company
or Employee contributions made on behalf of such person will be treated
as if it were paid to or on behalf of the 5% owner or Highly Compensated
Employee.
For purposes of the immediately preceding sentence, the term "family" means,
with respect to any employee, the employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
The term "compensation" for purposes of this Section 2.30 means
compensation as defined in section 415(c)(3) of the Code, determined without
regard to section 125 of the Code (regarding contributions to a cafeteria
plan), section 402(a)(8) of the Code (regarding contributions to a 401(k)
plan) and section 402(h)(1)(B) of the Code (regarding contributions to a
simplified employee pension plan), and in the case of employer contributions
made under a salary reduction agreement, without regard to section 403(b) of
the Code (regarding annuity contracts).
2.31 "Highly Compensated Former Employee" means a former employee who
separated from Service with the Company or an Affiliated Company before the
beginning of the Plan Year and who was a Highly Compensated Employee for
either:
(a) The employee's year of separation from Service; or
(b) Any Plan Year ending on or after the employee's 55th birthday.
An employee who performs no services for the Company or an Affiliated Company
during the Plan Year will be treated as a former employee.
2.32 "Home Office Salary Grade" means the job classification system for
home office employees as in effect from time to time.
2.33 "Hour of Service" means an hour of employment for which an
Employee is paid or is entitled to payment for the performance of duties as
determined under the Labor Department Regulations governing the computation
of hours of service.
2.34 "Investment Committee" means the committee appointed to control
and manage the Plan's assets as described in Section 17.
2.35 "Investment Manager" means a person who is appointed to direct the
investment of all or any part of the Trust Fund under Section 17.2 and is
either a bank, an insurance company or a registered investment adviser under
the Investment Advisers Act of 1940 and who has acknowledged in writing that
it is a fiduciary with respect to the Plan.
2.36 "IRS" means the United States Internal Revenue Service.
2.37 "Labor Department" means the United States Department of Labor.
2.38 "Legally Married" means that the Member participates in a
marriage, other than a common-law marriage, which is recognized as legal and
binding by the state where the Member lives.
2.39 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
2.40 "Member" means any Employee who is enrolled in the membership of
the Plan as provided in Section 3.
2.41 "Membership Date" means June 1 and December 1 of each Plan Year.
2.42 "Misconduct" means that a person:
(a) Has committed an act of embezzlement, fraud or theft with
respect to the property of the Company or an Affiliated Company or any person
with whom the Company or an Affiliated Company does business;
(b) Has deliberately disregarded the rules of the Company or an
Affiliated Company in such a manner as to cause material loss, damage or
injury to, or otherwise endanger the property or employees of the Company or
an Affiliated Company;
(c) Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
(d) Has engaged in any conduct which constitutes unfair
competition with the Company or an Affiliated Company;
(e) Has induced any person to breach any contract with the Company
or an Affiliated Company; or
(f) Has sold Company or Affiliated Company products to an
unauthorized account or has assisted an authorized account in wholesaling
Company or Affiliated Company products.
2.43 "Normal Retirement Age" means age 65 or, in the case of a Member
whose Service begins after the Member reaches age 60, the Member's age on the
5th anniversary of the date the Member's Service begins.
2.44 "Normal Retirement Benefit" means the normal retirement benefit
payable to a Member under Section 4.1.
2.45 "Normal Retirement Date" or "Normal Retirement" means the date the
Member is entitled to receive a Normal Retirement Benefit under Section 4.1.
2.46 "Participating Company" means LS&CO. or any Affiliated Company,
the board of directors or equivalent governing body of which adopts the Plan
and the Trust Agreement by appropriate action with the written consent of the
Board of Directors. Any Affiliated Company which so adopts the Plan will be
deemed to appoint Levi Strauss Associates Inc., the Administrative Committee,
the Investment Committee and the Trustee its exclusive agents to exercise on
its behalf all of the power and authority conferred under this Plan document,
or by the Trust Agreement, upon the Company. The authority of Levi Strauss
Associates Inc., the Committees and the Trustee to act as such agents will
continue until the Plan is terminated as to the Affiliated Company and the
relevant portion of the Trust Fund has been distributed by the Trustee as
provided in Section 19.
2.47 "PBGC" means the United States Pension Benefit Guaranty
Corporation.
2.48 "Plan" means this Revised Home Office Pension Plan of Levi Strauss
Associates Inc., as amended from time to time.
2.49 "Plan Year" means the annual period corresponding to LS&CO.'s
fiscal year for federal income tax purposes.
2.50 "Qualified Domestic Relations Order" means a domestic relations
order that satisfies the requirements described in Section 21.3.
2.51 "Qualified Joint and Survivor Annuity" means an annuity described
in Section 11.1.
2.52 "Regulations" means the applicable regulations issued under the
Code or the Act by the IRS, the PBGC, the Labor Department or any other
governmental authority and any temporary rules promulgated by such
authorities pending the issuance of such regulations.
2.53 "Rehire Anniversary Year" means for the first year that a Member
returns to Service as a Casual Employee, the period beginning on the date the
Member returns to Service and ending on December 31. The Rehire Anniversary
Year for the second and all subsequent years that a Member remains in Service
as a Casual Employee means the calendar year. The Benefit Service earned by
a Member during a Rehire Anniversary Year will be determined under Sections
2.9 and 13.2. A Member may only have one Rehire Anniversary Year at a given
time.
2.54 "Required Beginning Date" generally means April 1 of the calendar
year following the year in which the Member attains age 70-1/2. However, the
Required Beginning Date for a Member who is not a 5% owner within the meaning
of section 416(i)(1)(B)(i) of the Code, who attained age 70-1/2 during 1988,
and had not retired by the Effective Date, will be April 1, 1990. In
addition, the Required Beginning Date for a Member who attained age 70-1/2
before January 1, 1988, and who was not a 5% owner within the meaning of
section 416(i)(1)(B)(i) of the Code during any Plan Year ending with or
within the Plan Year in which he or she reached age 66-1/2 or any subsequent
year, is the April 1 following the later of the calendar year in which the
Member reaches age 70-1/2 or retires. Lastly, the Required Beginning Date
for a Member who filed a written election under section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982 before January 1, 1984, will be
the date specified in such election if the election satisfies all of the
applicable requirements specified by the IRS, as determined by the
Administrative Committee.
2.55 "Retiree Coordinator" means a retired Employee of the Company who
resumes employment with the Company or an Affiliated Company on a temporary
basis for the purpose of providing personal relations type services to other
retired employees of the Company or an Affiliated Company.
2.56 "Retirement Benefit" means the retirement benefit payable to a
Member in the form of a Straight Life Annuity as provided in Section 5.
2.57 "Retirement Date" means a Member's Normal Retirement Date, Early
Retirement Date or Deferred Retirement Date, or any other Retirement Date as
provided in Section 4.
2.58 "Service" means employment (whether or not as an Employee) with
the Company or with an Affiliated Company. Periods of employment performed
by a person before the Effective Date which would be disregarded under this
Plan or the Terminated Plan, as then in effect, will only be counted for
purposes of determining membership under Section 3, and not for any other
purpose under the Plan. Service which would be counted under the Terminated
Plan will be counted under this Plan, but the same period will be counted
only once. Service will begin on the date that an Employee first performs 1
Hour of Service for the Company or Affiliated Company. Service will end on
the earlier of:
(a) The date the Employee retires;
(b) The date the Employee dies;
(c) The date the Employee terminates employment; or
(d) On the first anniversary of the date the Employee is absent
from service for any other reason (e.g., an authorized period of absence, as
described in paragraphs (i) and (ii), etc. below).
However, the Service of a Member who becomes Totally and Permanently Disabled
and who continues to accrue Service under Section 9.1 will not terminate on
the date the Member terminates employment with the Company.
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated),
Service includes:
(i) Periods of vacation;
(ii) Periods of absence whether or not the Employee is paid,
not to exceed 12 calendar months, authorized by the Company for
sickness, temporary disability or personal reasons;
(iii) Periods of service in the Armed Forces of the United
States, if and to the extent required by the Military Selective Service
Act, as amended, or any other federal law of similar import; provided
that the Employee returns to Service with the Company or an Affiliated
Company within the time his or her employment rights are protected by
such law; and
(iv) Any period of 12 consecutive months or less, beginning
on the first day of the month after a Member terminates employment and
ending on the last day of the month preceding the Member's reemployment
date, if the Member performs at least 1 Hour of Service within the first
month of reemployment. Such period of Service will only be considered
for determining Membership in the Plan and determining the Member's
Vested Retirement Benefit, Early Retirement Benefit and Disability
Retirement Benefit.
Effective November 25, 1985, solely for the purpose of determining
whether an Employee has incurred a Break in Service, Service will end on the
second anniversary of the first day of a period of absence caused by any of
the following:
(i) The Employee's pregnancy;
(ii) The birth of the Employee's child;
(iii) The placement of a child with the Employee in connection
with the adoption of the child by the Employee; or
(iv) The care of the Employee's child immediately following
the child's birth or adoption.
The Administrative Committee may require the Employee to provide evidence
that the period of absence was due to one of the reasons described above.
A Member's Service will be determined by the Administrative Committee
and such determination will be conclusive and binding on all persons.
If an Employee terminates employment and is reemployed after incurring
a Break in Service, as defined in Section 2.11, Service will recommence on
the date the Employee again performs 1 Hour of Service. A Member will
receive credit for the aggregate of all periods of Service, except as
follows:
(a) If the Member has incurred a 60 consecutive month Break in
Service, Service before such 60-month Break in Service will only be counted
if the Member had a Vested Retirement Benefit under Section 2.70 before such
60 consecutive month Break in Service; and
(b) If a Member's Service as of November 25, 1985, would be
disregarded under the Terminated Plan in effect as of such date, such Service
will continue to be disregarded on and after November 25, 1985, under this
Plan to the extent permitted by applicable law.
2.59 "Social Security Benefit" means the annual amount of old age
insurance benefits which would be payable to a Member on his or her 65th
birthday, or any later Retirement Date, computed under the Federal Social
Security Act in effect on the date (which may not be later than the date of
the Member's termination of Service or, for a Member who terminates
employment by reason of Total and Permanent Disability, the date that the
Member is determined to be Totally and Permanently Disabled) as of which such
computation is made, on the assumptions that:
(a) There are no increases in the level of such old age benefits
after such computation date;
(b) If the Member retired on an Early Retirement Date, the Member
is not paid any Compensation on or after his or her Early Retirement Date;
(c) If the Member terminates Service other than on his or her
Early Retirement Date and before his or her 65th birthday the Member
continues to be paid annual Compensation from such computation date until his
or her 65th birthday at his or her annual rate of Compensation (as determined
by the Administrative Committee) in effect on such computation date; and
(d) The Member does not fail to qualify for, or lose such old age
insurance benefits by failure to apply for such benefits, entry into covered
employment or otherwise.
2.60 "Social Security Retirement Age" means age 65 if the Member was
born before January 1, 1938; age 66 if the Member was born on or after
January 1, 1938, and before January 1, 1955; and age 67 if the Member was
born on or after January 1, 1955.
2.61 "Straight Life Annuity" means an annuity described in
Section 11.2.
2.62 "Surviving Spouse" means:
(a) With respect to a Member who dies on or after the Annuity
Starting Date, the spouse to whom such Member was Legally Married as of the
Annuity Starting Date; and
(b) With respect to a Member who dies before the Annuity Starting
Date, the spouse to whom such Member was Legally Married for at least 1 year
as of the date of the Member's death.
If a Member divorces his or her Surviving Spouse after the Member's Annuity
Starting Date, such Surviving Spouse will continue to be the Member's
Surviving Spouse for purposes of the Plan unless provided otherwise based on
the terms of a Qualified Domestic Relations Order under Section 21.3. The
preceding sentence will apply regardless of whether the Member remarries
after his or her divorce from such Surviving Spouse. For purposes of the
Plan, the term "Surviving Spouse" will not include a Common-Law Spouse.
2.63 "Survivor Annuity" means the annuity described in Section 10.1
payable with respect to a Member who dies before the Annuity Starting Date.
2.64 "Terminated Plan" means the Terminated Home Office Pension Plan of
Levi Strauss & Co. for those in benefit pay status, as amended and terminated
effective December 31, 1985.
2.65 "Totally and Permanently Disabled" or "Total and Permanent
Disability" means the Member is eligible to receive disability benefits under
the Federal Social Security Act or, alternatively, has been determined to be
Totally and Permanently Disabled by the Administrative Committee based on
competent medical evidence.
2.66 "Trust Agreement" means the trust agreement between Levi Strauss
Associates Inc. and the Trustee as a part of the Plan under which the assets
of the Plan are managed.
2.67 "Trust Fund" means the trust fund consisting of the assets of the
Plan and maintained by the Trustee under the Plan and Trust Agreement.
2.68 "Trustee" means the Trustee or Trustees of the Trust Fund.
2.69 "Unmarried Partner" means a "partner" who shares a committed
relationship with the Member which has the following characteristics:
(a) The Member and "partner" live together;
(b) The Member and "partner" are financially interdependent;
(c) The Member and "partner" are jointly responsible for each
other's common welfare;
(d) The Member and "partner" consider themselves as life partners;
and
(e) The Member registers his or her partner as an Unmarried
Partner with LS&CO.
A "partner" does not include a Member's roommate, sibling, parent or other
blood relative. In addition, to qualify as an Unmarried Partner neither the
Member or the partner must be Legally Married. A "partner" who satisfies all
of the above characteristics will not qualify as an Unmarried Partner until
1 year after the date the Member registers the partner as an Unmarried
Partner with LS&CO., unless at the time the Member registers the partner, the
Member provides proof that the Member and his or her Domestic Partner have
been together in a relationship which satisfies the above requirements for at
least 1 year, in which case the partner will qualify as a Domestic Partner on
such registration date. The determination of whether a partner qualifies as
an Unmarried Partner will be made by the Administrative Committee in its sole
and absolute discretion.
2.70 "Vested Retirement Benefit" means the nonforfeitable Retirement
Benefit of a Member who has:
(a) Completed 5 Years of Service;
(b) Become eligible for benefits under Section 4.1 on account of
the attainment of Normal Retirement Age; or
(c) Become eligible for the Disability Retirement Service provided
in Section 9.1.
The term "Vested Retirement Benefit" also includes a Member's normal
retirement benefit earned under the Terminated Plan as of December 30, 1985.
If the Plan becomes Top Heavy, a Member's Vested Retirement Benefit will be
determined under Section 26.
2.71 "Vested Retirement Benefit Payment Date" means the date described
in Section 8 on which the payment of the Member's Vested Retirement Benefit
begins.
2.72 "Year of Service" means a 12 month period of Service in which a
Member has Service under Section 2.58. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
Years of Service and fractions of such years with respect to a Member who has
terminated Service and returns to Service with the Company will be determined
under Sections 2.58 and 3.3. Years of Service with respect to an Employee
who has terminated Service and returns to Service with the Company will be
determined under Sections 2.58 and 3.4.<PAGE>
SECTION 3 MEMBERSHIP AND TRANSFERS.
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3.1 Commencement of Membership. Each Employee who was a Member of the
Plan as of the Effective Date, will continue to be a Member. Each Employee
who was not a Member as of the Effective Date, will automatically become a
Member in the Plan on the later of the Membership Date next following:
(a) The first anniversary of the date the Employee's Service
commenced; or
(b) The date on which he or she becomes an Employee.
The Administrative Committee will take any necessary or appropriate
action to enroll each Employee eligible to be enrolled in the Plan under this
Section 3. If it is determined that an Employee has for any reason not been
timely enrolled in the membership of the Plan, such Employee will be
retroactively enrolled to the extent permitted by law.
3.2 Termination of Membership. A Member's membership in the Plan will
end upon his or her:
(a) Termination of Service for the purpose of retirement after his
or her Early Retirement Date, Normal Retirement Date or Deferred Retirement
Date;
(b) Death;
(c) Total and Permanent Disability (unless the Member continues to
accrue Service under Section 9.1);
(d) Termination of employment with the Company; or
(e) Upon any Break in Service.
The membership of a Member who, without any Break in Service, ceases to be an
Employee will not end but no subsequent Service will be treated as Benefit
Service unless and until the Member again becomes an Employee.
3.3 Rehired Members. If a Member who incurs a Break in Service is
rehired, he or she will recommence membership in the Plan and be credited
with his or her prior Service under the following paragraph (a) or (b):
(a) If the Member had a Vested Retirement Benefit at the time of
his or her Break in Service or, alternatively, has not incurred a 60
consecutive month Break in Service, then the Member will recommence
membership in the Plan on:
(i) The date of his or her reemployment, if the Member is
rehired as an Employee, or
(ii) The date he or she becomes an Employee, if the Member is
not rehired as an Employee.
The Member's prior Service will be taken into account for purposes of
determining his or her Vested Retirement Benefit under Section 2.70 and years
of Benefit Service under Section 2.9.
(b) If the Member did not have a Vested Retirement Benefit at the
time of his or her Break in Service and has incurred a 60 consecutive month
Break in Service, then the Member will be considered a new hire and begin
Membership in the Plan on the date he or she satisfies the eligibility
requirements described in Section 3.1. The Member's prior Service will not
be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.
3.4 Rehired Employees. If an Employee who is not a Member is rehired
following a Break in Service, he or she will begin membership in the Plan and
will be credited with his or her prior Service under the following paragraph
(a) or (b):
(a) If the Employee has not incurred a 60 consecutive month Break
in Service, the Employee will begin membership in the Plan on the date he or
she satisfies the eligibility requirements described in Section 3.1 taking
into account his or her prior Years of Service. The Employee's prior Service
will also be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.
(b) If the Employee has incurred a 60 consecutive month Break in
Service, the Employee will be considered a new hire and will begin membership
in the Plan on the date he or she satisfies the eligibility requirements
described in Section 3.1 based on his or her date of rehire without taking
into account his or her prior Years of Service. The Employee's prior Service
will not be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.<PAGE>
SECTION 4 RETIREMENT DATE.
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4.1 Normal Retirement Date. The Normal Retirement Date of a Member
will be the first day of the month coincident with or next following the date
the Member reaches Normal Retirement Age. A Member will have a right to his
or her Vested Retirement Benefit upon reaching his or her Normal Retirement
Age. Payment of a Member's Normal Retirement Benefit will begin on the last
day of the month in which the Member's Normal Retirement Date occurs unless
the Member elects to delay the payment of such benefit under Section 4.4. A
Member may remain in Service after his or her Normal Retirement Date, in
which case the date as of which the Member will be deemed to retire will be
determined under Section 4.3. A Member who has been deemed to retire will
continue to accrue Benefit Service under the Plan until his or her actual
retirement.
4.2 Early Retirement Date. The Early Retirement Date of a Member who
has reached Early Retirement Age will be the date specified in his or her
written application for Early Retirement Benefits. Such Early Retirement
Date will be the first day of a month which is not less than 30 nor more than
90 days following the date the Member files an Early Retirement Benefit
application with the Administrative Committee. Payment of a Member's Early
Retirement Benefit will begin on the last day of the month in which the
Member's Early Retirement Date occurs. Alternatively, a Member who has
reached Early Retirement Age may elect to delay the payment of his or her
Early Retirement Benefit under Section 4.4.
4.3 Deferred Retirement Date. The Deferred Retirement Date of a
Member who remains in Service after his or her Normal Retirement Date will be
the first day of the month next following the date of his or her termination
of Service. However, a Member will be deemed to retire (and the distribution
of the Member's Retirement Benefit will begin) as of the Member's Required
Beginning Date whether or not the Member's Service terminates at that time.
In addition, a Member who remains in Service after his or her Normal
Retirement Date will be deemed to retire on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company as provided in
Section 6.2. Payment of a Member's Deferred Retirement Benefit will begin on
the last day of the month in which his or her Deferred Retirement Date
occurs.
4.4 Postponement of Retirement Benefits. A Member may elect to delay
the payment of his or her Retirement Benefit beyond his or her Early
Retirement Age or the last day of the month in which the Member's Normal
Retirement Date or Deferred Retirement Date occurs, except as provided by
paragraph (a) or (b) below:
(a) Payment of a Member's Early Retirement Benefit must begin no
later than the month which includes his or her Normal Retirement Date; and
(b) Payment of a Member's Normal Retirement Benefit or Deferred
Retirement Benefit must begin no later than the Member's Required Beginning
Date.<PAGE>
SECTION 5 RETIREMENT BENEFIT.
- --------- ------------------
5.1 Basic Retirement Benefit. As of any date, the Retirement Benefit
of any Member payable as of his or her Normal Retirement Date or Deferred
Retirement Date will be:
(a) 2% of the Member's Final Average Compensation multiplied by
the Member's Benefit Service not in excess of 25 years, less
(b) 2% of the Member's Social Security Benefit multiplied by the
Member's Benefit Service not in excess of 25 years, plus
(c) 0.25% of the Member's Final Average Compensation multiplied by
the Member's Benefit Service in excess of 25 years.
A Member's Retirement Benefit will be subject to adjustment as provided in
Sections 5.2, and 5.3 and, if the Member is a reemployed Member, will be
calculated in accordance with Section 5.4.
5.2 Coordination of Retirement Benefits. The Retirement Benefit of a
Member who was a participant in any plan which is qualified under section
401(a) of the Code and which is maintained by (a) the Company, (b) a
corporation acquired by the Company, or (c) under a collective bargaining
agreement with the Company or any such corporation, will be reduced by the
Equivalent Actuarial Value of any benefits payable from that plan to the
Member with respect to any period of the Member's Benefit Service for which
benefits are also provided under this Plan. This reduction will not apply to
any benefits payable to a Member under the Employee Investment Plan of Levi
Strauss Associates Inc. or the Levi Strauss Associates Inc. Employee Long-
Term Investment and Savings Plan.
5.3 Reduction of Retirement Benefit. The Retirement Benefit of a
Member who was a member of the Terminated Plan will be reduced by any
benefits payable from that plan (including amounts paid through the Annuity
Contract purchased by the Terminated Plan) to or with respect to the Member.
Similarly, the Retirement Benefit of a Member who was a member of the Pension
Plan of Miller Belts, Ltd., Inc. will be reduced by the Equivalent Actuarial
Value of any benefits payable from that plan to or with respect to the
Member.
5.4 Retirement Benefit of Certain Reemployed Members. If a Member who
does not have a Vested Retirement Benefit and who incurs a Break in Service
for any reason returns to Service after incurring a 60 consecutive month
Break in Service under Section 3.3(b), then on the Member's later retirement
or termination of Service, his or her Retirement Benefit will be based only
upon the Member's Benefit Service after his or her return to Service. In all
other cases where a Member returns to Service, the Member's Retirement
Benefit upon later retirement or termination of Service will be based on his
or her total Benefit Service, reduced by the Equivalent Actuarial Value of
any benefit payments previously made to him or her (provided this does not
decrease his or her Retirement Benefit). See also Section 5.1 concerning the
benefit rate applied to a Member's Benefit Service.<PAGE>
SECTION 6 NORMAL RETIREMENT BENEFIT.
- --------- -------------------------
6.1 Payment of Benefits. A Member who retires from Service on his or
her Normal Retirement Date will be entitled to begin receiving Retirement
Benefit payments on the last day of the month in which his or her Normal
Retirement Date occurs. If the Member could have received a larger Early
Retirement Benefit (calculated in accordance with Section 7) under Section
4.2, beginning as of any date which could have been his or her Early
Retirement Date, such larger Early Retirement Benefit will be payable to the
Member.
6.2 Termination of Employment after Normal Retirement Age. In the
case of a Member who continues to be employed as an Employee or is reemployed
as an Employee after reaching Normal Retirement Age, the Member will be
deemed to retire for purposes of the Plan on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company, or as of the
Member's Required Beginning Date. Payment of the Member's Retirement Benefit
will be made as follows:
(a) In the case of a Member who continues to be employed as an
Employee, or in the case of a Member who terminated employment with the
Company after reaching Normal Retirement Age but is reemployed before
beginning to receive monthly Retirement Benefit payments, payment of the
Member's Retirement Benefit will begin (in the form determined under Section
11) as of the last day of the month in which the Member is deemed to retire.
If a Member who is deemed to retire under this Section 6.2 does not make a
valid election for payment of the Member's Retirement Benefit, the Member's
Retirement Benefit will be paid as a 50% Qualified Joint and Survivor
Annuity.
(b) In the case of a Member who is reemployed as an Employee after
reaching Normal Retirement Age and beginning to receive monthly Retirement
Benefit payments but whose benefits are suspended under Section 13.2, payment
of the Member's Retirement Benefit will recommence (in the same form as
before the suspension) as of the last day of the month in which the Member is
deemed to retire.
Any Member whose Retirement Benefit begins to be paid will be deemed to be
reemployed as of the first day of any subsequent calendar month in which he
or she is paid (or entitled to payment) for 40 or more Hours of Service, and
the Retirement Benefit suspension provisions of Section 13.2 will apply.<PAGE>
SECTION 7 EARLY RETIREMENT BENEFIT.
- --------- ------------------------
7.1 Payment of Early Retirement Benefit. A Member who retires on an
Early Retirement Date under Section 4.2 will be entitled to receive an Early
Retirement Benefit under this Section 7.
A Member who retires on an Early Retirement Date will be entitled to
receive the percentage of his or her Retirement Benefit based on the Member's
age as of his or her Early Retirement Date as described in the following
Table:
<TABLE>
Table A
-------
<CAPTION>
Age at Member's Percentage
Early Retirement Date Factor
--------------------- ----------
<S> <C>
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 92%
62 94%
63 96%
64 98%
65 100%
</TABLE>
In applying the above table, the Member's age at his or her Early Retirement
Date will be computed to years and completed months and the percentages will
be interpolated. Payment of a Member's reduced Early Retirement Benefit will
begin on the last day of the month in which the Member's Early Retirement
Date occurs.
If the Administrative Committee determines that a Member who is eligible
to retire on an Early Retirement Date has engaged in any act of Misconduct
while in Service, the Early Retirement Benefit payable to the Member will be
the Equivalent Actuarial Value of his or her accrued Retirement Benefit.
7.2 Postponement of Early Retirement Benefit. A Member who retires on
an Early Retirement Date may elect to delay payment of his or her Early
Retirement Benefit until the last day of any month following the Member's
Early Retirement Date, but no later than the month which includes the first
date which could have been the Member's Normal Retirement Date. The early
retirement factor to be used to calculate the Early Retirement Benefit of a
Member who delays benefit payment is the factor at the Member's age on the
date payment of his or her Early Retirement Benefit begins. If a Member
makes an election to delay the payment of his or her Early Retirement Benefit
and dies before the Annuity Starting Date, a Survivor Annuity will be payable
to the Member's Surviving Spouse or Domestic Partner as of the date of the
Member's death as described in Section 10.1. The Member may revoke an
election to delay the payment of his or her Early Retirement Benefit at any
time before the Annuity Starting Date.<PAGE>
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT.
- --------- ----------------------------------------
8.1 Payment of Vested Retirement Benefits. A Member who has completed
5 Years of Service will have a Vested Retirement Benefit determined in
accordance with Section 2.70 as of the date his or her Service terminates.
If the Plan becomes Top Heavy, as defined in Section 26, the Member's Vested
Retirement Benefit will be determined under Section 26. A Member will have
a right to begin receiving payment of his or her Vested Retirement Benefit on
the last day of the month in which his or her Normal Retirement Date occurs.
A Member who, at any time between December 1 and December 30, 1985, was
a member of the Terminated Plan and was in Service, will have a vested right
to his or her Retirement Benefit earned up to and including December 30,
1985. Other persons, the liabilities of whose benefits were assumed by this
Plan, will continue to have the same vested right to benefits that they had
in the Terminated Plan (if any).
8.2 Early Payment of Vested Retirement Benefits. A Member with a
right to receive his or her Vested Retirement Benefit may elect to begin
receiving benefit payments before the Member's Normal Retirement Date. The
amount distributable to the Member will equal the percentage of the Member's
Retirement Benefit based on the Member's age on the date such benefit
payments begin as described in the following Table B:
<TABLE>
Table B
-------
<CAPTION>
Age at Percentage
Commencement Factor
------------ ----------
<S> <C>
55 42%
56 45%
57 49%
58 53%
59 58%
60 63%
61 69%
62 76%
63 83%
64 91%
65 100%
</TABLE>
Such an election must be received by the Administrative Committee at least 30
days before the date on which benefit payments are to begin. Payment of the
Member's Vested Retirement Benefit will begin on the last day of any month
before the Member's Normal Retirement Date and on or after his or her 55th
birthday.
8.3 Death Before the Payment of Vested Retirement Benefits. If a
Member with a right to receive his or her Vested Retirement Benefit dies
before the Annuity Starting Date, a Survivor Annuity will be payable to the
Member's Surviving Spouse or Domestic Partner. The Survivor Annuity will be
calculated as of the date of the Member's death under Section 10.2.
8.4 Limitation on Vested Retirement Benefit Eligibility. If a Member
is not entitled to a benefit or additional Service on account of his or her:
(a) Normal Retirement Date under Section 6;
(b) Early Retirement Date under Section 7;
(c) Total and Permanent Disability under Section 9; or
(d) Death under Section 10;
then no Retirement Benefit will be payable under the Plan upon the Member's
termination of Service unless the Member has completed 5 Years of Service or
has a right to a Vested Retirement Benefit under Section 26.<PAGE>
SECTION 9 DISABILITY BEFORE RETIREMENT.
- --------- ----------------------------
9.1 Eligibility for Disability Service. A Member who has at least 5
Years of Service as of the date the Member becomes Totally and Permanently
Disabled and who is receiving disability benefits under the Levi Strauss &
Co. Welfare Plan will continue to accrue additional Benefit Service and Years
of Service under the Plan.
(a) Duration of Disability Service. A Member will continue to
accrue Benefit Service and Years of Service under the Plan until the earliest
of the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member elects an Early Retirement Date;
(iii) The Member reaches his or her earliest Normal Retirement
Date; or
(iv) Disability benefits are no longer payable to the Member
under the Levi Strauss & Co. Welfare Plan.
However, if the Administrative Committee determines that the Member engaged
in any act of Misconduct while in Service, he or she will not be entitled to
accrue additional Service under this Section 9.1 or any other provision of
the Plan. The Retirement Benefit of a Member who is Totally and Permanently
Disabled who engages in an act of Misconduct will be determined based on the
Member's Benefit Service as of the date the Member became Totally and
Permanently Disabled, as provided in Section 8.
(b) Payment of Retirement Benefit. Payment of the Retirement
Benefit of a Member who accrues additional Service under this Section 9.1
will begin in accordance with Section 7, if the Member elects an Early
Retirement Date, or if the Member does not elect an Early Retirement Date, in
accordance with Section 6 when the Member reaches his or her Normal
Retirement Date. The Member's Final Average Compensation, as determined by
the Committee, at the onset of his or her Total and Permanent Disability will
be the Member's Final Average Compensation for purposes of the Plan.
(c) Form of Retirement Benefit. The Retirement Benefit of a
Member who is Totally and Permanently Disabled may be paid in any of the
forms of benefit provided in Section 11.3. However, if the Member is legally
married such benefit must be paid in the form of a Qualified Joint and
Survivor Annuity unless the Member elects otherwise with the written consent
of his or her spouse under Section 12.1. If the Member dies before the
Annuity Starting Date, his or her Surviving Spouse or Domestic Partner will
be entitled to receive a Survivor Annuity under Section 10.
9.2 Forfeiture of Disability Service. If a former Member who has
completed at least 5 Years of Service and is otherwise entitled to Disability
Service under Section 9.1 fails to provide all information reasonably
requested by the Administrative Committee, or if the Administrative Committee
determines that the Member has engaged in any act of Misconduct while in
Service, no additional Disability Service will be credited to the Member
under Section 9.1.<PAGE>
SECTION 10 DEATH BENEFITS.
- ---------- --------------
10.1 Survivor Annuity. This Section 10 will govern the payment of
Retirement Benefits, if any, if the Member dies before the Annuity Starting
Date. Section 11 will govern the payment of Retirement Benefits, if any, if
the Member dies on or after the Annuity Starting Date.
10.2 Amount of Survivor Annuity. A Survivor Annuity will be payable to
the Surviving Spouse or Domestic Partner of a Member who dies with a Vested
Retirement Benefit before the Annuity Starting Date. The Survivor Annuity
will provide the Surviving Spouse or Domestic Partner with a monthly benefit
calculated as follows:
(a) If the Member dies before the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member:
(i) Separated from Service on the date of his or her death
(unless the Member had separated from Service before his or her death,
in which case the Member's actual date of separation from Service will
be used);
(ii) Survived until the earliest age the Member could have
begun receiving benefit payments under the Plan;
(iii) Elected to receive a 50% Qualified Joint and Survivor
Annuity, with his or her Surviving Spouse or Domestic Partner as
contingent annuitant, beginning on the earliest age the Member could
have begun receiving benefit payments under the Plan; and
(iv) Died on the day after such annuity became effective.
Such benefit will be calculated using the factors listed in Table B in
Section 8. Benefit payments to the Surviving Spouse or Domestic Partner will
begin on the last day of the month following the later of the date the Member
would have reached age 55 or the month in which the Member dies.
(b) If the Member dies after the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member had
retired on the first day of the month coincident with or next following the
date of the Member's death with a 50% Qualified Joint and Survivor Annuity,
with his or her Surviving Spouse or Domestic Partner as contingent annuitant.
The payments to the Surviving Spouse or Domestic Partner will begin no later
than the last day of the month following the date of the Member's death.
Neither the Member nor the Surviving Spouse nor the Domestic Partner may
waive the Survivor Annuity.
10.3 Entitlement to Death Benefit. No death benefit will be payable
under the Plan with respect to a Member who dies without both a Vested
Retirement Benefit and a Surviving Spouse or Domestic Partner.<PAGE>
SECTION 11 METHOD OF PAYMENT.
- ---------- -----------------
11.1 Normal Form of Benefit for Married Members. The normal form of
benefit for a Member who is Legally Married on the Annuity Starting Date is
a "Qualified Joint and Survivor Annuity." The term "Qualified Joint and
Survivor Annuity" means a benefit providing a reduced monthly annuity for the
life of the Member, ending with the payment due on the last day of the month
in which the Member died, and, if the Member dies leaving a Surviving Spouse
described in Section 2.62, a survivor annuity, in an amount equal to either
50% or 100% (as elected by the Member) of the monthly annuity payable to the
Member, for the life of the Surviving Spouse, beginning on the last day of
the month following the month in which the Member dies and ending with the
payment due on the last day of the month in which the Surviving Spouse dies.
A Member who has a Domestic Partner on the Annuity Starting Date may elect to
receive a survivor annuity with his or her Domestic Partner as the
Beneficiary under Section 11.3(b). See Section 12.4(b) for cases where the
Member dies after the Annuity Starting Date but before his or her first
Retirement Benefit payment.
11.2 Normal Form of Benefit for Single Members. The normal form of
benefit for a Member who does not have a Surviving Spouse on the Annuity
Starting Date is a "Straight Life Annuity." The term "Straight Life Annuity"
means a benefit providing a monthly annuity for the life of the Member ending
with the payment due on the last day of the month in which the Member dies.
11.3 Optional Forms of Benefit. Instead of the annuity otherwise
payable to the Member under Sections 11.1 or 11.2, a Member may elect to
receive the Equivalent Actuarial Value of any benefit to which he or she is
entitled under the Plan in one of the following forms:
(a) Straight Life Annuity: The Member may elect to receive a
monthly annuity payable to the Member for his or her life, ending with the
payment due on the last day of the month in which the Member dies.
(b) Survivorship Options: The Member may elect to receive a
reduced monthly annuity payable for the Member's life, and, after his or her
death, a monthly survivor annuity in the same amount (a "100% survivor
annuity") or 1/2 of such amount for the life of the Beneficiary. However, no
100% survivor annuity will be payable unless the Beneficiary is the Member's
Surviving Spouse or the Beneficiary is no more than 10 years younger than the
Member. If the Member's Beneficiary dies before benefit payments begin, the
Survivorship Option elected by the Member will automatically be cancelled and
the Member's Retirement Benefit will be paid in the normal form specified in
Section 11.1 or 11.2, as appropriate, unless the Member elects another
optional form of benefit under Section 12.1.
(c) 10-Year Certain and Life Option: The Member may elect to
receive a reduced monthly annuity payable for the Member's life. If the
Member dies before receiving 120 monthly payments, monthly payments will
continue to the Beneficiary designated by the Member (or, in the event of the
Beneficiary's death, to the Beneficiary's estate) until a total of 120
payments have been received by the Member and Beneficiary (or the
Beneficiary's estate). Payments under the 10-Year Certain and Life Option
may not be made over a period exceeding the life expectancies of the Member
and the Beneficiary, as determined under section 72(t) of the Code.
If the Member's Beneficiary dies before benefit payments begin, the
10-Year Certain and Life Option selected by the Member will automatically be
cancelled and the Member's benefit will be paid in the normal form of benefit
specified in Section 11.1 or 11.2, as appropriate, unless the Member elects
another optional form of benefit under Section 12.1.
(d) Direct Transfer Option. Effective for single sum
distributions made on and after January 1, 1993, the Member may elect to have
his or her Retirement Benefit directly transferred to a plan qualified under
section 401(a) of the Code which accepts direct transfer contributions, an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code (other
than an endowment contract), or an annuity plan described in section 403(a)
of the Code; provided that such single sum distribution exceeds $200 and
otherwise qualifies for transfer pursuant to section 401(a)(31) of the Code.
The Administrative Committee will provide each eligible Member with
notice of the direct transfer option as required by section 402(f) of the
Code (the "Section 402(f) Notice") at least 90 days and not less than 30 days
before the Annuity Starting Date. The Member will have at least 30 days
after the Section 402(f) Notice is provided to elect to have his or her
Retirement Benefit paid in the form of a direct transfer. The Member may
elect to waive this 30 day election period by affirmatively electing, before
the expiration of the 30 day period, to have his or her Retirement Benefit
paid in the form of a direct transfer. If the Member makes such an election,
no other benefits will be payable from the Plan to the Member and his or her
Beneficiary.
The interest rate specified in Section 25 will be used for determining
a single sum of Equivalent Actuarial Value of the Member's Retirement
Benefit.
11.4 Limitation on Optional Forms of Benefit. No election or
revocation of an election of an optional form of benefit may be made that
would result in payments to any person of less than $10 per month, and any
annuity amounting to less than $10 per month may be paid in quarterly or
semiannual installments. If this Section 11.4 is applicable to a Member, any
references to monthly benefits which would otherwise apply to the Member will
be modified to reflect that the Member is receiving quarterly or semiannual
installments, as applicable.
11.5 Mandatory Cash Out of Benefits Less than $3,500. If the
Equivalent Actuarial Value of a Member's Retirement Benefit is $3,500 or
less, such Equivalent Actuarial Value will be paid to the Member in a single
sum. Such single sum will be paid as soon as practicable after the Member's
Service terminates instead of any other payments under the Plan. No single
sum distribution will be made to a Member or to a Member's Surviving Spouse
after the Annuity Starting Date. Alternatively, effective with respect to
single sum distributions in excess of $200 made on and after January 1, 1993,
the Member may elect to have such distribution made in the form of a direct
transfer as described in Section 11.3(d).
The interest rate specified in Section 25 will be used for determining
a single sum Equivalent Actuarial Value of the Member's Retirement Benefit.
11.6 Reduction of Benefits. If a Member who has received a single sum
distribution under Section 11.5 returns to Service, his or her Retirement
Benefit will be based on his or her total Benefit Service but will be reduced
by the amount of the prior single sum distribution. Such subsequent
Retirement Benefit, if any, will be paid in the form determined under Section
12.4.<PAGE>
SECTION 12 BENEFIT ELECTIONS.
- ---------- -----------------
12.1 Election of Optional Forms of Benefits. A Member whose Retirement
Benefit is otherwise payable under the normal form described in Section 11.1
or Section 11.2 may elect in writing to receive his or her benefit under one
of the optional forms of benefit described in Section 11.3 during the
Election Period specified in Section 12.3.
12.2 Written Explanation and Election Form. Not more than 90 days and
at least 30 days before the Annuity Starting Date, the Administrative
Committee will provide an election form for purposes of electing an optional
form of benefit under the Plan as well as a written explanation of the terms,
conditions and effects of such election to each active Member and each
separated Member with a Vested Retirement Benefit whose benefit payments have
not yet begun.
The written explanation will contain:
(a) A description of the Qualified Joint and Survivor Annuity and
Straight Life Annuity described in Section 11.1 and Section 11.2;
(b) Notice of the Member's right to waive the Qualified Joint and
Survivor Annuity or Straight Life Annuity by electing an optional form of
benefit;
(c) A description of the different optional forms of benefit
described in Section 11.3;
(d) Notice of the requirement that the Member's spouse must
consent to the Member's waiver of the Qualified Joint and Survivor Annuity
and election of an optional form of benefit;
(e) Notice of the Member's right to revoke the waiver of the
Qualified Joint and Survivor Annuity or Straight Life Annuity and election of
an optional form of benefit during the Election Period specified in
Section 12.3;
(f) A general explanation of the financial effect of election of
each of the optional forms of benefit; and
(g) Notice that the Member may request an explanation of the
specific financial effect, in terms of monthly payments, on the Member's
benefit of making an election.
If the Member requests a written explanation of the specific financial
effect of electing an optional form of benefit under the Plan during the
Election Period, such explanation will be provided to the Member within 30
days of the date of his or her request. Alternatively, the Administrative
Committee may in its discretion, before a request by a Member, include the
written explanation of the specific financial effect of electing an optional
form of benefit under the Plan in the explanatory notice described above.
12.3 Applicable Election Period and Form of Election. The Election
Period will begin on the date the Administrative Committee provides the
Member with the written explanation of the optional forms of benefit under
the Plan described in Section 12.2 and generally will end on the earlier of:
(a) The date of the Member's death; or
(b) The later of:
(i) The Member's Annuity Starting Date; or
(ii) 90 days after the date that such written explanation is
furnished.
However, if the Member requests a written explanation of the specific
financial effect of electing an optional form of benefit under the Plan under
Section 12.2, the Election Period will end on the earlier of (i) the date of
the Member's death or (ii) 90 days after the date that such written
explanation is furnished.
During the Election Period, any election not to take payment in the
normal form of benefit provided in Section 11.1 and Section 11.2 will be
revocable. After the expiration of the Election Period, any election made
will be irrevocable, and the Member will not be entitled to make an election
if no election has been made. A Member may elect to begin receiving monthly
benefit payments before the expiration of the Election Period. If the Member
is Legally Married and elects to receive his or her Retirement Benefit in a
form other than the Qualified Joint and Survivor Annuity, such election will
not be effective without the written consent of his or her spouse. A Member
who elects to begin receiving monthly benefit payments before the expiration
of the Election Period may, nevertheless, elect to change his or her benefit
election, and elect another optional form of benefit during the remainder of
the Election Period. If a Member makes such an election, his or her
Retirement Benefit will begin being paid in the new optional benefit form as
soon as practicable after the Administrative Committee receives the Member's
benefit election.
If a Legally Married Member elects to receive his or her Retirement
Benefit in a form other than the Qualified Joint and Survivor Annuity
specified in Section 11.1 and/or designates a person other than his or her
spouse as his or her contingent annuitant, the election or designation will
be effective only if consented to by the Member's spouse. The consent must:
(a) Be in writing;
(b) Acknowledge the effect of the election and/or designation and
the spouse's consent thereto;
(c) Be witnessed by a notary public; and
(d) Be delivered to the Administrative Committee.
No spousal consent will be required if the Administrative Committee
determines to its satisfaction that the spouse cannot be located or that
there exist such other circumstances preventing such consent that may be
prescribed in applicable Regulations or rulings issued by the IRS. The
Administrative Committee may determine a Member's marital status in
accordance with such reasonable procedures as it may adopt from time to time.
If an active or separated Member's spouse or contingent annuitant dies
before payment of the Members' Retirement Benefit begins and the Member
elected a contingent annuitant option under Section 11.3, such form of
benefit will be automatically cancelled and the Member will be deemed not to
have selected an optional form of benefit (if an optional contingent
annuitant benefit was elected). The Member may later elect an optional form
of benefit if the election is timely made. Each Member may (with the written
consent of his or her spouse if the Member is Legally Married) change any
election of a form of benefit by executing a new election in accordance with
this Section 12 until the expiration of the Election Period.
12.4 Special Circumstances Governing Elections. The following
paragraphs govern the election of optional forms of benefit under the Plan.
(a) Death Before Annuity Starting Date. If a Member who is
Legally Married or who has a Domestic Partner dies before the Annuity
Starting Date and before the beginning of the Election Period, his or her
Surviving Spouse or Domestic Partner, as applicable, will be entitled to
receive a Survivor Annuity under Section 10 of the Plan. If a Member who is
Legally Married dies before the Annuity Starting Date but during the Election
Period after electing (with the written consent of his or her spouse) to
waive the Qualified Joint and Survivor Annuity, the Member's spouse will
nevertheless be entitled to receive a Survivor Annuity under Section 10 of
the Plan. Similarly, if a Member who has a Domestic Partner dies before the
Annuity Starting Date but during the Election Period after electing to waive
the Straight Life Annuity, the Member's Domestic Partner will nevertheless be
entitled to receive a Survivor Annuity under Section 10 of the Plan.
(b) Death on or After Annuity Starting Date. If a Member who is
Legally Married dies on or after the Annuity Starting Date, the Member's
Retirement Benefit will be paid to his or her Surviving Spouse in the form of
a Qualified Joint and Survivor Annuity under Section 11.1, unless the Member
elected an optional form of benefit (with his or her spouse's consent).
Conversely, if the Member delays the payment of his or her Retirement Benefit
beyond the Annuity Starting Date and dies on or after the Annuity Starting
Date after having elected an optional form of benefit, the Member's benefit
will be paid under the terms of that election upon his or her death. The
Member's election and the spouse's consent must comply with the requirements
of Section 12.3.
If a Member who has a Domestic Partner dies on or after the Annuity
Starting Date, no Retirement Benefit will be payable to his or her Domestic
Partner unless the Member elected an optional form of benefit which provides
for such payment. Conversely, if a Member who has a Domestic Partner delays
the payment of his or her Retirement Benefit beyond the Annuity Starting Date
and dies on or after the Annuity Starting Date after electing an optional
form of benefit, the Member's Retirement Benefit will be paid under the terms
of that election upon his or her death.
(c) Reemployed Members. If a Member is reemployed by the Company
after his or her Normal Retirement Date, Deferred Retirement Date or Vested
Retirement Benefit Payment Date described in Section 8.1 and the Member's
Retirement Benefit payments are suspended under Section 13.2(a) or Section
13.2(b), the Administrative Committee will not be required to provide the
Member with a written explanation of the optional forms of benefit payable
under the Plan nor obtain a new benefit election and spousal consent upon the
Member's later termination of Service or the resumption of benefit payments
under Section 13.2(a) or Section 13.2(b). Rather, upon the Member's later
termination of Service, or upon the later resumption of benefit payments, his
or her benefit (as adjusted under Section 13.2(d) after the Member's
reemployment) will recommence in the form in which they were being paid
before the suspension of such benefit payments under Section 13.2.
If a Member is reemployed by the Company after his or her Early
Retirement Date or Vested Retirement Benefit Payment Date described in
Section 8.2 and the Member's Retirement Benefit payments are suspended under
Section 13.2(a) or Section 13.2(b), the Member's prior benefit election will
automatically be cancelled and of no effect. Upon the Member's later
termination of Service, the Administrative Committee will provide the Member
with the written explanation of the optional forms of benefit payable under
the Plan and obtain a new benefit election and spousal consent, if the Member
is Legally Married. Upon the Member's later termination of Service, his or
her Retirement Benefit (as adjusted under Section 13.2(d) after the Member's
reemployment) will be paid in the form in which the Member elects under
Section 13.2.
(d) Reemployment After Cashout. If a Member is reemployed by the
Company after receiving a mandatory cash out of his or her Retirement Benefit
under Section 11.5, then any additional Retirement Benefit payable to the
Member upon his or her later termination of Service will be subject to the
terms and conditions of Section 10, regarding the Survivor Annuity, and
Section 11, regarding the Qualified Joint and Survivor Annuity. Accordingly,
if the Member is Legally Married or has a Domestic Partner and dies before
the Annuity Starting Date, the Member's Retirement Benefit will be paid in
the form of a Survivor Annuity. If the Member is Legally Married and dies on
or after the Annuity Starting Date, the Member's Retirement Benefit will be
paid in the form of a Qualified Joint and Survivor Annuity, unless such
annuity is waived, with the consent of the Member's spouse. If the Member
has a Domestic Partner and the Member dies on or after the Annuity Starting
Date, no Retirement Benefit will be payable under the Plan, unless the Member
has elected an optional form of benefit under Section 12.3.
If the Equivalent Actuarial Value of a Member's Retirement Benefit, is
$3,500 or less as of the date of the Member's separation from Service, such
benefit will be paid in the form of a single sum under Section 11.5.<PAGE>
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS.
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13.1 Payment of Benefits. Payment of a Member's Retirement Benefit
will begin not later than the earlier of:
(a) 60 days after the last to occur of:
(i) The last day of the Plan Year in which the Member
reaches age 65;
(ii) The last day of the Plan Year in which the Member
separates from Employment with the Company; or
(iii) The last day of the Plan Year which contains the 10th
anniversary of the date the Member began membership in the Plan; or
(b) The Required Beginning Date.
If a Member or former Member dies before his or her entire Retirement
Benefit has been distributed, such benefit will become payable in full not
later than 5 years following the date of the Member's death. However, if
benefit payments have begun and will be made to the Member over a period not
extending beyond the life expectancy of the Member or the joint lives or
joint life expectancy of the Member and the Member's Beneficiary, any
remaining benefit may be paid over a period not extending beyond the payment
period elected by the Member and in effect at his or her death. The
preceding requirements will be satisfied if the Member's benefit is to be
paid over the life or life expectancy of the Beneficiary in accordance with
Regulations issued by the IRS and the payment of such benefit begins no later
than (i) 1 year after the death of the Member, or (ii) if the Member's
Surviving Spouse is the designated Beneficiary, the date the Member would
have attained age 70-1/2. If the Surviving Spouse of the Member dies before
the complete payment of the Member's Retirement Benefit, the remainder of
such benefit may be paid to the Surviving Spouse's designated beneficiary as
if the Surviving Spouse were a Member.
All Retirement Benefit payments will be made in accordance with the
minimum distribution and incidental benefit requirements of section 401(a)(9)
of the Code which require generally that certain minimum amounts be
distributed to the Member each calendar year, beginning with the calendar
year in which the Member's Required Beginning Date falls, in order to assure
that certain minimum amounts be paid to the Member and that only "incidental"
benefits be provided to the Member's Beneficiaries. Any distribution option
required by section 401(a)(9) of the Code will override and supersede any
inconsistent distribution options provided for in the Plan.
13.2 Suspension of Benefits. A Member who is reemployed by the Company
after his or her Retirement Date will be subject to the following benefit
suspension provisions.
(a) Reemployment as Employee. If a Member who is receiving
monthly benefit payments on account of his or her Normal Retirement, Deferred
Retirement or Vested Retirement Benefit Payment Date described in Section 8.1
is reemployed by the Company as an Employee, such monthly benefit payments
will be suspended upon the Member's reemployment. Such monthly benefit
payments will recommence (in the form in which they were being paid before
the suspension) upon the earlier of (i) the date the Member terminates
Service, or (ii) any month during which the Member is credited with less than
40 Hours of Service.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 8.2 is reemployed by the Company as an Employee, such monthly
benefit payments will be suspended upon the Member's reemployment. Such
monthly benefit payments will recommence (in the form elected by the Member
under Section 12) upon the Member's subsequent termination of Service.
(b) Reemployment as a Casual Employee. If a Member who is
receiving monthly benefit payments on account of his or her Normal
Retirement, Deferred Retirement or Vested Retirement Benefit Payment Date
described in Section 8.1 is reemployed by the Company as a Casual Employee,
such monthly benefit payments will be suspended after the Member completes
950 Hours of Service during a Rehire Anniversary Year. Such suspension will
be effective for each month in which the Member is credited with at least 40
Hours of Service. Such monthly benefit payments will recommence during each
succeeding Rehire Anniversary Year and will continue to be paid (in the same
form as they were before the suspension) until the Member again completes 950
Hours of Service, in which case such benefit payments will be suspended.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 8.2 is reemployed by the Company as a Casual Employee, such
monthly benefit payments will be suspended after the Member completes 950
Hours of Service during a Rehire Anniversary year. Such benefit payments
will not recommence until the Member's termination of Service. At such time,
the Member's Retirement Benefit will be paid in the form elected by the
Member under Section 12.
(c) Limitations on Benefit Suspension. If a Member or former
Member is reemployed by the Company after reaching age 70-1/2, his or her
monthly benefit payments, if any, will continue. In addition, if a Member
who is reemployed after his or her Retirement Date continues in Service after
his or her Required Beginning Date, the Member will be deemed to have
terminated Service for purposes of this Section 13 and Section 12.4 as of his
or her Required Beginning Date.
(d) Benefit Service While Reemployed. A Member described in any
of the preceding paragraphs who is reemployed by the Company as an Employee
or as a Casual Employee will be credited with a full month of Benefit Service
for every calendar month in which he or she is credited with at least 1 Hour
of Service or in which he or she otherwise has Service. However, any
additional Retirement Benefit the Member would accrue as a result of being
credited with Benefit Service under this Section 13.2, will be offset by the
monthly benefits distributed to the Member. Such offset will not reduce the
Member's monthly benefit payments below the amount the Member was receiving
on account of his or her earlier termination of employment. Such offset will
be made for a Member who is reemployed by the Company after his or her Normal
Retirement, Deferred Retirement or Vested Retirement Benefit Payment Date
described in Section 8.1 for each month the Member is engaged in "Section
203(a)(3)(B) Service," as defined in the Act. A Member will be engaged in
Section 203(a)(3)(B) Service during any month in which he or she is credited
with at least 40 Hours of Service. Such offset will be made for a Member who
is reemployed by the Company after his or her Early Retirement or Vested
Retirement Benefit Payment Date described in Section 8.2 for each month of
the Member's reemployment. Any additional Retirement Benefit earned by the
Member will be paid in the form provided by Section 12.4.
(e) Retiree Coordinators. If a Member retires and is reemployed
by the Company as a Retiree Coordinator, he or she will continue to receive
monthly Retirement Benefits, if any, and will not resume membership in the
Plan while so employed.<PAGE>
SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT.
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14.1 Scope of Limitations on Benefits. The provisions of this Section
14 will govern the following benefits:
(a) Any annuity payable to a Member for life as part of a
Qualified Joint and Survivor Annuity or as part of a Survivorship Option
elected by the Member under Section 11.3 and having the effect of a
"qualified joint and survivor annuity" within the meaning of section 417 of
the Code;
(b) Any Straight Life Annuity payable to a Member under Section
11.2 or 11.3; and
(c) Any other Survivorship Option or other option elected by a
Member under Section 11.3 (including both the annuity payable to the Member
and any other annuity or benefit payable).
14.2 Basic Limitations on Benefits. The benefits to which Section 14
is applicable may not exceed the Equivalent Actuarial Value of a Qualified
Joint and Survivor Annuity or Straight Life Annuity in an annual amount equal
to the lesser of:
(a) The $90,000 limitation in effect under section 415(b)(1)(a) of
the Code (as adjusted to take into account changes in the cost-of-living
under any Regulations or rulings of the IRS) (the "$90,000 Limitation"); or
(b) 100% of the Member's High-3 Year Average Compensation (the
"Compensation Limitation"),
subject, however, to the following provisions of this Section 14.
If a Member's benefit would exceed the above limitation, then the
Member's benefit will be reduced as necessary. However, the Member's benefit
will in no event be reduced below the amount of such benefit as of
November 27, 1983, determined under the Terminated Plan (including its
benefit limitations) as then in effect.
14.3 Adjustments to Limitations. The $90,000 Limitation and
Compensation Limitation will be subject to the following provisions:
(a) Benefits Payable to Former Members. In the case of a Member
who has separated from Service, the $90,000 Limitation will be adjusted
annually to reflect changes in the cost-of-living under any Regulations or
rulings issued by the IRS.
(b) Early Payment Adjustment. If benefits become payable to a
Member before he or she reaches the Social Security Retirement Age but on or
after the date on which the Member reaches age 62, the $90,000 Limitation
will be reduced by .00556 for each of the first 36 months and by .00417 for
each additional month by which the Member's benefit commencement date
precedes his or her Social Security Retirement Age. If benefits become
payable before the Member reaches age 62, the $90,000 Limitation will be
reduced as provided in the preceding sentence until age 62 and will be
further reduced for each month by which the benefit commencement date
precedes the Member's 62nd birthday. In adjusting the $90,000 Limitation for
the payment of benefits before age 62, the interest rate used will be the
greater of 5% per annum or the rate used for determining actuarial reductions
for early payment of benefits described in Section 25 of this Plan.
(c) Delayed Payment Adjustment. If benefits become payable to a
Member after he or she reaches the Social Security Retirement Age, the
$90,000 Limitation will be adjusted, using an interest assumption not greater
than the lesser of 5% or the post-retirement interest rate used for making
Equivalent Actuarial Value determinations under the Plan, so that it has an
Equivalent Actuarial Value to a $90,000 benefit beginning at the Social
Security Retirement Age. Such limitation may not exceed the Compensation
Limitation.
(d) Service and Membership Reductions. If the Member has
completed less than 10 Years of Plan membership and/or less than 10 Years of
Service (including fractional parts of a year), the $90,000 Limitation will
be reduced by multiplying it by a fraction, the numerator of which is the
number of years of Plan membership of the Member and the denominator of which
is 10, and the Compensation Limitation will be multiplied by a fraction the
numerator of which is the number of Years of Service of the Member and the
denominator of which is 10. As provided in Sections 2.58 and 2.72, Years of
Service which would be counted under the Terminated Plan will be counted
under this Plan but the same period will be counted only once.
14.4 Minimum Benefit. The $90,000 Limitation and Compensation
Limitation will not apply if:
(a) The annual benefits payable under all defined benefit plans
maintained by the Company or an Affiliated Company with respect to the Member
does not exceed $1,000 multiplied by the Member's Years of Service (not to
exceed 10); and
(b) The Member has not participated in any defined contribution
plan (within the meaning of section 414(i) of the Code) maintained by the
Company or an Affiliated Company.
14.5 TRA 86 Protected Benefits. If on or before the first day of the
first Plan Year beginning after December 31, 1986 (November 30, 1987), a
Member was a participant in 1 or more defined benefit plans maintained by the
Company or an Affiliated Company which were in existence on May 6, 1986, and
that met the applicable requirements of section 415 of the Code for all prior
Plan Years, the $90,000 Limitation will equal the greater of the amount
specified in Section 14.2(a), as adjusted under the preceding paragraphs of
this Section 14, or the Member's Retirement Benefit at the close of the last
Plan Year beginning on or before December 31, 1986, calculated as if the
Member had terminated employment on the last day of said Plan Year. In
calculating a Member's Retirement Benefit for purposes of the preceding
sentence, the Administrative Committee will disregard changes in the terms
and conditions of the Plan and cost-of-living adjustments occurring after May
5, 1986.
14.6 Multiple Plans. The Administrative Committee will, to the extent
required by the Act and the Code and in accordance with the Regulations,
apply the $90,000 Limitation and Compensation Limitation by taking into
account the benefits payable and the contributions made under any other plans
maintained by the Company or Affiliated Company which are qualified under
section 401(a) of the Code. If such other plan is a defined contribution
plan, then the sum of the "defined benefit plan fraction" (as defined in
section 415(e)(2) of the Code) and the "defined contribution plan fraction"
(as defined in section 415(e)(3) of the Code) may not exceed 1. In any case
where the combined fraction is in excess of 1, then the Retirement Benefit
payable under this Plan will be reduced (but not below the Member's
Retirement Benefit as of the last day of the Plan Year beginning before
January 1, 1987). The reduction will be of sufficient amount to eliminate
the excess over the combined maximum.
If the Plan becomes Top Heavy and, therefore, subject to the provisions
of Section 26, then for purposes of determining the "defined benefit plan
fraction" and the "defined contribution plan fraction," a factor of 100% will
be substituted for the factor of 125% used in calculating the denominators of
such fractions, unless both of the following conditions are satisfied:
(a) The Plan is not Super Top Heavy as defined in Section 26 of
the Plan; and
(b) The contributions and benefits on behalf of all Participants
other than Key Employees meet the requirements of section 416(h) of the Code.
14.7 Special Limitations on Benefits. The annual Retirement Benefit
payments to a Member who is among the 25 highest Highly Compensated Employees
and highest Highly Compensated Former Employees will be restricted to an
amount equal to the payments that would be made on behalf of the Member under
a single life annuity that is the Equivalent Actuarial Value of the Member's
Retirement Benefit under the Plan. The above restrictions will not apply,
however, if one of the following conditions is met:
(a) After payment to a Member described in the preceding paragraph
of all of his or her "benefits" under the Plan, the value of the Plan assets
equals or exceeds 110% of the value of current liabilities as defined in
section 412(l)(7) of the Code; or
(b) The value of "benefits" for a Member described in the
preceding paragraph is less than 1% of the value of current liabilities; or
(c) The value of "benefits" payable to the Member under the Plan
does not exceed the amount described in section 411(a)(11)(A) of the Code
regarding the restrictions on mandatory single sum distributions of less than
$3,500.
"Benefits" include any periodic income, any withdrawal values payable to a
living Member, and any death benefits not provided for by insurance on the
Member's life.<PAGE>
SECTION 15 BENEFICIARIES.
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If no Beneficiary designation is in effect under Section 11.3 at the
time of a Member's death, or if no designated Beneficiary survives the
Member, the payment of the Member's Vested Retirement Benefit, if any, will
be made to the following persons in the order listed:
(a) To the Member's Surviving Spouse, if any;
(b) If the Member has no Surviving Spouse, then to his or her
children;
(c) If the Member has no living children, then to his or her
parents;
(d) If the Member has no living parents, then to his or her
brothers and sisters; or
(e) If the Member has no living brothers and sisters, then to his
or her estate.
The Administrative Committee will, in its sole and absolute discretion,
determine the right of such persons to receive the benefit payable with
respect to a Member, if any. If the Administrative Committee is in doubt as
to the right of any person to receive such amount, the Administrative
Committee may direct the Trustee to retain such amount, without liability for
any interest on such amount, until the rights to such amount are determined,
or, alternatively, may direct the Trustee to pay such amount into any court
of appropriate jurisdiction and such payment will be a complete discharge of
the liability of the Plan and the Trust Fund.<PAGE>
SECTION 16 FUNDING AND CONTRIBUTIONS.
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16.1 Contributions. Subject to the provisions of Sections 19 and 20 of
this Plan, the Company will contribute to the Trust Fund, for each Plan Year,
the amount required by the Act and the Code. The Investment Committee will
arrange for the establishment and maintenance of such funding accounts as are
required by the Act and the Code.
16.2 Actuarial Assumptions. The Administrative Committee will adopt
and may change from time to time the actuarial assumptions and methods that
are recommended by the Actuary for purposes of making actuarial valuations
for the Plan. At such times as may be required by the Act or the Code or
requested by the Administrative Committee, the Actuary will make an actuarial
valuation of the Plan, including such calculations as may be necessary to
determine whether the Plan is adequately funded, will estimate the
contributions required under Section 16.1 and will report the results of its
valuation to the Administrative Committee. Before the termination of the
Plan, forfeitures of benefits arising from a Member's termination of Service,
death or any other reason will not be applied to increase the benefit that
any Member would otherwise be entitled to receive under the Plan, but may be
anticipated in estimating costs and will be applied to reduce the Company's
contributions under the Plan.
16.3 Trust Fund. All monies, securities or other property received as
contributions under the Plan will be delivered to the Trustee under the Trust
Fund, to be managed, invested, reinvested and distributed in accordance with
the Plan, the Trust Agreement, and any agreement with an insurance company or
other financial institution constituting a part of the Plan and Trust
Agreement.
16.4 Expenses of the Plan. The expenses of administering the Plan may
be paid out of the Trust Fund if the Participating Companies do not pay such
expenses directly in such proportions as determined by the Administrative
Committee. The administrative expenses include but are not limited to:
(a) The premiums for termination insurance payable to the PBGC;
(b) The fees and expenses of any employee and of the Trustee for
the performance of their duties under the Trust Agreement;
(c) The expenses incurred by the members of the Administrative
Committee and of the Investment Committee in the performance of their duties
under the Plan (including reasonable compensation for any legal counsel,
certified public accountants and actuaries and any outside agents and cost of
services provided with respect to the Plan); and
(d) All other proper charges and disbursements of the Trustee or
the members of the Administrative Committee and of the Investment Committee
(including settlements of claims or legal actions approved by counsel to the
Plan),
An election by the Participating Companies to pay all or a part of the above
expenses directly will not bind the Participating Companies as to their
rights to elect, with respect to the same or other expenses, at any other
time to have such expenses paid from the Trust Fund or to have the Trustee
reimburse the Participating Companies for expenditures already made. In
estimating costs under the Plan, administrative costs may be anticipated.<PAGE>
SECTION 17 ADMINISTRATION OF THE PLAN.
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17.1 Administrative Committee. The Administrative Committee is the
"Plan Administrator" of the Plan (as such term is used in the Act) and the
"Named Fiduciary" (as defined under section 402 of the Act) with respect to
the operation and administration of the Plan. The Administrative Committee
will employ the Actuary and such certified public accountants as it requires
or may deem advisable for the Plan. The Administrative Committee will make
rules and regulations and take any other actions to administer the Plan as it
may deem appropriate. The Administrative Committee may adopt periods in
which advance notice required under the Plan must be given and will
communicate such periods to Employees. The Administrative Committee will
have sole discretion to interpret the terms of the Plan and to determine
eligibility for benefits and the amount of benefits payable to a Member, if
any, under the objective criteria set forth in the Plan. The Administrative
Committee's rules, interpretations, regulations and actions will be
conclusive and binding on all persons.
In administering the Plan, the Administrative Committee (a) will act in
a nondiscriminatory manner to the extent required by section 401(a) and
related sections of the Code, and (b) will at all times discharge its duties
in accordance with the standards set forth in section 404(a)(1) of the Act.
17.2 Control and Management of Plan Assets. The Investment Committee
is the "Named Fiduciary" (as defined under section 402 of the Act) with
respect to the management and control of the assets of the Plan, but only to
the extent that it will have the authority to:
(a) Appoint 1 or more Trustees to hold the assets of the Plan in
trust and to enter into a trust agreement with each Trustee it appoints;
(b) Appoint 1 or more Investment Managers for any assets of the
Plan and to enter into an investment management agreement with each
Investment Manager it appoints;
(c) Remove any Trustee or Investment Manager so appointed;
(d) Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
(e) Perform such other functions as are specifically assigned to
the Investment Committee under the Plan.
In addition, the Investment Committee will have the responsibility for
monitoring and reviewing the investment performance of the Plan to ensure
that it is consistent with the requirements of the Act and the Code and the
funding policy adopted by the Administrative Committee. The Investment
Committee will establish the necessary parameters or standards regarding Plan
investments to ensure that such criteria continue to be met.
17.3 Trustees and Investment Managers. Each Trustee appointed under
Section 17.2 will have the exclusive authority and discretion to control and
manage the Plan assets held in trust by it, except to the extent that:
(a) The Investment Committee directs how those assets will be
invested;
(b) The Investment Committee allocates the authority to manage
those assets to 1 or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
Each Investment Manager appointed will have the exclusive authority to
manage, including the power to acquire and dispose of, the Plan assets
assigned to it by the Investment Committee, except to the extent that the
Investment Committee prescribes how those assets will be invested. The
Trustee and each Investment Manager will be solely responsible for
diversifying the investment, in accordance with section 404(a)(1)(C) of the
Act, of the Plan assets assigned to them by the Investment Committee, except
to the extent that the Investment Committee directs or the Plan prescribes
how those assets will be invested.
17.4 Committee Membership. Both the Administrative Committee and the
Investment Committee will consist of at least 3 members. Each Member will be
appointed by, will remain in office at the will of, and may be removed, with
or without cause, by the Board of Directors. Any member of either Committee
may resign at any time. The Board of Directors will designate the chairman
of each Committee.
To the maximum extent permitted by law, no member of either Committee
will be personally liable by reason of any contract or other instrument
executed by him or her, or on his or her behalf, in his or her capacity as a
member of such Committee, nor for any mistake of judgment made in good faith.
The Company will indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums of which are
paid from the Company's own assets), each member of the Administrative
Committee and Investment Committee and each other officer, employee or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan or to the management and control
of the assets of the Plan may be delegated or allocated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any
act or omission to act in connection with the Plan, unless arising out of
such person's own fraud or willful misconduct.
17.5 Reports to Board of Directors. Each Committee will report to the
Board of Directors, or to its designee for this purpose, annually and at such
other times specified by the Board of Directors or such designee, with regard
to the matters for which it is responsible under the Plan.
17.6 Employment of Advisers. The Administrative Committee and the
Investment Committee may make use of employees of the Company or outside
agents as they each require or may deem advisable for purposes of performing
their respective duties under the Plan. Either Committee may rely upon the
written opinion or advice of counsel provided by the Company, fairness
opinions provided by investment bankers and written opinions or advice
provided by the Actuary and accountants engaged by the Administrative
Committee. Either Committee may delegate to any such agent or to any
subcommittee or member of the Committees its authority to perform any act
under the Plan, including, without limitation, those matters involving the
exercise of discretion. Any such delegation of discretion will be subject to
revocation at any time at the discretion of the appropriate Committee.
17.7 Limitations on Committee Actions. No member of either Committee
will be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under the Plan. The members
of the Administrative Committee and of the Investment Committee will not
receive any special compensation for serving in their capacities as members
of such Committees but will be reimbursed for any reasonable expenses
incurred in connection with performing their Committee duties. Except as
otherwise required by the Act, no bond or other security will be required of
either Committee or any Committee member in any jurisdiction. Any person may
serve on both Committees, and any member of either Committee, any
subcommittee or agent to whom either Committee delegates any authority, and
any other person or group of persons, may serve in more than one fiduciary
capacity (including service both as a trustee and administrator) with respect
to the Plan.
17.8 Committee Meetings. Each Committee will establish its own
procedures and the time and place for its meetings, and provide for the
keeping of minutes of all meetings. A majority of the members of a Committee
will constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of a Committee may be taken upon the affirmative vote
of a majority of the members of the Committee at a meeting or, at the
direction of its chairman, without a meeting by "mail," telegraph or
telephone; provided that all of the members of the Committee are informed by
mail or telegraph of their right to vote on the proposal and of the outcome
of the vote. "Mail" will include any written or electronic interoffice
communication.
17.9 Accounting and Disbursement of Plan Assets. The Administrative
Committee will appoint a person who will cause to be kept full and accurate
accounts of receipts and disbursements of the Plan, and will cause to be
deposited all funds of the Plan to the name and credit of the Plan, in such
depositories as may be designated by the Investment Committee. Such person
will cause to be disbursed the monies and funds of the Plan when so
authorized by either the Investment Committee or the Administrative Committee
and will generally perform such other duties as may be assigned to him or her
from time to time by either Committee. All demands for money of the Plan
will be signed by such person or such other person or persons as either
Committee may from time to time designate in writing.<PAGE>
SECTION 18 CLAIMS AND REVIEW PROCEDURES.
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18.1 Applications for Benefits. Any application for a benefit under
the Plan must be submitted to the Administrative Committee at the Company's
principal office. The application must be in writing on the prescribed form
and must be signed by the applicant.
18.2 Denial of Applications. If any application for a benefit is
denied in whole or in part, the Administrative Committee will notify the
applicant in writing of the right to a review of the denial. The written
notice will state, in a manner reasonably calculated to be understood by the
applicant:
(a) The specific reasons for the denial;
(b) The specific references to the Plan provisions on which the
denial was based;
(c) A description of any information or material necessary to
perfect the application;
(d) An explanation of why such material is necessary; and
(e) An explanation of the Plan's review procedure.
The written notice will be given to the applicant within 90 days after the
Administrative Committee receives the application, unless special
circumstances require an extension of time for processing the application.
In no event will the extension exceed a period of 90 days from the end of the
initial 90-day period. If an extension is required, written notice of the
need for the extension will be furnished to the applicant before the end of
the initial 90-day period. The notice will indicate the special
circumstances requiring the extension of time and the date by which the
Administrative Committee expects to give a decision. If written notice is
not given to the applicant within the initial 90-day period, then the
application will be deemed to have been denied (for purposes of Section 18.3)
upon the expiration of such period.
18.3 Requests for Review. Any person whose application for a benefit
is denied in whole or in part (or such person's duly authorized
representative) may appeal the denial by submitting to the Administrative
Committee a request for a review of such application within 60 days after
receiving written notice of the denial (or within 60 days of a deemed denial
under Section 18.2). The Administrative Committee will give the applicant or
such representative an opportunity to review pertinent documents (except
legally privileged materials) in preparing such request for review and to
submit issues and comments in writing. The request for review must be in
writing and must be addressed to the Company's principal office. The request
for review must state all of the grounds on which it is based, all facts in
support of the request and any other matters which the applicant deems
pertinent. The Administrative Committee may require the applicant to submit
such additional facts, documents or other material as it may deem necessary
or appropriate in making its review.
18.4 Decisions on Review. The Administrative Committee will act upon
each request for review within 60 days after it receives the request unless
special circumstances require an extension of time for processing, but in no
event will the decision on review be given more than 120 days after the
Administrative Committee receives the request for review. If an extension is
required, written notice of the need for an extension will be given to the
applicant before the end of the initial 60-day period. The Administrative
Committee will give prompt, written notice of its decision to the applicant.
If the Administrative Committee confirms the denial of the application for a
benefit in whole or in part, the notice will state, in a manner calculated to
be understood by the applicant, the specific reasons for the denial and
specific references to the Plan provisions on which the decision is based.
To the extent that the Administrative Committee overrules the denial of the
application for a benefit, such benefit will be paid to the applicant.
18.5 Exhaustion of Administrative Remedies. No legal or equitable
action for a benefit under the Plan will be brought unless and until the
claimant has completed the following:
(a) Submitted a written application for a benefit in accordance
with Section 18.1;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 18.3; and
(d) Been notified in writing that the Administrative Committee has
affirmed the denial of the application.
A claimant may bring an action without completing the above steps after the
Administrative Committee has failed to act on the claim within the time
prescribed in Section 18.2 and Section 18.4.<PAGE>
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION.
- ---------- -------------------------------------
19.1 Termination by Participating Company. Any Participating Company
may terminate its participation in the Plan by giving the Board of Directors
prior written notice specifying a termination date which will be the last day
of a month at least 60 days after the date such notice is received by the
Board of Directors. If the specified termination date is not at least 60
days after the date the notice of termination is received by the Board of
Directors, the specified termination date will automatically be changed to
the last day of the first month which is at least 60 days after the date the
notice is received. The Board of Directors may waive the 60 day notice
requirement and terminate the Participating Company's participation in the
Plan as of any earlier date. The Board of Directors may also terminate any
Participating Company's participation in the Plan, as of any termination date
specified by the Board of Directors, for the failure of the Participating
Company to make proper contributions or to comply with any other provision of
the Plan, or for any other reason the Board of Directors deems appropriate.
In any event, the Administrative Committee will promptly notify the IRS, the
PBGC and other appropriate governmental authorities under Sections 19.3 and
20.3 of the Plan.
19.2 Effect of Termination. Upon termination of the Plan as to any
Participating Company, no amount will subsequently be payable under the Plan
to or with respect to any Members then employed by such Participating
Company, except as provided in this Section 19, and no amount will be payable
to the Participating Company. Subject to any conditions which the IRS, the
PBGC or any other governmental authority may impose, the Administrative
Committee will direct the Trustee to segregate such portion of the Trust Fund
(the "Distributable Reserve") as the Actuary determines to be properly
allocable in accordance with the Act to the active employees of such
Participating Company. To the maximum extent permitted by the Act, any
rights of Members no longer employed by the Participating Company, former
Members and their Beneficiaries, Surviving Spouses and other eligible
survivors under the Plan will be unaffected by a termination of the Plan as
to any Participating Company, and any payments, transfers or contributions of
the Distributable Reserve as provided in Section 20 will constitute a
complete discharge of all liabilities under the Trust Fund.
If the Plan is terminated with respect to a Participating Company, the
Retirement Benefit of any Highly Compensated Employee and any Highly
Compensated Former Employee of such company will be limited to a benefit that
is nondiscriminatory under section 401(a)(4) of the Code.
19.3 IRS Termination Procedure. If the Plan is terminated with respect
to a Participating Company, the Administrative Committee or the appropriate
Company office must submit the Plan to the IRS for a determination that the
termination of the Plan with respect to the Participating Company will not
adversely impact the qualified status of the Plan and the Trust Fund under
sections 401(a) and 501(a) of the Code. No distributions of assets will be
made in connection with the termination of the Plan until the IRS has issued
a determination as to the effect of such termination. The Participating
Company may, by written notice delivered to the Administrative Committee and
the Trustee, waive its right to apply for such a determination. Any such
waiver request must be approved by the Board of Directors.
19.4 PBGC Termination Procedure. Upon receipt by the Administrative
Committee of an IRS determination regarding the termination of the Plan as to
a Participating Company, or if the Participating Company waives its right to
obtain an IRS determination and the Board of Directors approves such waiver
request, the following provisions will apply:
(a) At least 60 days before the date on which the Participating
Company's participation in the Plan is to be terminated, the Administrative
Committee will provide Members and Beneficiaries with a Notice of Intent to
Terminate the Plan with respect to the Participating Company. As soon as
administratively practicable after such Notice of Intent to Terminate is
provided, the Administrative Committee will file notice with the PBGC
indicating that the Plan is to be terminated with respect to the
Participating Company.
(b) If the PBGC issues a Notice of Noncompliance within 60 days
after it receives notice of the termination of the Plan, the Administrative
Committee will refrain from taking any further action to terminate the Plan
with respect to the Participating Company and will cooperate with the PBGC
with respect to such termination of the Plan. Alternatively, the
Administrative Committee may declare the termination of the Plan to be null
and void with respect to the Participating Company and continue to treat the
Plan with respect to such Company as an ongoing Plan for all purposes under
the Act and the Code.
(c) If the PBGC does not issue a notice of noncompliance within 60
days after it receives notice of the termination of the Plan, then the
Administrative Committee will distribute the distributable reserve to Members
employed by the Participating Company in accordance with Section 20.5 of the
Plan and the applicable Regulations issued by the PBGC regarding plan
terminations.
If the PBGC issues revised Regulations regarding plan terminations, such
Regulations will supersede and override any inconsistent provisions of this
Plan, and any termination of the Plan with respect to a Participating Company
will be accomplished under the terms and provisions of such Regulations.
19.5 Termination of the Plan. If the Plan is terminated with respect
to all Participating Companies, the provisions of this Section 19 will be
applied to each of the Participating Companies individually or collectively
as determined by the Administrative Committee in its sole and absolute
discretion.<PAGE>
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- ---------- ------------------------------------------------------
20.1 Right to Amend. The Board of Directors have the right at any
time, to modify, alter or amend this Plan, in whole or in part, prospectively
or retroactively. No amendment will reduce any Participant's Retirement
Benefit, calculated as of the date on which the amendment is adopted, except
to the extent as may be appropriate or necessary to enable the Plan and Trust
Fund to continue to satisfy the requirements of section 401(a) and section
501(a) of the Code or other applicable law. Any such amendment will be
evidenced by an instrument in writing duly executed, acknowledged and
delivered to the Administrative Committee and the Trustee. If the Plan is
amended by the Board of Directors after it is adopted by an Affiliated
Company, unless otherwise expressly provided, it will be treated as so
amended by the Affiliated Company without the necessity of any action on the
part of the Affiliated Company.
20.2 Plan Merger or Consolidation. The Board of Directors reserves the
right to merge or consolidate this Plan with any other plan or to direct the
Trustee to transfer the assets held in the Trust Fund and/or the liabilities
of this Plan to any other plan or to accept a transfer of assets and
liabilities from any other plan. In the event of the merger or consolidation
of this Plan and the Trust Fund with any other plan, or a transfer of assets
or liabilities to or from the Trust Fund to or from any other plan, then each
Member will be entitled to a benefit immediately after the merger,
consolidation or transfer (determined as if the Plan was then terminated)
that is equal to or greater than the benefit he or she would have been
entitled to receive immediately before such merger, consolidation or transfer
(if this Plan had then terminated).
20.3 Termination of the Plan. The Board of Directors hopes and expects
to continue the Plan indefinitely. Nevertheless, to the full extent
permitted by law, the Board of Directors reserves the right to suspend or
terminate the Plan or to completely discontinue benefit accruals under the
Plan. As required by law, before the termination, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, any
other fiduciary or the PBGC of its intent to terminate the Plan. Upon such
termination, the Members' rights to their Retirement Benefits will become
fully vested and nonforfeitable.
On the complete termination of the Plan, LS&CO. and all or any
Participating Companies, as determined by the Board of Directors or its
designee, will receive such amounts, if any, as remain in the Trust Fund
after the satisfaction of all liabilities under the Plan.
20.4 Partial Termination of the Plan. Upon a curtailment of the Plan
or a discontinuance of the Plan with respect to a group or class of Members
that constitutes a "Partial Termination" as defined under section 411(d)(3)
of the Code, all such Members' rights to their Retirement Benefits under the
Plan at the time of the Partial Termination will become fully vested and
nonforfeitable. If a Partial Termination occurs, the Administrative Committee
may instruct the Actuary to allocate the assets among the Members in
accordance with section 4044(a) of the Act. The assets allocated to the
Members affected by the Partial Termination will then be segregated by the
Trustee, and the funds so allocated and segregated will then be used to pay
Retirement Benefits under the Plan to such Members in accordance with Section
20.5 as though the Plan had been completely terminated. If such funds are
insufficient to pay the affected Members' Retirement Benefits, the
Participating Company employing such Members will be liable for the
insufficiency. Alternatively, the Administrative Committee may postpone
Retirement Benefit distributions to such Members until their subsequent
termination of employment with the Company in accordance with other
provisions of the Plan.
20.5 Manner of Distribution. Upon termination of the Plan and the
allocation of Plan assets, the Administrative Committee may, in its sole and
absolute discretion, direct the Trustee to convert the Trust Fund into cash
and liquidate it by making Retirement Benefit distributions to Members in
accordance with the modes of distribution provided for in Section 11.
Alternatively, with the consent of the Board of Directors, or its designee,
the Administrative Committee may direct the Trustee to hold the Members'
Retirement Benefits in the Trust Fund until such Members or their
Beneficiaries become eligible to receive Retirement Benefit distributions
under the terms and provisions of this Plan.
If the Plan is liquidated, the Administrative Committee will instruct
the Trustee to purchase nontransferable deferred annuities for each person
entitled to Retirement Benefit distributions, with the monthly payment
provided by the annuity, the form of the annuity, and the date on which
payments will commence under the annuity to be determined in accordance with
the preceding Sections of the Plan. If the assets held in the Trust Fund are
insufficient to purchase all of such annuities, the assets will be allocated
among the Members in the manner prescribed by section 4044(a) of the Act.
However, the Board of Directors, or its designee, and the Administrative
Committee will not instruct the Trustee to liquidate the Trust Fund before
complying with the Act.<PAGE>
SECTION 21 INALIENABILITY OF BENEFITS.
- ---------- --------------------------
21.1 No Assignment Permitted. Except as may otherwise be required by
law, no amount payable at any time under the Plan and the Trust Agreement
will be used or diverted for purposes other than for the exclusive benefit of
Members and their Beneficiaries. No amount payable under the Plan will be
subject in any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any Member,
contingent annuitant, Beneficiary, or Alternate Payee, and any attempt to so
alienate or subject any such amount will be void. If any Member, contingent
annuitant, Beneficiary, or Alternate Payee, attempts to, or alienates, sells,
transfers, assigns, pledges, attaches, charges or otherwise encumbers any
amount payable under the Plan and Trust Agreement, or any part of such
amount, or if by reason of his or her bankruptcy or any other event, such
amount would be made subject to his or her debts or liabilities or would
otherwise not be enjoyed by him or her, then the Administrative Committee, if
it so elects, may direct that such amount be withheld and that such amount or
any portion of such amount be paid or applied to or for the benefit of such
person, his or her spouse, children or other dependents, or any of them, in
such manner and proportion as the Administrative Committee may deem proper.
The following arrangements are not prohibited under the Plan:
(a) Arrangements for the withholding of tax from benefit
distributions;
(b) Arrangements for the recovery of benefit overpayments;
(c) Arrangements for the recovery of amounts described in section
4045(b) of the Act in the event of the termination of the Plan and the
recapture of such amounts; or
(d) Arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided
that such arrangement is not part of an arrangement constituting an
assignment or alienation).
In addition, the return of Company contributions under Section 21.2 and the
creation, assignment or recognition of a right to all or a portion of a
Member's Retirement Benefit under a Qualified Domestic Relations Order under
Section 21.3 will not violate this Section 21.1.
21.2 Return of Contributions. All Company contributions to the Plan
are expressly conditioned upon the deductibility of such contributions under
section 404 of the Code. If the deduction of any Company contribution is
disallowed, then the amount for which a deduction is disallowed will be
returned to the appropriate Participating Company within 12 months after the
date of the disallowance. In addition, if any Company contribution is made
as a result of a mistake of fact, such contribution may be repaid to the
appropriate Participating Company within 12 months after it is made. Any
Company contribution so returned will be reduced to reflect losses, but will
not be increased to reflect gains or income.
21.3 Qualified Domestic Relations Orders. The Administrative Committee
will honor the terms of a Qualified Domestic Relations Order that satisfies
the following requirements:
(a) Requirements. In accordance with section 414(p) of the Code,
a Domestic Relations Order will not be treated as a Qualified Domestic
Relations Order unless it satisfies all of the following conditions:
(i) The Domestic Relations Order clearly specifies the name
and last known mailing address (if any) of the Member and the name and
last known mailing address of each Alternate Payee covered by the order,
the amount or percentage of the Member's Retirement Benefit to be paid
to each Alternate Payee or the manner in which such amount or percentage
is to be determined, and the number of payments or period to which such
order applies.
(ii) The Domestic Relations Order specifically indicates that
it applies to this Plan.
(iii) The Domestic Relations Order does not require this Plan
to provide any type or form of benefit, or any option, not otherwise
provided under the Plan, and it does not require the Plan to provide
increased benefits (determined on the basis of actuarial equivalence
factors in Section 25).
(iv) The Domestic Relations Order does not require the
payment of all or a portion of a Member's Retirement Benefit to an
Alternate Payee which is required to be paid to another Alternate Payee
under another order previously determined to qualify as a Qualified
Domestic Relations Order.
(b) Early Commencement of Payments to Alternate Payees. A
Domestic Relations Order requiring payment to an Alternate Payee before a
Member has separated from employment may qualify as a Qualified Domestic
Relations Order as long as the order does not require payment before the
Member's "Earliest Retirement Age," which is the earliest date on which the
Member could elect to receive a Retirement Benefit under the Plan. If the
order requires payments to begin after a Member's Earliest Retirement Age but
before a Member's actual retirement, the amount of the payments must be
determined as if the Member began receiving benefit payments on the date on
which the payments are to begin under the order, but taking into account only
the Equivalent Actuarial Value of the Member's Retirement Benefit at that
time and not taking into account the Equivalent Actuarial Value of any
Company subsidy for Early Retirement Benefits which may at any time be
provided by the Plan under Section 7. The Retirement Benefit payable to an
Alternate Payee will not be recalculated upon the Member's actual or deemed
retirement.
(c) Alternate Payment Forms. The Domestic Relations Order may
call for the payment of the Retirement Benefit to an Alternate Payee in any
form in which benefits may be paid under the Plan to the Member, other than
in the form of a Qualified Joint and Survivor Annuity with respect to the
Alternate Payee and his or her subsequent spouse.
(d) Actuarial Calculations. The actuarial factors and assumptions
used by the Administrative Committee under Section 25 of the Plan in making
actuarial equivalency determinations for calculating the payment of benefits
before a Member's Normal Retirement Date will be used for purposes of
calculating the Equivalent Actuarial Value of the Retirement Benefit payable
to the Alternate Payee.
(e) Processing of Qualified Domestic Relations Orders. The
Administrative Committee will promptly notify the Member, and any Alternate
Payee (including any Alternate Payee who may be entitled to benefits under a
previously received Qualified Domestic Relations Order) of the receipt of any
Domestic Relations Order which could qualify as a Qualified Domestic
Relations Order. At the same time, the Administrative Committee will advise
the Member and each Alternate Payee of the Plan provisions relating to the
determination of the qualified status of such orders.
Within a reasonable period of time after receipt of a copy of the
Domestic Relations Order, the Administrative Committee will determine whether
the order is a Qualified Domestic Relations Order and notify the Member and
each Alternate Payee of its determination. The determination of the status
of a Domestic Relations Order as a Qualified Domestic Relations Order will be
made in accordance with such uniform and nondiscriminatory rules and
procedures as may be adopted by the Administrative Committee from time to
time. If monthly benefits are presently being paid with respect to a Member
named in a Domestic Relations Order which may qualify as a Qualified Domestic
Relations Domestic Relations Order, or if the Member's Retirement Benefit
becomes payable after receipt of the order, the Administrative Committee will
notify the Trustee to segregate and hold the amounts which would be payable
to the Alternate Payee or payees designated in the order if the order is
ultimately determined to be a Qualified Domestic Relations Order.
If the Administrative Committee determines that the order is a Qualified
Domestic Relations Order within 18 months of receipt of the order, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the Alternate Payee specified
in the Qualified Domestic Relations Order. Conversely, if within the same 18
month period the Administrative Committee determines that the Domestic
Relations Order is not a Qualified Domestic Relations Order, or if the status
of the order as a Qualified Domestic Relations Order is not resolved, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the person or persons who
would have been entitled to such amounts if the order had not been entered.
If the Administrative Committee determines that a Domestic Relations Order is
a Qualified Domestic Relations Order after the close of the 18 month period
mentioned above, the determination will be applied prospectively only. The
determination of the Administrative Committee as to the status of a Domestic
Relations Order as a Qualified Domestic Relations Order will be binding and
conclusive on all interested parties, present and future, subject to the
claims review provisions of Section 18.
(f) Responsibility of Alternate Payees. Any person claiming to be
an Alternate Payee under a Qualified Domestic Relations Order will be
responsible for supplying the Administrative Committee with a certified or
otherwise authenticated copy of the order and any other information or
evidence that the Administrative Committee deems necessary in order to
substantiate the person's claim or the status of the order as a Qualified
Domestic Relations Order.<PAGE>
SECTION 22 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF BATTERY STREET
- ---------- ----------------------------------------------------------
ENTERPRISES, INC. OR ANY OF ITS SUBSIDIARIES.
--------------------------------------------
Unless otherwise required by the Act, the provisions of this Section 22
will apply only in the case of an Employee who was treated as an active
employee of Koracorp Industries, Inc. or any of its subsidiaries on September
10, 1979 (the date such companies were acquired by Diversified Apparel
Enterprises, Inc., the predecessor of Battery Street Enterprises, Inc.) and
who became an Employee either by transferring directly to the employ of the
Company from Diversified Apparel Enterprises, Inc. or any of its
subsidiaries, or by remaining an active employee at least until December 1,
1980, when Diversified Apparel Enterprises, Inc. and certain of its
subsidiaries became Participating Companies of the Terminated Plan. Such an
Employee will accrue Service under the Plan under paragraphs (a) and (b)
below.
(a) In addition to Service as defined in Section 2.58, Service
will also include, solely for purposes of determining Years of Service under
Section 3, Section 4.1, Section 8, Section 9 and Section 10.2, all years and
monthly fractions of such years of continuous employment with Koracorp
Industries, Inc. or any of its subsidiaries, which was provided before the
acquisition of such companies by Diversified Apparel Enterprises, Inc.
(b) In addition to Benefit Service as defined in Section 2.9,
Benefit Service will also include all years and monthly fractions of such
years of continuous employment with Diversified Apparel Enterprises, Inc. or
any of its subsidiaries after September 10, 1979, and before December 1,
1980.<PAGE>
SECTION 23 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN
- ---------- ---------------------------------------------------
MANUFACTURING COMPANY, TOP-NOTCH MANUFACTURING COMPANY,
-------------------------------------------------------
INCORPORATED AND MILLER BELTS LTD., INC.
---------------------------------------
In addition to Benefit Service and Service as defined in Sections 2.9
and 2.58, respectively, Benefit Service and Service will also include all
years and monthly fractions of such years of continuous employment with
Oberman Manufacturing Company or Top-Notch Manufacturing Company,
Incorporated beginning after June 1, 1966, and ending before the date such
entities were acquired by LS&CO. and who became an Employee before November
28, 1977, by virtue of being paid at the equivalent of LS&CO.'s Home Office
Salary Grade 12 or above and, thus, transferring to the LS&CO. Home Office
Payroll.<PAGE>
SECTION 24 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN FORMER
- ---------- ---------------------------------------------------------
EMPLOYEES OF ASIAN PACIFIC INDUSTRIES, INC.
------------------------------------------
In the case of a person who became an Employee as a result of the
acquisition of the assets of Asian Pacific Industries, Inc. on December 31,
1986, Service as defined in Section 2.58 will include employment with Asian
Pacific Industries, Inc. and its subsidiaries and affiliates before such
acquisition to the same extent as if such employment had been with the
Company. Employment with Asian Pacific Industries, Inc. and its subsidiaries
and affiliates before such acquisition will not, however, be counted for
purposes of determining a Member's Benefit Service under Section 2.9.<PAGE>
SECTION 25 ACTUARIAL EQUIVALENCE FACTORS.
- ---------- -----------------------------
Unless otherwise specified in the Plan, the following actuarial
assumptions will be used for purposes of calculating various forms of benefit
under the Plan:
(a) Mortality:
(i) Except as provided in paragraph (ii), the Mortality
Table used under the Plan will be the 1983 Group Annuity Mortality
Table, assuming a relevant population that consists of 50% males and 50%
females.
(ii) For purposes of determining the Actuarial Equivalent of
benefits which begin to be paid before a Member's Normal Retirement Date
under the Plan, the mortality table used will be the 1951 Group Annuity
table on a female basis. The resulting factors will be rounded to the
next higher percentage.
(b) Interest Rate:
(i) For purposes of calculating a single sum payment made
after November 1, 1992, under Section 11.3 or Section 11.5, the interest
rate used under the Plan will equal the interest rate or rates that
would be used by the PBGC for purposes of determining the present value
of a lump sum distribution on plan termination, determined as of the
first day of the month during which the notice of the optional forms of
benefit payable under the Plan and election form described in Section
12.2 is distributed (or would otherwise be distributed to the Member if
the single sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500) which will not be more than 120 days before the
Annuity Starting Date.
(ii) For single sum distributions made during the period
beginning November 1, 1991, and ending on November 1, 1992, the interest
rate used under the Plan will equal whichever of the rates described in
(A) or (B) below which produces the greater single sum benefit:
(A) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the notice
of the optional forms of benefit payable under the Plan and
election form described in Section 12.2 is distributed to the
Member (or would otherwise be distributed to the Member if the
lump sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500); or
(B) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the
distribution occurs.
(iii) For single sum distributions made before November 1,
1991, the interest rate or rates used under the Plan will equal the
interest rate or rates used by the PBGC for purposes of determining the
present value of a lump sum on plan termination, determined as of the
first day of the month in which the distribution occurs.
(iv) For purposes of calculating all other optional forms of
benefit under the Plan, the interest rate used will be 7%.
(v) For purposes of determining the Equivalent Actuarial
Value of Retirement Benefit payments beginning before a Member's Normal
Retirement Date under the Plan, the interest rate used will be 6%.<PAGE>
SECTION 26 TOP HEAVY BENEFITS.
- ---------- ------------------
If the Plan becomes "Top Heavy," the provisions of this Section 26 will
become operative. The Plan will be Top Heavy for a Plan Year if, on the last
day of the prior Plan Year (the "Determination Date"), more than 60% of the
present value of the "Accrued Benefits" under the Plan are credited to or
allocable to "Key Employees." For purposes of determining the present value
of a Member's Accrued Benefit, turnover is to be ignored. The Plan will be
"Super Top Heavy" if, on the Determination Date, more than 90% of the present
value of the Accrued Benefits under the Plan are credited or allocable to Key
Employees.
"Accrued Benefit" means the value of the Member's Retirement Benefit as
determined under Section 5 of the Plan (and the Member's accrued benefit
determined under any other defined benefit plans which are members of a
"Required Aggregation Group" of which this Plan is also a member). The
Member's Accrued Benefit will be increased by any distributions made to the
Member during the 5-year period ending on the Determination Date; except the
Accrued Benefit of a Member who has not performed any services for the
Company or an Affiliated Company during such 5-year period and the Accrued
Benefit of any Member who was formerly a Key Employee will be disregarded.
The present value will be determined as of the most recent "Valuation Date"
that is within the 12-month period ending on the "Determination Date" and as
described in the Regulations under the Code, using an interest rate of 7% per
year and the 1983 Group Annuity Mortality Table, assuming a relevant
population that consists of 50% males and 50% females. In determining the
present value, benefits not related to retirement benefits will be excluded,
and subsidized early retirement benefits and subsidized benefit options will
be excluded unless deemed to be nonproportional subsidies as described in the
Regulations under the Code. The Valuation Date is the same as the valuation
date used for determining minimum funding standards under section 412 of the
Code, whether or not a valuation was performed during the year.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee determines (in its sole and absolute
discretion, but under the provisions of section 416 of the Code) that the
Plan is a constituent in an "Aggregation Group" this Plan will be considered
Top Heavy or Super Top Heavy only if the Aggregation Group is a "Top Heavy
Group" or a "Super Top Heavy Group." An "Aggregation Group" includes:
(a) Each plan intended to qualify under section 401(a) of the Code
sponsored by the Company or an Affiliated Company in which 1 or more Key
Employees participate;
(b) Each other plan of the Company or an Affiliated Company that
is considered in conjunction with such plans in determining whether or not
the discrimination and coverage requirements of section 401(a)(4) and section
410 of the Code are satisfied; and
(c) In the discretion of the Administrative Committee, any other
such plan of the Company or an Affiliated Company, which, when considered in
conjunction with the plans referred to above, satisfies the nondiscrimination
and coverage requirements of section 401(a)(4) and section 410 of the Code.
A "Top Heavy Group" is an Aggregation Group in which the sum (determined
as of the Determination Date) of the present value of the cumulative Accrued
Benefits for Key Employees (as determined by the Administrative Committee)
under all "defined benefit plans" (as defined in section 414(j) of the Code)
included in such group plus the aggregate of the amounts credited to accounts
of Key Employees under all "defined contribution plans" (as defined in
section 414(i) of the Code) included in such group, exceed 60% of the total
of such amounts for all Employees and Beneficiaries covered by such plans.
A "Super Top Heavy Group" is an Aggregation Group for which the sum so
determined for Key Employees exceeds 90% of the sum so determined for all
Employees and Beneficiaries. Such determination will be made in accordance
with section 416 of the Code.
If the Plan becomes Top Heavy, then the Retirement Benefit credited to
each Participant other than a Key Employee will not be less than the product
of:
(a) The percentage which is the lesser of:
(i) 2% multiplied by the Participant's Years of Service (as
determined in accordance with this Section 26) or
(ii) 20%; and
(b) The Participant's "Average Yearly Compensation."
A Member's Years of Service will not include Years of Service beginning
before January 1, 1984, or Years of Service ending in a Plan Year during
which the Plan is not Top Heavy. The "Average Yearly Compensation" of a
Member will be the average rate of annual Compensation in effect for a Member
during the 5 consecutive calendar years in which the Member's Compensation is
the greatest, excluding Plan Years ending before January 1, 1984, and Plan
Years beginning after the last Plan Year during which the Plan was Top Heavy.
"Compensation" means compensation as defined in section 414(q)(7) of the
Code.
If the Plan becomes Top Heavy, the Vested Retirement Benefit of a Member
who terminates service with the Company or an Affiliated Company before his
or her Normal Retirement Date or death will be equal to the percentage of his
or her Accrued Benefit determined under the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
If the Plan at any time is Top Heavy and later ceases to be Top Heavy,
each Member who is credited with less than 2 Years of Service as of the last
day of the last Plan Year in which the Plan is Top Heavy will have his or her
Vested Retirement Benefit determined under Section 2.70 (unless and until the
Plan again becomes Top Heavy). If a Member has at least 3 Years of Service
on the last day of the last Plan Year in which the Plan is Top Heavy, for
each future Plan Year his or her Vested Retirement Benefit will be calculated
in accordance with this Section 26 as though the Plan were Top Heavy. If a
Member does not have at least 3 Years of Service on the last day of the last
Plan Year in which the Plan is Top Heavy, his or her Vested Retirement
Benefit for each future Plan Year will be calculated in accordance with
Section 2.70.<PAGE>
SECTION 27 GENERAL LIMITATIONS AND PROVISIONS.
- ---------- ----------------------------------
27.1 No Employment Right. Nothing contained in the Plan will give any
employee the right to be retained in the employment of the Company or any
Affiliated Company or affect the right of any such employer to dismiss any
employee. The adoption and maintenance of the Plan will not constitute a
contract between the Company and any employee or consideration for, or an
inducement to or condition of, the employment of any employee.
27.2 Payments from the Trust Fund. The Trust Fund will be the sole
source of benefits under the Plan and, except as otherwise required by the
Act, the Company, the Administrative Committee and the Investment Committee
assume no liability or responsibility for payment of such benefits. Each
Member, Surviving Spouse, Domestic Partner, Beneficiary or other person who
will claim the right to any payment under the Plan will be entitled to look
only to the Trust Fund for such payment and will not have the right, claim or
demand against the Company, the Administrative Committee or the Investment
Committee or any member of the Committees, or any employee or member of the
Board of Directors.
27.3 Payments to Minors or Incompetents. If the Administrative
Committee finds that any person to whom any amount is payable under the Plan
is unable to care for his or her affairs because of illness or accident, or
is a minor, or has died, then any payment due him or her or his or her estate
(unless a prior claim for such amount has been made by a duly appointed legal
representative) may, if the Administrative Committee so elects, be paid to
his or her spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Administrative
Committee to be a proper recipient on behalf of such person otherwise
entitled to payment. Any such payment will be a complete discharge of the
liability of the Plan and the Trust Fund.
27.4 Lost Members or Beneficiaries. If the Administrative Committee is
unable to locate a Member, Surviving Spouse, Domestic Partner or Beneficiary
who is entitled to receive any amount payable under the Plan, the
Administrative Committee may (but need not) direct that such amount be
applied to reduce the contributions of the Participating Companies to the
Plan. If the Member, Surviving Spouse, Domestic Partner or Beneficiary later
makes a claim for such amount before the date final distributions are made
from the Trust Fund following termination of the Plan, such amount (without
income, gains or other adjustment) will be reinstated and paid to him or her
as provided in Section 11. However, if any amount would have been lost by
reason of escheat under applicable state law, then such amount will not be
subject to reinstatement. If the Plan is terminated and final distributions
are made from the Trust Fund before the applicable escheat period with
respect to a lost Member, Surviving Spouse, Domestic Partner or Beneficiary
has expired, the Administrative Committee may direct the transfer of any such
person's unclaimed benefit to an individual retirement account.
27.5 Personal Data to the Administrative Committee. Each Member must
file with the Administrative Committee such pertinent information concerning
himself or herself, his or her spouse, his or her Domestic Partner, his or
her Beneficiary or any other person as the Administrative Committee may
specify, and no member, Surviving Spouse, Domestic Partner, Beneficiary or
other person will have any rights to any benefit under the Plan unless such
information is filed by or with respect to him or her. The Administrative
Committee is entitled to rely on personal data given to it by a Member.
27.6 Insurance Contracts. If the payment of any benefit under the Plan
is provided for by a contract with an insurance company the payment of such
benefit will be subject to all the provisions of such contract.
27.7 Notice to the Administrative Committee. All elections,
designations, requests, notices, instructions and other communications from
a Participating Company, a Member, Beneficiary, Surviving Spouse, Domestic
Partner or other person to the Administrative Committee, required or
permitted under the Plan, will be:
(a) In such form as is prescribed from time to time by the
Administrative Committee;
(b) Mailed by first-class mail or delivered to such location as
will be specified by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual
receipt by the Administrative Committee at such location.
27.8 Notices to Members and Beneficiaries. All notices, statements,
reports and other communications from a Participating Company or the
Administrative Committee or Investment Committee to any employee, Member,
Beneficiary or other person (other than the Administrative Committee)
required or permitted under the Plan will be deemed to have been duly given
when delivered to, or when mailed by first-class mail, postage prepaid and
addressed to, such employee, Member, Beneficiary or other person at his or
her address last appearing on the records of the Administrative Committee.
27.9 Word Usage. Whenever used in the Plan, the masculine gender
includes the feminine, and wherever the context of the Plan dictates, the
plural will be read as the singular and the singular as the plural. Uses of
the term "Sections" as a cross-reference will be to other Sections contained
in the Plan and not to another instrument, document or publication unless
specifically stated otherwise.
27.10 Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construing the
provisions of the Plan.
27.11 Governing Law. The Plan and all rights under the Plan will be
governed by and construed in accordance with California law except to the
extent such law is preempted by the Code and the Act.
27.12 Heirs and Successors. All of the provisions of the Plan will be
binding upon all persons who will be entitled to any benefits under the Plan,
their heirs and legal representatives.
27.13 Withholding. Payment of benefits under this Plan will be subject
to applicable law governing the withholding of taxes from benefit payments,
and the Trustee and Administrative Committee will be authorized to withhold
taxes from the payment of any benefits under the Plan, in accordance with
applicable law.
IN WITNESS WHEREOF, LEVI STRAUSS ASSOCIATES INC. has caused this Plan to
be executed and its corporate seal to be hereunto affixed by its duly
authorized officers, as of this _____ day of _______________, 1993.
LEVI STRAUSS ASSOCIATES INC.
By:
------------------------------
Its:
------------------------
ATTEST:
By:
---------------------------------------------<PAGE>
<PAGE>
Exhibit 10k
-----------
LEVI STRAUSS ASSOCIATES INC.
REVISED EMPLOYEE RETIREMENT PLAN
As Amended and Restated
Effective November 27, 1989<PAGE>
LEVI STRAUSS ASSOCIATES INC.
REVISED EMPLOYEE RETIREMENT PLAN
As Amended and Restated
Effective November 27, 1989
TABLE OF CONTENTS
Page
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES . . . . . . . 1
1.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Persons to Whom Plan Applies. . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 "Actuary" . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 "Administrative Committee". . . . . . . . . . . . . . . . . 3
2.4 "Affiliated Company". . . . . . . . . . . . . . . . . . . . 3
2.5 "Alternate Payee" . . . . . . . . . . . . . . . . . . . . . 3
2.6 "Annuity Contract". . . . . . . . . . . . . . . . . . . . . 3
2.7 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . 3
2.8 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 "Benefit Service" . . . . . . . . . . . . . . . . . . . . . 4
2.10 "Board of Directors". . . . . . . . . . . . . . . . . . . . 5
2.11 "Break in Service". . . . . . . . . . . . . . . . . . . . . 5
2.12 "Casual Employee" . . . . . . . . . . . . . . . . . . . . . 5
2.13 "Code". . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 "Common-Law Spouse" . . . . . . . . . . . . . . . . . . . . 5
2.16 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 "Deferred Retirement Benefit" . . . . . . . . . . . . . . . 5
2.18 "Deferred Retirement Date" or "Deferred Retirement" . . . . 6
2.19 "Disability Retirement Benefit" . . . . . . . . . . . . . . 6
2.20 "Domestic Partner". . . . . . . . . . . . . . . . . . . . . 6
2.21 "Domestic Relations Order". . . . . . . . . . . . . . . . . 6
2.22 "Early Retirement Age". . . . . . . . . . . . . . . . . . . 6
2.23 "Early Retirement Benefit". . . . . . . . . . . . . . . . . 6
2.24 "Early Retirement Date" or "Early Retirement" . . . . . . . 6
2.25 "Effective Date". . . . . . . . . . . . . . . . . . . . . . 6
2.26 "Employee". . . . . . . . . . . . . . . . . . . . . . . . . 6
2.27 "Equivalent Actuarial Value". . . . . . . . . . . . . . . . 8
2.28 "Excess Account B". . . . . . . . . . . . . . . . . . . . . 8
2.29 "Exempt Member" . . . . . . . . . . . . . . . . . . . . . . 8
2.30 "High-3 Year Average Compensation". . . . . . . . . . . . . 8
2.31 "Highly Compensated Employee" . . . . . . . . . . . . . . . 10
2.32 "Highly Compensated Former Employee". . . . . . . . . . . . 12
2.33 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . 12
2.34 "Investment Committee". . . . . . . . . . . . . . . . . . . 12
2.35 "Investment Manager". . . . . . . . . . . . . . . . . . . . 12
2.36 "IRS" . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.37 "Labor Department". . . . . . . . . . . . . . . . . . . . . 13
2.38 "Legally Married" . . . . . . . . . . . . . . . . . . . . . 13
2.39 "LS&CO.". . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.40 "Member". . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.41 "Membership Date" . . . . . . . . . . . . . . . . . . . . . 13
2.42 "Misconduct". . . . . . . . . . . . . . . . . . . . . . . . 13
2.43 "Non-Exempt Member" . . . . . . . . . . . . . . . . . . . . 14
2.44 "Normal Retirement Age" . . . . . . . . . . . . . . . . . . 14
2.45 "Normal Retirement Benefit" . . . . . . . . . . . . . . . . 14
2.46 "Normal Retirement Date" or "Normal Retirement" . . . . . . 14
2.47 "Participating Company" . . . . . . . . . . . . . . . . . . 14
2.48 "PBGC". . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.49 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.50 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . 14
2.51 "Qualified Domestic Relations Order". . . . . . . . . . . . 14
2.52 "Qualified Joint and Survivor Annuity". . . . . . . . . . . 14
2.53 "Regulations" . . . . . . . . . . . . . . . . . . . . . . . 14
2.54 "Rehire Anniversary Year" . . . . . . . . . . . . . . . . . 15
2.55 "Required Beginning Date" . . . . . . . . . . . . . . . . . 15
2.56 "Retiree Coordinator" . . . . . . . . . . . . . . . . . . . 15
2.57 "Retirement Benefit". . . . . . . . . . . . . . . . . . . . 15
2.58 "Retirement Date" . . . . . . . . . . . . . . . . . . . . . 15
2.59 "Service" . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.60 "Social Security Retirement Age". . . . . . . . . . . . . . 17
2.61 "Straight Life Annuity" . . . . . . . . . . . . . . . . . . 18
2.62 "Surviving Spouse". . . . . . . . . . . . . . . . . . . . . 18
2.63 "Survivor Annuity". . . . . . . . . . . . . . . . . . . . . 18
2.64 "Terminated Plan" . . . . . . . . . . . . . . . . . . . . . 18
2.65 "Totally and Permanently Disabled" or "Total and
Permanent Disability" . . . . . . . . . . . . . . . . . . 18
2.66 "Trust Agreement" . . . . . . . . . . . . . . . . . . . . . 18
2.67 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . . 18
2.68 "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.69 "Unmarried Partner" . . . . . . . . . . . . . . . . . . . . 19
2.70 "Vested Retirement Benefit" . . . . . . . . . . . . . . . . 19
2.71 "Vested Retirement Benefit Payment Date". . . . . . . . . . 20
2.72 "Year of Service" . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3 MEMBERSHIP AND TRANSFERS. . . . . . . . . . . . . . . . . . 21
3.1 Commencement of Membership. . . . . . . . . . . . . . . . . 21
3.2 Termination of Membership . . . . . . . . . . . . . . . . . 21
3.3 Rehired Members . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Rehired Employees . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4 RETIREMENT DATE . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Normal Retirement Date. . . . . . . . . . . . . . . . . . . 23
4.2 Early Retirement Date . . . . . . . . . . . . . . . . . . . 23
4.3 Deferred Retirement Date. . . . . . . . . . . . . . . . . . 23
4.4 Postponement of Retirement Benefits . . . . . . . . . . . . 23
SECTION 5 RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . . . . 25
5.1 Basic Retirement Benefit. . . . . . . . . . . . . . . . . . 25
5.2 Retirement Benefit of Member of the Terminated Plan . . . . 25
5.3 Adjustments to Retirement Benefit . . . . . . . . . . . . . 26
5.4 Coordination of Retirement Benefits . . . . . . . . . . . . 26
5.5 Reduction of Retirement Benefit . . . . . . . . . . . . . . 26
5.6 Retirement Benefit of Certain Reemployed Members. . . . . . 26
SECTION 6 EXCESS ACCOUNT B. . . . . . . . . . . . . . . . . . . . . . 28
6.1 Background. . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Account B Benefit . . . . . . . . . . . . . . . . . . . . . 28
6.3 Excess Account B Offsets. . . . . . . . . . . . . . . . . . 29
6.4 Determination of Excess Account B Monthly Benefit
Equivalent. . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Application of Certain Limitations on Benefits. . . . . . . 30
6.6 Optional Forms of Benefit . . . . . . . . . . . . . . . . . 31
6.7 Effect of Prior Distribution of Excess Account B. . . . . . 31
6.8 Limitation to Certain Offsets . . . . . . . . . . . . . . . 31
6.9 Restoration of Excess Account B . . . . . . . . . . . . . . 31
SECTION 7 NORMAL RETIREMENT BENEFIT . . . . . . . . . . . . . . . . . 32
7.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 32
7.2 Termination of Employment after Normal Retirement Age . . . 32
SECTION 8 EARLY RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . 33
8.1 Payment of Early Retirement Benefit . . . . . . . . . . . . 33
8.2 Postponement of Early Retirement Benefit. . . . . . . . . . 34
SECTION 9 TERMINATION OF SERVICE BEFORE RETIREMENT. . . . . . . . . . 35
9.1 Payment of Vested Retirement Benefits . . . . . . . . . . . 35
9.2 Early Payment of Vested Retirement Benefits . . . . . . . . 35
9.3 Death Before the Payment of Vested Retirement
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4 Limitation on Vested Retirement Benefit Eligibility . . . . 36
9.5 Single Sum Payment of Excess Account B. . . . . . . . . . . 36
SECTION 10 DISABILITY BEFORE RETIREMENT. . . . . . . . . . . . . . . . 37
10.1 Eligibility for Disability Benefit. . . . . . . . . . . . . 37
10.2 Disability Retirement Benefit . . . . . . . . . . . . . . . 37
10.3 Disability Service. . . . . . . . . . . . . . . . . . . . . 38
10.4 Forfeiture or Reduction of Disability Retirement
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11 DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 42
11.1 Survivor Annuity. . . . . . . . . . . . . . . . . . . . . . 42
11.2 Amount of Survivor Annuity. . . . . . . . . . . . . . . . . 42
11.3 Entitlement to Death Benefit. . . . . . . . . . . . . . . . 43
SECTION 12 METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . . . 44
12.1 Normal Form of Benefit for Married Members. . . . . . . . . 44
12.2 Normal Form of Benefit for Single Members . . . . . . . . . 44
12.3 Optional Forms of Benefit . . . . . . . . . . . . . . . . . 44
12.4 Limitation on Optional Forms of Benefit . . . . . . . . . . 46
12.5 Mandatory Cash Out of Benefits Less than $3,500 . . . . . . 46
12.6 Reduction of Benefits . . . . . . . . . . . . . . . . . . . 46
SECTION 13 BENEFIT ELECTIONS . . . . . . . . . . . . . . . . . . . . . 48
13.1 Election of Optional Forms of Benefits. . . . . . . . . . . 48
13.2 Written Explanation and Election Form . . . . . . . . . . . 48
13.3 Applicable Election Period and Form of Election . . . . . . 49
13.4 Special Circumstances Governing Elections . . . . . . . . . 50
SECTION 14 PAYMENT AND SUSPENSION OF BENEFITS. . . . . . . . . . . . . 53
14.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 53
14.2 Suspension of Benefits. . . . . . . . . . . . . . . . . . . 54
SECTION 15 MAXIMUM AMOUNT OF RETIREMENT BENEFIT. . . . . . . . . . . . 56
15.1 Scope of Limitations on Benefits. . . . . . . . . . . . . . 56
15.2 Basic Limitations on Benefits . . . . . . . . . . . . . . . 56
15.3 Adjustments to Limitations. . . . . . . . . . . . . . . . . 56
15.4 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . 57
15.5 TRA 86 Protected Benefits . . . . . . . . . . . . . . . . . 58
15.6 Multiple Plans. . . . . . . . . . . . . . . . . . . . . . . 58
15.7 Special Limitations on Benefits . . . . . . . . . . . . . . 59
SECTION 16 BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 17 FUNDING AND CONTRIBUTIONS . . . . . . . . . . . . . . . . . 61
17.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . 61
17.2 Actuarial Assumptions . . . . . . . . . . . . . . . . . . . 61
17.3 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . 61
17.4 Expenses of the Plan. . . . . . . . . . . . . . . . . . . . 61
SECTION 18 ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . 63
18.1 Administrative Committee. . . . . . . . . . . . . . . . . . 63
18.2 Control and Management of Plan Assets . . . . . . . . . . . 63
18.3 Trustees and Investment Managers. . . . . . . . . . . . . . 64
18.4 Committee Membership. . . . . . . . . . . . . . . . . . . . 64
18.5 Reports to Board of Directors . . . . . . . . . . . . . . . 65
18.6 Employment of Advisers. . . . . . . . . . . . . . . . . . . 65
18.7 Limitations on Committee Actions. . . . . . . . . . . . . . 65
18.8 Committee Meetings. . . . . . . . . . . . . . . . . . . . . 66
18.9 Accounting and Disbursement of Plan Assets. . . . . . . . . 66
SECTION 19 CLAIMS AND REVIEW PROCEDURES. . . . . . . . . . . . . . . . 67
19.1 Applications for Benefits . . . . . . . . . . . . . . . . . 67
19.2 Denial of Applications. . . . . . . . . . . . . . . . . . . 67
19.3 Requests for Review . . . . . . . . . . . . . . . . . . . . 67
19.4 Decisions on Review . . . . . . . . . . . . . . . . . . . . 68
19.5 Exhaustion of Administrative Remedies . . . . . . . . . . . 68
SECTION 20 TERMINATION OF EMPLOYER PARTICIPATION . . . . . . . . . . . 69
20.1 Termination by Participating Company. . . . . . . . . . . . 69
20.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 69
20.3 IRS Termination Procedure . . . . . . . . . . . . . . . . . 70
20.4 PBGC Termination Procedure. . . . . . . . . . . . . . . . . 70
20.5 Termination of the Plan . . . . . . . . . . . . . . . . . . 71
SECTION 21 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND
TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 72
21.1 Right to Amend. . . . . . . . . . . . . . . . . . . . . . . 72
21.2 Plan Merger or Consolidation. . . . . . . . . . . . . . . . 72
21.3 Termination of the Plan . . . . . . . . . . . . . . . . . . 72
21.4 Partial Termination of the Plan . . . . . . . . . . . . . . 73
21.5 Manner of Distribution. . . . . . . . . . . . . . . . . . . 73
SECTION 22 INALIENABILITY OF BENEFITS. . . . . . . . . . . . . . . . . 74
22.1 No Assignment Permitted . . . . . . . . . . . . . . . . . . 74
22.2 Return of Contributions . . . . . . . . . . . . . . . . . . 75
22.3 Qualified Domestic Relations Orders . . . . . . . . . . . . 75
SECTION 23 SPECIAL SERVICE PROVISIONS FOR "AFFECTED MEMBERS" . . . . . 78
SECTION 24 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF
BATTERY STREET ENTERPRISES, INC. OR ANY OF ITS
SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 25 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN
MANUFACTURING COMPANY, TOP-NOTCH MANUFACTURING
COMPANY, INCORPORATED AND MILLER BELTS LTD., INC. . . . . 80
SECTION 26 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN
FORMER EMPLOYEES OF ASIAN PACIFIC INDUSTRIES, INC.. . . . 81
SECTION 27 EARLY RETIREMENT SUPERVISOR BUY OUT BENEFIT . . . . . . . . 82
SECTION 28 ACTUARIAL EQUIVALENCE FACTORS . . . . . . . . . . . . . . . 83
SECTION 29 TOP HEAVY BENEFITS. . . . . . . . . . . . . . . . . . . . . 85
SECTION 30 GENERAL LIMITATIONS AND PROVISIONS. . . . . . . . . . . . . 88
30.1 No Employment Right . . . . . . . . . . . . . . . . . . . . 88
30.2 Payments from the Trust Fund. . . . . . . . . . . . . . . . 88
30.3 Payments to Minors or Incompetents. . . . . . . . . . . . . 88
30.4 Lost Members or Beneficiaries . . . . . . . . . . . . . . . 88
30.5 Personal Data to the Administrative Committee . . . . . . . 89
30.6 Insurance Contracts . . . . . . . . . . . . . . . . . . . . 89
30.7 Notice to the Administrative Committee. . . . . . . . . . . 89
30.8 Notices to Members and Beneficiaries. . . . . . . . . . . . 89
30.9 Word Usage. . . . . . . . . . . . . . . . . . . . . . . . . 90
30.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 90
30.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 90
30.12 Heirs and Successors. . . . . . . . . . . . . . . . . . . . 90
30.13 Withholding . . . . . . . . . . . . . . . . . . . . . . . . 90
APPENDIX A
APPENDIX B<PAGE>
LEVI STRAUSS ASSOCIATES INC.
REVISED EMPLOYEE RETIREMENT PLAN
--------------------------------
As Amended and Restated
Effective November 27, 1989
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
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1.1 Introduction.
On January 1, 1976, the Levi Strauss & Co. Employee Retirement Plan was
adopted. It was amended and terminated effective December 31, 1985, and it
was renamed the Terminated Employee Retirement Plan of Levi Strauss & Co.
(the "Terminated Plan") for those in benefit pay status. This Levi Strauss
Associates Inc. Revised Employee Retirement Plan (originally named the
Revised Levi Strauss & Co. Employee Retirement Plan) (the "Plan") was adopted
effective December 30, 1985. Each employee who was a Member of the
Terminated Plan on December 30, 1985, and who was not receiving benefits on
that date or scheduled to receive benefits no later than January 31, 1986,
from the Terminated Plan was transferred to this Plan as of December 30,
1985. This Plan was established to maintain retirement benefits and certain
other benefits for those who are transferred from the Terminated Plan and for
others who have or may have rights to benefits under the Terminated Plan as
of December 30, 1985, but who are not receiving benefits on that date or
scheduled to receive benefits no later than January 31, 1986, from the
Terminated Plan. This Plan was also established to provide such benefits to
eligible employees ("Employees") of Levi Strauss & Co. and other
Participating Companies (collectively referred to as the "Company"), or to
the beneficiaries of such Employees, and thereby to encourage such Employees
to make and continue careers with the Company, as described in this Plan
document and in the Trust Agreement adopted as a part of this Plan. The Plan
was amended and restated effective November 28, 1988, and subsequently
amended and restated effective November 27, 1989.
By this instrument Levi Strauss Associates Inc. amends and restates the
Plan to comply with the Tax Reform Act of 1986, as amended, and related
legislation. The provisions of this amended and restated Plan will generally
be effective November 27, 1989, except as specifically stated otherwise in
this document (the "Effective Date"). Levi Strauss Associates Inc. intends
that the Plan as so amended and restated and the Trust Fund established under
the Plan, will continue to qualify as a plan and trust which meet the
requirements of sections 401(a) and 501(a), respectively, of the Internal
Revenue Code of 1986, as amended.
1.2 Persons to Whom Plan Applies. This Plan document is not a new
Plan which succeeds the Plan as previously in effect, but is an amendment and
restatement of the Plan as in effect before the Effective Date. The amount,
right to and form of any benefits under the Plan, of each Member who is an
Employee on and after the Effective Date, or of persons who are claiming
through such a Member, will be determined under this Plan. The amount, right
to and form of any benefits under this Plan of each Member who has separated
from Service with the Company before the Effective Date, or of persons who
are claiming benefits through such a Member, will be determined in accordance
with the provisions of the Plan in effect on the date of the Member's
separation from Service, except as may otherwise be expressly provided under
this Plan, unless the Member again becomes an Employee on or after the
Effective Date. This amended and restated Plan will not reduce any Member's
Retirement Benefit under the Plan, as determined on the date immediately
preceding the Effective Date, and this Plan will be construed accordingly.<PAGE>
SECTION 2 DEFINITIONS.
- --------- -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Act" means the Employee Retirement Income Security Act of 1974,
as amended, and any Regulations or rulings issued under the Act.
2.2 "Actuary" means the enrolled actuary (within the meaning of the
Act) engaged by the Administrative Committee.
2.3 "Administrative Committee" means the committee appointed to
administer the Plan as described in Section 18.1.
2.4 "Affiliated Company" means:
(a) A corporation that is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes Levi
Strauss Associates Inc.;
(b) Any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with Levi Strauss
Associates Inc.;
(c) An organization (whether or not incorporated) that is a member
of an affiliated service group (as defined in section 414(m) of the Code)
which includes Levi Strauss Associates Inc.;
(d) Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; and
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
2.5 "Alternate Payee" means the spouse, former spouse, child or other
dependent of a Member who is recognized by a Qualified Domestic Relations
Order as having the right to receive all, or a portion of, the Member's
Retirement Benefit.
2.6 "Annuity Contract" means the annuity contract purchased from
Transamerica Occidental Life Insurance Company with respect to the Revised
Employee Retirement Plan upon the termination of the Terminated Plan on
December 30, 1985.
2.7 "Annuity Starting Date" means the first day of the first month for
which an amount is payable to a Member as an annuity. The Annuity Starting
Date for a Member who elects (with the consent of his or her spouse if the
Member is legally married) to receive his or her Retirement Benefit in a form
other than an annuity in accordance with Section 12.3 and the Annuity
Starting Date with respect to a Member's Excess Account B is the first day on
which all events (including the passing of the day on which benefit payments
are scheduled to begin) have occurred which entitle the Member to receive his
or her first benefit payment from the Plan.
2.8 "Beneficiary" means the beneficiary or beneficiaries designated by
a Member or otherwise under Section 12.3 and Section 16 (or such other person
or persons as may be designated as such under applicable law) to receive the
amount, if any, payable under the Plan upon the Member's death.
2.9 "Benefit Service" means the number of Years of Service and
fractions of such years before a Member's Retirement Date during which the
Member was an Employee. For this purpose, a Member will accrue a full month
of Benefit Service for every calendar month in which he or she is credited
with at least 1 Hour of Service or in which he or she otherwise has Service.
Years of Service and fractions of such years will be determined by the
Administrative Committee based on such months of Benefit Service.
Benefit Service with respect to a Member who is Totally and Permanently
Disabled, will include any additional Benefit Service credited under Section
10.3.
Benefit Service with respect to a Member who is on a military leave of
absence will include any Benefit Service required to be credited under the
Military Selective Services Act, as amended, or any other federal law of
similar import. If a Member who is on a military leave of absence becomes
Totally and Permanently Disabled, and the Member has at least 5 Years of
Service, Benefit Service with respect to the Member will include any
additional Benefit Service the Member elects to receive, or is required to
receive, under Section 10.3 in lieu of the Disability Retirement Benefit
payable under Section 10.2.
Benefit Service with respect to a Member who is reemployed by the
Company as an Employee or a Casual Employee after his or her Vested
Retirement Benefit Payment Date, Early Retirement Date, Normal Retirement
Date, or Deferred Retirement Date, will mean the number of Years of Service
and fractions of such years during which the Member is so reemployed,
determined under Section 14.2 of the Plan. Years of Service will be
determined by the Administrative Committee based on such months of Benefit
Service. Such additional Benefit Service will be added to the Member's
Benefit Service earned before his or her Vested Retirement Benefit Payment
Date, Early Retirement Date, Normal Retirement Date, or Deferred Retirement
Date as provided in Section 5.6. A Member who retires and is reemployed by
the Company as a Retiree Coordinator will not resume membership in the Plan
or accrue additional Benefit Service under this Section 2.9 or Section 14.2.
2.10 "Board of Directors" means the Board of Directors of Levi Strauss
Associates Inc. The Board of Directors may delegate to any committee,
subcommittee or any of its members, or to any agent, its authority to perform
any act under the Plan, including without limitation those matters involving
the exercise of discretion. Any such delegation of discretion will be
subject to revocation at any time at the discretion of the Board of
Directors. Any reference to the Board of Directors in connection with such
delegated authority will be deemed a reference to the delegate or delegates.
2.11 "Break in Service" means a period of at least 12 consecutive
calendar months, beginning on the date Service ends, during which a person
has not performed 1 Hour of Service (or been treated as performing Service)
under Section 2.59, as determined by the Administrative Committee.
2.12 "Casual Employee" means a Member who is rehired by the Company on
or after his or her Early Retirement Date or Normal Retirement Date on a
temporary basis to fill in gaps in the local payroll workforce. Any Benefit
Service earned by a Member who returns to Service as a Casual Employee will
be determined under Section 2.9 and Section 14.2. Any Benefit Service earned
by the Member as a Casual Employee will be added to the Member's Benefit
Service earned before his or her Early Retirement Date or Normal Retirement
Date, as provided in Section 5.6.
2.13 "Code" means the Internal Revenue Code of 1986, as amended, and
any Regulations or rulings issued under the Code.
2.14 "Committee" means the Administrative Committee or Investment
Committee, as applicable.
2.15 "Common-Law Spouse" means the spouse of a Member under a common-
law marriage that is recognized under the law of the state where the Member
resides. The determination of whether a person is a Common-Law Spouse will
be made by the Administrative Committee, in its sole and absolute discretion.
2.16 "Company" means Levi Strauss Associates Inc., LS&CO. and each
other Participating Company or any of them.
2.17 "Deferred Retirement Benefit" means the deferred retirement
benefit payable to a Member under Section 4.3.
2.18 "Deferred Retirement Date" or "Deferred Retirement" means the date
a Member is entitled to receive a Deferred Retirement Benefit under
Section 4.3.
2.19 "Disability Retirement Benefit" means the retirement benefit
payable to a Member who is Totally and Permanently Disabled under
Section 10.2.
2.20 "Domestic Partner" means the Common-Law Spouse or Unmarried
Partner of a Member who is entitled to receive a Survivor Annuity under
Section 11.
2.21 "Domestic Relations Order" means any judgment, decree, or order
(including an order approving a property settlement agreement) that:
(a) Relates to the provision of child support, alimony, or marital
property rights to a spouse, child, or other dependent of a Member; and
(b) Is entered or made under the domestic relations or community
property laws of any state.
2.22 "Early Retirement Age" means the Member's age when the Member has
attained age 55 and completed 15 Years of Service. In addition, the term
"Early Retirement Age" with respect to a supervisor of the Company whose job
is displaced due to alternate manufacturing or self-managed work teams, will
mean the Member's age when the Member is between the ages of 50 and 55, has
completed at least 15 Years of Service and is eligible to receive the Early
Retirement Supervisor Buy Out Benefit described in Section 27.
2.23 "Early Retirement Benefit" means the early retirement benefit
payable to a Member under Section 4.2.
2.24 "Early Retirement Date" or "Early Retirement" means the date a
Member is entitled to receive an Early Retirement Benefit under Section 4.2.
2.25 "Effective Date" means November 27, 1989, except as expressly
provided otherwise in this document or as required by the Tax Reform Act of
1986, as amended, or other applicable legislation.
2.26 "Employee" means any person who is employed by the Company
excluding:
(a) Any employee of LS&CO. who is paid from the home office of
Levi Strauss Associates Inc.;
(b) Any stocktaker, Retiree Coordinator or "Temporary Employee;"
(c) Any employee who is not employed in a state or territory of
the United States or who receives no remuneration from the Company that
constitutes income from sources within the United States (within the meaning
of section 861(a)(3) of the Code);
(d) Any employee who is an over-the-road truck driver and is
compensated on a mileage basis or who is a dispatcher for such over-the-road
truck drivers;
(e) Any employee who is included in a unit of employees covered by
a negotiated collective bargaining agreement which does not provide for his
or her membership in the Plan;
(f) A "leased employee" (as defined in section 414(n) or section
414(o) of the Code) who is providing services to the Company or an Affiliated
Company; or
(g) An employee who is included in a group or classification of
employees on a payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan.
A member of the board of directors of the Company is not eligible for
membership in the Plan unless he or she is also an Employee of the Company.
Any "Temporary Employee" and any stocktaker employed by the Company will not
be treated as an Employee, except for the purposes of and in accordance with
receiving benefits computed under the Terminated Plan.
For purposes of this Section 2.26, a "Temporary Employee" means a person who:
(i) Is hired to fill, for a period not to exceed 6 calendar
months, a position which arises from either an emergency situation or
the temporary absence of an Employee; and
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time.
A person's status as an Employee will be determined by the
Administrative Committee and such determination will be conclusive and
binding on all persons.
2.27 "Equivalent Actuarial Value" means a benefit of equivalent value
when computed on the basis of the factors specified in Section 28. With
respect to a Member's Excess Account B, "Equivalent Actuarial Value" means a
benefit of equivalent value when computed on the basis of the factors
specified in Section 6.
2.28 "Excess Account B" means the remaining amount, if any, of a
Member's matching company contribution account under the Terminated Plan as
of December 30, 1985.
2.29 "Exempt Member" means an Employee who is exempt from the overtime
requirements of the Federal Wage and Hour laws.
2.30 "High-3 Year Average Compensation" means a Member's average annual
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member
has not been employed with the Company or an Affiliated Company for 3
Consecutive Plan Years, "High-3 Year Average Compensation" will mean the
Member's average annual compensation for the actual number of consecutive
Plan Years with the Company or an Affiliated Company during which his or her
compensation was the highest.
"Compensation" includes the Member's wages, salaries, fees for
professional services and other amounts received (without regard to whether
an amount is paid in cash) for personal services actually performed in the
course of employment with the Company or an Affiliated Company to the extent
that the amounts are includable in gross income (including but not limited to
commissions paid sales representatives, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements or expenses under a nonaccountable
plan (as defined in section 1.62(c) of the Code)) determined without regard
to the exclusions from gross income under sections 931 and 939 of the Code.
"Compensation" will also include:
(a) In the case of a Member who is an employee within the meaning
of section 401(c) of the Code, the Member's earned income (as described under
section 401(c)(2) of the Code) determined without regard to the exclusions
from gross income similar to those in sections 931 and 939 of the Code;
(b) Any foreign earned income as defined under section 911(b) of
the Code, regardless of whether such income is excludable from the gross
income of the Employee under section 911 of the Code;
(c) Amounts described in sections 104(a)(3), 105(a) and 105(b) of
the Code, but only to the extent that such amounts are includable in the
gross income of the Employee;
(d) Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Employee, but only to the extent
that such amounts are not deductible by the Employee under section 217 of the
Code;
(e) The value of a nonqualified stock option granted to the
Employee by the Company or an Affiliated Company, but only to the extent that
the value of the option is includable in the gross income of the Employee for
the taxable year when granted; and
(f) The amount includable in the gross income of the Employee upon
making an election described in section 83(b) of the Code.
"Compensation" will not include:
(a) Company contributions to a deferred compensation plan that
before application of the limitations of section 415 of the Code are not
includable in the Employee's gross income for federal income tax purposes in
the taxable year of the Employee in which the contributions are made;
(b) Company contributions to a simplified employee pension plan
described in section 408(k) of the Code to the extent that such contributions
are not considered as compensation for the taxable year in which contributed;
(c) Any distributions from a deferred compensation plan
regardless of whether such amounts are includable in gross income of the
Employee for federal income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock
option;
(e) Amounts realized when restricted stock or property becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(f) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(g) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are excludable from gross income of the Employee); Company
contributions to a cafeteria plan described in section 125 of the Code, or
Company contributions (whether or not under a salary reduction arrangement)
towards the purchase of an annuity contract described in section 403(b) of
the Code (whether or not the contributions are excludable from the gross
income of the Employee).
In determining the High-3 Year Average Compensation for each Plan Year
beginning on or after the Effective Date, compensation for any Plan Year in
excess of $200,000, or any successor limitation as provided for the Plan Year
in section 401(a)(17) of the Code (as adjusted as provided under section
401(a)(17) of the Code) (the "401(a)(17) limitation"), will be disregarded.
For Plan Years beginning in and after 1991, the adjustment to the 401(a)(17)
limitation that takes effect on January 1 of each year is effective for the
Plan Year beginning in that year. For the 1989 and 1990 Plan Years, the
adjustment to the 401(a)(17) limitation that is effective January 1 of 1989
and 1990 will be used for the Plan Year that ends in each of such years. In
determining the compensation of an Employee, the family aggregation rules of
section 414(q)(6) of the Code will apply, except that in applying those
rules, the term "family" will include only the spouse of the Employee and any
lineal descendants of the Employee who have not reached age 19 before the
close of the Plan Year.
2.31 "Highly Compensated Employee" means an Employee of the Company or
an Affiliated Company who:
(a) During the preceding Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or an
Affiliated Company in excess of $75,000 (as adjusted under Regulations
or rulings issued by the IRS);
(iii) Received "compensation" from the Company or an
Affiliated Company in excess of $50,000 (as adjusted under Regulations
or rulings issued by the IRS) and was in the top 20% of employees of the
Company and all Affiliated Companies when ranked on the basis of
"compensation" paid during such Plan Year (referred to as the "Top Paid
Group" under IRS Regulations); or
(iv) Was at any time an officer of the Company or an
Affiliated Company and received "compensation" greater than 50% of the
amount in effect under section 415(b)(1)(A) of the Code; or
(b) During the Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(l) of the Code); or
(ii) Satisfies the requirements of paragraphs (ii), (iii), or
(iv) of Section 2.31(a) and is a member of the group consisting of the
100 employees of the Company and all Affiliated Companies paid the
greatest "compensation" during the Plan Year.
For purposes of determining the number of employees in the Top
Paid Group under Section 2.31(a)(iii) for a Plan Year, the following
employees, as described in sections 414(q)(8) and (11) of the Code, will
be excluded:
(i) Those who have not completed 6 months of Service;
(ii) Those who normally work less than 17-1/2 hours per week;
(iii) Those who normally work less than 6 months during any
year;
(iv) Those who have not attained age 21;
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administrative Committee will determine whether an employee is an
officer based on the responsibilities of the employee with the Company or an
Affiliated Company. Of those employees determined to be officers, no more
than 50 employees (or, if less, the greater of 3 employees or 10% of the
employees, excluding all employees described in sections 414(q)(8) and (11)
of the Code) will be treated as officers. Further, if no officer receives
the level of "compensation" described in Section 2.31(a)(iv), the highest
paid officer of the Company and all Affiliated Companies will be treated as
a Highly Compensated Employee described in Section 2.31(a)(iv).
For purposes of determining whether an employee is a Highly Compensated
Employee only, any person who is a member of the family of a 5% owner or of
a Highly Compensated Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest compensation during the Plan Year:
(i) Will not be considered a separate employee; and
(ii) Any "compensation" paid to such person and the Company
or Employee contributions made on behalf of such person will be treated
as if it were paid to or on behalf of the 5% owner or Highly Compensated
Employee.
For purposes of the immediately preceding sentence, the term "family" means,
with respect to any employee, the employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
The term "compensation" for purposes of this Section 2.31 means
compensation as defined in section 415(c)(3) of the Code, determined without
regard to section 125 of the Code (regarding contributions to a cafeteria
plan), section 402(a)(8) of the Code (regarding contributions to a 401(k)
plan) and section 402(h)(1)(B) of the Code (regarding contributions to a
simplified employee pension plan), and in the case of employer contributions
made under a salary reduction agreement, without regard to section 403(b) of
the Code (regarding annuity contracts).
2.32 "Highly Compensated Former Employee" means a former employee who
separated from Service with the Company or an Affiliated Company before the
beginning of the Plan Year and who was a Highly Compensated Employee for
either:
(a) The employee's year of separation from Service; or
(b) Any Plan Year ending on or after the employee's 55th birthday.
An employee who performs no services for the Company or an Affiliated Company
during the Plan Year will be treated as a former employee.
2.33 "Hour of Service" means an hour of employment for which an
Employee is paid or is entitled to payment for the performance of duties as
determined under the Labor Department Regulations governing the computation
of hours of service.
2.34 "Investment Committee" means the committee appointed to control
and manage the Plan's assets as described in Section 18.
2.35 "Investment Manager" means a person who is appointed to direct the
investment of all or any part of the Trust Fund under Section 18.2 and is
either a bank, an insurance company or a registered investment adviser under
the Investment Advisers Act of 1940 and who has acknowledged in writing that
it is a fiduciary with respect to the Plan.
2.36 "IRS" means the United States Internal Revenue Service.
2.37 "Labor Department" means the United States Department of Labor.
2.38 "Legally Married" means that the Member participates in a
marriage, other than a common-law marriage, which is recognized as legal and
binding by the state where the Member lives.
2.39 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
2.40 "Member" means any Employee who is enrolled in the membership of
the Plan as provided in Section 3.
2.41 "Membership Date" means June 1 and December 1 of each Plan Year.
2.42 "Misconduct" means that a person:
(a) Has committed an act of embezzlement, fraud or theft with
respect to the property of the Company or an Affiliated Company or any person
with whom the Company or an Affiliated Company does business;
(b) Has deliberately disregarded the rules of the Company or an
Affiliated Company in such a manner as to cause material loss, damage or
injury to, or otherwise endanger the property or employees of the Company or
an Affiliated Company;
(c) Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
(d) Has engaged in any conduct which constitutes unfair
competition with the Company or an Affiliated Company;
(e) Has induced any person to breach any contract with the Company
or an Affiliated Company; or
(f) Has sold Company or Affiliated Company products to an
unauthorized account or has assisted an authorized account in wholesaling
Company or Affiliated Company products.
2.43 "Non-Exempt Member" means a Member who is not an Exempt Member.
2.44 "Normal Retirement Age" means age 65 or, in the case of a Member
whose Service begins after the Member reaches age 60, the Member's age on the
5th anniversary of the date the Member's Service commences.
2.45 "Normal Retirement Benefit" means the normal retirement benefit
payable to a Member under Section 4.1.
2.46 "Normal Retirement Date" or "Normal Retirement" means the date the
Member is entitled to receive a Normal Retirement Benefit under Section 4.1.
2.47 "Participating Company" means LS&CO. or any Affiliated Company,
the board of directors or equivalent governing body of which adopts the Plan
and the Trust Agreement by appropriate action with the written consent of the
Board of Directors. Any Affiliated Company which so adopts the Plan will be
deemed to appoint Levi Strauss Associates Inc., the Administrative Committee,
the Investment Committee and the Trustee its exclusive agents to exercise on
its behalf all of the power and authority conferred under this Plan document,
or by the Trust Agreement, upon the Company. The authority of Levi Strauss
Associates Inc., the Committees and the Trustee to act as such agents will
continue until the Plan is terminated as to the Affiliated Company and the
relevant portion of the Trust Fund has been distributed by the Trustee as
provided in Section 20.
2.48 "PBGC" means the United States Pension Benefit Guaranty
Corporation.
2.49 "Plan" means this Levi Strauss Associates Inc. Revised Employee
Retirement Plan, as amended from time to time.
2.50 "Plan Year" means the annual period corresponding to LS&CO.'s
fiscal year for federal income tax purposes.
2.51 "Qualified Domestic Relations Order" means a domestic relations
order that satisfies the requirements described in Section 22.3.
2.52 "Qualified Joint and Survivor Annuity" means an annuity described
in Section 12.1.
2.53 "Regulations" means the applicable regulations issued under the
Code or the Act by the IRS, the PBGC, the Labor Department or any other
governmental authority and any temporary rules promulgated by such
authorities pending the issuance of such regulations.
2.54 "Rehire Anniversary Year" means for the first year that a Member
returns to Service as a Casual Employee, the period beginning on the date the
Member returns to Service and ending on December 31. The Rehire Anniversary
Year for the second and all subsequent years that a Member remains in Service
as a Casual Employee means the calendar year. The Benefit Service earned by
a Member during a Rehire Anniversary Year will be determined under Sections
2.9 and 14.2. A Member may only have one Rehire Anniversary Year at a given
time.
2.55 "Required Beginning Date" generally means April 1 of the calendar
year following the year in which the Member attains age 70-1/2. However, the
Required Beginning Date for a Member who is not a 5% owner within the meaning
of section 416(i)(1)(B)(i) of the Code, who attained age 70-1/2 during 1988,
and had not retired by the Effective Date, will be April 1, 1990. In
addition, the Required Beginning Date for a Member who attained age 70-1/2
before January 1, 1988, and who was not a 5% owner within the meaning of
section 416(i)(1)(B)(i) of the Code during any Plan Year ending with or
within the Plan Year in which he or she reached age 66-1/2 or any subsequent
year, is the April 1 following the later of the calendar year in which the
Member reaches age 70-1/2 or retires. Lastly, the Required Beginning Date
for a Member who filed a written election under section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982 before January 1, 1984, will be
the date specified in such election if the election satisfies all of the
applicable requirements specified by the IRS, as determined by the
Administrative Committee.
2.56 "Retiree Coordinator" means a retired Employee of the Company who
resumes employment with the Company or an Affiliated Company on a temporary
basis for the purpose of providing personal relations type services to other
retired employees of the Company or an Affiliated Company.
2.57 "Retirement Benefit" means the retirement benefit payable to a
Member in the form of a Straight Life Annuity as provided in Section 5.
2.58 "Retirement Date" means a Member's Normal Retirement Date, Early
Retirement Date or Deferred Retirement Date, or any other Retirement Date as
provided in Section 4.
2.59 "Service" means employment (whether or not as an Employee) with
the Company or with an Affiliated Company. Periods of employment performed
by a person before the Effective Date which would be disregarded under this
Plan or the Terminated Plan, as then in effect, will only be counted for
purposes of determining membership under Section 3, and not for any other
purpose under the Plan. Service which would be counted under the Terminated
Plan will be counted under this Plan, but the same period will be counted
only once. Service will begin on the date that an Employee first performs 1
Hour of Service for the Company or Affiliated Company. Service will end on
the earlier of:
(a) The date the Employee retires;
(b) The date the Employee dies;
(c) The date the Employee terminates employment; or
(d) On the first anniversary of the date the Employee is absent
from service for any other reason (e.g., an authorized period of absence, as
described in paragraphs (i) and (ii), etc. below).
However, the Service of a Member who becomes Totally and Permanently Disabled
and who elects to continue, or is required to continue, to accrue Service
under Section 10.3 will not terminate on the date the Member terminates
employment with the Company.
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated),
Service includes:
(i) Periods of vacation;
(ii) Periods of absence whether or not the Employee is paid,
not to exceed 12 calendar months, authorized by the Company for
sickness, temporary disability or personal reasons;
(iii) Service in the Armed Forces of the United States if and
to the extent required by the Military Selective Service Act, as
amended, or any other federal law of similar import; provided that the
Employee returns to Service with the Company or an Affiliated Company
within the time his or her employment rights are protected by such law;
and
(iv) Any period of 12 consecutive months or less, beginning
on the first day of the month after a Member terminates employment and
ending on the last day of the month preceding the Member's reemployment
date, if the Member performs at least 1 Hour of Service within the first
month of reemployment. Such period of Service will only be considered
for determining Membership in the Plan and determining the Member's
Vested Retirement Benefit, Early Retirement Benefit and Disability
Retirement Benefit.
Effective November 25, 1985, solely for the purpose of determining
whether an Employee has incurred a Break in Service, Service will end on the
second anniversary of the first day of a period of absence caused by any of
the following:
(i) The Employee's pregnancy;
(ii) The birth of the Employee's child;
(iii) The placement of a child with the Employee in connection
with the adoption of the child by the Employee; or
(iv) The care of the Employee's child immediately following
the child's birth or adoption.
The Administrative Committee may require the Employee to provide evidence
that the period of absence was due to one of the reasons described above.
A Member's Service will be determined by the Administrative Committee
and such determination will be conclusive and binding on all persons.
If an Employee terminates employment and is reemployed after incurring
a Break in Service, as defined in Section 2.11, Service will recommence on
the date the Employee again performs 1 Hour of Service. A Member will
receive credit for the aggregate of all periods of Service, except as
follows:
(a) If the Member has incurred a 60 consecutive month Break in
Service, Service before such 60-month Break in Service will only be counted
if the Member had a Vested Retirement Benefit under Section 2.70 before such
60 consecutive month Break in Service; and
(b) If a Member's Service as of November 25, 1985, would be
disregarded under the Terminated Plan in effect as of such date, such Service
will continue to be disregarded on and after November 25, 1985, under this
Plan to the extent permitted by applicable law.
2.60 "Social Security Retirement Age" means age 65 if the Member was
born before January 1, 1938; age 66 if the Member was born on or after
January 1, 1938, and before January 1, 1955; and age 67 if the Member was
born on or after January 1, 1955.
2.61 "Straight Life Annuity" means an annuity described in
Section 12.2.
2.62 "Surviving Spouse" means:
(a) With respect to a Member who dies on or after the Annuity
Starting Date, the spouse to whom such Member was Legally Married as of the
Annuity Starting Date; and
(b) With respect to a Member who dies before the Annuity Starting
Date, the spouse to whom such Member was Legally Married for at least 1 year
as of the date of the Member's death.
If a Member divorces his or her Surviving Spouse after the Member's Annuity
Starting Date, such Surviving Spouse will continue to be the Member's
Surviving Spouse for purposes of the Plan unless provided otherwise based on
the terms of a Qualified Domestic Relations Order under Section 22.3. The
preceding sentence will apply regardless of whether the Member remarries
after his or her divorce from such Surviving Spouse. For purposes of the
Plan, the term "Surviving Spouse" will not include a Common-Law Spouse.
2.63 "Survivor Annuity" means the annuity described in Section 11.1
payable with respect to a Member who dies before the Annuity Starting Date.
2.64 "Terminated Plan" means the Terminated Employee Retirement Plan of
Levi Strauss & Co. for those in benefit pay status, as amended and terminated
effective December 31, 1985.
2.65 "Totally and Permanently Disabled" or "Total and Permanent
Disability" means the Member is eligible to receive disability benefits under
the Federal Social Security Act or, alternatively, has been determined to be
Totally and Permanently Disabled by the Administrative Committee based on
competent medical evidence.
2.66 "Trust Agreement" means the trust agreement between Levi Strauss
Associates Inc. and the Trustee as a part of the Plan under which the assets
of the Plan are managed.
2.67 "Trust Fund" means the trust fund consisting of the assets of the
Plan and maintained by the Trustee under the Plan and Trust Agreement.
2.68 "Trustee" means the Trustee or Trustees of the Trust Fund.
2.69 "Unmarried Partner" means a "partner" who shares a committed
relationship with the Member which has the following characteristics:
(a) The Member and "partner" live together;
(b) The Member and "partner" are financially interdependent;
(c) The Member and "partner" are jointly responsible for each
other's common welfare;
(d) The Member and "partner" consider themselves as life partners;
and
(e) The Member registers his or her partner as an Unmarried
Partner with LS&CO.
A "partner" does not include a Member's roommate, sibling, parent or other
blood relative. In addition, to qualify as an Unmarried Partner neither the
Member or the partner must be Legally Married. A "partner" who satisfies all
of the above characteristics will not qualify as an Unmarried Partner until
1 year after the date the Member registers the partner as an Unmarried
Partner with LS&CO., unless at the time the Member registers the partner, the
Member provides proof that the Member and his or her Domestic Partner have
been together in a relationship which satisfies the above requirements for at
least one year, in which case the partner will qualify as a Domestic Partner
on such registration date. The determination of whether a partner qualifies
as an Unmarried Partner will be made by the Administrative Committee in its
sole and absolute discretion.
2.70 "Vested Retirement Benefit" means the nonforfeitable Retirement
Benefit of a Member who has:
(a) Completed 5 Years of Service;
(b) Become eligible for benefits under Section 4.1 on account of
the attainment of Normal Retirement Age; or
(c) Become eligible for the Disability Retirement Benefit provided
in Section 10.2.
The term "Vested Retirement Benefit" also includes a Member's normal
retirement benefit earned under the Terminated Plan as of December 30, 1985
(including Excess Account B). If the Plan becomes Top Heavy, a Member's
Vested Retirement Benefit will be determined under Section 29.
2.71 "Vested Retirement Benefit Payment Date" means the date described
in Section 9 on which the payment of the Member's Vested Retirement Benefit
begins.
2.72 "Year of Service" means a 12 month period of Service in which a
Member has Service under Section 2.59. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
Years of Service and fractions of such years with respect to a Member who has
terminated Service and returns to Service with the Company will be determined
under Sections 2.59 and 3.3. Years of Service with respect to an Employee
who has terminated Service and returns to Service with the Company will be
determined under Sections 2.59 and 3.4.<PAGE>
SECTION 3 MEMBERSHIP AND TRANSFERS.
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3.1 Commencement of Membership. Each Employee who was a Member of the
Plan as of the Effective Date, will continue to be a Member. Each Employee
who was not a Member as of the Effective Date, will automatically become a
Member in the Plan on the later of the Membership Date next following:
(a) The first anniversary of the date the Employee's Service
commenced; or
(b) The date on which he or she becomes an Employee.
The Administrative Committee will take any necessary or appropriate
action to enroll each Employee eligible to be enrolled in the Plan under this
Section 3. If it is determined that an Employee has for any reason not been
timely enrolled in the membership of the Plan, such Employee will be
retroactively enrolled to the extent permitted by law.
3.2 Termination of Membership. A Member's membership in the Plan will
end upon his or her:
(a) Termination of Service for the purpose of retirement after his
or her Early Retirement Date, Normal Retirement Date or Deferred Retirement
Date;
(b) Death;
(c) Total and Permanent Disability (unless the Member is eligible
for and elects to continue to accrue Service under Section 10.3);
(d) Termination of employment with the Company; or
(e) Upon any Break in Service.
The membership of a Member who, without any Break in Service, ceases to be an
Employee will not end but no subsequent Service will be treated as Benefit
Service unless and until the Member again becomes an Employee.
3.3 Rehired Members. If a Member who incurs a Break in Service is
rehired, he or she will recommence membership in the Plan and be credited
with his or her prior Service under the following paragraph (a) or (b):
(a) If the Member had a Vested Retirement Benefit at the time of
his or her Break in Service or, alternatively, has not incurred a 60
consecutive month Break in Service, then the Member will recommence
membership in the Plan on:
(i) The date of his or her reemployment, if the Member is
rehired as an Employee, or
(ii) The date he or she becomes an Employee, if the Member is
not rehired as an Employee.
The Member's prior Service will be taken into account for purposes of
determining his or her Vested Retirement Benefit under Section 2.70 and years
of Benefit Service under Section 2.9.
(b) If the Member did not have a Vested Retirement Benefit at the
time of his or her Break in Service and has incurred a 60 consecutive month
Break in Service, then the Member will be considered a new hire and begin
Membership in the Plan on the date he or she satisfies the eligibility
requirements described in Section 3.1. The Member's prior Service will not
be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.
3.4 Rehired Employees. If an Employee who is not a Member is rehired
following a Break in Service, he or she will begin membership in the Plan and
will be credited with his or her prior Service under the following paragraph
(a) or (b):
(a) If the Employee has not incurred a 60 consecutive month Break
in Service, the Employee will begin membership in the Plan on the date he or
she satisfies the eligibility requirements described in Section 3.1 taking
into account his or her prior Years of Service. The Employee's prior Service
will also be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.
(b) If the Employee has incurred a 60 consecutive month Break in
Service, the Employee will be considered a new hire and will begin membership
in the Plan on the date he or she satisfies the eligibility requirements
described in Section 3.1 based on his or her date of rehire without taking
into account his or her prior Years of Service. The Employee's prior Service
will not be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.70 and years of Benefit Service under
Section 2.9.<PAGE>
SECTION 4 RETIREMENT DATE.
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4.1 Normal Retirement Date. The Normal Retirement Date of a Member
will be the first day of the month coincident with or next following the date
the Member reaches Normal Retirement Age. A Member will have a right to his
or her Vested Retirement Benefit upon reaching his or her Normal Retirement
Age. Payment of a Member's Normal Retirement Benefit will begin on the last
day of the month in which the Member's Normal Retirement Date occurs unless
the Member elects to delay the payment of such benefit under Section 4.4. A
Member may remain in Service after his or her Normal Retirement Date, in
which case the date as of which the Member will be deemed to retire will be
determined under Section 4.3. A Member who has been deemed to retire will
continue to accrue Benefit Service under the Plan until his or her actual
retirement.
4.2 Early Retirement Date. The Early Retirement Date of a Member who
has reached Early Retirement Age will be the date specified in his or her
written application for Early Retirement Benefits. Such Early Retirement
Date will be the first day of a month which is not less than 30 nor more than
90 days following the date the Member files an Early Retirement Benefit
application with the Administrative Committee. Payment of a Member's Early
Retirement Benefit will begin on the last day of the month in which the
Member's Early Retirement Date occurs. Alternatively, a Member who has
reached Early Retirement Age may elect to delay the payment of his or her
Early Retirement Benefit under Section 4.4.
4.3 Deferred Retirement Date. The Deferred Retirement Date of a
Member who remains in Service after his or her Normal Retirement Date will be
the first day of the month next following the date of his or her termination
of Service. However, a Member will be deemed to retire (and the distribution
of the Member's Retirement Benefit will begin) as of the Member's Required
Beginning Date whether or not the Member's Service terminates at that time.
In addition, a Member who remains in Service after his or her Normal
Retirement Date will be deemed to retire on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company as provided in
Section 7.2. Payment of a Member's Deferred Retirement Benefit will begin on
the last day of the month in which his or her Deferred Retirement Date
occurs.
4.4 Postponement of Retirement Benefits. A Member may elect to delay
the payment of his or her Retirement Benefit beyond his or her Early
Retirement Age or the last day of the month in which the Member's Normal
Retirement Date or Deferred Retirement Date occurs, except as provided by
paragraph (a) or (b) below:
(a) Payment of a Member's Early Retirement Benefit must begin no
later than the month which includes his or her Normal Retirement Date; and
(b) Payment of a Member's Normal Retirement Benefit or Deferred
Retirement Benefit must begin no later than the Member's Required Beginning
Date.<PAGE>
SECTION 5 RETIREMENT BENEFIT.
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5.1 Basic Retirement Benefit. As of any date, the Retirement Benefit
of any Member payable as of his or her Normal Retirement Date or Deferred
Retirement Date will be:
(a) $8.00 multiplied by the Member's Benefit Service before
November 26, 1990; and
(b) $20.00 multiplied by the Member's Benefit Service as a Non-
Exempt Member after November 25, 1990; and
(c) $32.00 multiplied by the Member's Benefit Service as an Exempt
Member after November 25, 1990.
The Basic Retirement Benefit of a Member payable as of his or her Early
Retirement Date will be determined under Section 8.
For the month of November, 1990, the Member will accrue the $20 or $32 rate,
whichever is applicable, based on the Member's employment status as of
November 25, 1990. In addition, if a Member's employment status changes from
Non-Exempt to Exempt during any month, the Member will accrue the $32.00 rate
for such month and for each subsequent month in which he or she is employed
by the Company as an Exempt Employee. Conversely, if the Member's employment
status changes from Exempt to Non-Exempt in any month, the Member will accrue
the $32.00 rate for the month of the change and the $20.00 rate for each
subsequent month in which he or she is employed by the Company as a Non-
Exempt Employee. A Member who is Totally and Permanently Disabled or on a
military leave of absence and eligible to accrue additional Benefit Service
under Section 2.9, will continue to accrue at the $20.00 or $32.00 rate,
depending on whether the Member was Non-Exempt or Exempt at the time he or
she became Totally and Permanently Disabled or on the date the military leave
of absence began.
The Basic Retirement Benefit payable to a Member will be subject to
adjustment as provided in Sections 5.3, 5.4 and 5.5 and, if the Member is a
reemployed Member, will be calculated in accordance with Section 5.6.
5.2 Retirement Benefit of Member of the Terminated Plan. As of any
date, the Retirement Benefit of a former member of the Terminated Plan who is
entitled to benefits under this Plan, whose Service terminated before
December 30, 1985, but after he or she completes 10 Years of Service and who
terminated Service for any reason other than death, disability or retirement
and was not subsequently rehired is equal to the sum of:
(a) $6.00 multiplied by his or her Benefit Service prior to
January 1, 1976; and
(b) $8.00 multiplied by his or her Benefit Service on and after
January 1, 1976.
The Retirement Benefit of a Member of the Terminated Plan will be subject to
adjustment as provided in Sections 5.3, 5.4 and 5.5 and, if the Member is a
reemployed Member, will be calculated in accordance with Section 5.6.
5.3 Adjustments to Retirement Benefit. A Member's Retirement Benefit
will be subject to the offsets and reductions described in Section 6
regarding Excess Account B.
5.4 Coordination of Retirement Benefits. The Retirement Benefit of a
Member who was a participant in any plan which is qualified under section
401(a) of the Code and which is maintained by (a) the Company, (b) a
corporation acquired by the Company, or (c) under a collective bargaining
agreement with the Company or any such corporation, will be reduced by the
Equivalent Actuarial Value of any benefits payable from that plan to the
Member with respect to any period of the Member's Benefit Service for which
benefits are also provided under this Plan. This reduction will not apply to
any benefits payable to a Member under the Employee Investment Plan of Levi
Strauss Associates Inc., the Levi Strauss Associates Inc. Employee Long-Term
Investment and Savings Plan, or the Employee Stock Ownership Plan of Levi
Strauss & Co. which was terminated in 1985.
5.5 Reduction of Retirement Benefit. The Retirement Benefit of a
Member who was a member of the Terminated Plan will be reduced by any
benefits payable from that plan (including amounts paid through the Annuity
Contract purchased by the Terminated Plan) to or with respect to the Member.
5.6 Retirement Benefit of Certain Reemployed Members. If a Member who
does not have a Vested Retirement Benefit and who incurs a Break in Service
for any reason returns to Service after incurring a 60 consecutive month
Break in Service under Section 3.3(b), then on the Member's later retirement
or termination of Service, his or her Retirement Benefit will be based only
upon the Member's Benefit Service after his or her return to Service. In all
other cases where a Member returns to Service, the Member's Retirement
Benefit upon later retirement or termination of Service will be based on his
or her total Benefit Service, reduced by the Equivalent Actuarial Value of
any benefit payments previously made to him or her (provided this does not
decrease his or her Retirement Benefit). See also Sections 5.1 and 5.2
concerning the benefit rate applied to a Member's Benefit Service.<PAGE>
SECTION 6 EXCESS ACCOUNT B.
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6.1 Background. Prior to January 1, 1976, the Employee Retirement
Plan (the "Prior Plan") was a thrift and savings plan, with Member
contributions ("Account A") and matching company contributions ("Account B").
The Prior Plan was converted into a money purchase pension plan, and then a
defined benefit pension plan. In connection with the latter conversion,
accumulated Member contributions were distributed to Members, but company
matching contributions in Account B were retained by the Prior Plan. Upon
the Member's termination of employment, the Equivalent Actuarial Value of the
Member's accrued benefit under the defined benefit feature of the Prior Plan
was offset against the Member's interest in Account B.
On December 30, 1985, the Prior Plan was terminated, annuities were
purchased for the Members, and the benefit liabilities were spun-off to this
Revised Employee Retirement Plan for active and terminated vested Members.
At this time the value of each Member's Account B was determined, and offset
by the Equivalent Actuarial Value of the Member's accrued benefit. The
resulting amount, if any, was termed the Member's "Excess Account B," and was
used to purchase an account balance under the Annuity Contract with interest
guaranteed at 9% per annum until the Member's retirement, death, disability
or termination of employment. At such time, the Member may elect to receive
his or her Excess Account B balance in a single sum, or in the form of a
monthly annuity, determined according to the guaranteed purchase rates of the
Annuity Contract, or using the then-current purchase rates offered by the
issuer of the annuity if such rates would be more favorable. The Member's
Excess Account B benefit election must be consented to by the Member's legal
spouse in an appropriate form.
Under this Revised Employee Retirement Plan, any benefit accrued after
December 31, 1985, is subject to an offset that is equivalent to the monthly
annuity payable to the Member at Normal Retirement Age with respect to his or
her Excess Account B, as provided under the terms of the Annuity Contract.
Since both the rate of interest credited under the Annuity Contract and the
purchase rate used to convert the Excess Account B into a monthly annuity
equivalent were fixed, the offset to each Member's post-1985 benefit accrual
is definitely determinable and is not subject to change.
6.2 Account B Benefit. Each Member's or former Member's Excess
Account B will equal the amount payable to the Member or former Member under
the Annuity Contract purchased with respect to the Member's or former
Member's Excess Account B. A Member's or Former Member's Excess Account B
will be payable to the Member according to the terms of the Annuity Contract.
6.3 Excess Account B Offsets. Any benefit accrued by a Member under
the Plan after December 31, 1985, will be subject to an offset of the
Member's Excess Account B as determined under the following paragraph (a),
(b), (c) or (d).
(a) Normal Retirement. Any Retirement Benefit that is accrued
after December 31, 1985, that is payable on account of a Member's Normal
Retirement Date under Section 7 or termination of Service under Section 9,
which begins on or after a Member's Normal Retirement Date, will be reduced
by the Member's Excess Account B Monthly Benefit Equivalent, as determined
under Section 6.4. Such offset may not reduce the Member's Retirement
Benefit below the Member's Vested Retirement Benefit as of December 31, 1985.
(b) Early Retirement. Any unreduced Early Retirement Benefit that
is payable to a Member under Section 8.1(a) or Section 27 will equal the
Member's Normal Retirement benefit determined under Section 6.3(a). Any
reduced Early Retirement Benefit that is payable to a Member under Section
8.1(b) will equal the Member's Normal Retirement benefit determined under
Section 6.3(a), multiplied by the applicable percentage described in Table A
of Section 8.1(b). Any reduced Early Retirement Benefit that is payable to
a Member under Section 27 will equal the Member's Normal Retirement Benefit
determined under Section 6.3(a), multiplied by the applicable percentage
described in Section 27.
(c) Disability Retirement. Any unreduced Disability Retirement
Benefit that is payable to a Member under Section 10.2(a) will equal 100% of
the Member's Normal Retirement benefit determined under Section 6.3(a). Any
reduced Disability Retirement Benefit that is payable to a Member under
Section 10.2(b) will equal the Equivalent Actuarial Value of the Member's
Normal Retirement benefit determined under Section 6.3(a) as of the date of
the Member's termination of Service.
If the Member receives additional Service under Section 10.3 in lieu of
the Disability Retirement Benefit provided in Section 10.2(a), the Disability
Retirement Benefit ultimately payable to the Member will be determined under
Section 6.3(a) (regarding Normal Retirement benefits) or Section 6.3(b)
(regarding Early Retirement benefits), whichever is applicable.
(d) Death. If the Member dies before the Annuity Starting Date,
the Survivor Annuity payable under Section 11, if any, will be determined
under Section 6.3(a) (regarding Normal Retirement benefits) or Section 6.3(b)
(regarding Early Retirement benefits), whichever is applicable. If the
Member dies on or after the Annuity Starting Date, the Qualified Joint and
Survivor Annuity or optional form of benefit payable under Section 12, if
any, will be determined under Section 6.3(a) (regarding Normal Retirement
benefits) or Section 6.3(b) (regarding Early Retirement benefits), whichever
is applicable.
6.4 Determination of Excess Account B Monthly Benefit Equivalent. A
Member's Excess Account B Monthly Benefit Equivalent will be determined by
crediting the Member's Excess Account B with interest on its daily balance
from January 1, 1986, until the later of (a) the Effective Date, or (b) the
Member's Normal Retirement Date, at an annual effective rate of 9%, and
dividing the result by the Equivalent Actuarial Value of a Straight Life
Annuity at the Member's age on such date. For purposes of this Section 6.4,
Equivalent Actuarial Value will be computed using the 1983 Group Annuity
Mortality Table, on a male only basis, with a 5-year setback of age, and an
interest rate according to the following table, based on the date the
Member's Excess Account B Monthly Benefit Equivalent is determined:
8.00% for calendar years 1986 through 1990;
7.50% for calendar years 1991 through 1995;
7.00% for calendar years 1996 through 2000;
6.50% for calendar years 2001 through 2005;
6.00% for calendar years 2006 through 2010;
5.50% for calendar years 2011 through 2015;
5.00% for calendar years 2016 through 2020;
4.50% for calendar years 2021 through 2025;
4.00% for calendar years after 2025.
If payment of the Member's benefit under Section 6.3 begins before the
Member's Normal Retirement Date, the amount of the Excess Account B monthly
annuity will be the Equivalent Actuarial Value of the Member's Excess Account
B as of the date benefits begin, calculated using the assumptions described
in this Section 6.4.
If payment of the Member's benefit under Section 6.3 begins after the
Member's Normal Retirement Date, the amount of the Excess Account B monthly
annuity will be the Equivalent Actuarial Value of the Member's Excess Account
B as of the Member's Normal Retirement Date, calculated using the assumptions
described in this Section 6.4.
6.5 Application of Certain Limitations on Benefits. The limitations
on benefits under Section 15 will not apply to payments of a Member's Excess
Account B. However, the amount of the employer contributions which are the
basis for the Excess Account B balances will be considered in determining the
limitations on the Member's Retirement Benefit under Section 15.2, as
provided in Section 15.6.
6.6 Optional Forms of Benefit. The Excess Account B monthly annuity
will only be payable to a Member or his or her Surviving Spouse, Domestic
Partner, Beneficiary or Alternate Payee, as appropriate, in one of the
optional forms of benefit contained in the Annuity Contract.
6.7 Effect of Prior Distribution of Excess Account B. If a Member
received a prior distribution of his or her Excess Account B, his or her Plan
benefit will be determined under the provisions of Section 6.3 as if such
distribution had not taken place.
6.8 Limitation to Certain Offsets. In no event will the Retirement
Benefit of a Member who receives an unreduced Early Retirement Benefit under
Section 8.1(a) or an unreduced Disability Retirement Benefit under Section
10.2(a), plus the monthly annuity that would be provided to the Member under
the Annuity Contract with respect to the Member's Excess Account B, beginning
on the date that payment of the Member's benefits commences, be less than
100% of the Member's Retirement Benefit calculated under Section 5.1, as
modified by Section 5.6, regarding reemployed Members.
6.9 Restoration of Excess Account B. If a Member who terminated
Service on or after November 1, 1984, and before December 1, 1985, and who
forfeited his or her nonvested Account B benefits under the Terminated Plan
returns to Service before incurring a 60 consecutive month Break in Service,
the Member will be treated as if his or her Excess Account B was used to
purchase an account balance under the Annuity Contract and the Member's
Retirement Benefit accrued under the Plan after December 31, 1985, will be
subject to the offset provided for under this Section 6.<PAGE>
SECTION 7 NORMAL RETIREMENT BENEFIT.
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7.1 Payment of Benefits. A Member who retires from Service on his or
her Normal Retirement Date will be entitled to begin receiving Retirement
Benefit payments on the last day of the month in which his or her Normal
Retirement Date occurs. If the Member could have received a larger Early
Retirement Benefit (calculated in accordance with Section 8) under Section
4.2, beginning as of any date which could have been his or her Early
Retirement Date, such larger Early Retirement Benefit will be payable to the
Member.
7.2 Termination of Employment after Normal Retirement Age. In the
case of a Member who continues to be employed as an Employee or is reemployed
as an Employee after reaching Normal Retirement Age, the Member will be
deemed to retire for purposes of the Plan on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company, or as of the
Member's Required Beginning Date. Payment of the Member's Retirement Benefit
will be made as follows:
(a) In the case of a Member who continues to be employed as an
Employee, or in the case of a Member who terminated employment with the
Company after reaching Normal Retirement Age but is reemployed before
beginning to receive monthly Retirement Benefit payments, payment of the
Member's Retirement Benefit will begin (in the form determined under Section
12) as of the last day of the month in which the Member is deemed to retire.
If a Member who is deemed to retire under this Section 6.2 does not make a
valid election for payment of the Member's Retirement Benefit, the Member's
Retirement Benefit will be paid as a 50% Qualified Joint and Survivor
Annuity.
(b) In the case of a Member who is reemployed as an Employee after
reaching Normal Retirement Age and beginning to receive monthly Retirement
Benefit payments but whose benefits are suspended under Section 14.2, payment
of the Member's Retirement Benefit payments will recommence (in the same form
as before the suspension) as of the last day of the month in which the Member
is deemed to retire.
Any Member whose Retirement Benefit begins to be paid will be deemed to be
reemployed as of the first day of any subsequent calendar month in which he
or she is paid (or entitled to payment) for 40 or more Hours of Service, and
the Retirement Benefit suspension provisions of Section 14.2 will apply.<PAGE>
SECTION 8 EARLY RETIREMENT BENEFIT.
- --------- ------------------------
8.1 Payment of Early Retirement Benefit. A Member who retires on an
Early Retirement Date under Section 4.2 will be entitled to receive an Early
Retirement Benefit under the following paragraph (a) or (b).
(a) Unreduced Early Retirement Benefit. Effective on or after
July 15, 1989, or the date provided in a collective bargaining agreement
applicable to the employment location of the Member as described in the
attached Appendix A, a Member who has reached age 55 and whose total attained
age plus Years of Service equals or exceeds 80, will be entitled to receive
an Early Retirement Benefit equal to 100% of his or her Retirement Benefit.
Payment of such Early Retirement Benefit will begin on the last day of the
month in which the Member's Early Retirement Date occurs.
(b) Reduced Early Retirement Benefit. A Member who does not
satisfy the requirements specified in paragraph (a) who retires on an Early
Retirement Date will be entitled to receive the percentage of his or her
Retirement Benefit based on the Member's age as of his or her Early
Retirement Date as described in the following Table:
<TABLE>
Table A
-------
<CAPTION>
Age at Member's Percentage
Early Retirement Date Factor
--------------------- ----------
<S> <C>
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 92%
62 94%
63 96%
64 98%
65 100%
</TABLE>
In applying the above table, the Member's age at his or her Early Retirement
Date will be computed to years and completed months and the percentages will
be interpolated. These percentage factors will not apply to benefits payable
under Section 6 regarding Excess Account B, and the terms of such Section, to
the extent applicable, will control. Payment of a Member's reduced Early
Retirement Benefit will begin on the last day of the month in which the
Member's Early Retirement Date occurs.
If the Administrative Committee determines that a Member who is eligible
to retire on an Early Retirement Date has engaged in any act of Misconduct
while in Service, the Early Retirement Benefit payable to the Member will be
the Equivalent Actuarial Value of his or her accrued Retirement Benefit.
8.2 Postponement of Early Retirement Benefit. A Member who retires on
an Early Retirement Date may elect to delay the payment of his or her Early
Retirement Benefit until the last day of any month following the Member's
Early Retirement Date, but no later than the month which includes the first
date which could have been the Member's Normal Retirement Date. The early
retirement factor to be used to calculate the Early Retirement Benefit of a
Member who delays benefit payments is the factor at the Member's age on the
date payment of the Member's Early Retirement Benefit begins. If a Member
makes an election to delay the payment of his or her Early Retirement Benefit
and dies before the Annuity Starting date, a Survivor Annuity will be payable
to the Member's Surviving Spouse or Domestic Partner as of the date of the
Member's death as described in Section 11.1. The Member may revoke an
election to delay the payment of his or her Early Retirement Benefit at any
time before the Annuity Starting Date.<PAGE>
SECTION 9 TERMINATION OF SERVICE BEFORE RETIREMENT.
- --------- ----------------------------------------
9.1 Payment of Vested Retirement Benefits. A Member who has completed
5 Years of Service will have a Vested Retirement Benefit determined in
accordance with Section 2.70 as of the date his or her Service terminates.
If the Plan becomes Top Heavy, as defined in Section 29, the Member's Vested
Retirement Benefit will be determined under Section 29. A Member will have
a right to begin receiving payment of his or her Vested Retirement Benefit on
the last day of the month in which his or her Normal Retirement Date occurs.
If the Equivalent Actuarial Value of the Member's Retirement Benefit is
$3,500 or less, the Member will either be entitled to elect to receive an
immediate distribution of his or her benefit under Section 12.3, or will
automatically receive a distribution of his or her benefit under Section
12.5.
A Member who, at any time between December 1 and December 30, 1985, was
a member of the Terminated Plan and was in Service, will have a vested right
to his or her Retirement Benefit earned up to and including December 30,
1985. Other persons, the liabilities of whose benefits were assumed by this
Plan, will continue to have the same vested right to benefits that they had
in the Terminated Plan (if any).
9.2 Early Payment of Vested Retirement Benefits. A Member with a
right to receive his or her Vested Retirement Benefit may elect to begin
receiving benefit payments before the Member's Normal Retirement Date. The
amount distributable to the Member will equal the percentage of the Member's
Vested Retirement Benefit based on the Member's age on the date the Member's
benefit payments begin as described in the following Table B:
<TABLE>
Table B
-------
<CAPTION>
Age at Percentage
Commencement Factor
------------ ----------
<S> <C>
55 42%
56 45%
57 49%
58 53%
59 58%
60 63%
61 69%
62 76%
63 83%
64 91%
65 100%
</TABLE>
Such an election must be received by the Administrative Committee at least 30
days before the date on which benefit payments are to begin. Payment of the
Member's Vested Retirement Benefit will begin on the last day of any month
before the Member's Normal Retirement Date and on or after his or her 55th
birthday.
9.3 Death Before the Payment of Vested Retirement Benefits. If a
Member with a right to receive his or her Vested Retirement Benefit dies
before the Annuity Starting Date, a Survivor Annuity will be payable to the
Member's Surviving Spouse or Domestic Partner. The Survivor Annuity will be
calculated under Section 11.1 as of the date of the Member's death.
9.4 Limitation on Vested Retirement Benefit Eligibility. If a Member
is not entitled to a benefit on account of his or her:
(a) Normal Retirement Date under Section 7;
(b) Early Retirement Date under Section 8;
(c) Total and Permanent Disability under Section 10; or
(d) Death under Section 11,
then no Retirement Benefit will be payable under the Plan upon the Member's
termination of Service unless the Member has completed 5 Years of Service or
has a right to a Vested Retirement Benefit under Section 26.
9.5 Single Sum Payment of Excess Account B. A Member whose Service
terminates for any reason other than death will be entitled to receive the
then-value of his or her Excess Account B in a single sum regardless of the
amount of the Excess Account B. Such benefit will be paid as of the last day
of the month in which the Member files his or her single sum benefit election
with the Administrative Committee.
If the Member does not elect to receive a single sum payment of his or
her Excess Account B, the Member will be entitled to have such benefit paid
in the form of a monthly annuity beginning at his or her Normal Retirement
Date, or beginning on the last day of any month before the Member's Normal
Retirement Date and on or after his or her 55th birthday. If the Member
elects to receive his or her Excess Account B in the form of an annuity, the
amount of such annuity will be determined according to the guaranteed
purchase rates of the Annuity Contract, or the then-current purchase rates
used by the issuer of the annuity if such rates would be more favorable.<PAGE>
SECTION 10 DISABILITY BEFORE RETIREMENT.
- ---------- ----------------------------
10.1 Eligibility for Disability Benefit. A Member who is Totally and
Permanently Disabled may be eligible for a Disability Retirement Benefit
under Section 10.2. Alternatively, effective November 26, 1990, if a Member
has at least 5 Years of Service as of the date the Member becomes Totally and
Permanently Disabled, the Member may be eligible to elect to receive
additional Service in lieu of receipt of the Disability Retirement Benefit as
provided in Section 10.3(a). Also effective November 26, 1990, if a Member
who has at least 5 Years of Service becomes Totally and Permanently Disabled
and is entitled to disability benefits under the Levi Strauss & Co. Welfare
Plan, as provided in Section 10.2(b), the Member will be required to receive
additional Service in lieu of the Disability Retirement Benefit provided
under Section 10.2.
10.2 Disability Retirement Benefit. A Member who is Totally and
Permanently Disabled may be entitled to receive a Disability Retirement
Benefit under the applicable following paragraph (a) or (b). Payment of the
Member's Disability Retirement Benefit will begin as provided in paragraph
(c) in the form elected by the Member under paragraph (d).
(a) Unreduced Disability Retirement Benefit. A Member who:
(i) Was age 55 or older on July 15, 1989, or the date
provided in a collective bargaining agreement applicable to the
employment location of the Member as described in the attached Appendix
A;
(ii) Had completed at least 10 Years of Service before
November 25, 1990; or
(iii) Becomes Totally and Permanently Disabled on or after
November 26, 1990, and has completed at least 5 Years of Service,
and who terminates Service due to a Total and Permanent Disability will be
entitled to receive an unreduced Disability Retirement Benefit under the
Plan. However, if the Administrative Committee determines that the Member
engaged in any act of Misconduct while in Service, the Member's unreduced
Disability Retirement Benefit will be reduced as provided in Section 10.4.
(b) Reduced Disability Retirement Benefit. A Member who does not
qualify for the unreduced Disability Retirement Benefit in paragraph (a), who
terminates Service due to a Total and Permanent Disability and who has
completed 1 Year of Service but who has not then completed 5 Years of
Service, will be entitled to receive a reduced Disability Retirement Benefit
as of the date of his or her termination of Service. The reduced Disability
Retirement Benefit for a Member who becomes Totally and Permanently Disabled
on or after age 55, will be calculated under Table B under Section 9.2 of the
Plan. The reduced Disability Retirement Benefit for a Member who becomes
Totally and Permanently Disabled before reaching age 55, will be calculated
using the 1983 Group Annuity Mortality Table, assuming a relevant population
that consists of 50% males and 50% females and a 7% interest rate. However,
if the Administrative Committee determines that the Member engaged in any act
of Misconduct while in Service, the Member will not be entitled to receive a
reduced Disability Retirement Benefit, as provided in Section 10.4.
(c) Payment of Benefits. Payment of the Member's Disability
Retirement Benefit will begin on the last day of the month following the date
of the Member's termination of Service and will continue until such time as
the Administrative Committee determines that the Member is no longer Totally
and Permanently Disabled. See Section 10.4 regarding the reduction of the
unreduced Disability Retirement Benefit payable under Section 10.3(a) in
instances involving Member Misconduct.
(d) Form of Disability Retirement Benefit. A Member's Disability
Retirement Benefit may be paid in any of the forms of benefit provided in
Section 12.3. However, if the Member is legally married such benefit must be
paid in the form of a Qualified Joint and Survivor Annuity unless the Member
elects otherwise with the written consent of his or her spouse under
Section 13.1. If the Member dies before the Annuity Starting Date, his or
her Surviving Spouse or Domestic Partner will be entitled to receive a
Survivor Annuity under Section 11.
10.3 Disability Service. A Member who is Totally and Permanently
Disabled may be eligible to, or required to, receive Disability Service under
the following paragraph (a) or (b) in lieu of the Member's Disability
Retirement Benefit payable under Section 10.2. Payment of the Disability
Retirement Benefit will begin as provided in paragraph (c) in the form
elected by the Member under paragraph (d).
(a) Disability Service for Members Not Entitled to Welfare
Benefits. Effective November 26, 1990, a Member who has at least 5 Years of
Service as of the date the Member becomes Totally and Permanently Disabled
may, in lieu of receipt of a Disability Retirement Benefit under Section
10.2, elect to receive additional Service. Such an election must be made
within the 90-day period preceding the Member's Annuity Starting Date as
determined under Section 10.2. Not less than 90 days before the Annuity
Starting Date, the Administrative Committee will provide the Member an
election form for such purpose as well as a written explanation of the terms,
conditions and effects of such an election. Any election so made must be
consented to in writing by the Member's spouse if the Member is married.
An eligible Member who elects to receive additional Disability Service
will continue to accrue Benefit Service and Years of Service under the Plan
until the earliest of the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member retires as of an Early Retirement Date; or
(iii) The Member reaches his or her earliest Normal Retirement
Date.
However, if the Administrative Committee determines that the Member engaged
in any act of Misconduct while in Service, he or she will not be entitled to
accrue additional Service under this Section 10.3(a) or any other provision
of the Plan. The Disability Retirement Benefit of a Member who engages in an
act of Misconduct will be determined based on the Member's Benefit Service as
of the date the Member became Totally and Permanently Disabled, as provided
in Section 10.4.
(b) Disability Service for Members Entitled to Welfare Benefits.
Effective November 1, 1990, if a Member who has at least 5 Years of Service
as of the date the Member becomes Totally and Permanently Disabled and if the
Member is an Exempt Member on the LS&CO. Factory and Distribution payroll or
the Brittania payroll and is receiving disability benefits under the Levi
Strauss & Co. Welfare Plan, the Member will continue to accrue Service under
this Plan and will not be entitled to receive the Disability Retirement
Benefit provided in Section 10.2.
A Member will continue to accrue Benefit Service and Years of Service
under the Plan until the earliest of the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member elects an Early Retirement Date;
(iii) The Member reaches his or her earliest Normal Retirement
Date; or
(iv) Disability benefits are no longer payable to the Member
under the Levi Strauss & Co. Welfare Plan.
However, if the Administrative Committee determines that the Member engaged
in any act of Misconduct while in Service, he or she will not be entitled to
accrue additional Service under this Section 10.3(b) or any other provision
of the Plan. The Disability Retirement Benefit of a Member who engages in an
act of Misconduct will be determined based on the Member's Benefit Service as
of the date the Member became Totally and Permanently Disabled, as provided
in Section 10.4.
(c) Payment of Benefits. Payment of the Disability Retirement
Benefit of a Member who accrues additional Service under this Section 10.3
will begin in accordance with Section 8.1, if the Member elects an Early
Retirement Date, or if the Member does not elect an Early Retirement Date, in
accordance with Section 7.1 when the Member reaches his or her Normal
Retirement Date.
(d) Form of Disability Retirement Benefit. Payment of a Member's
Disability Retirement Benefit may be paid in any of the forms of benefit
provided in Section 12.3. However, if the Member is legally married such
benefit must be paid in the form of a Qualified Joint and Survivor Annuity
unless the Member elects otherwise with the written consent of his or her
spouse under Section 13.1. If the Member dies before his or her Annuity
Starting Date, his or her Surviving Spouse or Domestic Partner will be
entitled to receive a Survivor Annuity under Section 11.
10.4 Forfeiture or Reduction of Disability Retirement Benefits. A
Member's Disability Retirement Benefit or entitlement to additional Service
under this Section 10 may be reduced or forfeited under the following
paragraphs (a), (b) or (c).
(a) Reduction of Unreduced Disability Retirement Benefit. If a
former Member who has completed at least 5 Years of Service and is otherwise
entitled to an unreduced Disability Retirement Benefit under Section 10.2(a)
fails to provide all information reasonably requested by the Administrative
Committee, or if the Administrative Committee determines that the Member has
engaged in any act of Misconduct while in Service, the Member's Disability
Retirement Benefit will be reduced. The Member's reduced Disability
Retirement Benefit will equal the Equivalent Actuarial Value of the Member's
Retirement Benefit as of the date of his or her termination of Service by
reason of Disability. The Member's reduced Disability Retirement Benefit
will continue to be paid to the Member on the same basis as the Member's
prior unreduced Disability Benefit. No reduction of a Member's unreduced
Disability Benefit will be made under this Section 10.4(a) if the Member
satisfies the requirements for an unreduced Early Retirement Benefit under
Section 8.1(a).
(b) Forfeiture of Reduced Disability Retirement Benefit. If a
former Member who has completed less than 5 Years of Service and is otherwise
entitled to a reduced Disability Retirement Benefit under Section 10.2(b)
fails to provide all information reasonably requested by the Administrative
Committee, or if the Administrative Committee determines that the Member has
engaged in any act of Misconduct while in Service, no Disability Benefit will
be payable to the Member under Section 10.2(b).
(c) Forfeiture of Disability Service. If a former Member who has
completed at least 5 Years of Service and is otherwise entitled to Disability
Service under Section 10.3 fails to provide all information reasonably
requested by the Administrative Committee, or if the Administrative Committee
determines that the Member has engaged in any act of Misconduct while in
Service, no additional Disability Service will be credited to the Member
under Section 10.3.<PAGE>
SECTION 11 DEATH BENEFITS.
- ---------- --------------
11.1 Survivor Annuity. This Section 11 will govern the payment of
Retirement Benefits, if any, if the Member dies before the Annuity Starting
Date. Section 12 will govern the payment of Retirement Benefits, if any, if
the Member dies on or after the Annuity Starting Date.
11.2 Amount of Survivor Annuity. A Survivor Annuity will be payable to
the Surviving Spouse or Domestic Partner of a Member who dies with a Vested
Retirement Benefit before the Annuity Starting Date. The Survivor Annuity
will provide the Surviving Spouse or Domestic Partner with a monthly benefit
calculated as follows:
(a) If the Member dies before the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member:
(i) Separated from Service on the date of his or her death
(unless the Member had separated from Service before his or her death,
in which case the Member's actual date of separation from Service will
be used);
(ii) Survived until the earliest age the Member could have
begun receiving benefit payments under the Plan;
(iii) Elected to receive a 50% Qualified Joint and Survivor
Annuity, with his or her Surviving Spouse or Domestic Partner as
contingent annuitant, beginning on the earliest age the Member could
have begun receiving benefit payments under the Plan; and
(iv) Died on the day after such annuity became effective.
Such benefit will be calculated using the factors listed in Table B in
Section 9. Benefit payments to the Surviving Spouse or Domestic Partner will
begin on the last day of the month following the later of the date the Member
would have reached age 55 or the month in which the Member dies.
(b) If the Member dies after the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member had
retired on the first day of the month coincident with or next following the
date of the Member's death with a 50% Qualified Joint and Survivor Annuity,
with his or her Surviving Spouse or Domestic Partner as contingent annuitant.
Benefit payments to the Surviving Spouse or Domestic Partner will begin no
later than the last day of the month following the date of the Member's
death.
Neither the Member nor the Surviving Spouse nor the Domestic Partner may
waive the Survivor Annuity.
11.3 Entitlement to Death Benefit. No death benefit will be payable
under the Plan with respect to a Member who dies without both a Vested
Retirement Benefit and a Surviving Spouse or Domestic Partner. However, if
the Member has an Excess Account B, such account will be paid to his or her
Surviving Spouse, Domestic Partner or Beneficiary, as applicable.<PAGE>
SECTION 12 METHOD OF PAYMENT.
- ---------- -----------------
12.1 Normal Form of Benefit for Married Members. The normal form of
benefit for a Member who is Legally Married on the Annuity Starting Date is
a "Qualified Joint and Survivor Annuity." The term "Qualified Joint and
Survivor Annuity" means a benefit providing a reduced monthly annuity for the
life of the Member, ending with the payment due on the last day of the month
in which the Member died, and, if the Member dies leaving a Surviving Spouse
described in Section 2.62, a survivor annuity, in an amount equal to either
50% or 100% (as elected by the Member) of the monthly annuity payable to the
Member, for the life of the Surviving Spouse, beginning on the last day of
the month following the month in which the Member dies and ending with the
payment due on the last day of the month in which the Surviving Spouse dies.
A Member who has a Domestic Partner on the Annuity Starting Date may elect to
receive a survivor annuity with his or her Domestic Partner as the
Beneficiary under Section 12.3(b). See Section 13.4(b) for cases where the
Member dies after the Annuity Starting Date but before his or her first
Retirement Benefit payment.
12.2 Normal Form of Benefit for Single Members. The normal form of
benefit for a Member who does not have a Surviving Spouse on the Annuity
Starting Date is a "Straight Life Annuity." The term "Straight Life Annuity"
means a benefit providing a monthly annuity for the life of the Member ending
with the payment due on the last day of the month in which the Member dies.
12.3 Optional Forms of Benefit. Instead of the annuity otherwise
payable to the Member under Sections 12.1 or 12.2, a Member may elect to
receive the Equivalent Actuarial Value of any benefit to which he or she is
entitled under the Plan in one of the following forms:
(a) Straight Life Annuity: The Member may elect to receive a
monthly annuity payable to the Member for his or her life, ending with the
payment due on the last day of the month in which the Member dies.
(b) Survivorship Options: The Member may elect to receive a
reduced monthly annuity payable for the Member's life, and, after his or her
death, a monthly survivor annuity in the same amount (a "100% survivor
annuity") or 1/2 of such amount for the life of the Beneficiary. However, no
100% survivor annuity will be payable unless the Beneficiary is the Member's
Surviving Spouse or the Beneficiary is no more than 10 years younger than the
Member. If the Member's Beneficiary dies before benefit payments begin, the
Survivorship Option elected by the Member will automatically be cancelled and
the Member's Retirement Benefit will be paid in the normal form specified in
Section 12.1 or 12.2, as appropriate, unless the Member elects another
optional form of benefit under Section 13.1.
(c) 10-Year Certain and Life Option: The Member may elect to
receive a reduced monthly annuity payable for the Member's life. If the
Member dies before receiving 120 monthly payments, monthly payments will
continue to the Beneficiary designated by the Member (or, in the event of the
Beneficiary's death, to the Beneficiary's estate) until a total of 120
payments have been received by the Member and Beneficiary (or the
Beneficiary's estate). Payments under the 10-Year Certain and Life Option
may not be made over a period exceeding the life expectancies of the Member
and the Beneficiary, as determined under section 72(t) of the Code.
If the Member's Beneficiary dies before benefit payments begin, the
10-Year Certain and Life Option selected by the Member will automatically be
cancelled and the Member's benefit will be paid in the normal form of benefit
specified in Section 12.1 or 12.2, as appropriate, unless the Member elects
another optional form of benefit under Section 13.1.
(d) Single Sum Option: If the Equivalent Actuarial Value of a
Member's Retirement Benefit, excluding the Member's Excess Account B under
Section 6, if any, is $3,500 or less, the Member may elect to receive an
immediate cash single sum equal to the Equivalent Actuarial Value of such
Retirement Benefit, plus the amount of the Excess Account B, if any.
Alternatively, effective for single sum distributions made on and after
January 1, 1993, the Member may elect to have his or her Retirement Benefit
directly transferred to a plan qualified under section 401(a) of the Code
which accepts direct transfer contributions, an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code (other than an endowment contract),
or an annuity plan described in section 403(a) of the Code; provided that
such single sum distribution exceeds $200 and otherwise qualifies for
transfer pursuant to section 401(a)(31) of the Code.
The Administrative Committee will provide each eligible Member with
notice of the direct transfer option as required by section 402(f) of the
Code (the "Section 402(f) Notice") at least 90 days and not less than 30 days
before the Annuity Starting Date. The Member will have at least 30 days
after the Section 402(f) Notice is provided to elect to have his or her
Retirement Benefit paid in the form of a direct transfer. The Member may
elect to waive this 30 day election period by affirmatively electing, before
the expiration of the 30 day period, to have his or her Retirement Benefit
paid in the form of a direct transfer. If the Member makes such an election,
no other benefits will be payable from the Plan to the Member and his or her
Beneficiary.
The interest rate specified in Section 28 will be used for determining
a single sum of Equivalent Actuarial Value of the Member's Retirement
Benefit. The single sum Equivalent Actuarial Value of the Member's Excess
Account B will be determined in accordance with the Annuity Contract
providing the Excess Account B benefit, as described in Section 6.
A Member who is entitled to receive an immediate single sum
distribution, may, instead, elect to receive his or her benefit in the form
of an immediate annuity, payable in the normal form described in Section 12.1
or Section 12.2, as appropriate.
12.4 Limitation on Optional Forms of Benefit. No election or
revocation of an election of an optional form of benefit may be made that
would result in payments to any person of less than $10 per month, and any
annuity amounting to less than $10 per month may be paid in quarterly or
semiannual installments. If this Section 12.4 is applicable to a Member, any
references to monthly benefits which would otherwise apply to the Member will
be modified to reflect that the Member is receiving quarterly or semiannual
installments, as applicable.
12.5 Mandatory Cash Out of Benefits Less than $3,500. If the
Equivalent Actuarial Value of a Member's Retirement Benefit including any
Excess Account B payable under Section 6 is $3,500 or less, such Equivalent
Actuarial Value will be paid to the Member in a single sum. Such single sum
will be paid as soon as practicable after the Member's Service terminates
instead of any other payments under the Plan. No single sum distribution
will be made to a Member or to a Member's Surviving Spouse after the Annuity
Starting Date. Alternatively, effective with respect to single sum
distributions in excess of $200 made on and after January 1, 1993, the Member
may elect to have such distribution made in the form of a direct transfer as
described in Section 12.3(d).
The interest rate specified in Section 28 will be used for determining
a single sum Equivalent Actuarial Value of the Member's Retirement Benefit.
The single sum of Equivalent Actuarial Value of the Member's Excess
Account B will be determined in accordance with the Annuity Contract
providing the Excess Account B benefit, as described in Section 6.
12.6 Reduction of Benefits. If a Member who has received a single sum
distribution under Section 12.3(d) or 12.5 returns to Service, his or her
Retirement Benefit will be based on his or her total Benefit Service but will
be reduced by the amount of the prior single sum distribution. Such
subsequent Retirement Benefit, if any, will be paid in the form determined
under Section 13.3.<PAGE>
SECTION 13 BENEFIT ELECTIONS.
- ---------- -----------------
13.1 Election of Optional Forms of Benefits. A Member whose Retirement
Benefit is otherwise payable under the normal form described in Section 12.1
or Section 12.2 may elect in writing to receive his or her benefit under one
of the optional forms of benefit described in Section 12.3 during the
Election Period specified in Section 13.3.
13.2 Written Explanation and Election Form. Not more than 90 days, and
at least 30 days, before the Annuity Starting Date, the Administrative
Committee will provide an election form for purposes of electing an optional
form of benefit under the Plan as well as a written explanation of the terms,
conditions and effects of such election to each active Member and each
separated Member with a Vested Retirement Benefit whose benefit payments have
not yet begun.
The written explanation will contain:
(a) A description of the Qualified Joint and Survivor Annuity and
Straight Life Annuity described in Section 12.1 and Section 12.2;
(b) Notice of the Member's right to waive the Qualified Joint and
Survivor Annuity or Straight Life Annuity by electing an optional form of
benefit;
(c) A description of the different optional forms of benefit
described in Section 12.3;
(d) Notice of the requirement that the Member's spouse must
consent to the Member's waiver of the Qualified Joint and Survivor Annuity
and election of an optional form of benefit;
(e) Notice of the Member's right to revoke the waiver of the
Qualified Joint and Survivor Annuity or Straight Life Annuity and election of
an optional form of benefit during the Election Period specified in
Section 13.3;
(f) A general explanation of the financial effect of election of
each of the optional forms of benefit; and
(g) Notice that the Member may request an explanation of the
specific financial effect, in terms of monthly payments, on the Member's
benefit of making an election.
If the Member requests a written explanation of the specific financial
effect of electing an optional form of benefit under the Plan during the
Election Period, such explanation will be provided to the Member within 30
days of the date of his or her request. Alternatively, the Administrative
Committee may in its discretion, before a request by a Member, include the
written explanation of the specific financial effect of electing an optional
form of benefit under the Plan in the explanatory notice described above.
13.3 Applicable Election Period and Form of Election. The Election
Period will begin on the date the Administrative Committee provides the
Member with the written explanation of the optional forms of benefit under
the Plan described in Section 13.2 and generally will end on the earlier of:
(a) The date of the Member's death; or
(b) The later of:
(i) The Member's Annuity Starting Date; or
(ii) 90 days after the date that such written explanation is
furnished.
However, if the Member requests a written explanation of the specific
financial effect of electing an optional form of benefit under the Plan under
Section 13.2, the Election Period will end on the earlier of (i) the date of
the Member's death or (ii) 90 days after the date that such written
explanation is furnished.
During the Election Period, any election not to take payment in the
normal form of benefit provided in Section 12.1 and Section 12.2 will be
revocable. After the expiration of the Election Period, any election made
will be irrevocable, and the Member will not be entitled to make an election
if no election has been made. A Member may elect to begin receiving monthly
benefit payments before the expiration of the Election Period. If the Member
is Legally Married and elects to receive his or her Retirement Benefit in a
form other than the Qualified Joint and Survivor Annuity, such election will
not be effective without the written consent of his or her spouse. A Member
who elects to begin receiving monthly benefit payments before the expiration
of the Election Period may, nevertheless, elect to change his or her benefit
election, and elect another optional form of benefit during the remainder of
the Election Period. If a Member makes such an election, his or her
Retirement Benefit will begin being paid in the new optional benefit form as
soon as practicable after the Administrative Committee receives the Member's
benefit election.
If a Legally Married Member elects to receive his or her Retirement
Benefit in a form other than the Qualified Joint and Survivor Annuity
specified in Section 12.1 and/or designates a person other than his or her
spouse as his or her contingent annuitant, the election or designation will
be effective only if consented to by the Member's spouse. The consent must:
(a) Be in writing;
(b) Acknowledge the effect of the election and/or designation and
the spouse's consent thereto;
(c) Be witnessed by a notary public; and
(d) Be delivered to the Administrative Committee.
No spousal consent will be required if the Administrative Committee
determines to its satisfaction that the spouse cannot be located or that
there exist such other circumstances preventing such consent that may be
prescribed in applicable Regulations or rulings issued by the IRS. The
Administrative Committee may determine a Member's marital status in
accordance with such reasonable procedures as it may adopt from time to time.
If an active or separated Member's spouse or contingent annuitant dies
before payment of the Member's Retirement Benefit begins and the Member
elected a contingent annuitant option under Section 12.3, such form of
benefit will be automatically cancelled and the Member will be deemed not to
have selected an optional form of benefit (if an optional contingent
annuitant benefit was elected). The Member may later elect an optional form
of benefit if the election is timely made. Each Member may (with the written
consent of his or her spouse if the Member is Legally Married) change any
election of a form of benefit by executing a new election in accordance with
this Section 13 until the expiration of the Election Period.
13.4 Special Circumstances Governing Elections. The following
paragraphs govern the election of optional forms of benefit under the Plan.
(a) Death Before Annuity Starting Date. If a Member who is
Legally Married or who has a Domestic Partner dies before the Annuity
Starting Date and before the beginning of the Election Period, the Member's
Surviving Spouse or Domestic Partner, as applicable, will be entitled to
receive a Survivor Annuity under Section 11 of the Plan. If a Member who is
Legally Married dies before the Annuity Starting Date but during the
Election Period after electing (with the written consent of his or her
spouse) to waive the Qualified Joint and Survivor Annuity, the Member's
spouse will nevertheless be entitled to receive a Survivor Annuity under
Section 11 of the Plan. Similarly, if a Member who has a Domestic Partner
dies before the Annuity Starting Date but during the Election Period after
electing to waive the Straight Life Annuity, the Member's Domestic Partner
will nevertheless be entitled to receive a Survivor Annuity under Section 11
of the Plan.
(b) Death on or after Annuity Starting Date. If a Member who is
Legally Married dies on or after the Annuity Starting Date, the Member's
Retirement Benefit will be paid to his or her Surviving Spouse in the form of
a Qualified Joint and Survivor Annuity under Section 12.1, unless the Member
elected an optional form of benefit (with his or her spouse's consent).
Similarly, if the Member delays the payment of his or her Retirement Benefit
beyond the Annuity Starting Date and dies on or after the Annuity Starting
Date after having elected an optional form of benefit, the Member's benefit
will be paid under the terms of that election upon his or her death. The
Member's election and the spouse's consent must comply with the requirements
of Section 13.3.
If a Member who has a Domestic Partner dies on or after the Annuity
Starting Date, no Retirement Benefit will be payable to his or her Domestic
Partner unless the Member elected an optional form of benefit which provides
for such payment. Conversely, if a Member who has a Domestic Partner delays
the payment of his or her Retirement Benefit beyond the Annuity Starting Date
and dies on or after the Annuity Starting Date after electing an optional
form of benefit, the Member's Retirement Benefit will be paid under the terms
of that election upon his or her death.
(c) Reemployed Members. If a Member is reemployed by the Company
after his or her Normal Retirement Date, Deferred Retirement Date or Vested
Retirement Benefit Payment Date described in Section 9.1 and the Member's
Retirement Benefit payments are suspended under Section 14.2(a) or Section
14.2(b), the Administrative Committee will not be required to provide the
Member with a written explanation of the optional forms of benefit payable
under the Plan nor obtain a new benefit election and spousal consent upon the
Member's later termination of Service or the resumption of benefit payments
under Section 14.2(a) or Section 14.2(b). Rather, upon the Member's later
termination of Service, or upon the later resumption of benefit payments, his
or her benefit (as adjusted under Section 14.2(d) after the Member's
reemployment) will recommence in the form in which they were being paid
before the suspension of such benefit payments under Section 14.2.
If a Member is reemployed by the Company after his or her Early
Retirement Date or Vested Retirement Benefit Payment Date described in
Section 9.2 and the Member's Retirement Benefit payments are suspended under
Section 14.2(a) or Section 14.2(b), the Member's prior benefit election will
automatically be cancelled and of no effect. Upon the Member's later
termination of Service, the Administrative Committee will provide the Member
with the written explanation of the optional forms of benefit payable under
the Plan and obtain a new benefit election and spousal consent, if the Member
is Legally Married. Upon the Member's later termination of Service, his or
her Retirement Benefit (as adjusted for any additional benefit Service earned
under Section 14.2(c) after the Member's reemployment) will be paid in the
form in which the Member elects under Section 13.2.
(d) Reemployment After Cashout. If a Member is reemployed by the
Company after receiving a cash out of his or her Retirement Benefit under
Section 12.3(d) or Section 12.5, then any additional Retirement Benefit
payable to the Member upon his or her later termination of Service will be
subject to the terms and conditions of Section 11, regarding the Survivor
Annuity, and Section 12, regarding the Qualified Joint and Survivor Annuity.
Accordingly, if the Member is Legally Married or has a Domestic Partner and
dies before the Annuity Starting Date, the Member's Retirement Benefit will
be paid in the form of a Survivor Annuity.
If the Member is Legally Married and dies on or after the Annuity
Starting Date, the Member's Retirement Benefit will be paid in the form of a
Qualified Joint and Survivor Annuity, unless such annuity is waived, with the
consent of the Member's spouse, under Section 13.3. If the Member has a
Domestic Partner and the Member dies on or after the Annuity Starting Date,
no Retirement Benefit will be payable under the Plan, unless the Member has
elected an optional form of benefit under Section 13.3.
If the Equivalent Actuarial Value of a Member's Retirement Benefit
including the Member's Excess Account B, if any, payable under Section 6, is
$3,500 or less as of the date of the Member's separation from Service, such
benefit will be paid in the form of a single sum under Section 12.5.<PAGE>
SECTION 14 PAYMENT AND SUSPENSION OF BENEFITS.
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14.1 Payment of Benefits. Payment of a Member's Retirement Benefit
will begin not later than the earlier of:
(a) 60 days after the last to occur of:
(i) The last day of the Plan Year in which the Member
reaches age 65;
(ii) The last day of the Plan Year in which the Member
separates from Employment with the Company; or
(iii) The last day of the Plan Year which contains the 10th
anniversary of the date the Member began membership in the Plan; or
(b) The Required Beginning Date.
If a Member or former Member dies before his or her entire Retirement
Benefit has been distributed, such benefit will become payable in full not
later than 5 years following the date of the Member's death. However, if
benefit payments have begun and will be made to the Member over a period not
extending beyond the life expectancy of the Member or the joint lives or
joint life expectancy of the Member and the Member's Beneficiary, any
remaining benefits may be paid over a period not extending beyond the payment
period elected by the Member and in effect at his or her death. The
preceding requirements will be satisfied if the Member's benefit is to be
paid over the life or life expectancy of the Beneficiary in accordance with
Regulations issued by the IRS and the payment of such benefit begins no later
than (i) 1 year after the death of the Member, or (ii) if the Member's
Surviving Spouse is the designated Beneficiary, the date the Member would
have attained age 70-1/2. If the Surviving Spouse of the Member dies before
the complete payment of the Member's Retirement Benefit, the remainder of
such benefit may be paid to the Surviving Spouse's designated beneficiary as
if the Surviving Spouse were a Member.
All Retirement Benefit payments will be made in accordance with the
minimum distribution and incidental benefit requirements of section 401(a)(9)
of the Code which require generally that certain minimum amounts be
distributed to the Member each calendar year, beginning with the calendar
year in which the Member's Required Beginning Date falls, in order to assure
that certain minimum amounts be paid to the Member and that only "incidental"
benefits be provided to the Member's Beneficiaries. Any distribution option
required by section 401(a)(9) of the Code will override and supersede any
inconsistent distribution options provided for in the Plan.
14.2 Suspension of Benefits. A Member who is reemployed by the Company
after his or her Retirement Date will be subject to the following benefit
suspension provisions.
(a) Reemployment as Employee. If a Member who is receiving
monthly benefit payments on account of his or her Normal Retirement, Deferred
Retirement or Vested Retirement Benefit Payment Date described in Section 9.1
is reemployed by the Company as an Employee, such monthly benefit payments
will be suspended upon the Member's reemployment. Such monthly benefit
payments will recommence (in the form in which they were being paid prior to
the suspension) upon the earlier of (i) the date the Member terminates
Service, or (ii) any month during which the Member is credited with less than
40 Hours of Service.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 9.2 is reemployed by the Company as an Employee, such monthly
benefit payments will be suspended upon the Member's reemployment. Such
monthly benefit payments will recommence (in the form elected by the Member
under Section 13.3) upon the Member's subsequent termination of Service.
(b) Reemployment as a Casual Employee. If a Member who is
receiving monthly benefit payments on account of his or her Normal Retirement
or Deferred Retirement or Vested Retirement Benefit Payment Date described in
Section 9.1 is reemployed by the Company as a Casual Employee, such monthly
benefit payments will be suspended after the Member completes 950 Hours of
Service during a Rehire Anniversary Year. Such suspension will be effective
for each month in which the Member is credited with at least 40 Hours of
Service. Such monthly benefit payments will recommence during each
succeeding Rehire Anniversary Year and will continue to be paid (in the same
form as they were before the suspension) until the Member again completes 950
Hours of Service, in which case such monthly benefit payments will be
suspended.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 9.2 is reemployed by the Company as a Casual Employee, such
monthly benefit payments will be suspended after the Member completes 950
Hours of Service during a Rehire Anniversary year. Such benefit payments
will not recommence until the Member's termination of Service. At such time,
the Member's Retirement Benefit will be paid in the form elected by the
Member under Section 13.3.
(c) Limitations on Benefit Suspension. If a Member or former
Member is reemployed by the Company after reaching age 70-1/2, his or her
monthly benefit payment, if any, will continue. In addition, if a Member who
is reemployed after his or her Retirement Date continues in Service after his
or her Required Beginning Date, the Member will be deemed to have terminated
Service for purposes of this Section 14 and Section 13.3 as of his or her
Required Beginning Date.
(d) Benefit Service While Reemployed. A Member described in any
of the preceding paragraphs who is reemployed by the Company as an Employee
or as a Casual Employee will be credited with a full month of Benefit Service
for every calendar month in which he or she is credited with at least 1 Hour
of Service or in which he or she otherwise has Service. However, any
additional Retirement Benefit the Member would accrue as a result of being
credited with Benefit Service under this Section 14.2, will be offset by the
monthly benefit payments distributed to the Member. Such offset will not
reduce the Member's monthly benefit payments below the amount the Member was
receiving on account of his or her earlier termination of employment. Such
offset will be made for a Member who is reemployed by the Company after his
or her Normal Retirement, Deferred Retirement or Vested Retirement Benefit
Payment Date described in Section 9.1 for each month the Member is engaged in
"Section 203(a)(3)(B) Service," as defined in the Act. A Member will be
engaged in Section 203(a)(3)(B) Service during any month in which he or she
is credited with at least 40 Hours of Service. Such offset will be made for
a Member who is reemployed by the Company after his or her Early Retirement
or Vested Retirement Benefit Payment Date described in Section 9.2 for each
month of the Member's reemployment. Any additional Retirement Benefit earned
by the Member will be paid in the form provided by Section 13.3.
(e) Retiree Coordinators. If a Member retires and is reemployed
by the Company as a Retiree Coordinator, he or she will continue to receive
monthly Retirement Benefits, if any, and will not resume membership in the
Plan while so employed.<PAGE>
SECTION 15 MAXIMUM AMOUNT OF RETIREMENT BENEFIT.
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15.1 Scope of Limitations on Benefits. The provisions of this Section
15 will govern the following benefits:
(a) Any annuity payable to a Member for life as part of a
Qualified Joint and Survivor Annuity or as part of a Survivorship Option
elected by the Member under Section 12.3 and having the effect of a
"qualified joint and survivor annuity" within the meaning of section 417 of
the Code;
(b) Any Straight Life Annuity payable to a Member under Section
12.2 or 12.3; and
(c) Any other Survivorship Option or other option elected by a
Member under Section 12.3 (including both the annuity payable to the Member
and any other annuity or benefit payable).
The limitations of this Section 15 will only apply to a Member's Retirement
Benefit calculated under Section 5 and not to the Member's Excess Account B,
if any, described in Section 6.
15.2 Basic Limitations on Benefits. The benefits to which Section 15
is applicable may not exceed the Equivalent Actuarial Value of a Qualified
Joint and Survivor Annuity or Straight Life Annuity in an annual amount equal
to the lesser of:
(a) The $90,000 limitation in effect under section 415(b)(1)(a) of
the Code (as adjusted to take into account changes in the cost-of-living
under any Regulations or rulings of the IRS) (the "$90,000 Limitation"); or
(b) 100% of the Member's High-3 Year Average Compensation (the
"Compensation Limitation"),
subject, however, to the following provisions of this Section 15.
If a Member's benefit would exceed the above limitation, then the
Member's benefit will be reduced as necessary. However, the Member's benefit
will in no event be reduced below the amount of such benefit as of
November 27, 1983, determined under the Terminated Plan (including its
benefit limitations) as then in effect.
15.3 Adjustments to Limitations. The $90,000 Limitation and
Compensation Limitation will be subject to the following provisions:
(a) Benefits Payable to Former Members. In the case of a Member
who has separated from Service, the $90,000 Limitation will be adjusted
annually to reflect changes in the cost-of-living under any Regulations or
rulings issued by the IRS.
(b) Early Payment Adjustment. If benefits become payable to a
Member before he or she reaches the Social Security Retirement Age but on or
after the date on which the Member reaches age 62, the $90,000 Limitation
will be reduced by .00556 for each of the first 36 months and by .00417 for
each additional month by which the Member's benefit payment date precedes his
or her Social Security Retirement Age. If benefits become payable before the
Member reaches age 62, the $90,000 Limitation will be reduced as provided in
the preceding sentence until age 62 and will be further reduced for each
month by which the benefit payment date precedes the Member's 62nd birthday.
In adjusting the $90,000 Limitation for the payment of benefits before age
62, the interest rate used will be the greater of 5% per annum or the rate
used for determining actuarial reductions for early payment of benefits
described in Section 28 of this Plan.
(c) Delayed Payment Adjustment. If benefits become payable to a
Member after he or she reaches the Social Security Retirement Age, the
$90,000 Limitation will be adjusted, using an interest assumption not greater
than the lesser of 5% or the post-retirement interest rate used for making
Equivalent Actuarial Value determinations under the Plan, so that it has an
Equivalent Actuarial Value to a $90,000 benefit beginning at the Social
Security Retirement Age. Such limitation may not exceed the Compensation
Limitation.
(d) Service and Membership Reductions. If the Member has
completed less than 10 Years of Plan membership and/or less than 10 Years of
Service (including fractional parts of a year), the $90,000 Limitation will
be reduced by multiplying it by a fraction, the numerator of which is the
number of years of Plan membership of the Member and the denominator of which
is 10, and the Compensation Limitation will be multiplied by a fraction the
numerator of which is the number of Years of Service of the Member and the
denominator of which is 10. As provided in Sections 2.59 and 2.72, Years of
Service which would be counted under the Terminated Plan will be counted
under this Plan but the same period will be counted only once.
15.4 Minimum Benefit. The $90,000 Limitation and Compensation
Limitation will not apply if:
(a) The annual benefits payable under all defined benefit plans
maintained by the Company or an Affiliated Company with respect to the Member
does not exceed $1,000 multiplied by the Member's Years of Service (not to
exceed 10); and
(b) The Member has not participated in any defined contribution
plan (within the meaning of section 414(i) of the Code) maintained by the
Company or an Affiliated Company.
15.5 TRA 86 Protected Benefits. If on or before the first day of the
first Plan Year beginning after December 31, 1986 (November 30, 1987), a
Member was a participant in 1 or more defined benefit plans maintained by the
Company or an Affiliated Company which were in existence on May 6, 1986, and
that met the applicable requirements of section 415 of the Code for all prior
Plan Years, the $90,000 Limitation will equal the greater of the amount
specified in Section 15.2(a), as adjusted under the preceding paragraphs of
this Section 15, or the Member's Retirement Benefit at the close of the last
Plan Year beginning on or before December 31, 1986, calculated as if the
Member had terminated employment on the last day of said Plan Year. In
calculating a Member's Retirement Benefit for purposes of the preceding
sentence, the Administrative Committee will disregard changes in the terms
and conditions of the Plan and cost-of-living adjustments occurring after May
5, 1986.
15.6 Multiple Plans. The Administrative Committee will, to the extent
required by the Act and the Code and in accordance with the Regulations,
apply the $90,000 Limitation and Compensation Limitation by taking into
account the benefits payable and the contributions made under any other plans
maintained by the Company or Affiliated Company which are qualified under
section 401(a) of the Code. If such other plan is a defined contribution
plan, then the sum of the "defined benefit plan fraction" (as defined in
section 415(e)(2) of the Code) and the "defined contribution plan fraction"
(as defined in section 415(e)(3) of the Code) may not exceed 1. In any case
where the combined fraction is in excess of 1, then the Retirement Benefit
payable under this Plan will be reduced (but are not below the Member's
Retirement Benefit as of the last day of the Plan Year beginning before
January 1, 1987). The reduction will be of sufficient amount to eliminate
the excess over the combined maximum.
If the Plan becomes Top Heavy and, therefore, subject to the provisions
of Section 29, then for purposes of determining the "defined benefit plan
fraction" and the "defined contribution plan fraction," a factor of 100% will
be substituted for the factor of 125% used in calculating the denominators of
such fractions, unless both of the following conditions are satisfied:
(a) The Plan is not Super Top Heavy as defined in Section 29 of
the Plan; and
(b) The contributions and benefits on behalf of all Participants
other than Key Employees meet the requirements of section 416(h) of the Code.
15.7 Special Limitations on Benefits. The annual Retirement Benefit
payments to a Member who is among the 25 highest Highly Compensated Employees
and highest Highly Compensated Former Employees will be restricted to an
amount equal to the payments that would be made on behalf of the Member under
a single life annuity that is the Equivalent Actuarial Value of the Member's
Retirement Benefit under the Plan. The above restrictions will not apply,
however, if one of the following conditions is met:
(a) After payment to a Member described in the preceding paragraph
of all of his or her "benefits" under the Plan, the value of the Plan assets
equals or exceeds 110% of the value of current liabilities as defined in
section 412(l)(7) of the Code; or
(b) The value of "benefits" for a Member described in the
preceding paragraph is less than 1% of the value of current liabilities; or
(c) The value of "benefits" payable to the Member under the Plan
does not exceed the amount described in section 411(a)(11)(A) of the Code
regarding the restrictions on mandatory single sum distributions of less than
$3,500.
"Benefits" include any periodic income, any withdrawal values payable to a
living Member, and any death benefits not provided for by insurance on the
Member's life.<PAGE>
SECTION 16 BENEFICIARIES.
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If no Beneficiary designation is in effect under Section 12.3 at the
time of a Member's death, or if no designated Beneficiary survives the
Member, the payment of the Member's Vested Retirement Benefit, if any, will
be made to the following persons in the order listed:
(a) To the Member's Surviving Spouse, if any;
(b) If the Member has no Surviving Spouse, then to his or her
children;
(c) If the Member has no living children, then to his or her
parents;
(d) If the Member has no living parents, then to his or her
brothers and sisters; or
(e) If the Member has no living brothers and sisters, then to his
or her estate.
The Administrative Committee will, in its sole and absolute discretion,
determine the right of such persons to receive the benefit payable with
respect to a Member, if any. If the Administrative Committee is in doubt as
to the right of any person to receive such amount, the Administrative
Committee may direct the Trustee to retain such amount, without liability for
any interest on such amount, until the rights to such amount are determined,
or, alternatively, may direct the Trustee to pay such amount into any court
of appropriate jurisdiction and such payment will be a complete discharge of
the liability of the Plan and the Trust Fund.<PAGE>
SECTION 17 FUNDING AND CONTRIBUTIONS.
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17.1 Contributions. Subject to the provisions of Section 20 of this
Plan, the Company will contribute to the Trust Fund, for each Plan Year, the
amount required by the Act and the Code. The Investment Committee will
arrange for the establishment and maintenance of such funding accounts as are
required by the Act and the Code.
17.2 Actuarial Assumptions. The Administrative Committee will adopt
and may change from time to time the actuarial assumptions and methods that
are recommended by the Actuary for purposes of making actuarial valuations
for the Plan. At such times as may be required by the Act or the Code or
requested by the Administrative Committee, the Actuary will make an actuarial
valuation of the Plan, including such calculations as may be necessary to
determine whether the Plan is adequately funded, will estimate the
contributions required under Section 17.1 and will report the results of its
valuation to the Administrative Committee. Before the termination of the
Plan, forfeitures of benefits arising from a Member's termination of Service,
death or any other reason will not be applied to increase the benefit that
any Member would otherwise be entitled to receive under the Plan, but may be
anticipated in estimating costs and will be applied to reduce the Company's
contributions under the Plan.
17.3 Trust Fund. All monies, securities or other property received as
contributions under the Plan will be delivered to the Trustee under the Trust
Fund, to be managed, invested, reinvested and distributed in accordance with
the Plan, the Trust Agreement, and any agreement with an insurance company or
other financial institution constituting a part of the Plan and Trust
Agreement.
17.4 Expenses of the Plan. The expenses of administering the Plan may
be paid out of the Trust Fund if the Participating Companies do not pay such
expenses directly in such proportions as determined by the Administrative
Committee. The administrative expenses will include but are not limited to:
(a) The premiums for termination insurance payable to the PBGC;
(b) The fees and expenses of any employee and of the Trustee for
the performance of their duties under the Trust Agreement;
(c) The expenses incurred by the members of the Administrative
Committee and of the Investment Committee in the performance of their duties
under the Plan (including reasonable compensation for any legal counsel,
certified public accountants and actuaries and any outside agents and cost of
services provided with respect to the Plan); and
(d) All other proper charges and disbursements of the Trustee or
the members of the Administrative Committee and of the Investment Committee
(including settlements of claims or legal actions approved by counsel to the
Plan).
An election by the Participating Companies to pay all or a part of the above
expenses directly will not bind the Participating Companies as to their
rights to elect, with respect to the same or other expenses, at any other
time to have such expenses paid from the Trust Fund or to have the Trustee
reimburse the Participating Companies for expenditures already made. In
estimating costs under the Plan, administrative costs may be anticipated.<PAGE>
SECTION 18 ADMINISTRATION OF THE PLAN.
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18.1 Administrative Committee. The Administrative Committee is the
"Plan Administrator" of the Plan (as such term is used in the Act) and the
"Named Fiduciary" (as defined in section 402 of the Act) with respect to the
operation and administration of the Plan. The Administrative Committee will
employ the Actuary and such certified public accountants as it requires or
may deem advisable for the Plan. The Administrative Committee will make such
rules and regulations and take any other actions to administer the Plan as it
may deem appropriate. The Administrative Committee may adopt periods in
which advance notice required under the Plan must be given and will
communicate such periods to Employees. The Administrative Committee will
have sole discretion to interpret the terms of the Plan and to determine
eligibility for benefits and the amount of benefits payable to a Member, if
any, under the objective criteria set forth in the Plan. The Administrative
Committee's rules, interpretations, regulations and actions will be
conclusive and binding on all persons.
In administering the Plan, the Administrative Committee (a) will act
in a nondiscriminatory manner to the extent required by section 401(a) and
related sections of the Code, and (b) will at all times discharge its duties
in accordance with the standards set forth in section 404(a)(1) of the Act.
18.2 Control and Management of Plan Assets. The Investment Committee
is the "Named Fiduciary" (as defined in section 402 of the Act) with respect
to management and control of the assets of the Plan, but only to the extent
that it will have the authority to:
(a) Appoint 1 or more Trustees to hold the assets of the Plan in
trust and to enter into a trust agreement with each Trustee it appoints;
(b) Appoint 1 or more Investment Managers for any assets of the
Plan and to enter into an investment management agreement with each
Investment Manager it appoints;
(c) Remove any Trustee or Investment Manager so appointed;
(d) Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
(e) Perform such other functions as are specifically assigned to
the Investment Committee under the Plan.
In addition, the Investment Committee will have the responsibility for
monitoring and reviewing the investment performance of the Plan to ensure
that it is consistent with the requirements of the Act and the Code and the
funding policy adopted by the Administrative Committee. The Investment
Committee will establish the necessary parameters or standards regarding Plan
investments to ensure that such criteria continue to be met.
18.3 Trustees and Investment Managers. Each Trustee appointed under
Section 18.2 will have the exclusive authority and discretion to control and
manage the Plan assets held in trust by it, except to the extent that:
(a) The Investment Committee directs how those assets will be
invested;
(b) The Investment Committee allocates the authority to manage
those assets to 1 or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
Each Investment Manager appointed will have the exclusive authority to
manage, including the power to acquire and dispose of, the Plan assets
assigned to it by the Investment Committee, except to the extent that the
Investment Committee prescribes how those assets will be invested. The
Trustee and each Investment Manager will be solely responsible for
diversifying the investment, in accordance with section 404(a)(1)(C) of the
Act, of the Plan assets assigned to them by the Investment Committee, except
to the extent that the Investment Committee directs or the Plan prescribes
how those assets will be invested.
18.4 Committee Membership. Both the Administrative Committee and the
Investment Committee will consist of at least 3 members. Each member will be
appointed by, will remain in office at the will of, and may be removed, with
or without cause, by the Board of Directors. Any member of either Committee
may resign at any time. The Board of Directors will designate the chairman
of each Committee.
To the maximum extent permitted by law, no member of either Committee
will be personally liable by reason of any contract or other instrument
executed by him or her, or on his or her behalf, in his or her capacity as a
member of such Committee, nor for any mistake of judgment made in good faith.
The Company will indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums of which are
paid from the Company's own assets), each member of the Administrative
Committee and Investment Committee and each other officer, employee or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan or to the management and control
of the assets of the Plan may be delegated or allocated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any
act or omission to act in connection with the Plan, unless arising out of
such person's own fraud or willful misconduct.
18.5 Reports to Board of Directors. Each Committee will report to the
Board of Directors, or to its designee for this purpose, annually and at such
other times specified by the Board of Directors or such designee, with regard
to the matters for which it is responsible under the Plan.
18.6 Employment of Advisers. The Administrative Committee and the
Investment Committee may make use of employees of the Company or outside
agents as they each require or may deem advisable for purposes of performing
their respective duties under the Plan. Either Committee may rely upon the
written opinion or advice of counsel provided by the Company, fairness
opinions provided by investment bankers and written opinions or advice
provided by the Actuary and accountants engaged by the Administrative
Committee. Either Committee may delegate to any such agent or to any
subcommittee or member of the Committees its authority to perform any act
under the Plan, including, without limitation, those matters involving the
exercise of discretion. Any such delegation of discretion will be subject to
revocation at any time at the discretion of the appropriate Committee.
18.7 Limitations on Committee Actions. No member of either Committee
will be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under the Plan. The members
of the Administrative Committee and of the Investment Committee will not
receive any special compensation for serving in their capacities as members
of such Committees but will be reimbursed for any reasonable expenses
incurred in connection with performing their Committee duties. Except as
otherwise required by the Act, no bond or other security will be required of
either Committee or any Committee member in any jurisdiction. Any person may
serve on both Committees, and any member of either Committee, any
subcommittee or agent to whom either Committee delegates any authority, and
any other person or group of persons, may serve in more than one fiduciary
capacity (including service both as a trustee and administrator) with respect
to the Plan.
18.8 Committee Meetings. Each Committee will establish its own
procedures and the time and place for its meetings, and provide for the
keeping of minutes of all meetings. A majority of the members of a Committee
will constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of a Committee may be taken upon the affirmative vote
of a majority of the members of the Committee at a meeting or, at the
direction of its chairman, without a meeting by mail, telegraph or telephone;
provided that all of the members of the Committee are informed by mail or
telegraph of their right to vote on the proposal and of the outcome of the
vote thereon. "Mail" will include any written or electronic interoffice
communication.
18.9 Accounting and Disbursement of Plan Assets. The Administrative
Committee will appoint a person who will cause to be kept full and accurate
accounts of receipts and disbursements of the Plan, and will cause to be
deposited all funds of the Plan to the name and credit of the Plan, in such
depositories as may be designated by the Investment Committee. Such person
will cause to be disbursed the monies and funds of the Plan when so
authorized by either the Investment Committee or the Administrative Committee
and will generally perform such other duties as may be assigned to him or her
from time to time by either Committee. All demands for money of the Plan
will be signed by such person or such other person or persons as either
Committee may from time to time designate in writing.<PAGE>
SECTION 19 CLAIMS AND REVIEW PROCEDURES.
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19.1 Applications for Benefits. Any application for a benefit under
the Plan must be submitted to the Administrative Committee at the Company's
principal office. The application must be in writing on the prescribed form
and must be signed by the applicant.
19.2 Denial of Applications. If any application for a benefit is
denied in whole or in part, the Administrative Committee will notify the
applicant in writing of the right to a review of the denial. The written
notice will state, in a manner reasonably calculated to be understood by the
applicant:
(a) The specific reasons for the denial;
(b) The specific references to the Plan provisions on which the
denial was based;
(c) A description of any information or material necessary to
perfect the application;
(d) An explanation of why such material is necessary; and
(e) An explanation of the Plan's review procedure.
The written notice will be given to the applicant within 90 days after the
Administrative Committee receives the application, unless special
circumstances require an extension of time for processing the application.
In no event will the extension exceed a period of 90 days from the end of the
initial 90-day period. If an extension is required, written notice of the
need for the extension will be furnished to the applicant before the end of
the initial 90-day period. The notice will indicate the special
circumstances requiring the extension of time and the date by which the
Administrative Committee expects to give a decision. If written notice is
not given to the applicant within the initial 90-day period, then the
application will be deemed to have been denied (for purposes of Section 19.3)
upon the expiration of such period.
19.3 Requests for Review. Any person whose application for a benefit
is denied in whole or in part (or such person's duly authorized
representative) may appeal the denial by submitting to the Administrative
Committee a request for a review of such application within 60 days after
receiving written notice of the denial (or within 60 days of a deemed denial
under Section 19.2). The Administrative Committee will give the applicant or
such representative an opportunity to review pertinent documents (except
legally privileged materials) in preparing such request for review and to
submit issues and comments in writing. The request for review must be in
writing and must be addressed to the Company's principal office. The request
for review must state all of the grounds on which it is based, all facts in
support of the request and any other matters which the applicant deems
pertinent. The Administrative Committee may require the applicant to submit
such additional facts, documents or other material as it may deem necessary
or appropriate in making its review.
19.4 Decisions on Review. The Administrative Committee will act upon
each request for review within 60 days after it receives the request unless
special circumstances require an extension of time for processing, but in no
event will the decision on review be given more than 120 days after the
Administrative Committee receives the request for review. If an extension is
required, written notice of the need for an extension will be given to the
applicant before the end of the initial 60-day period. The Administrative
Committee will give prompt, written notice of its decision to the applicant.
If the Administrative Committee confirms the denial of the application for a
benefit in whole or in part, the notice will state, in a manner calculated to
be understood by the applicant, the specific reasons for the denial and
specific references to the Plan provisions on which the decision is based.
To the extent that the Administrative Committee overrules the denial of the
application for a benefit, such benefit will be paid to the applicant.
19.5 Exhaustion of Administrative Remedies. No legal or equitable
action for a benefit under the Plan will be brought unless and until the
claimant has completed the following:
(a) Submitted a written application for a benefit in accordance
with Section 19.1;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 19.3; and
(d) Been notified in writing that the Administrative Committee has
affirmed the denial of the application.
A claimant may bring an action without completing the above steps after the
Administrative Committee has failed to act on the claim within the time
prescribed in Section 19.2 and Section 19.4.<PAGE>
SECTION 20 TERMINATION OF EMPLOYER PARTICIPATION.
- ---------- -------------------------------------
20.1 Termination by Participating Company. Any Participating Company
may terminate its participation in the Plan by giving the Board of Directors
prior written notice specifying a termination date which will be the last day
of a month at least 60 days after the date such notice is received by the
Board of Directors. If the specified termination date is not at least 60
days after the date the notice of termination is received by the Board of
Directors, the specified termination date will automatically be changed to
the last day of the first month which is at least 60 days after the date the
notice is received. The Board of Directors may waive the 60 day notice
requirement and terminate the Participating Company's participation in the
Plan as of any earlier date. The Board of Directors may also terminate any
Participating Company's participation in the Plan, as of any termination date
specified by the Board of Directors, for the failure of the Participating
Company to make proper contributions or to comply with any other provision of
the Plan, or for any other reason the Board of Directors deems appropriate.
In any event, the Administrative Committee will promptly notify the IRS, the
PBGC and other appropriate governmental authorities under Sections 20.3 and
21.4 of the Plan.
20.2 Effect of Termination. Upon termination of the Plan as to any
Participating Company, no amount will subsequently be payable under the Plan
to or with respect to any Members then employed by such Participating
Company, except as provided in this Section 20, and no amount will be payable
to the Participating Company. Subject to any conditions which the IRS, the
PBGC or any other governmental authority may impose, the Administrative
Committee will direct the Trustee to segregate such portion of the Trust Fund
(the "Distributable Reserve") as the Actuary determines to be properly
allocable in accordance with the Act to the active employees of such
Participating Company. To the maximum extent permitted by the Act, any
rights of Members no longer employed by the Participating Company, former
Members and their Beneficiaries, Surviving Spouses and other eligible
survivors under the Plan will be unaffected by a termination of the Plan as
to any Participating Company, and any payments, transfers or contributions of
the Distributable Reserve as provided in Section 21 will constitute a
complete discharge of all liabilities under the Trust Fund.
If the Plan is terminated with respect to a Participating Company, the
Retirement Benefit of any Highly Compensated Employee and any Highly
Compensated Former Employee of such company will be limited to a benefit that
is nondiscriminatory under section 401(a)(4) of the Code.
20.3 IRS Termination Procedure. If the Plan is terminated with respect
to a Participating Company, the Administrative Committee or the appropriate
Company office must submit the Plan to the IRS for a determination that the
termination of the Plan with respect to the Participating Company will not
adversely impact the qualified status of the Plan and the Trust Fund under
sections 401(a) and 501(a) of the Code. No distributions of assets will be
made in connection with the termination of the Plan until the IRS has issued
a determination as to the effect of such termination. The Participating
Company may, by written notice delivered to the Administrative Committee and
the Trustee, waive its right to apply for such a determination. Any such
waiver request must be approved by the Board of Directors.
20.4 PBGC Termination Procedure. Upon receipt by the Administrative
Committee of an IRS determination regarding the termination of the Plan as to
a Participating Company, or if the Participating Company waives its right to
obtain an IRS determination and the Board of Directors approves such waiver
request, the following provisions will apply:
(a) At least 60 days before the date on which the Participating
Company's participation in the Plan is to be terminated, the Administrative
Committee will provide Members and Beneficiaries with a Notice of Intent to
Terminate the Plan with respect to the Participating Company. As soon as
administratively practicable after such Notice of Intent to Terminate is
provided, the Administrative Committee will file notice with the PBGC
indicating that the Plan is to be terminated with respect to the
Participating Company.
(b) If the PBGC issues a Notice of Noncompliance within 60 days
after it receives notice of the termination of the Plan, the Administrative
Committee will refrain from taking any further action to terminate the Plan
with respect to the Participating Company and will cooperate with the PBGC
with respect to such termination of the Plan. Alternatively, the
Administrative Committee may declare the termination of the Plan to be null
and void with respect to the Participating Company and continue to treat the
Plan with respect to such Company as an ongoing Plan for all purposes under
the Act and the Code.
(c) If the PBGC does not issue a notice of noncompliance within 60
days after it receives notice of the termination of the Plan, then the
Administrative Committee will distribute the distributable reserve to Members
employed by the Participating Company in accordance with Section 21.5 of the
Plan and the applicable Regulations issued by the PBGC regarding plan
terminations.
If the PBGC issues revised Regulations regarding plan terminations, such
Regulations will supersede and override any inconsistent provisions of this
Plan, and any termination of the Plan with respect to a Participating Company
will be accomplished under the terms and provisions of such Regulations.
20.5 Termination of the Plan. If the Plan is terminated with respect
to all Participating Companies, the provisions of this Section 20 will be
applied to each of the Participating Companies individually or collectively
as determined by the Administrative Committee in its sole and absolute
discretion.<PAGE>
SECTION 21 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- ---------- ------------------------------------------------------
21.1 Right to Amend. The Board of Directors have the right at any
time, to modify, alter or amend this Plan, in whole or in part, prospectively
or retroactively. No amendment will reduce any Participant's Retirement
Benefit, calculated as of the date on which the amendment is adopted, except
to the extent as may be appropriate or necessary to enable the Plan and Trust
Fund to continue to satisfy the requirements of section 401(a) and section
501(a) of the Code or other applicable law. Any such amendment will be
evidenced by an instrument in writing duly executed, acknowledged and
delivered to the Administrative Committee and the Trustee. If the Plan is
amended by the Board of Directors after it is adopted by an Affiliated
Company, unless otherwise expressly provided, it will be treated as so
amended by the Affiliated Company without the necessity of any action on the
part of the Affiliated Company.
21.2 Plan Merger or Consolidation. The Board of Directors reserves the
right to merge or consolidate this Plan with any other plan or to direct the
Trustee to transfer the assets held in the Trust Fund and/or the liabilities
of this Plan to any other plan or to accept a transfer of assets and
liabilities from any other plan. In the event of the merger or consolidation
of this Plan and the Trust Fund with any other plan, or a transfer of assets
or liabilities to or from the Trust Fund to or from any other plan, then each
Member will be entitled to a benefit immediately after the merger,
consolidation or transfer (determined as if the Plan was then terminated)
that is equal to or greater than the benefit he or she would have been
entitled to receive immediately before such merger, consolidation or transfer
(if this Plan had then terminated).
21.3 Termination of the Plan. The Board of Directors hopes and expects
to continue the Plan indefinitely. Nevertheless, to the full extent
permitted by law, the Board of Directors reserves the right to suspend or
terminate the Plan or to completely discontinue benefit accruals under the
Plan. As required by law, before the termination, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, any
other fiduciary or the PBGC of its intent to terminate the Plan. Upon such
termination, the Members' rights to their Retirement Benefits will become
fully vested and nonforfeitable.
On the complete termination of the Plan, LS&CO. and all or any
Participating Companies, as determined by the Board of Directors or its
designee, will receive such amounts, if any, as remain in the Trust Fund
after the satisfaction of all liabilities under the Plan.
21.4 Partial Termination of the Plan. Upon a curtailment of the Plan
or a discontinuance of the Plan with respect to a group or class of Members
that constitutes a "Partial Termination" as defined under section 411(d)(3)
of the Code, all such Members' rights to their Retirement Benefits under the
Plan at the time of the Partial Termination will become fully vested and
nonforfeitable. If a Partial Termination occurs, the Administrative Committee
may instruct the Actuary to allocate the assets among the Members in
accordance with section 4044(a) of the Act. The assets allocated to the
Members affected by the Partial Termination will then be segregated by the
Trustee, and the funds so allocated and segregated will then be used to pay
Retirement Benefits under the Plan to such Members in accordance with Section
21.5 as though the Plan had been completely terminated. If such funds are
insufficient to pay the affected Members' Retirement Benefits, the
Participating Company employing such Members will be liable for the
insufficiency. Alternatively, the Administrative Committee may postpone
Retirement Benefit distributions to such Members until their subsequent
termination of employment with the Company in accordance with other
provisions of the Plan.
21.5 Manner of Distribution. Upon termination of the Plan and the
allocation of Plan assets, the Administrative Committee may, in its sole and
absolute discretion, direct the Trustee to convert the Trust Fund into cash
and liquidate it by making Retirement Benefit distributions to Members in
accordance with the modes of distribution provided for in Section 12.
Alternatively, with the consent of the Board of Directors, or its designee,
the Administrative Committee may direct the Trustee to hold the Members'
Retirement Benefits in the Trust Fund until such Members or their
Beneficiaries become eligible to receive Retirement Benefit distributions
under the terms and provisions of this Plan.
If the Plan is liquidated, the Administrative Committee will instruct
the Trustee to purchase nontransferable deferred annuities for each person
entitled to Retirement Benefit distributions, with the monthly payment
provided by the annuity, the form of the annuity, and the date on which
payments will commence under the annuity to be determined in accordance with
the preceding Sections of the Plan. If the assets held in the Trust Fund are
insufficient to purchase all of such annuities, the assets will be allocated
among the Members in the manner prescribed by section 4044(a) of the Act.
However, the Board of Directors, or its designee, and the Administrative
Committee will not instruct the Trustee to liquidate the Trust Fund before
complying with the Act.<PAGE>
SECTION 22 INALIENABILITY OF BENEFITS.
- ---------- --------------------------
22.1 No Assignment Permitted. Except as may otherwise be required by
law, no amount payable at any time under the Plan and the Trust Agreement
will be used or diverted for purposes other than for the exclusive benefit of
Members and their Beneficiaries. No amount payable under the Plan will be
subject in any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any Member,
contingent annuitant, Beneficiary, or Alternate Payee, and any attempt to so
alienate or subject any such amount will be void. If any Member, contingent
annuitant, Beneficiary, or Alternate Payee, attempts to, or alienates, sells,
transfers, assigns, pledges, attaches, charges or otherwise encumbers any
amount payable under the Plan and Trust Agreement, or any part of such
amount, or if by reason of his or her bankruptcy or any other event, such
amount would be made subject to his or her debts or liabilities or would
otherwise not be enjoyed by him or her, then the Administrative Committee, if
it so elects, may direct that such amount be withheld and that such amount or
any portion of such amount be paid or applied to or for the benefit of such
person, his or her spouse, children or other dependents, or any of them, in
such manner and proportion as the Administrative Committee may deem proper.
The following arrangements are not prohibited under the Plan:
(a) Arrangements for the withholding of tax from benefit
distributions;
(b) Arrangements for the recovery of benefit overpayments;
(c) Arrangements for the recovery of amounts described in section
4045(b) of the Act in the event of the termination of the Plan and the
recapture of such amounts; or
(d) Arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided
that such arrangement is not part of an arrangement constituting an
assignment or alienation).
In addition, the return of Company contributions under Section 22.2 and the
creation, assignment or recognition of a right to all or a portion of a
Member's Retirement Benefit under a Qualified Domestic Relations Order under
Section 22.3 will not violate this Section 22.1.
22.2 Return of Contributions. All Company contributions to the Plan
are expressly conditioned upon the deductibility of such contributions under
section 404 of the Code. If the deduction of any Company contribution is
disallowed, then the amount for which a deduction is disallowed will be
returned to the appropriate Participating Company within 12 months after the
date of the disallowance. In addition, if any Company contribution is made
as a result of a mistake of fact, such contribution may be repaid to the
appropriate Participating Company within 12 months after it is made. Any
Company contribution so returned will be reduced to reflect losses, but will
not be increased to reflect gains or income.
22.3 Qualified Domestic Relations Orders. The Administrative Committee
will honor the terms of a Qualified Domestic Relations Order that satisfies
the following requirements.
(a) Requirements. In accordance with section 414(p) of the Code,
a Domestic Relations Order will not be treated as a Qualified Domestic
Relations Order unless it satisfies all of the following conditions:
(i) The Domestic Relations Order clearly specifies the name
and last known mailing address (if any) of the Member and the name and
last known mailing address of each Alternate Payee covered by the order,
the amount or percentage of the Member's Retirement Benefit to be paid
to each Alternate Payee or the manner in which such amount or percentage
is to be determined, and the number of payments or period to which such
order applies.
(ii) The Domestic Relations Order specifically indicates that
it applies to this Plan.
(iii) The Domestic Relations Order does not require this Plan
to provide any type or form of benefit, or any option, not otherwise
provided under the Plan, and it does not require the Plan to provide
increased benefits (determined on the basis of actuarial equivalence
factors in Section 28).
(iv) The Domestic Relations Order does not require the
payment of all or a portion of a Member's Retirement Benefit to an
Alternate Payee which is required to be paid to another Alternate Payee
under another order previously determined to qualify as a Qualified
Domestic Relations Order.
(b) Early Commencement of Payments to Alternate Payees. A
Domestic Relations Order requiring payment to an Alternate Payee before a
Member has separated from employment may qualify as a Qualified Domestic
Relations Order as long as the order does not require payment before the
Member's "Earliest Retirement Age," which is the earliest date on which the
Member could elect to receive a Retirement Benefit under the Plan. If the
order requires payments to begin after a Member's Earliest Retirement Age but
before a Member's actual retirement, the amount of the payments must be
determined as if the Member began receiving benefit payments on the date on
which the payments are to begin under the order, but taking into account only
the Equivalent Actuarial Value of the Member's Retirement Benefit at that
time and not taking into account the Equivalent Actuarial Value of any
Company subsidy for Early Retirement Benefits which may at any time be
provided by the Plan under Section 8. The Retirement Benefit payable to an
Alternate Payee will not be recalculated upon the Member's actual or deemed
retirement.
(c) Alternate Payment Forms. The Domestic Relations Order may
call for the payment of the Retirement Benefit to an Alternate Payee in any
form in which benefits may be paid under the Plan to the Member, other than
in the form of a Qualified Joint and Survivor Annuity with respect to the
Alternate Payee and his or her subsequent spouse.
(d) Actuarial Calculations. The actuarial factors and assumptions
used by the Administrative Committee under Section 28 of the Plan in making
actuarial equivalency determinations for calculating the payment of benefits
before a Member's Normal Retirement Date will be used for purposes of
calculating the Equivalent Actuarial Value of the Retirement Benefit payable
to the Alternate Payee.
(e) Processing of Qualified Domestic Relations Orders. The
Administrative Committee will promptly notify the Member, and any Alternate
Payee (including any Alternate Payee who may be entitled to benefits under a
previously received Qualified Domestic Relations Order) of the receipt of any
Domestic Relations Order which could qualify as a Qualified Domestic
Relations Order. At the same time, the Administrative Committee will advise
the Member and each Alternate Payee of the Plan provisions relating to the
determination of the qualified status of such orders.
Within a reasonable period of time after receipt of a copy of the
Domestic Relations Order, the Administrative Committee will determine whether
the order is a Qualified Domestic Relations Order and notify the Member and
each Alternate Payee of its determination. The determination of the status
of a Domestic Relations Order as a Qualified Domestic Relations Order will be
made in accordance with such uniform and nondiscriminatory rules and
procedures as may be adopted by the Administrative Committee from time to
time. If monthly benefits are presently being paid with respect to a Member
named in a Domestic Relations Order which may qualify as a Qualified Domestic
Relations Order, or if the Member's Retirement Benefit becomes payable after
receipt of the order, the Administrative Committee will notify the Trustee to
segregate and hold the amounts which would be payable to the Alternate Payee
or payees designated in the order if the order is ultimately determined to be
a Qualified Domestic Relations Order.
If the Administrative Committee determines that the order is a Qualified
Domestic Relations Order within 18 months of receipt of the order, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the Alternate Payee specified
in the Qualified Domestic Relations Order. Conversely, if within the same 18
month period the Administrative Committee determines that the Domestic
Relations Order is not a Qualified Domestic Relations Order, or if the status
of the order as a Qualified Domestic Relations Order is not resolved, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the person or persons who
would have been entitled to such amounts if the order had not been entered.
If the Administrative Committee determines that a Domestic Relations Order is
a Qualified Domestic Relations Order after the close of the 18 month period
mentioned above, the determination will be applied prospectively only. The
determination of the Administrative Committee as to the status of a Domestic
Relations Order as a Qualified Domestic Relations Order will be binding and
conclusive on all interested parties, present and future, subject to the
claims review provisions of Section 19.
(f) Responsibility of Alternate Payees. Any person claiming to be
an Alternate Payee under a Qualified Domestic Relations Order will be
responsible for supplying the Administrative Committee with a certified or
otherwise authenticated copy of the order and any other information or
evidence that the Administrative Committee deems necessary in order to
substantiate the person's claim or the status of the order as a Qualified
Domestic Relations Order.<PAGE>
SECTION 23 SPECIAL SERVICE PROVISIONS FOR "AFFECTED MEMBERS".
- ---------- -------------------------------------------------
An "Affected Member," as defined in this Section 23, will be entitled to
benefits under the following paragraph (a) or (b).
(a) An "Affected Member" who completes at least 9 (but fewer than
10) Years of Service will be entitled to receive his or her Retirement
Benefit calculated on the basis of the Member's Benefit Service to the date
Service terminates; and
(b) An "Affected Member" who attains age 50 and completes 15 Years
of Service before his or her Service terminates will be entitled to his or
her Retirement Benefit without reduction for early payment under Section 8
or 9.
The provisions of this Section 23 will control regardless of any
provisions of the Terminated Plan in effect prior to December 31, 1985, to
the contrary. An "Affected Member" is a Member whose Service terminates as
a result of the closure of Company facilities which have been designated by
the Administrative Committee on or before December 31, 1985. A list of such
closed Company facilities is attached as Appendix B.<PAGE>
SECTION 24 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF BATTERY STREET
- ---------- ----------------------------------------------------------
ENTERPRISES, INC. OR ANY OF ITS SUBSIDIARIES.
--------------------------------------------
Unless otherwise required by the Act, the provisions of this Memorandum
will apply only in the case of an Employee who was treated as an active
employee of Koracorp Industries, Inc. or any of its subsidiaries on September
10, 1979 (the date such companies were acquired by Diversified Apparel
Enterprises, Inc., the predecessor of Battery Street Enterprises, Inc.) and
who became an Employee either by transferring directly to the employ of the
Company from Diversified Apparel Enterprises, Inc. or any of its
subsidiaries, or by remaining an active employee at least until December 1,
1980, when Diversified Apparel Enterprises, Inc. and certain of its
subsidiaries became Participating Companies of the Terminated Plan. Such an
Employee will accrue Service under the Plan under paragraphs (a) and (b)
below.
(a) In addition to Service as defined in Section 2.59, Service
will also include, solely for purposes of determining Years of Service under
Section 3, Section 4, Section 9, Section 10 and Section 11.2, all years and
monthly fractions of such years of continuous employment with Koracorp
Industries, Inc. or any of its subsidiaries, which was performed before the
acquisition of such companies by Diversified Apparel Enterprises, Inc.
(b) In addition to Benefit Service as defined in Section 2.9,
Benefit Service will also include all years and monthly fractions of such
years of continuous employment with Diversified Apparel Enterprises, Inc. or
any of its subsidiaries after September 10, 1979, and before December 1,
1980.<PAGE>
SECTION 25 SPECIAL SERVICE PROVISIONS FOR EMPLOYEES OF OBERMAN
- ---------- ---------------------------------------------------
MANUFACTURING COMPANY, TOP-NOTCH MANUFACTURING
----------------------------------------------
COMPANY, INCORPORATED AND MILLER BELTS LTD., INC.
------------------------------------------------
In addition to Benefit Service and Service as defined in Sections 2.9
and 2.59, respectively, Benefit Service and Service will also include:
(a) In the case of an Employee who was an active employee of
Oberman Manufacturing Company or Top-Notch Manufacturing Company,
Incorporated on the date it was acquired by LS&CO. and who became an Employee
before November 28, 1977, all years and monthly fractions of such years of
continuous employment with said acquired corporation commencing after June 1,
1966, and ending prior to its acquisition by LS&CO.
(b) All years and monthly fractions of such years of continuous
employment with Miller Belts Ltd., Inc. after its acquisition by LS&CO.
(subject to the break in service rules of the Pension Plan of Miller Belts
Ltd., Inc. as it existed on November 28, 1976), by an Employee in the service
of Miller Belts Ltd., Inc. on the date of its acquisition by LS&CO.<PAGE>
SECTION 26 SPECIAL SERVICE AND BENEFIT PROVISIONS FOR CERTAIN
- ---------- --------------------------------------------------
FORMER EMPLOYEES OF ASIAN PACIFIC INDUSTRIES, INC.
-------------------------------------------------
(a) Service Provision. In the case of an employee who became an
Employee as a result of the acquisition of the assets of Asian Pacific
Industries, Inc. on December 31, 1986, Service as defined in Section 2.59
will include employment with Asian Pacific Industries, Inc. and its
subsidiaries and affiliates before such acquisition to the same extent as if
such employment had been with the Company. Employment with Asian Pacific
Industries, Inc. and its subsidiaries and affiliates before such acquisition
will not, however, be counted for purposes of determining a Member's Benefit
Service under Section 2.9.
(b) Benefit Provision. In the case of a Member who participated
in the Levi Strauss & Co. Retirement Plan for Brittania Employees, the
Member's Retirement Benefit under the Plan will consist of the Member's
frozen benefit under the Levi Strauss & Co. Retirement Plan for Brittania
Employees as of November 30, 1989, which was transferred to this Plan, plus
the Member's Retirement Benefit accrued under the Plan on and after December
1, 1989. Such a Member will not be entitled to accrue Benefit Service under
this Plan for the period during which he or she was a participant in the Levi
Strauss & Co. Retirement Plan for Brittania Employees.<PAGE>
SECTION 27 EARLY RETIREMENT SUPERVISOR BUY OUT BENEFIT.
- ---------- -------------------------------------------
Effective November 1, 1992, a Member who is a supervisor of the Employer
and whose job is displaced due to alternative manufacturing or self-managed
work teams before the end of the Plan year which ends in 1994 will be
entitled to an enhanced Early Retirement Supervisor Buy Out Benefit as
determined below:
(a) Unreduced Early Retirement Supervisor Buy Out Benefit.
If the Member is between the ages of 50 and 55, and the sum of the
Member's attained age plus Years of Service equals or exceeds 80, he or
she will be entitled to receive an Early Retirement Supervisor Buy Out
Benefit equal to 100% of his or her Retirement Benefit.
(b) 70% Reduced Early Retirement Supervisor Buy Out Benefit.
If the Member is between the ages of 50 and 55 and has completed at
least 15 Years of Service, he or she will be entitled to receive an
Early Retirement Supervisor Buy Out Benefit equal to 70% of his or her
Retirement Benefit.
(c) 42% Reduced Early Retirement Supervisor Buy Out Benefit.
If the Member is between the ages of 50 and 55 and has completed at
least 5 but less than 15 Years of Service, he or she will be entitled to
receive an Early Retirement Supervisor Buy Out Benefit equal to 42% of
his or her Retirement Benefit.
Payment of a Member's enhanced Early Retirement Supervisor Buy Out Benefit
will begin on the last day of the month in which the Member's Early
Retirement Date occurs.
If the Administrative Committee determines that a Member who is eligible to
retire on an Early Retirement Date has engaged in any act of Misconduct while
in Service, the Early Retirement Supervisor Buy Out Benefit payable to the
Member will be the Equivalent Actuarial Value of his or her accrued
Retirement Benefit.<PAGE>
SECTION 28 ACTUARIAL EQUIVALENCE FACTORS.
- ---------- -----------------------------
Unless otherwise specified in the Plan, the following actuarial
assumptions will be used for purposes of calculating various forms of benefit
under the Plan:
(a) Mortality:
(i) Except as provided in paragraph (ii), the Mortality
Table used under the Plan will be the 1983 Group Annuity Mortality
Table, assuming a relevant population that consists of 50% males and 50%
females.
(ii) For purposes of determining the Actuarial Equivalent of
benefits which begin to be paid before a Member's Normal Retirement Date
under the Plan, the mortality table used will be the 1951 Group Annuity
table on a female basis. The resulting factors will be rounded to the
next higher percentage.
(b) Interest Rate:
(i) For purposes of calculating a single sum payment made
after November 1, 1992, under Section 12.3 or Section 12.5, the interest
rate used under the Plan will equal the interest rate or rates that
would be used by the PBGC for purposes of determining the present value
of a lump sum distribution on plan termination, determined as of the
first day of the month during which the notice of the optional forms of
benefit payable under the Plan and election form described in Section
13.2 is distributed (or would otherwise be distributed to the Member if
the single sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500) which will not be more than 120 days before the
Annuity Starting Date.
(ii) For single sum distributions made during the period
beginning November 1, 1991, and ending on November 1, 1992, the interest
rate used under the Plan will equal whichever of the rates described in
(A) or (B) below which produces the greater single sum benefit:
(A) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the notice
of the optional forms of benefit payable under the Plan and
election form described in Section 13.2 is distributed to the
Member (or would otherwise be distributed to the Member if the
lump sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500); or
(B) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the
distribution occurs.
(iii) For single sum distributions made before November 1,
1991, the interest rate or rates used under the Plan will equal the
interest rate or rates used by the PBGC for purposes of determining the
present value of a lump sum on plan termination, determined as of the
first day of the month in which the distribution occurs.
(iv) For purposes of calculating all other optional forms of
benefit under the Plan, the interest rate used will be 7%.
(v) For purposes of determining the Equivalent Actuarial
Value of Retirement Benefit payments beginning before a Member's Normal
Retirement Date under the Plan, the interest rate used will be 6%.<PAGE>
SECTION 29 TOP HEAVY BENEFITS.
- ---------- ------------------
If the Plan becomes "Top Heavy," the provisions of this Section 29 will
become operative. The Plan will be Top Heavy for a Plan Year if, on the last
day of the prior Plan Year (the "Determination Date"), more than 60% of the
present value of the "Accrued Benefits" under the Plan are credited to or
allocable to "Key Employees." For purposes of determining the present value
of a Member's Accrued Benefit, turnover is to be ignored. The Plan will be
"Super Top Heavy" if, on the Determination Date, more than 90% of the present
value of the Accrued Benefits under the Plan are credited or allocable to Key
Employees.
"Accrued Benefit" means the value of the Member's Retirement Benefit as
determined under Section 5 of the Plan (and the Member's accrued benefit
determined under any other defined benefit plans which are members of a
"Required Aggregation Group" of which this Plan is also a member). The
Member's Accrued Benefit will be increased by any distributions made to the
Member during the 5-year period ending on the Determination Date; except,
that the Accrued Benefit of a Member who has not performed any services for
the Company or an Affiliated Company during such 5-year period and the
Accrued Benefit of any Member who was formerly a Key Employee will be
disregarded. The present value will be determined as of the most recent
"Valuation Date" that is within the 12-month period ending on the
"Determination Date" and as described in the Regulations under the Code,
using an interest rate of 7% per year and the 1983 Group Annuity Mortality
Table, assuming a relevant population that consists of 50% males and 50%
females. In determining the present value, benefits not related to
retirement benefits will be excluded, and subsidized early retirement
benefits and subsidized benefit options will be excluded unless deemed to be
nonproportional subsidies as described in the Regulations under the Code.
The Valuation Date is the same as the valuation date used for determining
minimum funding standards under section 412 of the Code, whether or not a
valuation was performed during the year.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee determines (in its sole and absolute
discretion, but under the provisions of section 416 of the Code) that the
Plan is a constituent in an "Aggregation Group" this Plan will be considered
Top Heavy or Super Top Heavy only if the Aggregation Group is a "Top Heavy
Group" or a "Super Top Heavy Group." An "Aggregation Group" includes:
(a) Each plan intended to qualify under section 401(a) of the Code
sponsored by the Company or an Affiliated Company in which 1 or more Key
Employees participate;
(b) Each other plan of the Company or an Affiliated Company that
is considered in conjunction with such plans in determining whether or not
the discrimination and coverage requirements of section 401(a)(4) and section
410 of the Code are satisfied; and
(c) In the discretion of the Administrative Committee, any other
such plan of the Company or an Affiliated Company, which, when considered in
conjunction with the plans referred to above, satisfies the nondiscrimination
and coverage requirements of section 401(a)(4) and section 410 of the Code.
A "Top Heavy Group" is an Aggregation Group in which the sum (determined
as of the Determination Date) of the present value of the cumulative Accrued
Benefits for Key Employees (as determined by the Administrative Committee)
under all "defined benefit plans" (as defined in section 414(j) of the Code)
included in such group plus the aggregate of the amounts credited to accounts
of Key Employees under all "defined contribution plans" (as defined in
section 414(i) of the Code) included in such group, exceed 60% of the total
of such amounts for all Employees and Beneficiaries covered by such plans.
A "Super Top Heavy Group" is an Aggregation Group for which the sum so
determined for Key Employees exceeds 90% of the sum so determined for all
Employees and Beneficiaries. Such determination will be made in accordance
with section 416 of the Code.
If the Plan becomes Top Heavy, then the Retirement Benefit credited to
each Participant other than a Key Employee will not be less than the product
of:
(a) The percentage which is the lesser of:
(i) 2% multiplied by the Participant's Years of Service (as
determined in accordance with this Section 29) or
(ii) 20%; and
(b) The Participant's "Average Yearly Compensation."
A Member's Years of Service will not include Years of Service beginning
before January 1, 1984, or Years of Service ending in a Plan Year during
which the Plan is not Top Heavy. The "Average Yearly Compensation" of a
Member will be the average rate of annual Compensation in effect for a Member
during the 5 consecutive calendar years in which the Member's Compensation is
the greatest, excluding Plan Years ending before January 1, 1984, and Plan
Years beginning after the last Plan Year during which the Plan was Top Heavy.
"Compensation" means compensation as defined in section 414(q)(7) of the
Code.
If the Plan becomes Top Heavy, the Vested Retirement Benefit of a Member
who terminates Service with the Company or an Affiliated Company before his
or her Normal Retirement Date or death will be equal to the percentage of his
or her Accrued Benefit determined under the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
If the Plan at any time is Top Heavy and later ceases to be Top Heavy,
each Member who is credited with less than 2 Years of Service as of the last
day of the last Plan Year in which the Plan is Top Heavy will have his or her
Vested Retirement Benefit determined under Section 2.70 (unless and until the
Plan again becomes Top Heavy). If a Member has at least 3 Years of Service
on the last day of the last Plan Year in which the Plan is Top Heavy, for
each future Plan Year his or her Vested Retirement Benefit will be calculated
in accordance with this Section 29 as though the Plan were Top Heavy. If a
Member does not have at least 3 Years of Service on the last day of the last
Plan Year in which the Plan is Top Heavy, his or her Vested Retirement
Benefit for each future Plan Year will be calculated in accordance with
Section 2.70.<PAGE>
SECTION 30 GENERAL LIMITATIONS AND PROVISIONS.
- ---------- ----------------------------------
30.1 No Employment Right. Nothing contained in the Plan will give any
employee the right to be retained in the employment of the Company or any
Affiliated Company or affect the right of any such employer to dismiss any
employee. The adoption and maintenance of the Plan will not constitute a
contract between the Company and any employee or consideration for, or an
inducement to or condition of, the employment of any employee.
30.2 Payments from the Trust Fund. The Trust Fund will be the sole
source of benefits under the Plan and, except as otherwise required by the
Act, the Company, the Administrative Committee and the Investment Committee
assume no liability or responsibility for payment of such benefits. Each
Member, Surviving Spouse, Domestic Partner, Beneficiary or other person who
will claim the right to any payment under the Plan will be entitled to look
only to the Trust Fund for such payment and will not have the right, claim or
demand against the Company, the Administrative Committee or the Investment
Committee or any member of the Committees, or any employee or member of the
Board of Directors.
30.3 Payments to Minors or Incompetents. If the Administrative
Committee finds that any person to whom any amount is payable under the Plan
is unable to care for his or her affairs because of illness or accident, or
is a minor, or has died, then any payment due him or her or his or her estate
(unless a prior claim for such amount has been made by a duly appointed legal
representative) may, if the Administrative Committee so elects, be paid to
his or her spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Administrative
Committee to be a proper recipient on behalf of such person otherwise
entitled to payment. Any such payment will be a complete discharge of the
liability of the Plan and the Trust Fund.
30.4 Lost Members or Beneficiaries. If the Administrative Committee is
unable to locate a Member, Surviving Spouse, Domestic Partner or Beneficiary
who is entitled to receive any amount payable under the Plan, the
Administrative Committee may (but need not) direct that such amount be
applied to reduce the contributions of the Participating Companies to the
Plan. If the Member, Surviving Spouse, Domestic Partner or Beneficiary later
makes a claim for such amount before the date final distributions are made
from the Trust Fund following termination of the Plan, such amount (without
income, gains or other adjustment) will be reinstated and paid to him or her
as provided in Section 12. However, if any amount would have been lost by
reason of escheat under applicable state law, then such amount will not be
subject to reinstatement. If the Plan is terminated and final distributions
are made from the Trust Fund before the applicable escheat period with
respect to a lost Member, Surviving Spouse, Domestic Partner or Beneficiary
has expired, the Administrative Committee may direct the transfer of any such
person's unclaimed benefit to an individual retirement account.
30.5 Personal Data to the Administrative Committee. Each Member must
file with the Administrative Committee such pertinent information concerning
himself or herself, his or her spouse, his or her Domestic Partner, his or
her Beneficiary or any other person as the Administrative Committee may
specify, and no member, Surviving Spouse, Domestic Partner, Beneficiary or
other person will have any rights to any benefit under the Plan unless such
information is filed by or with respect to him or her. The Administrative
Committee is entitled to rely on personal data given to it by a Member.
30.6 Insurance Contracts. If the payment of any benefit under the Plan
is provided for by a contract with an insurance company the payment of such
benefit will be subject to all the provisions of such contract.
30.7 Notice to the Administrative Committee. All elections,
designations, requests, notices, instructions and other communications from
a Participating Company, a Member, Beneficiary, Surviving Spouse, Domestic
Partner or other person to the Administrative Committee, required or
permitted under the Plan, will be:
(a) In such form as is prescribed from time to time by the
Administrative Committee;
(b) Mailed by first-class mail or delivered to such location as
will be specified by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual
receipt by the Administrative Committee at such location.
30.8 Notices to Members and Beneficiaries. All notices, statements,
reports and other communications from a Participating Company or the
Administrative Committee or Investment Committee to any employee, Member,
Beneficiary or other person (other than the Administrative Committee)
required or permitted under the Plan will be deemed to have been duly given
when delivered to, or when mailed by first-class mail, postage prepaid and
addressed to, such employee, Member, Beneficiary or other person at his or
her address last appearing on the records of the Administrative Committee.
30.9 Word Usage. Whenever used in the Plan, the masculine gender
includes the feminine, and wherever the context of the Plan dictates, the
plural will be read as the singular and the singular as the plural. Uses of
the term "Sections" as a cross-reference will be to other Sections contained
in the Plan and not to another instrument, document or publication unless
specifically stated otherwise.
30.10 Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construing the
provisions of the Plan.
30.11 Governing Law. The Plan and all rights under the Plan will be
governed by and construed in accordance with California law except to the
extent such law is preempted by the Code and the Act.
30.12 Heirs and Successors. All of the provisions of the Plan will be
binding upon all persons who will be entitled to any benefits under the Plan,
their heirs and legal representatives.
30.13 Withholding. Payment of benefits under this Plan will be subject
to applicable law governing the withholding of taxes from benefit payments,
and the Trustee and Administrative Committee will be authorized to withhold
taxes from the payment of any benefits under the Plan, in accordance with
applicable law.
IN WITNESS WHEREOF, LEVI STRAUSS ASSOCIATES INC. has caused this Plan to
be executed and its corporate seal to be hereunto affixed by its duly
authorized officers, as of this _____ day of _______________, 1993.
LEVI STRAUSS ASSOCIATES INC.
By:
------------------------------
Its:
------------------------
ATTEST:
By:
---------------------------------------------<PAGE>
APPENDIX A
EFFECTIVE DATES BY EMPLOYMENT LOCATION FOR
SECTION 8.1(a) AND SECTION 10.2(a)
----------------------------------
This Appendix A lists the employment locations and facility numbers
applicable to certain Members as of the date of the execution of this Plan.
Such employment locations and facility numbers may change from time to time.
If this occurs, a revised Appendix A will be attached to, and become a part
of, this Plan.
<TABLE>
<CAPTION>
Sections
8.1(a) and
First Second 10.2(a)
Local Local Effective
Plant Union # Union # Date
- -------------------------- ------- ------- ----------
<S> <C> <C> <C> <C>
2S Canton D.C. 2 0 7/15/89
4S Henderson D.C. 0 0 7/15/89
11S Little Rock D.C. 1162 0 5/15/90
15S Florence D.C. 1899 0 7/15/89
59M Memphis Cutting 965 0 7/15/89
390M Richardson 0 0 7/15/89
501M Albuquerque 0 0 7/15/89
502B Charlotte ORTD 0 0 11/28/88
503B ORTD North Little R 0 0 11/28/88
505M El Paso Goodyear 0 0 7/15/89
506B El Paso ORTD 0 0 11/28/89
510B Levi Strauss EPP 0 0 7/15/89
511M El Paso 0 0 7/15/89
512M Brownsville 0 0 7/15/89
512B Amarillo ORTD 0 0 11/28/88
513M Blue Ridge 0 0 7/15/89
515M Centerville 0 0 7/15/89
520M El Paso Airways 0 0 7/15/89
522M El Paso 0 0 7/15/89
524M El Paso-West 885 0 7/15/89
525M El Paso-East 0 0 7/15/89
527M Fayetteville 650 0 7/15/89
528M Harlingen 2286 0 7/15/89
530M Harrison 632 0 7/15/89
531M Johnson City 0 0 7/15/89
532M Knoxville 392 0 4/15/90
543M Morrilton 633 0 7/15/89
544M McAllen 2288 0 7/15/89
546M Murphy 0 0 7/15/89
548M Powell 491 0 4/15/90
549M Roswell 0 0 7/15/89
552M San Angelo 0 0 7/15/89
553M San Benito 0 0 7/15/89
554M San Antonio 1158 0 7/15/89
555M San Francisco 131 0 8/15/90
561M San Antonio 0 0 7/15/89
573M Mountain City 0 0 7/15/89
575M Valdosta 714 528 7/15/89
581M Warsaw 0 0 7/15/89
585M Wichita Falls 259 0 7/15/89
601F Amarillo SP 0 0 7/15/89
611F Knoxville 392 0 4/15/90
614F San Antonio Laundry 0 0 7/15/89
619F McAllen Laundry 0 0 7/15/89
621F San Antonio Laundry 0 0 7/15/89
633F Little Rock Rescreen 1162 0 7/15/89
680F El Paso 7/15/89
/TABLE
<PAGE>
APPENDIX B
LIST OF CLOSED COMPANY FACILITIES
FOR PURPOSES OF SECTION 23
--------------------------
<TABLE>
<CAPTION>
NBR. NAME
---- ----
<S> <C>
020M CORPUS CHRISTI
037S AMARILLO D.C.
091M STAR CITY
270B GARFIELD
366M PUERTO RICO
416S AMARILLO D.C.
502M ALBUQUERQUE
504M AMARILLO
510M BLACKSTONE
514M BEAUFORT
516M CAMPAIGN
517M CLOVIS
518M BYRDSTOWN
521M DENISON
523M ELIZABETHTON
529M HOBBS
536M MARYVILLE
538M WYNNE
539M & 059M MEMPHIS
541M MIDLAND
542M MACON
547M PLAINVIEW
550M RAMER
557M GREENSBORO
558M SAN JOSE
561M SAN ANTONIO
571M TYLER
572M GREENSBORO
588M CHARLESTON
606F BYRDSTOWN
608F LITTLE ROCK
900M GARLAND
901M SUNBURY
902M NEWARK
/TABLE
<PAGE>
<PAGE>
Exhibit 10l
-----------
LEVI STRAUSS ASSOCIATES INC.
RETIREMENT PLAN FOR OVER-THE-ROAD
TRUCK DRIVERS AND DISPATCHERS
As Amended and Restated
Effective November 27, 1989<PAGE>
LEVI STRAUSS ASSOCIATES INC.
RETIREMENT PLAN FOR OVER-THE-ROAD
TRUCK DRIVERS AND DISPATCHERS
As Amended and Restated
Effective November 27, 1989
TABLE OF CONTENTS
Page
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN
APPLIES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Persons to Whom Plan Applies. . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 "Actuary" . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 "Administrative Committee". . . . . . . . . . . . . . . . . 3
2.4 "Affiliated Company". . . . . . . . . . . . . . . . . . . . 3
2.5 "Alternate Payee" . . . . . . . . . . . . . . . . . . . . . 3
2.6 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . 3
2.7 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 "Benefit Service" . . . . . . . . . . . . . . . . . . . . . 4
2.9 "Board of Directors". . . . . . . . . . . . . . . . . . . . 4
2.10 "Break in Service". . . . . . . . . . . . . . . . . . . . . 5
2.11 "Casual Employee" . . . . . . . . . . . . . . . . . . . . . 5
2.12 "Code". . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 "Common-Law Spouse" . . . . . . . . . . . . . . . . . . . . 5
2.15 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 "Deferred Retirement Benefit" . . . . . . . . . . . . . . . 5
2.17 "Deferred Retirement Date" or "Deferred Retirement" . . . . 5
2.18 "Disability Retirement Benefit" . . . . . . . . . . . . . . 5
2.19 "Domestic Partner". . . . . . . . . . . . . . . . . . . . . 6
2.20 "Domestic Relations Order". . . . . . . . . . . . . . . . . 6
2.21 "Early Retirement Age". . . . . . . . . . . . . . . . . . . 6
2.22 "Early Retirement Benefit". . . . . . . . . . . . . . . . . 6
2.23 "Early Retirement Date" or "Early Retirement" . . . . . . . 6
2.24 "Effective Date". . . . . . . . . . . . . . . . . . . . . . 6
2.25 "Employee". . . . . . . . . . . . . . . . . . . . . . . . . 6
2.26 "Employee Retirement Plan". . . . . . . . . . . . . . . . . 7
2.27 "Equivalent Actuarial Value". . . . . . . . . . . . . . . . 7
2.28 "High-3 Year Average Compensation". . . . . . . . . . . . . 7
2.29 "Highly Compensated Employee" . . . . . . . . . . . . . . . 9
2.30 "Highly Compensated Former Employee". . . . . . . . . . . . 11
2.31 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . 12
2.32 "Investment Committee". . . . . . . . . . . . . . . . . . . 12
2.33 "Investment Manager". . . . . . . . . . . . . . . . . . . . 12
2.34 "IRS" . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.35 "Labor Department". . . . . . . . . . . . . . . . . . . . . 12
2.36 "Legally Married" . . . . . . . . . . . . . . . . . . . . . 12
2.37 "LS&CO.". . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.38 "Member". . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.39 "Membership Date" . . . . . . . . . . . . . . . . . . . . . 12
2.40 "Misconduct". . . . . . . . . . . . . . . . . . . . . . . . 12
2.41 "Normal Retirement Age" . . . . . . . . . . . . . . . . . . 13
2.42 "Normal Retirement Benefit" . . . . . . . . . . . . . . . . 13
2.43 "Normal Retirement Date" or "Normal Retirement" . . . . . . 13
2.44 "Participating Company" . . . . . . . . . . . . . . . . . . 13
2.45 "PBGC". . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.46 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.47 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . 14
2.48 "Qualified Domestic Relations Order". . . . . . . . . . . . 14
2.49 "Qualified Joint and Survivor Annuity". . . . . . . . . . . 14
2.50 "Regulations" . . . . . . . . . . . . . . . . . . . . . . . 14
2.51 "Rehire Anniversary Year" . . . . . . . . . . . . . . . . . 14
2.52 "Required Beginning Date" . . . . . . . . . . . . . . . . . 14
2.53 "Retiree Coordinator" . . . . . . . . . . . . . . . . . . . 15
2.54 "Retirement Benefit". . . . . . . . . . . . . . . . . . . . 15
2.55 "Retirement Date" . . . . . . . . . . . . . . . . . . . . . 15
2.56 "Service" . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.57 "Social Security Retirement Age". . . . . . . . . . . . . . 17
2.58 "Straight Life Annuity" . . . . . . . . . . . . . . . . . . 17
2.59 "Surviving Spouse". . . . . . . . . . . . . . . . . . . . . 17
2.60 "Survivor Annuity". . . . . . . . . . . . . . . . . . . . . 17
2.61 "Totally and Permanently Disabled" or "Total and
Permanent Disability" . . . . . . . . . . . . . . . . . . 17
2.62 "Trust Agreement" . . . . . . . . . . . . . . . . . . . . . 17
2.63 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . . 18
2.64 "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.65 "Unmarried Partner" . . . . . . . . . . . . . . . . . . . . 18
2.66 "Vested Retirement Benefit" . . . . . . . . . . . . . . . . 18
2.67 "Vested Retirement Benefit Payment Date". . . . . . . . . . 19
2.68 "Year of Service" . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3 MEMBERSHIP AND TRANSFERS. . . . . . . . . . . . . . . . . . 20
3.1 Commencement of Membership. . . . . . . . . . . . . . . . . 20
3.2 Termination of Membership . . . . . . . . . . . . . . . . . 20
3.3 Rehired Members . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Rehired Employees.. . . . . . . . . . . . . . . . . . . . . 21
SECTION 4 RETIREMENT DATE . . . . . . . . . . . . . . . . . . . . . . 22
4.1 Normal Retirement Date. . . . . . . . . . . . . . . . . . . 22
4.2 Early Retirement Date . . . . . . . . . . . . . . . . . . . 22
4.3 Deferred Retirement Date. . . . . . . . . . . . . . . . . . 22
4.4 Postponement of Retirement Benefits . . . . . . . . . . . . 22
SECTION 5 RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . . . . 24
5.1 Basic Retirement Benefit. . . . . . . . . . . . . . . . . . 24
5.2 Coordination of Retirement Benefits . . . . . . . . . . . . 24
5.3 Retirement Benefit of Certain Reemployed
Members . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6 NORMAL RETIREMENT BENEFIT . . . . . . . . . . . . . . . . . 26
6.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 26
6.2 Termination of Employment after Normal Retirement
Age . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7 EARLY RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . 27
7.1 Payment of Early Retirement Benefit . . . . . . . . . . . . 27
7.2 Postponement of Early Retirement Benefit. . . . . . . . . . 28
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT. . . . . . . . . . 29
8.1 Payment of Vested Retirement Benefits . . . . . . . . . . . 29
8.2 Early Payment of Vested Retirement Benefits . . . . . . . . 29
8.3 Death Before the Payment of Vested Retirement
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Limitation on Vested Retirement Benefit
Eligibility . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 DISABILITY BEFORE RETIREMENT. . . . . . . . . . . . . . . . 31
9.1 Eligibility for Disability Benefit. . . . . . . . . . . . . 31
9.2 Disability Retirement Benefit . . . . . . . . . . . . . . . 31
9.3 Disability Service. . . . . . . . . . . . . . . . . . . . . 32
9.4 Forfeiture or Reduction of Disability Retirement
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 10 DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Survivor Annuity. . . . . . . . . . . . . . . . . . . . . . 36
10.2 Amount of Survivor Annuity. . . . . . . . . . . . . . . . . 36
10.3 Entitlement to Death Benefit. . . . . . . . . . . . . . . . 37
SECTION 11 METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . . . 38
11.1 Normal Form of Benefit for Married Members. . . . . . . . . 38
11.2 Normal Form of Benefit for Single Members . . . . . . . . . 38
11.3 Optional Forms of Benefit . . . . . . . . . . . . . . . . . 38
11.4 Limitation on Optional Forms of Benefit . . . . . . . . . . 40
11.5 Mandatory Cash Out of Benefits Less than $3,500 . . . . . . 40
11.6 Reduction of Benefits . . . . . . . . . . . . . . . . . . . 40
SECTION 12 BENEFIT ELECTIONS.. . . . . . . . . . . . . . . . . . . . . 41
12.1 Election of Optional Forms of Benefits. . . . . . . . . . . 41
12.2 Written Explanation and Election Form . . . . . . . . . . . 41
12.3 Applicable Election Period and Form of Election . . . . . . 42
12.4 Special Circumstances Governing Elections . . . . . . . . . 43
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS. . . . . . . . . . . . . 46
13.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 46
13.2 Suspension of Benefits. . . . . . . . . . . . . . . . . . . 47
SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT. . . . . . . . . . . . 49
14.1 Scope of Limitations on Benefits. . . . . . . . . . . . . . 49
14.2 Basic Limitations on Benefits . . . . . . . . . . . . . . . 49
14.3 Adjustments to Limitations. . . . . . . . . . . . . . . . . 49
14.4 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . 50
14.5 TRA 86 Protected Benefits . . . . . . . . . . . . . . . . . 51
14.6 Multiple Plans. . . . . . . . . . . . . . . . . . . . . . . 51
14.7 Special Limitations on Benefits . . . . . . . . . . . . . . 51
SECTION 15 BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 16 FUNDING AND CONTRIBUTIONS . . . . . . . . . . . . . . . . . 54
16.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . 54
16.2 Actuarial Assumptions . . . . . . . . . . . . . . . . . . . 54
16.3 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . 54
16.4 Expenses of the Plan. . . . . . . . . . . . . . . . . . . . 54
SECTION 17 ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . 56
17.1 Administrative Committee. . . . . . . . . . . . . . . . . . 56
17.2 Control and Management of Plan Assets . . . . . . . . . . . 56
17.3 Trustees and Investment Managers. . . . . . . . . . . . . . 57
17.4 Committee Membership. . . . . . . . . . . . . . . . . . . . 57
17.5 Reports to Board of Directors . . . . . . . . . . . . . . . 58
17.6 Employment of Advisers. . . . . . . . . . . . . . . . . . . 58
17.7 Limitations on Committee Actions. . . . . . . . . . . . . . 58
17.8 Committee Meetings. . . . . . . . . . . . . . . . . . . . . 58
17.9 Accounting and Disbursement of Plan Assets. . . . . . . . . 59
SECTION 18 CLAIMS AND REVIEW PROCEDURES. . . . . . . . . . . . . . . . 60
18.1 Applications for Benefits . . . . . . . . . . . . . . . . . 60
18.2 Denial of Applications. . . . . . . . . . . . . . . . . . . 60
18.3 Requests for Review . . . . . . . . . . . . . . . . . . . . 60
18.4 Decisions on Review . . . . . . . . . . . . . . . . . . . . 61
18.5 Exhaustion of Administrative Remedies . . . . . . . . . . . 61
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION . . . . . . . . . . . 62
19.1 Termination by Participating Company. . . . . . . . . . . . 62
19.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 62
19.3 IRS Termination Procedure . . . . . . . . . . . . . . . . . 63
19.4 PBGC Termination Procedure. . . . . . . . . . . . . . . . . 63
19.5 Termination of the Plan . . . . . . . . . . . . . . . . . . 64
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND
TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 65
20.1 Right to Amend. . . . . . . . . . . . . . . . . . . . . . . 65
20.2 Plan Merger or Consolidation. . . . . . . . . . . . . . . . 65
20.3 Termination of the Plan . . . . . . . . . . . . . . . . . . 65
20.4 Partial Termination of the Plan . . . . . . . . . . . . . . 66
20.5 Manner of Distribution. . . . . . . . . . . . . . . . . . . 66
SECTION 21 INALIENABILITY OF BENEFITS. . . . . . . . . . . . . . . . . 67
21.1 No Assignment Permitted . . . . . . . . . . . . . . . . . . 67
21.2 Return of Contributions . . . . . . . . . . . . . . . . . . 68
21.3 Qualified Domestic Relations Orders . . . . . . . . . . . . 68
SECTION 22 ACTUARIAL EQUIVALENCE FACTORS . . . . . . . . . . . . . . . 71
SECTION 23 TOP HEAVY BENEFITS. . . . . . . . . . . . . . . . . . . . . 73
SECTION 24 GENERAL LIMITATIONS AND PROVISIONS. . . . . . . . . . . . . 76
24.1 No Employment Right . . . . . . . . . . . . . . . . . . . . 76
24.2 Payments from the Trust Fund. . . . . . . . . . . . . . . . 76
24.3 Payments to Minors or Incompetents. . . . . . . . . . . . . 76
24.4 Lost Members or Beneficiaries . . . . . . . . . . . . . . . 76
24.5 Personal Data to the Administrative Committee . . . . . . . 77
24.6 Insurance Contracts . . . . . . . . . . . . . . . . . . . . 77
24.7 Notice to the Administrative Committee. . . . . . . . . . . 77
24.8 Notices to Members and Beneficiaries. . . . . . . . . . . . 77
24.9 Word Usage. . . . . . . . . . . . . . . . . . . . . . . . . 78
24.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 78
24.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 78
24.12 Heirs and Successors. . . . . . . . . . . . . . . . . . . . 78
24.13 Withholding . . . . . . . . . . . . . . . . . . . . . . . . 78<PAGE>
LEVI STRAUSS ASSOCIATES INC.
RETIREMENT PLAN FOR OVER-THE ROAD
---------------------------------
TRUCK DRIVERS AND DISPATCHERS
-----------------------------
As Amended and Restated
Effective November 27, 1989
SECTION 1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
- --------- ---------------------------------------------
1.1 Introduction. On November 29, 1976, Levi Strauss Associates Inc.
adopted the Levi Strauss Associates Inc. Retirement Plan for Over-the-Road
Truck Drivers and Dispatchers (the "Plan") to provide retirement benefits to
eligible employees ("Employees") of Levi Strauss & Co. and other
Participating Companies (collectively referred to as the "Company"), or to
the beneficiaries of Employees, and thereby to encourage Employees to make
and continue careers with the Company, as described in this Plan document and
in the Trust Agreement adopted as a part of this Plan. The Plan was most
recently amended and restated effective November 28, 1988.
By this instrument Levi Strauss Associates Inc. amends and restates the
Plan to comply with the Tax Reform Act of 1986, as amended, and related
legislation. The provisions of this amended and restated Plan will generally
be effective November 27, 1989, except as specifically stated otherwise in
this document (the "Effective Date"). Levi Strauss Associates Inc. intends
that the Plan as so amended and restated and the Trust Fund established under
the Plan, will continue to qualify as a plan and trust which meet the
requirements of sections 401(a) and 501(a), respectively, of the Internal
Revenue Code of 1986, as amended.
1.2 Persons to Whom Plan Applies. This Plan document is not a new
Plan which succeeds the Plan as previously in effect, but it is an amendment
and restatement of the Plan as in effect before the Effective Date. The
amount, right to and form of any benefits under the Plan, of each Member who
is an Employee on and after the Effective Date, or of persons who are
claiming through such a Member, will be determined under this Plan. The
amount, right to and form of any benefits under this Plan, of each Member who
has separated from Service with the Company before the Effective Date, or of
persons who are claiming benefits through such a Member, will be determined
in accordance with the provisions of the Plan in effect on the date of the
Member's separation from Service, except as may otherwise be expressly
provided under this Plan, unless the Member again becomes an Employee on or
after the Effective Date. This amended and restated Plan will not reduce any
Member's Retirement Benefit under the Plan, as determined on the date
immediately preceding the Effective Date, and this Plan will be construed
accordingly.<PAGE>
SECTION 2 DEFINITIONS.
- --------- -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Act" means the Employee Retirement Income Security Act of 1974,
as amended, and any Regulations or rulings issued under the Act.
2.2 "Actuary" means the enrolled actuary (within the meaning of the
Act) engaged by the Administrative Committee.
2.3 "Administrative Committee" means the committee appointed to
administer the Plan as described in Section 17.1.
2.4 "Affiliated Company" means:
(a) A corporation that is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes Levi
Strauss Associates Inc.;
(b) Any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with Levi Strauss
Associates Inc.;
(c) An organization (whether or not incorporated) that is a member
of an affiliated service group (as defined in section 414(m) of the Code)
which includes Levi Strauss Associates Inc.;
(d) Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; and
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
2.5 "Alternate Payee" means the spouse, former spouse, child or other
dependent of a Member who is recognized by a Qualified Domestic Relations
Order as having the right to receive all, or a portion of, the Member's
Retirement Benefit.
2.6 "Annuity Starting Date" means the first day of the first month for
which an amount is payable to a Member as an annuity. The Annuity Starting
Date for a Member who elects (with the consent of his or her spouse if the
Member is legally married) to receive his or her Retirement Benefit in a form
other than an annuity in accordance with Section 11.3 is the first day on
which all events (including the passing of the day on which benefit payments
are scheduled to begin) have occurred which entitle the Member to receive his
or her first benefit payment from the Plan.
2.7 "Beneficiary" means the beneficiary or beneficiaries designated by
a Member or otherwise under Section 11.3 and Section 15 (or such other person
or persons as may be designated as such under applicable law) to receive the
amount, if any, payable under the Plan upon the Member's death.
2.8 "Benefit Service" means the number of Years of Service and
fractions of such years completed after November 29, 1976, and before a
Member's Retirement Date during which the Member was an Employee. For this
purpose, a Member will accrue a full month of Benefit Service for every
calendar month in which he or she is credited with at least 1 Hour of Service
or in which he or she otherwise has Service. Years of Service and fractions
of such years will be determined by the Administrative Committee based on
such months of Benefit Service.
Benefit Service with respect to a Member who is Totally and Permanently
Disabled, will include any additional Benefit Service credited under Section
9.3.
Benefit Service with respect to a Member who is on a military leave of
absence will include any Benefit Service required to be credited under the
Military Selective Services Act, as amended, or any other federal law of
similar import. If a Member who is on a military leave of absence becomes
Totally and Permanently Disabled, and the Member has at least 5 Years of
Service, Benefit Service with respect to the Member will include any
additional Benefit Service the Member elects to receive, or is required to
receive, under Section 9.3 in lieu of the Disability Retirement Benefit
payable under Section 9.2.
Benefit Service with respect to a Member who is reemployed by the
Company as an Employee or a Casual Employee after his or her Vested
Retirement Payment Date, Early Retirement Date, Normal Retirement Date, or
Deferred Retirement Date, will mean the number of Years of Service and
fractions of such years during which the Member is so reemployed, determined
under Section 13.2 of the Plan. Years of Service will be determined by the
Administrative Committee based on such months of Benefit Service. Such
additional Benefit Service will be added to the Member's Benefit Service
earned before his or her Vested Retirement Payment Date, Early Retirement
Date, Normal Retirement Date, or Deferred Retirement Date as provided in
Section 5.3. A Member who retires and is reemployed by the Company as a
Retiree Coordinator will not resume membership in the Plan or accrue
additional Benefit Service under this Section 2.8 or Section 13.2.
2.9 "Board of Directors" means the Board of Directors of Levi Strauss
Associates Inc. The Board of Directors may delegate to any committee,
subcommittee or any of its members, or to any agent, its authority to perform
any act under the Plan, including without limitation those matters involving
the exercise of discretion. Any such delegation of discretion will be
subject to revocation at any time at the discretion of the Board of
Directors. Any reference to the Board of Directors in connection with such
delegated authority will be deemed a reference to the delegate or delegates.
2.10 "Break in Service" means a period of at least 12 consecutive
calendar months, beginning on the date Service ends, during which a person
has not performed 1 Hour of Service (or been treated as performing Service)
under Section 2.56, as determined by the Administrative Committee.
2.11 "Casual Employee" means a Member who is rehired by the Company on
or after his or her Early Retirement Date or Normal Retirement Date on a
temporary basis to fill in gaps in the workforce. Any Benefit Service earned
by a Member who returns to Service as a Casual Employee will be determined
under Section 2.8 and Section 13.2. Any Benefit Service earned by the Member
as a Casual Employee will be added to the Member's Benefit Service earned
before his or her Early Retirement Date or Normal Retirement Date, as
provided in Section 5.3.
2.12 "Code" means the Internal Revenue Code of 1986, as amended, and
any Regulations or rulings issued under the Code.
2.13 "Committee" means the Administrative Committee or Investment
Committee, as applicable.
2.14 "Common-Law Spouse" means the spouse of a Member under a common-
law marriage that is recognized under the law of the state where the Member
resides. The determination of whether a person is a Common-Law Spouse will
be made by the Administrative Committee, in its sole and absolute discretion.
2.15 "Company" means Levi Strauss Associates Inc., LS&CO. and each
other Participating Company or any of them.
2.16 "Deferred Retirement Benefit" means the deferred retirement
benefit payable to a Member under Section 4.3.
2.17 "Deferred Retirement Date" or "Deferred Retirement" means the date
a Member is entitled to receive a Deferred Retirement Benefit under
Section 4.3.
2.18 "Disability Retirement Benefit" means the retirement benefit
payable to a Member who is Totally and Permanently Disabled under
Section 9.2.
2.19 "Domestic Partner" means the Common-Law Spouse or Unmarried
Partner of a Member who is entitled to receive a Survivor Annuity under
Section 10.
2.20 "Domestic Relations Order" means any judgment, decree, or order
(including an order approving a property settlement agreement) that:
(a) Relates to the provision of child support, alimony, or marital
property rights to a spouse, child, or other dependent of a Member; and
(b) Is entered or made under the domestic relations or community
property laws of any state.
2.21 "Early Retirement Age" means the Member's age when the Member has
attained age 55 and completed 15 Years of Service.
2.22 "Early Retirement Benefit" means the early retirement benefit
payable to a Member under Section 4.2.
2.23 "Early Retirement Date" or "Early Retirement" means the date a
Member is entitled to receive an Early Retirement Benefit under Section 4.2.
2.24 "Effective Date" means November 27, 1989, except as expressly
provided otherwise in this document or as required by the Tax Reform Act of
1986, as amended, or other applicable legislation.
2.25 "Employee" means any person who is employed by the Company as an
over-the-road truck driver who is compensated on a mileage basis or as a
dispatcher for such over-the-road truck drivers, excluding:
(a) Any employee of LS&CO. who is paid from the home office of
Levi Strauss Associates Inc.;
(b) Any stocktaker, Retiree Coordinator or "Temporary Employee;"
(c) Any employee who is not employed in a state or territory of
the United States or who receives no remuneration from the Company that
constitutes income from sources within the United States (within the meaning
of section 861(a)(3) of the Code);
(d) Any employee who is included in a unit of employees covered by
a negotiated collective bargaining agreement which does not provide for his
or her membership in the Plan;
(e) A "leased employee" (as defined in section 414(n) or section
414(o) of the Code) who is providing services to the Company or an Affiliated
Company; or
(f) An employee who is included in a group or classification of
employees on a payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan.
A member of the board of directors of the Company is not eligible for
membership in the Plan unless he or she is also an Employee of the Company.
For purposes of this Section 2.25, a "Temporary Employee" means a person who:
(i) Is hired to fill, for a period not to exceed 6 calendar
months, a position which arises from either an emergency situation or
the temporary absence of an Employee; and
(ii) Is subject, as a condition of such employment, to
termination without prior notice at any time.
A person's status as an Employee will be determined by the
Administrative Committee and such determination will be conclusive and
binding on all persons.
2.26 "Employee Retirement Plan" means the Levi Strauss Associates Inc.
Employee Retirement Plan, as may be amended from time to time.
2.27 "Equivalent Actuarial Value" means a benefit of equivalent value
when computed on the basis of the factors specified in Section 22.
2.28 "High-3 Year Average Compensation" means a Member's average annual
compensation from the Company or an Affiliated Company for the 3 consecutive
Plan Years during which his or her compensation was highest. If the Member
has not been employed with the Company or an Affiliated Company for 3
Consecutive Plan Years, "High-3 Year Average Compensation" will mean the
Member's average annual compensation for the actual number of consecutive
Plan Years with the Company or an Affiliated Company during which his or her
compensation was the highest.
"Compensation" includes the Member's wages, salaries, fees for
professional services and other amounts received (without regard to whether
an amount is paid in cash) for personal services actually performed in the
course of employment with the Company or an Affiliated Company to the extent
that the amounts are includable in gross income (including but not limited to
commissions paid sales representatives, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements or expenses under a nonaccountable
plan (as defined in section 1.62(c) of the Code) determined without regard to
the exclusions from gross income under sections 931 and 939 of the Code.
"Compensation" will also include:
(a) In the case of a Member who is an employee within the meaning
of section 401(c) of the Code, the Member's earned income (as described under
section 401(c)(2) of the Code) determined without regard to the exclusions
from gross income similar to those in sections 931 and 939 of the Code;
(b) Any foreign earned income as defined under section 911(b) of
the Code, regardless of whether such income is excludable from the gross
income of the Employee under section 911 of the Code;
(c) Amounts described in sections 104(a)(3), 105(a) and 105(b) of
the Code, but only to the extent that such amounts are includable in the
gross income of the Employee;
(d) Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Employee, but only to the extent
that such amounts are not deductible by the Employee under section 217 of the
Code;
(e) The value of a nonqualified stock option granted to the
Employee by the Company or an Affiliated Company, but only to the extent that
the value of the option is includable in the gross income of the Employee for
the taxable year when granted; and
(f) The amount includable in the gross income of the Employee upon
making an election described in section 83(b) of the Code.
"Compensation" will not include:
(a) Company contributions to a deferred compensation plan that
before application of the limitations of section 415 of the Code are not
includable in the Employee's gross income for federal income tax purposes in
the taxable year of the Employee in which the contributions are made;
(b) Company contributions to a simplified employee pension plan
described in section 408(k) of the Code to the extent that such contributions
are not considered as compensation for the taxable year in which contributed;
(c) Any distributions from a deferred compensation plan
regardless of whether such amounts are includable in gross income of the
Employee for federal income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock
option;
(e) Amounts realized when restricted stock or property becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(f) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(g) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are excludable from gross income of the Employee); Company
contributions to a cafeteria plan described in section 125 of the Code, or
Company contributions (whether or not under a salary reduction arrangement)
towards the purchase of an annuity contract described in section 403(b) of
the Code (whether or not the contributions are excludable from the gross
income of the Employee).
In determining the High-3 Year Average Compensation for each Plan Year
beginning on or after the Effective Date, compensation for any Plan Year in
excess of $200,000, or any successor limitation as provided for the Plan Year
in section 401(a)(17) of the Code (as adjusted as provided under section
401(a)(17) of the Code) (the "401(a)(17) limitation"), will be disregarded.
For Plan Years beginning in and after 1991, the adjustment to the 401(a)(17)
limitation that takes effect on January 1 of each year is effective for the
Plan Year beginning in that year. For the 1989 and 1990 Plan Years, the
adjustment to the 401(a)(17) limitation that is effective January 1 of 1989
and 1990 will be used for the Plan Year that ends in each of such years. In
determining the compensation of an Employee, the family aggregation rules of
section 414(q)(6) of the Code will apply, except that in applying those
rules, the term "family" will include only the spouse of the Employee and any
lineal descendants of the Employee who have not reached age 19 before the
close of the Plan Year.
2.29 "Highly Compensated Employee" means an Employee of the Company or
an Affiliated Company who:
(a) During the preceding Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or an
Affiliated Company in excess of $75,000 (as adjusted under Regulations
or rulings issued by the IRS);
(iii) Received "compensation" from the Company or an
Affiliated Company in excess of $50,000 (as adjusted under Regulations
or rulings issued by the IRS) and was in the top 20% of employees of the
Company and all Affiliated Companies when ranked on the basis of
"compensation" paid during such Plan Year (referred to as the "Top Paid
Group" under IRS Regulations); or
(iv) Was at any time an officer of the Company or an
Affiliated Company and received "compensation" greater than 50% of the
amount in effect under section 415(b)(1)(A) of the Code; or
(b) During the Plan Year:
(i) Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code); or
(ii) Satisfies the requirements of paragraphs (ii), (iii) or
(iv) of Section 2.29(a) and is a member of the group consisting of the
100 employees of the Company and all Affiliated Companies paid the
greatest "compensation" during the Plan Year.
For purposes of determining the number of employees in the Top
Paid Group under Section 2.29(a)(iii) for a Plan Year, the following
employees, as described in sections 414(q)(8) and (11) of the Code, will
be excluded:
(i) Those who have not completed 6 months of Service;
(ii) Those who normally work less than 17-1/2 hours per week;
(iii) Those who normally work less than 6 months during any
year;
(iv) Those who have not attained age 21;
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administrative Committee will determine whether an employee is an
officer based on the responsibilities of the employee with the Company or an
Affiliated Company. Of those employees determined to be officers, no more
than 50 employees (or, if less, the greater of 3 employees or 10% of the
employees, excluding all employees described in sections 414(q)(8) and (11)
of the Code) will be treated as officers. Further, if no officer receives
the level of "compensation" described in Section 2.29(a)(iv), the highest
paid officer of the Company and all Affiliated Companies will be treated as
a Highly Compensated Employee described in Section 2.29(a)(iv).
For purposes of determining whether an employee is a Highly Compensated
Employee only, any person who is a member of the family of a 5% owner or of
a Highly Compensated Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest compensation during the Plan Year:
(i) Will not be considered a separate employee; and
(ii) Any "compensation" paid to such person and the Company
or Employee contributions made on behalf of such person will be treated
as if it were paid to or on behalf of the 5% owner or Highly Compensated
Employee.
For purposes of the immediately preceding sentence, the term "family" means,
with respect to any employee, the employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
The term "compensation" for purposes of this Section 2.29 means
compensation as defined in section 415(c)(3) of the Code, determined without
regard to section 125 of the Code (regarding contributions to a cafeteria
plan), section 402(a)(8) of the Code (regarding contributions to a 401(k)
plan) and section 402(h)(1)(B) of the Code (regarding contributions to a
simplified employee pension plan), and in the case of employer contributions
made under a salary reduction agreement, without regard to section 403(b) of
the Code (regarding annuity contracts).
2.30 "Highly Compensated Former Employee" means a former employee who
separated from Service with the Company or an Affiliated Company before the
beginning of the Plan Year and who was a Highly Compensated Employee for
either:
(a) The employee's year of separation from Service; or
(b) Any Plan Year ending on or after the employee's 55th birthday.
An employee who performs no services for the Company or an Affiliated Company
during the Plan Year will be treated as a former employee.
2.31 "Hour of Service" means an hour of employment for which an
Employee is paid or is entitled to payment for the performance of duties as
determined under the Labor Department Regulations governing the computation
of hours of service.
2.32 "Investment Committee" means the committee appointed to control
and manage the Plan's assets as described in Section 17.
2.33 "Investment Manager" means a person who is appointed to direct the
investment of all or any part of the Trust Fund under Section 17.2 and is
either a bank, an insurance company or a registered investment adviser under
the Investment Advisers Act of 1940 and who has acknowledged in writing that
it is a fiduciary with respect to the Plan.
2.34 "IRS" means the United States Internal Revenue Service.
2.35 "Labor Department" means the United States Department of Labor.
2.36 "Legally Married" means that the Member participates in a
marriage, other than a common-law marriage, which is recognized as legal and
binding by the state where the Member lives.
2.37 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
2.38 "Member" means any Employee who is enrolled in the membership of
the Plan as provided in Section 3.
2.39 "Membership Date" means June 1 and December 1 of each Plan Year.
2.40 "Misconduct" means that a person:
(a) Has committed an act of embezzlement, fraud or theft with
respect to the property of the Company or an Affiliated Company or any person
with whom the Company or an Affiliated Company does business;
(b) Has deliberately disregarded the rules of the Company or an
Affiliated Company in such a manner as to cause material loss, damage or
injury to, or otherwise endanger the property or employees of the Company or
an Affiliated Company;
(c) Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
(d) Has engaged in any conduct which constitutes unfair
competition with the Company or an Affiliated Company;
(e) Has induced any person to breach any contract with the Company
or an Affiliated Company; or
(f) Has sold Company or Affiliated Company products to an
unauthorized account or has assisted an authorized account in wholesaling
Company or Affiliated Company products.
2.41 "Normal Retirement Age" means age 65 or, in the case of a Member
whose Service begins after the Member reaches age 60, the Member's age on the
5th anniversary of the date the Member's Service begins.
2.42 "Normal Retirement Benefit" means the normal retirement benefit
payable to a Member under Section 4.1.
2.43 "Normal Retirement Date" or "Normal Retirement" means the date the
Member is entitled to receive a Normal Retirement Benefit under Section 4.1.
2.44 "Participating Company" means LS&CO. or any Affiliated Company,
the board of directors or equivalent governing body of which adopts the Plan
and the Trust Agreement by appropriate action with the written consent of the
Board of Directors. Any Affiliated Company which so adopts the Plan will be
deemed to appoint Levi Strauss Associates, Inc., the Administrative
Committee, the Investment Committee and the Trustee its exclusive agents to
exercise on its behalf all of the power and authority conferred under this
Plan document, or by the Trust Agreement, upon the Company. The authority of
Levi Strauss Associates, Inc., the Committees and the Trustee to act as such
agents will continue until the Plan is terminated as to the Affiliated
Company and the relevant portion of the Trust Fund has been distributed by
the Trustee as provided in Section 19.
2.45 "PBGC" means the United States Pension Benefit Guaranty
Corporation.
2.46 "Plan" means this Levi Strauss Associates Inc. Retirement Plan for
Over-the-Road Truck Drivers and Dispatchers, as amended from time to time.
2.47 "Plan Year" means the annual period corresponding to LS&CO.'s
fiscal year for federal income tax purposes.
2.48 "Qualified Domestic Relations Order" means a domestic relations
order that satisfies the requirements described in Section 21.3.
2.49 "Qualified Joint and Survivor Annuity" means an annuity described
in Section 11.1.
2.50 "Regulations" means the applicable regulations issued under the
Code or the Act by the IRS, the PBGC, the Labor Department or any other
governmental authority and any temporary rules promulgated by such
authorities pending the issuance of such regulations.
2.51 "Rehire Anniversary Year" means for the first year that a Member
returns to Service as a Casual Employee, the period beginning on the date the
Member returns to Service and ending on December 31. The Rehire Anniversary
Year for the second and all subsequent years that a Member remains in Service
as a Casual Employee means the calendar year. The Benefit Service earned by
a Member during a Rehire Anniversary Year will be determined under Sections
2.8 and 13.2. A Member may only have one Rehire Anniversary Year at a given
time.
2.52 "Required Beginning Date" generally means April 1 of the calendar
year following the year in which the Member attains age 70-1/2. However, the
Required Beginning Date for a Member who is not a 5% owner within the meaning
of section 416(i)(1)(B)(i) of the Code, who attained age 70-1/2 during 1988,
and had not retired by the Effective Date, will be April 1, 1990. In
addition, the Required Beginning Date for a Member who attained age 70-1/2
before January 1, 1988, and who was not a 5% owner within the meaning of
section 416(i)(1)(B)(i) of the Code during any Plan Year ending with or
within the Plan Year in which he or she reached age 66-1/2 or any subsequent
year, is the April 1 following the later of the calendar year in which the
Member reaches age 70-1/2 or retires. Lastly, the Required Beginning Date
for a Member who filed a written election under section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982 before January 1, 1984, will be
the date specified in such election if the election satisfies all of the
applicable requirements specified by the IRS, as determined by the
Administrative Committee.
2.53 "Retiree Coordinator" means a retired Employee of the Company who
resumes employment with the Company or an Affiliated Company on a temporary
basis for the purpose of providing personal relations type services to other
retired employees of the Company or an Affiliated Company.
2.54 "Retirement Benefit" means the retirement benefit payable to a
Member in the form of a Straight Life Annuity as provided in Section 5.
2.55 "Retirement Date" means a Member's Normal Retirement Date, Early
Retirement Date or Deferred Retirement Date, or any other Retirement Date as
provided in Section 4.
2.56 "Service" means employment (whether or not as an Employee) with
the Company or with an Affiliated Company. Periods of employment performed
by a person before the Effective Date which would be disregarded under this
Plan or the Employee Retirement Plan as in effect on January 1, 1976, will
only be counted for purposes of determining membership under Section 3, and
not for any other purpose under the Plan. Service will begin on the date
that an Employee first performs 1 Hour of Service for the Company or
Affiliated Company. Service will end on the earlier of:
(a) The date the Employee retires;
(b) The date the Employee dies;
(c) The date the Employee terminates employment; or
(d) On the first anniversary of the date the Employee is absent
from service for any other reason (e.g., an authorized period of absence, as
described in paragraphs (i) and (ii), etc. below).
However, the Service of a Member who becomes Totally and Permanently Disabled
and who elects to continue, or is required to continue, to accrue Service
under Section 9.3 will not terminate on the date the Member terminates
employment with the Company.
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated),
Service includes:
(i) Periods of vacation;
(ii) Periods of absence whether or not the Employee is paid,
not to exceed 12 calendar months, authorized by the Company for
sickness, temporary disability or personal reasons;
(iii) Service in the Armed Forces of the United States, if and
to the extent required by the Military Selective Service Act, as
amended, or any other federal law of similar import; provided that the
Employee returns to Service with the Company or an Affiliated Company
within the time his or her employment rights are protected by such law;
and
(iv) Any period of 12 consecutive months or less, beginning
on the first day of the month after a Member terminates employment and
ending on the last day of the month preceding the Member's reemployment
date, if the Member performs at least 1 Hour of Service within the first
month of reemployment. Such period of Service will only be considered
for determining Membership in the Plan and determining the Member's
Vested Retirement Benefit, Early Retirement Benefit and Disability
Retirement Benefit.
Effective November 25, 1985, solely for the purpose of determining
whether an Employee has incurred a Break in Service, Service will end on the
second anniversary of the first day of a period of absence caused by any of
the following:
(i) The Employee's pregnancy;
(ii) The birth of the Employee's child;
(iii) The placement of a child with the Employee in connection
with the adoption of the child by the Employee; or
(iv) The care of the Employee's child immediately following
the child's birth or adoption.
The Administrative Committee may require the Employee to provide evidence
that the period of absence was due to one of the reasons described above.
A Member's Service will be determined by the Administrative Committee
and such determination will be conclusive and binding on all persons.
If an Employee terminates employment and is reemployed after incurring
a Break in Service, as defined in Section 2.10, Service will recommence on
the date the Employee again performs 1 Hour of Service. A Member will
receive credit for the aggregate of all periods of Service, except as
follows:
(a) If the Member has incurred a 60 consecutive month Break in
Service, Service before such 60-month Break in Service will only be counted
if the Member had a Vested Retirement Benefit under Section 2.66 before such
60 consecutive month Break in Service; and
(b) If a Member's Service as of November 25, 1985, would be
disregarded under the provisions of the Plan in effect as of such date, such
Service will continue to be disregarded on and after November 25, 1985, under
this Plan to the extent permitted by applicable law.
2.57 "Social Security Retirement Age" means age 65 if the Member was
born before January 1, 1938; age 66 if the Member was born on or after
January 1, 1938, and before January 1, 1955; and age 67 if the Member was
born on or after January 1, 1955.
2.58 "Straight Life Annuity" means an annuity described in
Section 11.2.
2.59 "Surviving Spouse" means:
(a) With respect to a Member who dies on or after the Annuity
Starting Date, the spouse to whom such Member was Legally Married as of the
Annuity Starting Date; and
(b) With respect to a Member who dies before the Annuity Starting
Date, the spouse to whom such Member was Legally Married for at least 1 year
as of the date of the Member's death.
If a Member divorces his or her Surviving Spouse after the Member's Annuity
Starting Date, such Surviving Spouse will continue to be the Member's
Surviving Spouse for purposes of the Plan unless provided otherwise based on
the terms of a Qualified Domestic Relations Order under Section 21.3. The
preceding sentence will apply regardless of whether the Member remarries
after his or her divorce from such Surviving Spouse. For purposes of the
Plan, the term "Surviving Spouse" will not include a Common-Law Spouse.
2.60 "Survivor Annuity" means the annuity described in Section 10.1
payable with respect to a Member who dies before the Annuity Starting Date.
2.61 "Totally and Permanently Disabled" or "Total and Permanent
Disability" means the Member is eligible to receive disability benefits under
the Federal Social Security Act or, alternatively, has been determined to be
Totally and Permanently Disabled by the Administrative Committee based on
competent medical evidence.
2.62 "Trust Agreement" means the trust agreement between Levi Strauss
Associates Inc. and the Trustee as a part of the Plan under which the assets
of the Plan are managed.
2.63 "Trust Fund" means the trust fund consisting of the assets of the
Plan and maintained by the Trustee under the Plan and Trust Agreement.
2.64 "Trustee" means the Trustee or Trustees of the Trust Fund.
2.65 "Unmarried Partner" means a "partner" who shares a committed
relationship with the Member which has the following characteristics:
(a) The Member and "partner" live together;
(b) The Member and "partner" are financially interdependent;
(c) The Member and "partner" are jointly responsible for each
other's common welfare;
(d) The Member and "partner" consider themselves as life partners;
and
(e) The Member registers his or her partner as an Unmarried
Partner with LS&CO.
A "partner" does not include a Member's roommate, sibling, parent or other
blood relative. In addition, to qualify as an Unmarried Partner neither the
Member or the partner must be Legally Married. A "partner" who satisfies all
of the above characteristics will not qualify as an Unmarried Partner until
1 year after the date the Member registers the partner as an Unmarried
Partner with LS&CO., unless at the time the Member registers the partner, the
Member provides proof that the Member and his or her Domestic Partner have
been together in a relationship which satisfies the above requirements for at
least one year, in which case the partner will qualify as a Domestic Partner
on such registration date. The determination of whether a partner qualifies
as an Unmarried Partner will be made by the Administrative Committee in its
sole and absolute discretion.
2.66 "Vested Retirement Benefit" means the nonforfeitable Retirement
Benefit of a Member who has:
(a) Completed 5 Years of Service;
(b) Become eligible for benefits under Section 4.1 on account of
the attainment of Normal Retirement Age; or
(c) Become eligible for the Disability Retirement Benefit provided
in Section 9.2.
If the Plan becomes Top Heavy, a Member's Vested Retirement Benefit will be
determined under Section 23.
2.67 "Vested Retirement Benefit Payment Date" means the date described
in Section 8 on which the payment of the Member's Vested Retirement Benefit
begins.
2.68 "Year of Service" means a 12 month period of Service in which a
Member has Service under Section 2.56. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
Years of Service and fractions of such years with respect to a Member who has
terminated Service and returns to Service with the Company will be determined
under Sections 2.56 and 3.3. Years of Service with respect to an Employee
who has terminated Service and returns to Service with the Company will be
determined under Sections 2.56 and 3.4.<PAGE>
SECTION 3 MEMBERSHIP AND TRANSFERS.
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3.1 Commencement of Membership. Each Employee who was a Member of the
Plan as of the Effective Date, will continue to be a Member. Each Employee
who was not a Member as of the Effective Date, will automatically become a
Member in the Plan on the later of the Membership Date next following:
(a) The first anniversary of the date the Employee's Service
commenced; or
(b) The date on which he or she becomes an Employee.
The Administrative Committee will take any necessary or appropriate
action to enroll each Employee eligible to be enrolled in the Plan under this
Section 3. If it is determined that such an Employee has for any reason not
been timely enrolled in the membership of the Plan, such Employee will be
retroactively enrolled to the extent permitted by law.
3.2 Termination of Membership. A Member's membership in the Plan will
end upon his or her:
(a) Termination of Service for the purpose of retirement after his
or her Early Retirement Date, Normal Retirement Date or Deferred Retirement
Date;
(b) Death;
(c) Total and Permanent Disability (unless the Member is eligible
for and elects to continue to accrue Service under Section 9.3);
(d) Termination of employment with the Company; or
(e) Upon any Break in Service.
The membership of a Member who, without any Break in Service, ceases to be an
Employee will not end but no subsequent Service will be treated as Benefit
Service unless and until the Member again becomes an Employee.
3.3 Rehired Members. If a Member who incurs a Break in Service is
rehired, he or she will recommence membership in the Plan and be credited
with his or her prior Service under the following paragraph (a) or (b):
(a) If the Member had a Vested Retirement Benefit at the time of
his or her Break in Service or, alternatively, has not incurred a 60
consecutive month Break in Service, then the Member will recommence
membership in the Plan on:
(i) The date of his or her reemployment, if the Member is
rehired as an Employee, or
(ii) The date he or she becomes an Employee, if the Member is
not rehired as an Employee.
The Member's prior Service will be taken into account for purposes of
determining his or her Vested Retirement Benefit under Section 2.66 and years
of Benefit Service under Section 2.8.
(b) If the Member did not have a Vested Retirement Benefit at the
time of his or her Break in Service and has incurred a 60 consecutive month
Break in Service, then the Member will be considered a new hire and begin
Membership in the Plan on the date he or she satisfies the eligibility
requirements described in Section 3.1. The Member's prior Service will not
be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.66 and years of Benefit Service under
Section 2.8.
3.4 Rehired Employees. If an Employee who is not a Member is rehired
following a Break in Service, he or she will begin membership in the Plan and
will be credited with his or her prior Service under the following paragraph
(a) or (b):
(a) If the Employee has not incurred a 60 consecutive month Break
in Service, the Employee will begin membership in the Plan on the date he or
she satisfies the eligibility requirements described in Section 3.1 taking
into account his or her prior Years of Service. The Employee's prior Service
will also be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.66 and years of Benefit Service under
Section 2.8.
(b) If the Employee has incurred a 60 consecutive month Break in
Service, the Employee will be considered a new hire and will begin membership
in the Plan on the date he or she satisfies the eligibility requirements
described in Section 3.1 based on his or her date of rehire without taking
into account his or her prior Years of Service. The Employee's prior Service
will not be taken into account for purposes of determining his or her Vested
Retirement Benefit under Section 2.66 and years of Benefit Service under
Section 2.8.<PAGE>
SECTION 4 RETIREMENT DATE.
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4.1 Normal Retirement Date. The Normal Retirement Date of a Member
will be the first day of the month coincident with or next following the date
the Member reaches Normal Retirement Age. A Member will have a right to his
or her Vested Retirement Benefit upon reaching his or her Normal Retirement
Age. Payment of a Member's Normal Retirement Benefit will begin on the last
day of the month in which the Member's Normal Retirement Date occurs unless
the Member elects to delay the payment of such benefit under Section 4.4. A
Member may remain in Service after his or her Normal Retirement Date, in
which case the date as of which the Member will be deemed to retire will be
determined under Section 4.3. A Member who has been deemed to retire will
continue to accrue Benefit Service under the Plan until his or her actual
retirement.
4.2 Early Retirement Date. The Early Retirement Date of a Member who
has reached Early Retirement Age will be the date specified in his or her
written application for Early Retirement Benefits. Such Early Retirement
Date will be the first day of a month which is not less than 30 nor more than
90 days following the date the Member files an Early Retirement Benefit
application with the Administrative Committee. Payment of a Member's Early
Retirement Benefit will begin on the last day of the month in which the
Member's Early Retirement Date occurs. Alternatively, a Member who has
reached Early Retirement Age may elect to delay the payment of his or her
Early Retirement Benefit under Section 4.4.
4.3 Deferred Retirement Date. The Deferred Retirement Date of a
Member who remains in Service after his or her Normal Retirement Date will be
the first day of the month next following the date of his or her termination
of Service. However, a Member will be deemed to retire (and the distribution
of the Member's Retirement Benefit will begin) as of the Member's Required
Beginning Date whether or not the Member's Service terminates at that time.
In addition, a Member who remains in Service after his or her Normal
Retirement Date will be deemed to retire on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company as provided in
Section 6.2. Payment of a Member's Deferred Retirement Benefit will begin on
the last day of the month in which his or her Deferred Retirement Date
occurs.
4.4 Postponement of Retirement Benefits. A Member may elect to delay
the payment of his or her Retirement Benefit beyond his or her Early
Retirement Age or the last day of the month in which the Member's Normal
Retirement Date or Deferred Retirement Date occurs, except as provided by
paragraph (a) or (b) below:
(a) Payment of a Member's Early Retirement Benefit must begin no
later than the month which includes his or her Normal Retirement Date; and
(b) Payment of a Member's Normal Retirement Benefit or Deferred
Retirement Benefit must begin no later than the Member's Required Beginning
Date.<PAGE>
SECTION 5 RETIREMENT BENEFIT.
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5.1 Basic Retirement Benefit. As of any date, the Retirement Benefit
of any Member payable as of his or her Normal Retirement Date or Deferred
Retirement Date will be:
(a) $32.00 multiplied by the Member's Benefit Service on and after
November 1, 1990; plus
(b) $18.00 multiplied by the Member's Benefit Service before
November 1, 1990.
No more than 25 years of Benefit Service computed after November 28, 1976,
will be considered in determining a Member's Basic Retirement Benefit. For
this purpose, years of Benefit Service accrued on and after November 1, 1990,
will be considered first and, if such years of service do not amount to 25,
years of Benefit Service accrued before November 1, 1990, will also be
considered until the 25 year maximum is reached.
The Basic Retirement Benefit of a Member payable as of his or her Early
Retirement Date will be determined under Section 7.
The Basic Retirement Benefit payable to a Member will be subject to
adjustment as provided in Sections 5.2 and, if the Member is a reemployed
Member, will be calculated in accordance with Section 5.3.
5.2 Coordination of Retirement Benefits. The Retirement Benefit of a
Member who was a participant in any plan which is qualified under section
401(a) of the Code and which is maintained by (a) the Company, (b) a
corporation acquired by the Company, or (c) under a collective bargaining
agreement with the Company or any such corporation, will be reduced by the
Equivalent Actuarial Value of any benefits payable from that plan to the
Member with respect to any period of the Member's Benefit Service for which
benefits are also provided under this Plan. This reduction will not apply to
any benefits payable to a Member under the Employee Investment Plan of Levi
Strauss Associates Inc., the Levi Strauss Associates Inc. Employee Long-Term
Investment and Savings Plan, or the Employee Stock Ownership Plan of Levi
Strauss & Co. which was terminated in 1985.
5.3 Retirement Benefit of Certain Reemployed Members. If a Member who
does not have a Vested Retirement Benefit and who incurs a Break in Service
for any reason returns to Service after incurring a 60 consecutive month
Break in Service under Section 3.3(b), then on the Member's later retirement
or termination of Service, his or her Retirement Benefit will be based only
upon the Member's Benefit Service after his or her return to Service. In all
other cases where a Member returns to Service, the Member's Retirement
Benefit upon later retirement or termination of Service will be based on his
or her total Benefit Service, reduced by the Equivalent Actuarial Value of
any benefit payments previously made to him or her (provided this does not
decrease his or her Retirement Benefit). See also Section 5.1 concerning the
benefit rate applied to a Member's Benefit Service.<PAGE>
SECTION 6 NORMAL RETIREMENT BENEFIT.
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6.1 Payment of Benefits. A Member who retires from Service on his or
her Normal Retirement Date will be entitled to begin receiving Retirement
Benefit payments on the last day of the month in which his or her Normal
Retirement Date occurs. If the Member could have received a larger Early
Retirement Benefit (calculated in accordance with Section 7) under Section
4.2, beginning as of any date which could have been his or her Early
Retirement Date, such larger Early Retirement Benefit will be payable to the
Member.
6.2 Termination of Employment after Normal Retirement Age. In the
case of a Member who continues to be employed as an Employee or is reemployed
as an Employee after reaching Normal Retirement Age, the Member will be
deemed to retire for purposes of the Plan on the first day of any calendar
month in which he or she is paid (or is entitled to payment) for less than 40
Hours of Service by the Company or an Affiliated Company, or as of the
Member's Required Beginning Date. Payment of the Member's Retirement Benefit
will be made as follows:
(a) In the case of a Member who continues to be employed as an
Employee, or in the case of a Member who terminated employment with the
Company after reaching Normal Retirement Age but is reemployed before
beginning to receive monthly Retirement Benefit payments, payment of the
Member's Retirement Benefit will begin (in the form determined under Section
11) as of the last day of the month in which the Member is deemed to retire.
If a Member who is deemed to retire under this Section 6.2 does not make a
valid election for payment of the Member's Retirement Benefit, the Member's
Retirement Benefit will be paid as a 50% Qualified Joint and Survivor
Annuity.
(b) In the case of a Member who is reemployed as an Employee after
reaching Normal Retirement Age and beginning to receive monthly Retirement
Benefit payments but whose benefits are suspended under Section 13.2, payment
of the Member's Retirement Benefit payments will recommence (in the same form
as before the suspension) as of the last day of the month in which the Member
is deemed to retire.
Any Member whose Retirement Benefit begins to be paid will be deemed to be
reemployed as of the first day of any subsequent calendar month in which he
or she is paid (or entitled to payment) for 40 or more Hours of Service, and
the Retirement Benefit suspension provisions of Section 13.2 will apply.<PAGE>
SECTION 7 EARLY RETIREMENT BENEFIT.
- --------- ------------------------
7.1 Payment of Early Retirement Benefit. A Member who retires on an
Early Retirement Date under Section 4.2 will be entitled to receive an Early
Retirement Benefit under the following paragraph (a) or (b).
(a) Unreduced Early Retirement Benefit. A Member who has reached
age 55 and whose total attained age plus Years of Service equals or exceeds
80, will be entitled to receive an Early Retirement Benefit equal to 100% of
his or her Retirement Benefit. Payment of such Early Retirement Benefit will
begin on the last day of the month in which the Member's Early Retirement
Date occurs.
(b) Reduced Early Retirement Benefit. A Member who does not
satisfy the requirements specified in paragraph (a) who retires on an Early
Retirement Date will be entitled to receive the percentage of his or her
Retirement Benefit based on the Member's age as of his or her Early
Retirement Date as described in the following Table:
<TABLE>
Table A
-------
<CAPTION>
Age at Member's Percentage
Early Retirement Date Factor
--------------------- ----------
<S> <C>
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 92%
62 94%
63 96%
64 98%
65 100%
</TABLE>
In applying the above table, the Member's age at his or her Early Retirement
Date will be computed to years and completed months and the percentages will
be interpolated. Payment of a Member's reduced Early Retirement Benefit will
begin on the last day of the month in which the Member's Early Retirement
Date occurs.
If the Administrative Committee determines that a Member who is eligible
to retire on an Early Retirement Date has engaged in any act of Misconduct
while in Service, the Early Retirement Benefit payable to such Member will be
the Equivalent Actuarial Value of his or her accrued Retirement Benefit.
7.2 Postponement of Early Retirement Benefit. A Member who retires on
an Early Retirement Date may elect to delay the payment of his or her Early
Retirement Benefit until the last day of any month following the Member's
Early Retirement Date, but no later than the month which includes the first
date which could have been the Member's Normal Retirement Date. The early
retirement factor to be used to calculate the Early Retirement Benefit of a
Member who delays benefit payments is the factor at the Member's age on the
date payment of the Member's Early Retirement Benefit begins. If a Member
makes an election to delay the payment of his or her Early Retirement Benefit
and dies before the Annuity Starting date, a Survivor Annuity will be payable
to the Member's Surviving Spouse or Domestic Partner as of the date of the
Member's death as described in Section 10.1. The Member may revoke an
election to delay the payment of his or her Early Retirement Benefit at any
time before the Annuity Starting Date.<PAGE>
SECTION 8 TERMINATION OF SERVICE BEFORE RETIREMENT.
- --------- ----------------------------------------
8.1 Payment of Vested Retirement Benefits. A Member who has completed
5 years of Service will have a Vested Retirement Benefit determined in
accordance with Section 2.66 as of the date his or her Service terminates.
If the Plan becomes Top Heavy, as defined in Section 23, the Member's Vested
Retirement Benefit will be determined under Section 23. A Member will have
a right to begin receiving payment of his or her Vested Retirement Benefit on
the last day of the month in which his or her Normal Retirement Date occurs.
8.2 Early Payment of Vested Retirement Benefits. A Member with a
right to receive his or her Vested Retirement Benefit may elect to begin
receiving benefit payments before the Member's Normal Retirement Date. The
amount distributable to the Member will equal the percentage of the Member's
Retirement Benefit based on the Member's age on the date the Member's benefit
payments begin as described in the following Table B:
<TABLE>
Table B
-------
<CAPTION>
Age at Percentage
Commencement Factor
------------ ----------
<S> <C>
55 42%
56 45%
57 49%
58 53%
59 58%
60 63%
61 69%
62 76%
63 83%
64 91%
65 100%
</TABLE>
Such an election must be received by the Administrative Committee at least 30
days before the date on which benefit payments are to begin. Payment of the
Member's Vested Retirement Benefit will begin on the last day of any month
before the Member's Normal Retirement Date and on or after his or her 55th
birthday.
8.3 Death Before the Payment of Vested Retirement Benefits. If a
Member with a right to receive his or her Vested Retirement Benefit dies
before the Annuity Starting Date, a Survivor Annuity will be payable to the
Member's Surviving Spouse or Domestic Partner. The Survivor Annuity will be
calculated as of the date of the Member's death under Section 10.1.
8.4 Limitation on Vested Retirement Benefit Eligibility. If a Member
is not entitled to a benefit on account of his or her:
(a) Normal Retirement Date under Section 6;
(b) Early Retirement Date under Section 7;
(c) Total and Permanent Disability under Section 9; or
(d) Death under Section 10,
then no Retirement Benefit will be payable under the Plan upon the Member's
termination of Service unless the Member has completed 5 Years of Service or
has a right to a Vested Retirement Benefit under Section 23.<PAGE>
SECTION 9 DISABILITY BEFORE RETIREMENT.
- --------- ----------------------------
9.1 Eligibility for Disability Benefit. A Member who is Totally and
Permanently Disabled may be eligible for a Disability Retirement Benefit
under Section 9.2. Alternatively, effective November 26, 1990, if a Member
has at least 5 Years of Service as of the date the Member becomes Totally and
Permanently Disabled, the Member may be eligible to elect to receive
additional Service in lieu of receipt of the Disability Retirement Benefit as
provided in Section 9.3(a). Also effective November 26, 1990, if a Member
who has at least 5 Years of Service becomes Totally and Permanently Disabled
and is entitled to disability benefits under the Levi Strauss & Co. Welfare
Plan, as provided in Section 9.2(b), the Member will be required to receive
additional Service in lieu of the Disability Retirement Benefit provided
under Section 9.2.
9.2 Disability Retirement Benefit. A Member who is Totally and
Permanently Disabled may be entitled to receive a Disability Retirement
Benefit under the following paragraph (a) or (b). Payment of the Member's
Disability Retirement Benefit will begin as provided in paragraph (c) in the
form elected by the Member under paragraph (d).
(a) Unreduced Disability Retirement Benefit. A Member who:
(i) Was age 55 or older on July 15, 1989;
(ii) Had completed at least 10 Years of Service before
November 25, 1990; or
(iii) Becomes Totally and Permanently Disabled on or after
November 26, 1990, and has completed at least 5 Years of Service,
and who terminates Service due to a Total and Permanent Disability will be
entitled to receive an unreduced Disability Retirement Benefit under the
Plan. However, if the Administrative Committee determines that the Member
engaged in any act of Misconduct while in Service, the Member's unreduced
Disability Retirement Benefit will be reduced as provided in Section 9.4.
(b) Reduced Disability Retirement Benefit. A Member who does not
qualify for the unreduced Disability Retirement Benefit in paragraph (a), who
terminates Service due to a Total and Permanent Disability and who has
completed 1 Year of Service but who has not then completed 5 Years of
Service, will be entitled to receive a reduced Disability Retirement Benefit
as of the date of his or her termination of Service. The reduced Disability
Retirement Benefit for a Member who becomes Totally and Permanently Disabled
on or after age 55, will be calculated under Table B under Section 8.2 of the
Plan. The reduced Disability Retirement Benefit for a Member who becomes
Totally and Permanently Disabled before reaching age 55, will be calculated
using the 1983 Group Mortality Table, assuming a relevant population that
consists of 50% males and 50% females and a 7% interest rate. However, if
the Administrative Committee determines that the Member engaged in any act of
Misconduct while in Service, the Member will not be entitled to receive a
reduced Disability Retirement Benefit, as provided in Section 9.4.
(c) Payment of Benefits. Payment of the Member's Disability
Retirement Benefit will begin on the last day of the month following the date
of the Member's termination of Service and will continue until such time as
the Administrative Committee determines that the Member is no longer Totally
and Permanently Disabled. See Section 9.4 regarding the reduction of the
unreduced Disability Retirement Benefit payable under Section 9.3(a) in
instances involving Member Misconduct.
(d) Form of Disability Retirement Benefit. A Member's Disability
Retirement Benefit may be paid in any of the forms of benefit provided in
Section 11.3. However, if the Member is legally married such benefit must be
paid in the form of a Qualified Joint and Survivor Annuity unless the Member
elects otherwise with the written consent of his or her spouse under
Section 12.1. If the Member dies before the Annuity Starting Date, his or
her Surviving Spouse or Domestic Partner will be entitled to receive a
Survivor Annuity under Section 10.
9.3 Disability Service. A Member who is Totally and Permanently
Disabled may be eligible to, or required to, receive Disability Service under
the following paragraph (a) or (b) in lieu of the Disability Retirement
Benefit payable under Section 9.2. Payment of the Member's Disability
Retirement Benefit will begin as provided in paragraph (c) in the form
elected by the Member under paragraph (d).
(a) Disability Service for Members Not Entitled to Welfare
Benefits. Effective November 26, 1990, a Member who has at least 5 Years of
Service as of the date the Member becomes Totally and Permanently Disabled
may, in lieu of receipt of a Disability Retirement Benefit under Section 9.2,
elect to receive additional Service. Such an election must be made within
the 90-day period preceding the Member's Annuity Starting Date as determined
under Section 9.2. Not less than 90 days before the Annuity Starting Date,
the Administrative Committee will provide to the Member an election form for
such purpose as well as a written explanation of the terms, conditions and
effects of such an election. Any election so made must be consented to in
writing by the Member's spouse if the Member is married.
An eligible Member who elects to receive additional Service under this
Section 9.3(a) will continue to accrue Benefit Service and Years of Service
under the Plan until the earliest of the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member retires as of an Early Retirement Date; or
(iii) The Member reaches his or her earliest Normal Retirement
Date.
However, if the Administrative Committee determines that the Member engaged
in any act of Misconduct while in Service, he or she will not be entitled to
accrue additional Service under this Section 9.3(a) or any other provision of
the Plan. The Disability Retirement Benefit of a Member who engages in an
act of Misconduct will be determined based on the Member's Benefit Service as
of the date the Member became Totally and Permanently Disabled, as provided
in Section 9.4.
(b) Disability Service for Members Entitled to Welfare Benefits.
Effective November 1, 1990, if a Member who has at least 5 Years of Service
as of the date the Member becomes Totally and Permanently Disabled and the
Member is receiving disability benefits under the Levi Strauss & Co. Welfare
Plan, the Member will continue to accrue Service under this Plan and will not
be entitled to receive the Disability Retirement Benefit provided in Section
9.2.
A Member will continue to accrue Benefit Service and Years of Service
under the Plan until the earliest of the date:
(i) The Member is no longer Totally and Permanently
Disabled;
(ii) The Member elects an Early Retirement Date;
(iii) The Member reaches his or her earliest Normal Retirement
Date; or
(iv) Disability benefits are no longer payable to the Member
under the Levi Strauss & Co. Welfare Plan.
However, if the Administrative Committee determines that the Member engaged
in any act of Misconduct while in Service, he or she will not be entitled to
accrue additional Service under this Section 9.3(b) or any other provision of
the Plan. The Disability Retirement Benefit of a Member who engages in an
act of Misconduct will be determined based on the Member's Benefit Service as
of the date the Member became Totally and Permanently Disabled, as provided
in Section 9.4.
(c) Payment of Benefits. Payment of the Disability Retirement
Benefit of a Member who accrues additional Service under this Section 9.3
will begin in accordance with Section 8.1, if the Member elects an Early
Retirement Date, or if the Member does not elect an Early Retirement Date, in
accordance with Section 7.1 when the Member reaches his or her Normal
Retirement Date.
(d) Form of Disability Retirement Benefit. Payment of a Member's
Disability Retirement Benefit may be paid in any of the forms of benefit
provided in Section 11.3. However, if the Member is legally married such
benefit must be paid in the form of a Qualified Joint and Survivor Annuity
unless the Member elects otherwise with the written consent of his or her
spouse under Section 12.1. If the Member dies before his or her Annuity
Starting Date, his or her Surviving Spouse or Domestic Partner will be
entitled to receive a Survivor Annuity under Section 10.
9.4 Forfeiture or Reduction of Disability Retirement Benefits. A
Member's Disability Retirement Benefit or entitlement to additional Service
under this Section 9 may be reduced or forfeited under the following
paragraphs (a), (b) or (c).
(a) Reduction of Unreduced Disability Retirement Benefit. If a
former Member who has completed at least 5 Years of Service and is otherwise
entitled to an unreduced Disability Retirement Benefit under Section 9.2(a)
fails to provide all information reasonably requested by the Administrative
Committee, or if the Administrative Committee determines that the Member has
engaged in any act of Misconduct while in Service, the Member's Disability
Retirement Benefit will be reduced. The Member's reduced Disability
Retirement Benefit will equal the Equivalent Actuarial Value of the Member's
Retirement Benefit as of the date of his or her termination of Service by
reason of Disability. The Member's reduced Disability Retirement Benefit
will continue to be paid to the Member on the same basis as the Member's
prior unreduced Disability Benefit. No reduction of a Member's unreduced
Disability Benefit will be made under this Section 9.4(a) if the Member
satisfies the requirements for an unreduced Early Retirement Benefit under
Section 7.1(a).
(b) Forfeiture of Reduced Disability Retirement Benefit. If a
former Member who has completed less than 5 Years of Service and is otherwise
entitled to a reduced Disability Retirement Benefit under Section 9.2(b)
fails to provide all information reasonably requested by the Administrative
Committee, or if the Administrative Committee determines that the Member has
engaged in any act of Misconduct while in Service, no Disability Benefit will
be payable to the Member under Section 9.2(b).
(c) Forfeiture of Disability Service. If a former Member who has
completed at least 5 Years of Service and is otherwise entitled to Disability
Service under Section 9.3 fails to provide all information reasonably
requested by the Administrative Committee, or if the Administrative Committee
determines that the Member has engaged in any act of Misconduct while in
Service, no additional Disability Service will be credited to the Member
under Section 9.3.<PAGE>
SECTION 10 DEATH BENEFITS.
- ---------- --------------
10.1 Survivor Annuity. This Section 10 will govern the payment of
Retirement Benefits, if any, if the Member dies before the Annuity Starting
Date. Section 11 will govern the payment of Retirement Benefits, if any, if
the Member dies on or after the Annuity Starting Date.
10.2 Amount of Survivor Annuity. A Survivor Annuity will be payable to
the Surviving Spouse or Domestic Partner of a Member who dies with a Vested
Retirement Benefit before the Annuity Starting Date. The Survivor Annuity
will provide the Surviving Spouse or Domestic Partner with a monthly benefit
calculated as follows:
(a) If the Member dies before the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member:
(i) Separated from Service on the date of his or her death
(unless the Member had separated from Service before his or her death,
in which case the Member's actual date of separation from Service will
be used);
(ii) Survived until the earliest age the Member could have
begun receiving benefit payments under the Plan;
(iii) Elected to receive a 50% Qualified Joint and Survivor
Annuity, with his or her Surviving Spouse or Domestic Partner as
contingent annuitant, beginning on the earliest age the Member could
have begun receiving benefit payments under the Plan; and
(iv) Died on the day after such annuity became effective.
Such benefit will be calculated using the factors listed in Table B in
Section 8. Benefit payments to the Surviving Spouse or Domestic Partner will
begin on the last day of the month following the later of the date the Member
would have reached age 55 or the month in which the Member dies.
(b) If the Member dies after the earlier of his or her Early
Retirement Age or Normal Retirement Age, the Surviving Spouse or Domestic
Partner will receive a monthly benefit equal to the monthly benefit the
Surviving Spouse or Domestic Partner would have received if the Member had
retired on the first day of the month coincident with or next following the
date of the Member's death with a 50% Qualified Joint and Survivor Annuity,
with his or her Surviving Spouse or Domestic Partner as contingent annuitant.
Benefit payments to the Surviving Spouse or Domestic Partner will begin no
later than the last day of the month following the date of the Member's
death.
Neither the Member nor the Surviving Spouse nor the Domestic Partner may
waive the Survivor Annuity.
10.3 Entitlement to Death Benefit. No death benefit will be payable
under the Plan with respect to a Member who dies without both a Vested
Retirement Benefit and a Surviving Spouse or Domestic Partner.<PAGE>
SECTION 11 METHOD OF PAYMENT.
- ---------- -----------------
11.1 Normal Form of Benefit for Married Members. The normal form of
benefit for a Member who is Legally Married on the Annuity Starting Date is
a "Qualified Joint and Survivor Annuity." The term "Qualified Joint and
Survivor Annuity" means a benefit providing a reduced monthly annuity for the
life of the Member, ending with the payment due on the last day of the month
in which the Member died, and, if the Member dies leaving a Surviving Spouse
described in Section 2.59, a survivor annuity, in an amount equal to either
50% or 100% (as elected by the Member) of the monthly annuity payable to the
Member, for the life of the Surviving Spouse, beginning on the last day of
the month following the month in which the Member dies and ending with the
payment due on the last day of the month in which the Surviving Spouse dies.
A Member who has a Domestic Partner on the Annuity Starting Date may elect to
receive a survivor annuity with his or her Domestic Partner as the
Beneficiary under Section 11.3(b). See Section 12.4(b) for cases where the
Member dies after the Annuity Starting Date but before his or her first
Retirement Benefit payment.
11.2 Normal Form of Benefit for Single Members. The normal form of
benefit for a Member who does not have a Surviving Spouse on the Annuity
Starting Date is a "Straight Life Annuity." The term "Straight Life Annuity"
means a benefit providing a monthly annuity for the life of the Member ending
with the payment due on the last day of the month in which the Member dies.
11.3 Optional Forms of Benefit. Instead of the annuity otherwise
payable to the Member under Sections 11.1 or 11,2, a Member may elect to
receive the Equivalent Actuarial Value of any benefit to which he or she is
entitled under the Plan in one of the following forms:
(a) Straight Life Annuity: The Member may elect to receive a
monthly annuity payable to the Member for his or her life, ending with the
payment due on the last day of the month in which the Member dies.
(b) Survivorship Options: The Member may elect to receive a
reduced monthly annuity payable for the Member's life, and, after his or her
death, a monthly survivor annuity in the same amount (a "100% survivor
annuity") or 1/2 of such amount for the life of the Beneficiary. However, no
100% survivor annuity will be payable unless the Beneficiary is the Member's
Surviving Spouse or the Beneficiary is no more than 10 years younger than the
Member. If the Member's Beneficiary dies before benefit payments begin, the
Survivorship Option elected by the Member will automatically be cancelled and
the Member's Retirement Benefit will be paid in the normal form specified in
Section 11.1 or 11.2, as appropriate, unless the Member elects another
optional form of benefit under Section 12.1.
(c) 10-Year Certain and Life Option: The Member may elect to
receive a reduced monthly annuity payable for the Member's life. If the
Member dies before receiving 120 monthly payments, monthly payments will
continue to the Beneficiary designated by the Member (or, in the event of the
Beneficiary's death, to the Beneficiary's estate) until a total of 120
payments have been received by the Member and Beneficiary (or the
Beneficiary's estate). Payments under the 10-Year Certain and Life Option
may not be made over a period exceeding the life expectancies of the Member
and the Beneficiary, as determined under section 72(t) of the Code.
If the Member's Beneficiary dies before benefit payments begin, the
10-Year Certain and Life Option selected by the Member will automatically be
cancelled and the Member's benefit will be paid in the normal form of benefit
specified in Section 11.1 or 11.2, as appropriate, unless the Member elects
another optional form of benefit under Section 12.1.
(d) Direct Transfer Option. Effective for single sum
distributions made on and after January 1, 1993, the Member may elect to have
his or her Retirement Benefit directly transferred to a plan qualified under
section 401(a) of the Code which accepts direct transfer contributions, an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code (other
than an endowment contract), or an annuity plan described in section 403(a)
of the Code; provided that such single sum distribution exceeds $200 and
otherwise qualifies for direct transfer pursuant to section 401(a)(31) of the
Code.
The Administrative Committee will provide each eligible Member with
notice of the direct transfer option as required by section 402(f) of the
Code (the "Section 402(f) Notice") at least 90 days and not less than 30 days
before the Annuity Starting Date. The Member will have at least 30 days
after the Section 402(f) Notice is provided to elect to have his or her
Retirement Benefit paid in the form of a direct transfer. The Member may
elect to waive this 30 day election period by affirmatively electing, before
the expiration of the 30 day period, to have his or her Retirement Benefit
paid in the form of a direct transfer. If the Member makes such an election,
no other benefits will be payable from the Plan to the Member and his or her
Beneficiary.
The interest rate specified in Section 25 will be used for determining
a single sum of Equivalent Actuarial Value of the Member's Retirement
Benefit.
11.4 Limitation on Optional Forms of Benefit. No election or
revocation of an election of an optional form of benefit may be made that
would result in payments to any person of less than $10 per month, and any
annuity amounting to less than $10 per month may be paid in quarterly or
semiannual installments. If this Section 11.4 is applicable to a Member, any
references to monthly benefits which would apply to the Member will be
modified to reflect that the Member is receiving quarterly or semiannual
installments, as applicable.
11.5 Mandatory Cash Out of Benefits Less than $3,500. If the
Equivalent Actuarial Value of a Member's Retirement Benefit is $3,500 or
less, such Equivalent Actuarial Value will be paid to the Member in a single
sum. Such single sum will be paid as soon as practicable after the Member's
Service terminates instead of any other payments under the Plan. No single
sum distribution will be made to a Member or to a Member's Surviving Spouse
after the Annuity Starting Date. Alternatively, effective with respect to
single sum distributions in excess of $200 made on and after January 1, 1993,
the Member may elect to have such distribution made in the form of a direct
transfer as described in Section 11.3(d).
The interest rate specified in Section 22 will be used for determining
a single sum Equivalent Actuarial Value of the Member's Retirement Benefit.
11.6 Reduction of Benefits. If a Member who has received a single sum
distribution under Section 11.5 returns to Service, his or her Retirement
Benefit will be based on his or her total Benefit Service but will be reduced
by the amount of the prior single sum distribution. Such subsequent
Retirement Benefit, if any, will be paid in the form determined under Section
12.3.<PAGE>
SECTION 12 BENEFIT ELECTIONS.
- ---------- -----------------
12.1 Election of Optional Forms of Benefits. A Member whose Retirement
Benefit is otherwise payable under the normal form described in Section 11.1
or Section 11.2 may elect in writing to receive his or her benefit under one
of the optional forms of benefit described in Section 11.3 during the
Election Period specified in Section 12.3.
12.2 Written Explanation and Election Form. Not more than 90 days, and
at least 30 days, before the Annuity Starting Date, the Administrative
Committee will provide an election form for purposes of electing an optional
form of benefit under the Plan as well as a written explanation of the terms,
conditions and effects of such election to each active Member and each
separated Member with a Vested Retirement Benefit whose benefit payments have
not yet begun.
The written explanation will contain:
(a) A description of the Qualified Joint and Survivor Annuity and
Straight Life Annuity described in Section 11.1 and Section 11.2;
(b) Notice of the Member's right to waive the Qualified Joint and
Survivor Annuity or Straight Life Annuity by electing an optional form of
benefit;
(c) A description of the different optional forms of benefit
described in Section 11.3;
(d) Notice of the requirement that the Member's spouse must
consent to the Member's waiver of the Qualified Joint and Survivor Annuity
and election of an optional form of benefit;
(e) Notice of the Member's right to revoke the waiver of the
Qualified Joint and Survivor Annuity or Straight Life Annuity and election of
an optional form of benefit during the Election Period specified in
Section 12.3;
(f) A general explanation of the financial effect of election of
each of the optional forms of benefit; and
(g) Notice that the Member may request an explanation of the
specific financial effect, in terms of monthly payments, on the Member's
benefit of making an election.
If the Member requests a written explanation of the specific financial
effect of electing an optional form of benefit under the Plan during the
Election Period, such explanation will be provided to the Member within 30
days of the date of his or her request. Alternatively, the Administrative
Committee may in its discretion, before a request by a Member, include the
written explanation of the specific financial effect of electing an optional
form of benefit under the Plan in the explanatory notice described above.
12.3 Applicable Election Period and Form of Election. The Election
Period will begin on the date the Administrative Committee provides the
Member with the written explanation of the optional forms of benefit under
the Plan described in Section 12.2 and generally will end on the earlier of:
(a) The date of the Member's death; or
(b) The later of:
(i) The Member's Annuity Starting Date; or
(ii) 90 days after the date that such written explanation is
furnished.
However, if the Member requests a written explanation of the specific
financial effect of electing an optional form of benefit under the Plan under
Section 12.2, the Election Period will end on the earlier of (i) the date of
the Member's death or (ii) 90 days after the date that such written
explanation is furnished.
During the Election Period, any election not to take payment in the
normal form of benefit provided in Section 11.1 and Section 11.2 will be
revocable. After the expiration of the Election Period, any election made
will be irrevocable, and the Member will not be entitled to make an election
if no election has been made. A Member may elect to begin receiving monthly
benefit payments before the expiration of the Election Period. If the Member
is Legally Married and elects to receive his or her Retirement Benefit in a
form other than the Qualified Joint and Survivor Annuity, such election will
not be effective without the written consent of his or her spouse. A Member
who elects to begin receiving monthly benefit payments before the expiration
of the Election Period may, nevertheless, elect to change his or her benefit
election, and elect another optional form of benefit during the remainder of
the Election Period. If a Member makes such an election, his or her
Retirement Benefit will begin being paid in the new optional benefit form as
soon as practicable after the Administrative Committee receives the Member's
benefit election.
If a Legally Married Member elects to receive his or her Retirement
Benefit in a form other than the Qualified Joint and Survivor Annuity
specified in Section 11.1 and/or designates a person other than his or her
spouse as his or her contingent annuitant, the election or designation will
be effective only if consented to by the Member's spouse. The consent must:
(a) Be in writing;
(b) Acknowledge the effect of the election and/or designation and
the spouse's consent thereto;
(c) Be witnessed by a notary public; and
(d) Be delivered to the Administrative Committee.
No spousal consent will be required if the Administrative Committee
determines to its satisfaction that the spouse cannot be located or that
there exist such other circumstances preventing such consent that may be
prescribed in applicable Regulations or rulings issued by the IRS. The
Administrative Committee may determine a Member's marital status in
accordance with such reasonable procedures as it may adopt from time to time.
If an active or separated Member's spouse or contingent annuitant dies
before payment of the Member's Retirement Benefit begins and the Member
elected a contingent annuitant option under Section 11.3, such form of
benefit will be automatically cancelled and the Member will be deemed not to
have selected an optional form of benefit (if an optional contingent
annuitant benefit was elected). The Member may later elect an optional form
of benefit if the election is timely made. Each Member may (with the
written consent of his or her spouse if the Member is Legally Married) change
any election of a form of benefit by executing a new election in accordance
with this Section 12 until the expiration of the Election Period.
12.4 Special Circumstances Governing Elections. The following
paragraphs will govern the election of optional forms of benefit under the
Plan.
(a) Death Before Annuity Starting Date. If a Member who is
Legally Married or who has a Domestic Partner dies before the Annuity
Starting Date and before the beginning of the Election Period, the Member's
Surviving Spouse or Domestic Partner, as applicable, will be entitled to
receive a Survivor Annuity under Section 10 of the Plan. If a Member who is
Legally Married dies before the Annuity Starting Date but during the Election
Period after electing (with the written consent of his or her spouse) to
waive the Qualified Joint and Survivor Annuity, the Member's spouse will
nevertheless be entitled to receive a Survivor Annuity under Section 10 of
the Plan. Similarly, if a Member who has a Domestic Partner dies before the
Annuity Starting Date but during the Election Period after electing to waive
the Straight Life Annuity, the Member's Domestic Partner will nevertheless be
entitled to receive a Survivor Annuity under Section 10 of the Plan.
(b) Death on or after Annuity Starting Date. If a Member who is
Legally Married dies on or after the Annuity Starting Date, the Member's
Retirement Benefit will be paid to his or her Surviving Spouse in the form of
a Qualified Joint and Survivor Annuity under Section 11.1, unless the Member
elected an optional form of benefit (with his or her spouse's consent).
Similarly, if the Member delays the payment of his or her Retirement Benefit
beyond the Annuity Starting Date and dies on or after the Annuity Starting
Date after having elected an optional form of benefit, the Member's benefit
will be paid under the terms of that election upon his or her death. The
Member's election and the spouse's consent must comply with the requirements
of Section 12.3.
If a Member who has a Domestic Partner dies on or after the Annuity
Starting Date, no Retirement Benefit will be payable to his or her Domestic
Partner unless the Member elected an optional form of benefit which provides
for such payment. Conversely, if a Member who has a Domestic Partner delays
the payment of his or her Retirement Benefit beyond the Annuity Starting Date
and dies on or after the Annuity Starting Date after electing an optional
form of benefit, the Member's Retirement Benefit will be paid under the
terms of that election upon his or her death.
(c) Reemployed Members. If a Member is reemployed by the Company
after his or her Normal Retirement Date, Deferred Retirement Date or Vested
Retirement Benefit Payment Date described in Section 8.1 and the Member's
Retirement Benefit payments are suspended under Section 13.2(a) or Section
13.2(b), the Administrative Committee will not be required to provide the
Member with a written explanation of the optional forms of benefit payable
under the Plan nor obtain a new benefit election and spousal consent upon the
Member's later termination of Service or the resumption of benefit payments
under Section 13.2(a) or Section 13.2(b). Rather, upon the Member's later
termination of Service, or upon the later resumption of benefit payments, his
or her benefit (as adjusted under Section 13.2(d) after the Member's
reemployment) will recommence in the form in which they were being paid
before the suspension of such benefit payments under Section 13.2.
If a Member is reemployed by the Company after his or her Early
Retirement Date or Vested Retirement Benefit Payment Date described in
Section 8.2 and the Member's Retirement Benefit payments are suspended under
Section 13.2(a) or Section 13.2(b), the Member's prior benefit election will
automatically be cancelled and of no effect. Upon the Member's later
termination of Service, the Administrative Committee will provide the Member
with the written explanation of the optional forms of benefit payable under
the Plan and obtain a new benefit election and spousal consent, if the Member
is Legally Married. Upon the Member's later termination of Service, his or
her Retirement Benefit (as adjusted under Section 13.2(d) after the Member's
reemployment) will be paid in the form in which the Member elects under
Section 13.2.
(d) Reemployment after Cashout. If a Member is reemployed by the
Company after receiving a mandatory cash out of his or her Retirement Benefit
under Section 11.5, then any additional Retirement Benefit payable to the
Member upon his or her later termination of Service will be subject to the
terms and conditions of Section 10, regarding the Survivor Annuity, and
Section 11, regarding the Qualified Joint and Survivor Annuity. Accordingly,
if the Member is Legally Married or has a Domestic Partner and dies before
the Annuity Starting Date, the Member's Retirement Benefit will be paid in
the form of a Survivor Annuity. If the Member is Legally Married and dies on
or after the Annuity Starting Date, the Member's Retirement Benefit will be
paid in the form of a Qualified Joint and Survivor Annuity, unless such
annuity is waived, with the consent of the Member's spouse. If the Member
has a Domestic Partner and the Member dies on or after the Annuity Starting
Date, no Retirement Benefit will be payable under the Plan, unless the Member
has elected an optional form of benefit under Section 12.3
If the Equivalent Actuarial Value of a Member's Retirement Benefit is
$3,500 or less as of the date of the Member's separation from Service, such
benefit will be paid in the form of a single sum under Section 11.5.<PAGE>
SECTION 13 PAYMENT AND SUSPENSION OF BENEFITS.
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13.1 Payment of Benefits. Payment of a Member's Retirement Benefit
will begin not later than the earlier of:
(a) 60 days after the last to occur of:
(i) The last day of the Plan Year in which the Member
reaches age 65;
(ii) The last day of the Plan Year in which the Member
separates from Employment with the Company; or
(iii) The last day of the Plan Year which contains the 10th
anniversary of the date the Member began membership in the Plan; or
(b) The Required Beginning Date.
If a Member or former Member dies before his or her entire Retirement
Benefit has been distributed, such benefit will become payable in full not
later than 5 years following the date of the Member's death. However, if
benefit payments have begun and will be made to the Member over a period not
extending beyond the life expectancy of the Member or the joint lives or
joint life expectancy of the Member and the Member's Beneficiary, any
remaining benefits may be paid over a period not extending beyond the payment
period elected by the Member and in effect at his or her death. The
preceding requirements will be satisfied if the Member's benefit is to be
paid over the life or life expectancy of the Beneficiary in accordance with
Regulations issued by the IRS and the payment of such benefit begins no later
than (i) 1 year after the death of the Member, or (ii) if the Member's
Surviving Spouse is the designated Beneficiary, the date the Member would
have attained age 70-1/2. If the Surviving Spouse of the Member dies before
the complete payment of the Member's Retirement Benefit, the remainder of
such benefit may be paid to the Surviving Spouse's designated beneficiary as
if the Surviving Spouse were a Member.
All Retirement Benefit payments will be made in accordance with the
minimum distribution and incidental benefit requirements of section 401(a)(9)
of the Code which require generally that certain minimum amounts be
distributed to the Member each calendar year, beginning with the calendar
year in which the Member's Required Beginning Date falls, in order to assure
that certain minimum amounts be paid to the Member and that only "incidental"
benefits be provided to the Member's Beneficiaries. Any distribution option
required by section 401(a)(9) of the Code will override and supersede any
inconsistent distribution options provided for in the Plan.
13.2 Suspension of Benefits. A Member who is reemployed by the Company
after his or her Retirement Date will be subject to the following benefit
suspension provisions.
(a) Reemployment as Employee. If a Member who is receiving
monthly benefit payments on account of his or her Normal Retirement, Deferred
Retirement or Vested Retirement Benefit Payment Date described in Section 8.1
is reemployed by the Company as an Employee, such monthly benefit payments
will be suspended upon the Member's reemployment. Such monthly benefit
payments will recommence (in the form in which they were being paid prior to
the suspension) upon the earlier of (i) the date the Member terminates
Service, or (ii) any month during which the Member is credited with less than
40 Hours of Service.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 8.2 is reemployed by the Company as an Employee, such monthly
benefit payments will be suspended upon the Member's reemployment. Such
monthly benefit payments will recommence (in the form elected by the Member
under Section 12) upon the Member's subsequent termination of Service.
(b) Reemployment as a Casual Employee. If a Member who is
receiving monthly benefit payments on account of his or her Normal
Retirement, Deferred Retirement or Vested Retirement Benefit Payment Date
described in Section 8.1 is reemployed by the Company as a Casual Employee,
such monthly benefit payments will be suspended after the Member completes
950 Hours of Service during a Rehire Anniversary Year. Such suspension will
be effective for each month in which the Member is credited with at least 40
Hours of Service. Such monthly benefit payments will recommence during each
succeeding Rehire Anniversary Year and will continue to be paid (in the same
form as they were before the suspension) until the Member again completes 950
Hours of Service, in which case such monthly benefit payments will be
suspended.
If a Member who is receiving monthly benefit payments on account of his
or her Early Retirement or Vested Retirement Benefit Payment Date described
in Section 8.2 is reemployed by the Company as a Casual Employee, such
monthly benefit payments will be suspended after the Member completes 950
Hours of Service during a Rehire Anniversary year. Such benefit payments
will not recommence until the Member's termination of Service. At such time,
the Member's Retirement Benefit will be paid in the form elected by the
Member under Section 12.3.
(c) Limitations on Benefit Suspension. If a Member or former
Member is reemployed by the Company after reaching age 70-1/2, his or her
monthly benefit payment, if any, will continue. In addition, if a Member who
is reemployed after his or her Retirement Date continues in Service after his
or her Required Beginning Date, the Member will be deemed to have terminated
Service for purposes of Section 13 and Section 12.4 as of his or her Required
Beginning Date.
(d) Benefit Service While Reemployed. A Member described in any
of the preceding paragraphs who is reemployed by the Company as an Employee
or as a Casual Employee will be credited with a full month of Benefit Service
for every calendar month in which he or she is credited with at least 1 Hour
of Service or in which he or she otherwise has Service. However, any
additional Retirement Benefit the Member would accrue as a result of being
credited with Benefit Service under this Section 13, will be offset by the
monthly benefit payments distributed to the Member. Such offset will not
reduce the Member's monthly benefit payments below the amount the Member was
receiving on account of his or her earlier termination of employment. Such
offset will be made for a Member who is reemployed by the Company after his
or her Normal Retirement, Deferred Retirement or Vested Retirement Benefit
Payment Date described in Section 8.1 for each month the Member is engaged in
"Section 203(a)(3)(B) Service," as defined in the Act. A Member will be
engaged in Section 203(a)(3)(B) Service during any month in which he or she
is credited with at least 40 Hours of Service. Such offset will be made for
a Member who is reemployed by the Company after his or her Early Retirement
or Vested Retirement Benefit Payment Date described in Section 8.2 for each
month of the Member's reemployment. Any additional Retirement Benefit earned
by the Member will be paid in the form provided by Section 12.4.
(e) Retiree Coordinators. If a Member retires and is reemployed
by the Company as a Retiree Coordinator, he or she will continue to receive
monthly Retirement Benefits, if any, and will not resume membership in the
Plan while so employed.<PAGE>
SECTION 14 MAXIMUM AMOUNT OF RETIREMENT BENEFIT.
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14.1 Scope of Limitations on Benefits. The provisions of this Section
14 will govern the following benefits:
(a) Any annuity payable to a Member for life as part of a
Qualified Joint and Survivor Annuity or as part of a Survivorship Option
elected by the Member under Section 11.3 and having the effect of a
"qualified joint and survivor annuity" within the meaning of section 417 of
the Code;
(b) Any Straight Life Annuity payable to a Member under Section
11.2 or 11.3; and
(c) Any other Survivorship Option or other option elected by a
Member under Section 11.3 (including both the annuity payable to the Member
and any other annuity or benefit payable).
14.2 Basic Limitations on Benefits. The benefits to which Section 14
is applicable may not exceed the Equivalent Actuarial Value of a Qualified
Joint and Survivor Annuity or Straight Life Annuity in an annual amount equal
to the lesser of:
(a) The $90,000 limitation in effect under section 415(b)(1)(a) of
the Code (as adjusted to take into account changes in the cost-of-living
under any Regulations or rulings of the IRS) (the "$90,000 Limitation"); or
(b) 100% of the Member's High-3 Year Average Compensation (the
"Compensation Limitation"),
subject, however, to the following provisions of this Section 14.
If a Member's benefit would exceed the above limitation, then the Member's
benefit will be reduced as necessary. However, the Member's benefit will in
no event be reduced below the amount of such benefit as of November 27, 1983,
determined under the Plan (including its benefit limitations) as then in
effect.
14.3 Adjustments to Limitations. The $90,000 Limitation and
Compensation Limitation will be subject to the following provisions:
(a) Benefits Payable to Former Members. In the case of a Member
who has separated from Service, the $90,000 Limitation will be adjusted
annually to reflect changes in the cost-of-living under any Regulations or
rulings issued by the IRS.
(b) Early Payment Adjustment. If benefits become payable to a
Member before he or she reaches the Social Security Retirement Age but on or
after the date on which the Member reaches age 62, the $90,000 Limitation
will be reduced by .00556 for each of the first 36 months and by .00417 for
each additional month by which the Member's benefit commencement date
precedes his or her Social Security Retirement Age. If benefits become
payable before the Member reaches age 62, the $90,000 Limitation will be
reduced as provided in the preceding sentence until age 62 and will be
further reduced for each month by which the benefit commencement date
precedes the Member's 62nd birthday. In adjusting the $90,000 Limitation for
the payment of benefits before age 62, the interest rate used will be the
greater of 5% per annum or the rate used for determining actuarial reductions
for early payment of benefits described in Section 22 of this Plan.
(c) Delayed Payment Adjustment. If benefits become payable to a
Member after he or she reaches the Social Security Retirement Age, the
$90,000 Limitation will be adjusted, using an interest assumption not greater
than the lesser of 5% or the post-retirement interest rate used for making
Equivalent Actuarial Value determinations under the Plan, so that it has an
Equivalent Actuarial Value to a $90,000 benefit beginning at the Social
Security Retirement Age. Such limitation may not exceed 100% of the Member's
High 3-Year Average Compensation.
(d) Service and Membership Reductions. If the Member has
completed less than 10 Years of Plan membership and/or less than 10 Years of
Service (including fractional parts of a year), the $90,000 Limitation will
be reduced by multiplying it by a fraction, the numerator of which is the
number of years of Plan membership of the Member and the denominator of which
is 10, and the Compensation Limitation will be multiplied by a fraction the
numerator of which is the number of Years of Service of the Member and the
denominator of which is 10. As provided in Sections 2.56 and 2.68, Years of
Service which would be counted under the Plan and the Employee Retirement
Plan will be counted under this Plan but the same period will be counted only
once.
14.4 Minimum Benefit. The $90,000 Limitation and Compensation
Limitation will not apply if:
(a) The annual benefits payable under all defined benefit plans
maintained by the Company or an Affiliated Company with respect to the Member
does not exceed $1,000 multiplied by the Member's Years of Service (not to
exceed 10); and
(b) The Member has not participated in any defined contribution
plan (within the meaning of section 414(i) of the Code) maintained by the
Company or an Affiliated Company.
14.5 TRA 86 Protected Benefits. If on or before the first day of the
first Plan Year beginning after December 31, 1986 (November 30, 1987), a
Member was a participant in 1 or more defined benefit plans maintained by the
Company or an Affiliated Company which were in existence on May 6, 1986, and
that met the applicable requirements of section 415 of the Code for all prior
Plan Years, the $90,000 Limitation will equal the greater of the amount
specified in Section 14.2(a), as adjusted under the preceding paragraphs of
this Section 14, or the Member's Retirement Benefit at the close of the last
Plan Year beginning on or before December 31, 1986, calculated as if the
Member had terminated employment on the last day of said Plan Year. In
calculating a Member's Retirement Benefit for purposes of the preceding
sentence, the Administrative Committee will disregard changes in the terms
and conditions of the Plan and cost-of-living adjustments occurring after May
5, 1986.
14.6 Multiple Plans. The Administrative Committee will, to the extent
required by the Act and the Code and in accordance with the Regulations,
apply the $90,000 Limitation and Compensation Limitation by taking into
account the benefits payable and the contributions made under any other plans
maintained by the Company or Affiliated Company which are qualified under
section 401(a) of the Code. If such other plan is a defined contribution
plan, then the sum of the "defined benefit plan fraction" (as defined in
section 415(e)(2) of the Code) and the "defined contribution plan fraction"
(as defined in section 415(e)(3) of the Code) may not exceed 1. In any case
where the combined fraction is in excess of 1, then the Retirement Benefit
payable under this Plan will be reduced (but not below the Member's
Retirement Benefit as of the last day of the Plan Year beginning before
January 1, 1987). The reduction will be of sufficient amount to eliminate
the excess over the combined maximum.
If the Plan becomes Top Heavy and, therefore, subject to the provisions
of Section 23, then for purposes of determining the defined benefit plan
fraction" and the "defined contribution plan fraction," a factor of 100% will
be substituted for the factor of 125% used in calculating the denominators of
such fractions, unless both of the following conditions are satisfied:
(a) The Plan is not Super Top Heavy as defined in Section 23 of
the Plan; and
(b) The contributions and benefits on behalf of all Participants
other than Key Employees meet the requirements of section 416(h) of the Code.
14.7 Special Limitations on Benefits. The annual Retirement Benefit
payments to a Member who is among the 25 highest Highly Compensated Employees
and highest Highly Compensated Former Employees will be restricted to an
amount equal to the payments that would be made on behalf of the Member under
a single life annuity that is the Equivalent Actuarial Value of the Member's
Retirement Benefit under the Plan. The above restrictions will not apply,
however, if one of the following conditions is met:
(a) After payment to a Member described in the preceding paragraph
of all of his or her "benefits" under the Plan, the value of the Plan assets
equals or exceeds 110% of the value of current liabilities as defined in
section 412(l)(7) of the Code; or
(b) The value of "benefits" for a Member described in the
preceding paragraph is less than 1% of the value of current liabilities; or
(c) The value of "benefits" payable to the Member under the Plan
does not exceed the amount described in section 411(a)(11)(A) of the Code
regarding the restrictions on mandatory single sum distributions of less than
$3,500.
"Benefits" include any periodic income, any withdrawal values payable to a
living Member, and any death benefits not provided for by insurance on the
Member's life.<PAGE>
SECTION 15 BENEFICIARIES.
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If no Beneficiary designation is in effect under Section 11.3 at the
time of a Member's death, or if no designated Beneficiary survives the
Member, the payment of the Member's Vested Retirement Benefit, if any, will
be made to the following persons in the order listed:
(a) To the Member's Surviving Spouse, if any;
(b) If the Member has no Surviving Spouse, then to his or her
children;
(c) If the Member has no living children, then to his or her
parents;
(d) If the Member has no living parents, then to his or her
brothers and sisters; or
(e) If the Member has no living brothers and sisters, then to his
or her estate.
The Administrative Committee will, in its sole and absolute discretion,
determine the right of such persons to receive the benefit payable with
respect to a Member, if any. If the Administrative Committee is in doubt as
to the right of any person to receive such amount, the Administrative
Committee may direct the Trustee to retain such amount, without liability for
any interest on such amount, until the rights to such amount are determined,
or, alternatively, may direct the Trustee to pay such amount into any court
of appropriate jurisdiction and such payment will be a complete discharge of
the liability of the Plan and the Trust Fund.<PAGE>
SECTION 16 FUNDING AND CONTRIBUTIONS.
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16.1 Contributions. Subject to the provisions of Sections 19 and 20 of
this Plan, the Company will contribute to the Trust Fund, for each Plan Year,
the amount required by the Act and the Code. The Investment Committee will
arrange for the establishment and maintenance of such funding accounts as are
required by the Act and the Code.
16.2 Actuarial Assumptions. The Administrative Committee will adopt
and may change from time to time the actuarial assumptions and methods that
are recommended by the Actuary for purposes of making actuarial valuations
for the Plan. At such times as may be required by the Act or the Code or
requested by the Administrative Committee, the Actuary will make an actuarial
valuation of the Plan, including such calculations as may be necessary to
determine whether the Plan is adequately funded, will estimate the
contributions required under Section 16.1 and will report the results of its
valuation to the Administrative Committee. Before the termination of the
Plan, forfeitures of benefits arising from a Member's termination of Service,
death or any other reason will not be applied to increase the benefit that
any Member would otherwise be entitled to receive under the Plan, but may be
anticipated in estimating costs and will be applied to reduce the Company's
contributions under the Plan.
16.3 Trust Fund. All monies, securities or other property received as
contributions under the Plan will be delivered to the Trustee under the Trust
Fund, to be managed, invested, reinvested and distributed in accordance with
the Plan, the Trust Agreement and any agreement with an insurance company or
other financial institution constituting a part of the Plan and Trust
Agreement.
16.4 Expenses of the Plan. The expenses of administering the Plan may
be paid out of the Trust Fund if the Participating Companies do not pay such
expenses directly in such proportions as determined by the Administrative
Committee. The administrative expenses will include but are not limited to:
(a) The premiums for termination insurance payable to the PBGC;
(b) The fees and expenses of any employee and of the Trustee for
the performance of their duties under the Trust Agreement;
(c) The expenses incurred by the members of the Administrative
Committee and of the Investment Committee in the performance of their duties
under the Plan (including reasonable compensation for any legal counsel,
certified public accountants and actuaries and any outside agents and cost of
services provided with respect to the Plan); and
(d) All other proper charges and disbursements of the Trustee or
the members of the Administrative Committee and of the Investment Committee
(including settlements of claims or legal actions approved by counsel to the
Plan).
An election by the Participating Companies to pay all or a part of the above
expenses directly will not bind the Participating Companies as to their
rights to elect, with respect to the same or other expenses, at any other
time to have such expenses paid from the Trust Fund or to have the Trustee
reimburse the Participating Companies for expenditures already made. In
estimating costs under the Plan, administrative costs may be anticipated.<PAGE>
SECTION 17 ADMINISTRATION OF THE PLAN.
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17.1 Administrative Committee. The Administrative Committee is the
"Plan Administrator" of the Plan (as such term is used in the Act) and the
"Named Fiduciary" (as defined in section 402 of the Act) with respect to the
operation and administration of the Plan. The Administrative Committee will
employ the Actuary and such certified public accountants as it requires or
may deem advisable for the Plan. The Administrative Committee will make such
rules and regulations and take any other actions to administer the Plan as it
may deem appropriate. The Administrative Committee may adopt periods in
which advance notice required under the Plan must be given and will
communicate such periods to Employees. The Administrative Committee will
have sole discretion to interpret the terms of the Plan and to determine
eligibility for benefits and the amount of benefits payable to a Member, if
any, under the objective criteria set forth in the Plan. The Administrative
Committee's rules, interpretations, regulations and actions will be
conclusive and binding on all persons.
In administering the Plan, the Administrative Committee (a) will act
in a nondiscriminatory manner to the extent required by section 401(a) and
related sections of the Code, and (b) will at all times discharge its duties
in accordance with the standards set forth in section 404(a)(1) of the Act.
17.2 Control and Management of Plan Assets. The Investment Committee
is the "Named Fiduciary" (as defined in section 402 of the Act) with respect
to the management and control of the assets of the Plan, but only to the
extent that it will have the authority to:
(a) Appoint 1 or more Trustees to hold the assets of the Plan in
trust and to enter into a trust agreement with each Trustee it appoints;
(b) Appoint 1 or more Investment Managers for any assets of the
Plan and to enter into an investment management agreement with each
Investment Manager it appoints;
(c) Remove any Trustee or Investment Manager so appointed;
(d) Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
(e) Perform such other functions as are specifically assigned to
the Investment Committee under the Plan.
In addition, the Investment Committee will have the responsibility for
monitoring and reviewing the investment performance of the Plan to ensure
that it is consistent with the requirements of the Act and the Code and the
funding policy adopted by the Administrative Committee. The Investment
Committee will establish the necessary parameters or standards regarding Plan
investments to ensure that such criteria continue to be met.
17.3 Trustees and Investment Managers. Each Trustee appointed under
Section 17.2 will have the exclusive authority and discretion to control and
manage the Plan assets held in trust by it, except to the extent that:
(a) The Investment Committee directs how those assets will be
invested;
(b) The Investment Committee allocates the authority to manage
those assets to 1 or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
Each Investment Manager appointed will have the exclusive authority to
manage, including the power to acquire and dispose of, the Plan assets
assigned to it by the Investment Committee, except to the extent that the
Investment Committee prescribes how those assets will be invested. The
Trustee and each Investment Manager will be solely responsible for
diversifying the investment, in accordance with section 404(a)(1)(C) of the
Act, of the Plan assets assigned to them by the Investment Committee, except
to the extent that the Investment Committee directs or the Plan prescribes
how those assets will be invested.
17.4 Committee Membership. Both the Administrative Committee and the
Investment Committee will consist of at least 3 members. Each Member will be
appointed by, will remain in office at the will of, and may be removed, with
or without cause, by the Board of Directors. Any member of either Committee
may resign at any time. The Board of Directors will designate the chairman
of each Committee.
To the maximum extent permitted by law, no member of either Committee
will be personally liable by reason of any contract or other instrument
executed by him or her, or on his or her behalf, in his or her capacity as a
member of such Committee, nor for any mistake of judgment made in good faith.
The Company will indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums of which are
paid from the Company's own assets), each member of the Administrative
Committee and Investment Committee and each other officer, employee or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan or to the management and control
of the assets of the Plan may be delegated or allocated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any
act or omission to act in connection with the Plan, unless arising out of
such person's own fraud or willful misconduct.
17.5 Reports to Board of Directors. Each Committee will report to the
Board of Directors, or to its designee for this purpose, annually and at such
other times specified by the Board of Directors or such designee, with regard
to the matters for which it is responsible under the Plan.
17.6 Employment of Advisers. The Administrative Committee and the
Investment Committee may make use of employees of the Company or outside
agents as they each require or may deem advisable for purposes of performing
their respective duties under the Plan. Either Committee may rely upon the
written opinion or advice of counsel provided by the Company, fairness
opinions provided by investment bankers and written opinions or advice
provided by the Actuary and accountants engaged by the Administrative
Committee. Either Committee may delegate to any such agent or to any
subcommittee or member of the Committees its authority to perform any act
under the Plan, including, without limitation, those matters involving the
exercise of discretion. Any such delegation of discretion will be subject to
revocation at any time at the discretion of the appropriate Committee.
17.7 Limitations on Committee Actions. No member of either Committee
will be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under the Plan. The members
of the Administrative Committee and of the Investment Committee will not
receive any special compensation for serving in their capacities as members
of such Committees but will be reimbursed for any reasonable expenses
incurred in connection with performing their Committee duties. Except as
otherwise required by the Act, no bond or other security will be required of
either Committee or any Committee member in any jurisdiction. Any person may
serve on both Committees, and any member of either Committee, any
subcommittee or agent to whom either Committee delegates any authority, and
any other person or group of persons, may serve in more than one fiduciary
capacity (including service both as a trustee and administrator) with respect
to the Plan.
17.8 Committee Meetings. Each Committee will establish its own
procedures and the time and place for its meetings, and provide for the
keeping of minutes of all meetings. A majority of the members of a Committee
will constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of a Committee may be taken upon the affirmative vote
of a majority of the members of the Committee at a meeting or, at the
direction of its chairman, without a meeting by mail, telegraph or telephone;
provided that all of the members of the Committee are informed by mail or
telegraph of their right to vote on the proposal and of the outcome of the
vote thereon. "Mail" will include any written or electronic interoffice
communication.
17.9 Accounting and Disbursement of Plan Assets. The Administrative
Committee will appoint an individual who will cause to be kept full and
accurate accounts of receipts and disbursements of the Plan, and will cause
to be deposited all funds of the Plan to the name and credit of the Plan, in
such depositories as may be designated by the Investment Committee. Such
person will cause to be disbursed the monies and funds of the Plan when so
authorized by either the Investment Committee or the Administrative Committee
and will generally perform such other duties as may be assigned to him or her
from time to time by either Committee. All demands for money of the Plan
will be signed by such person or such other person or persons as either
Committee may from time to time designate in writing.<PAGE>
SECTION 18 CLAIMS AND REVIEW PROCEDURES.
- ---------- ----------------------------
18.1 Applications for Benefits. Any application for a benefit under
the Plan must be submitted to the Administrative Committee at the Company's
principal office. The application must be in writing on the prescribed form
and must be signed by the applicant.
18.2 Denial of Applications. If any application for a benefit is
denied in whole or in part, the Administrative Committee will notify the
applicant in writing of the right to a review of the denial. The written
notice will state, in a manner reasonably calculated to be understood by the
applicant:
(a) The specific reasons for the denial;
(b) The specific references to the Plan provisions on which the
denial was based;
(c) A description of any information or material necessary to
perfect the application;
(d) An explanation of why such material is necessary; and
(e) An explanation of the Plan's review procedure.
The written notice will be given to the applicant within 90 days after the
Administrative Committee receives the application, unless special
circumstances require an extension of time for processing the application.
In no event will the extension exceed a period of 90 days from the end of the
initial 90-day period. If an extension is required, written notice of the
need for the extension will be furnished to the applicant before the end of
the initial 90-day period. The notice will indicate the special
circumstances requiring the extension of time and the date by which the
Administrative Committee expects to give a decision. If written notice is
not given to the applicant within the initial 90-day period, then the
application will be deemed to have been denied (for purposes of Section 18.3)
upon the expiration of such period.
18.3 Requests for Review. Any person whose application for a benefit
is denied in whole or in part (or such person's duly authorized
representative) may appeal the denial by submitting to the Administrative
Committee a request for a review of such application within 60 days after
receiving written notice of the denial (or within 60 days of a deemed denial
under Section 18.2). The Administrative Committee will give the applicant or
such representative an opportunity to review pertinent documents (except
legally privileged materials) in preparing such request for review and to
submit issues and comments in writing. The request for review must be in
writing and must be addressed to the Company's principal office. The request
for review must state all of the grounds on which it is based, all facts in
support of the request and any other matters which the applicant deems
pertinent. The Administrative Committee may require the applicant to submit
such additional facts, documents or other material as it may deem necessary
or appropriate in making its review.
18.4 Decisions on Review. The Administrative Committee will act upon
each request for review within 60 days after it receives the request unless
special circumstances require an extension of time for processing, but in no
event will the decision on review be given more than 120 days after the
Administrative Committee receives the request for review. If an extension is
required, written notice of the need for an extension will be given to the
applicant before the end of the initial 60-day period. The Administrative
Committee will give prompt, written notice of its decision to the applicant.
If the Administrative Committee confirms the denial of the application for a
benefit in whole or in part, the notice will state, in a manner calculated to
be understood by the applicant, the specific reasons for the denial and
specific references to the Plan provisions on which the decision is based.
To the extent that the Administrative Committee overrules the denial of the
application for a benefit, such benefit will be paid to the applicant.
18.5 Exhaustion of Administrative Remedies. No legal or equitable
action for a benefit under the Plan will be brought unless and until the
claimant has completed the following:
(a) Submitted a written application for a benefit in accordance
with Section 18.1;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 18.3; and
(d) Been notified in writing that the Administrative Committee has
affirmed the denial of the application.
A claimant may bring an action without completing the above steps after the
Administrative Committee has failed to act on the claim within the time
prescribed in Section 18.2 and Section 18.4.<PAGE>
SECTION 19 TERMINATION OF EMPLOYER PARTICIPATION.
- ---------- -------------------------------------
19.1 Termination by Participating Company. Any Participating Company
may terminate its participation in the Plan by giving the Board of Directors
prior written notice specifying a termination date which will be the last day
of a month at least 60 days after the date such notice is received by the
Board of Directors. If the specified termination date is not at least 60
days after the date the notice of termination is received by the Board of
Directors, the specified termination date will automatically be changed to
the last day of the first month which is at least 60 days after the date the
notice is received. The Board of Directors may waive the 60 day notice
requirement and terminate the Participating Company's participation in the
Plan as of any earlier date. The Board of Directors may also terminate any
Participating Company's participation in the Plan, as of any termination date
specified by the Board of Directors, for the failure of the Participating
Company to make proper contributions or to comply with any other provision of
the Plan, or for any other reason the Board of Directors deems appropriate.
In any event, the Administrative Committee will promptly notify the IRS, the
PBGC and other appropriate governmental authorities under Sections 19.3 and
20.3 of the Plan.
19.2 Effect of Termination. Upon termination of the Plan as to any
Participating Company, no amount will subsequently be payable under the Plan
to or with respect to any Members then employed by such Participating
Company, except as provided in this Section 19, and no amount will be payable
to the Participating Company. Subject to any conditions which the IRS, the
PBGC or any other governmental authority may impose, the Administrative
Committee will direct the Trustee to segregate such portion of the Trust Fund
(the "Distributable Reserve") as the Actuary determines to be properly
allocable in accordance with the Act to the active employees of such
Participating Company. To the maximum extent permitted by the Act, any
rights of Members no longer employed by the Participating Company, former
Members and their Beneficiaries, Surviving Spouses and other eligible
survivors under the Plan will be unaffected by a termination of the Plan as
to any Participating Company, and any payments, transfers or contributions of
the Distributable Reserve as provided in Section 20 will constitute a
complete discharge of all liabilities under the Trust Fund.
If the Plan is terminated with respect to a Participating Company, the
Retirement Benefit of any Highly Compensated Employee and any Highly
Compensated Former Employee of such company will be limited to a benefit that
is nondiscriminatory under section 401(a)(4) of the Code.
19.3 IRS Termination Procedure. If the Plan is terminated with respect
to a Participating Company, the Administrative Committee or the appropriate
Company office must submit the Plan to the IRS for a determination that the
termination of the Plan with respect to the Participating Company will not
adversely impact the qualified status of the Plan and the Trust Fund under
sections 401(a) and 501(a) of the Code. No distributions of assets will be
made in connection with the termination of the Plan until the IRS has issued
a determination as to the effect of such termination. The Participating
Company may, by written notice delivered to the Administrative Committee and
the Trustee, waive its right to apply for such a determination. Any such
waiver request must be approved by the Board of Directors.
19.4 PBGC Termination Procedure. Upon receipt by the Administrative
Committee of an IRS determination regarding the termination of the Plan as to
a Participating Company, or if the Participating Company waives its right to
obtain an IRS determination and the Board of Directors approves such waiver
request, the following provisions will apply:
(a) At least 60 days before the date on which the Participating
Company's participation in the Plan is to be terminated, the Administrative
Committee will provide Members and Beneficiaries with a Notice of Intent to
Terminate the Plan with respect to the Participating Company. As soon as
administratively practicable after such Notice of Intent to Terminate is
provided, the Administrative Committee will file notice with the PBGC
indicating that the Plan is to be terminated with respect to the
Participating Company.
(b) If the PBGC issues a Notice of Noncompliance within 60 days
after it receives notice of the termination of the Plan, the Administrative
Committee will refrain from taking any further action to terminate the Plan
with respect to the Participating Company and will cooperate with the PBGC
with respect to such termination of the Plan. Alternatively, the
Administrative Committee may declare the termination of the Plan to be null
and void with respect to the Participating Company and continue to treat the
Plan with respect to such Company as an ongoing Plan for all purposes under
the Act and the Code.
(c) If the PBGC does not issue a notice of noncompliance within 60
days after it receives notice of the termination of the Plan, then the
Administrative Committee will distribute the distributable reserve to Members
employed by the Participating Company in accordance with Section 20.5 of the
Plan and the applicable Regulations issued by the PBGC regarding plan
terminations.
If the PBGC issues revised Regulations regarding plan terminations, such
Regulations will supersede and override any inconsistent provisions of this
Plan, and any termination of the Plan with respect to a Participating Company
will be accomplished under the terms and provisions of such Regulations.
19.5 Termination of the Plan. If the Plan is terminated with respect
to all Participating Companies, the provisions of this Section 19 will be
applied to each of the Participating Companies individually or collectively
as determined by the Administrative Committee in its sole and absolute
discretion.<PAGE>
SECTION 20 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- ---------- ------------------------------------------------------
20.1 Right to Amend. The Board of Directors have the right at any
time, to modify, alter or amend this Plan, in whole or in part, prospectively
or retroactively. No amendment will reduce any Participant's Retirement
Benefit, calculated as of the date on which the amendment is adopted, except
to the extent as may be appropriate or necessary to enable the Plan and Trust
Fund to continue to satisfy the requirements of section 401(a) and section
501(a) of the Code or other applicable law. Any such amendment will be
evidenced by an instrument in writing duly executed, acknowledged and
delivered to the Administrative Committee and the Trustee. If the Plan is
amended by the Board of Directors after it is adopted by an Affiliated
Company, unless otherwise expressly provided, it will be treated as so
amended by the Affiliated Company without the necessity of any action on the
part of the Affiliated Company.
20.2 Plan Merger or Consolidation. The Board of Directors reserves the
right to merge or consolidate this Plan with any other plan or to direct the
Trustee to transfer the assets held in the Trust Fund and/or the liabilities
of this Plan to any other plan or to accept a transfer of assets and
liabilities from any other plan. In the event of the merger or consolidation
of this Plan and the Trust Fund with any other plan, or a transfer of assets
or liabilities to or from the Trust Fund to or from any other plan, then each
Member will be entitled to a benefit immediately after the merger,
consolidation or transfer (determined as if the Plan was then terminated)
that is equal to or greater than the benefit he or she would have been
entitled to receive immediately before such merger, consolidation or transfer
(if this Plan had then terminated).
20.3 Termination of the Plan. The Board of Directors hopes and expects
to continue the Plan indefinitely. Nevertheless, to the full extent
permitted by law, the Board of Directors reserves the right to suspend or
terminate the Plan or to completely discontinue benefit accruals under the
Plan. As required by law, before the termination, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, any
other fiduciary or the PBGC of its intent to terminate the Plan. Upon such
termination, the Members' rights to their Retirement Benefits will become
fully vested and nonforfeitable.
On the complete termination of the Plan, LS&CO. and all or any
Participating Companies, as determined by the Board of Directors or its
designee, will receive such amounts, if any, as remain in the Trust Fund
after the satisfaction of all liabilities under the Plan.
20.4 Partial Termination of the Plan. Upon a curtailment of the Plan
or a discontinuance of the Plan with respect to a group or class of Members
that constitutes a "Partial Termination" as defined under section 411(d)(3)
of the Code, all such Members' rights to their Retirement Benefits under the
Plan at the time of the Partial Termination will become fully vested and
nonforfeitable. If a Partial Termination occurs, the Administrative Committee
may instruct the Actuary to allocate the assets among the Members in
accordance with section 4044(a) of the Act. The assets allocated to the
Members affected by the Partial Termination will then be segregated by the
Trustee, and the funds so allocated and segregated will then be used to pay
Retirement Benefits under the Plan to such Members in accordance with Section
20.5 as though the Plan had been completely terminated. If such funds are
insufficient to pay the affected Members' Retirement Benefits, the
Participating Company employing such Members will be liable for the
insufficiency. Alternatively, the Administrative Committee may postpone
Retirement Benefit distributions to such Members until their subsequent
termination of employment with the Company in accordance with other
provisions of the Plan.
20.5 Manner of Distribution. Upon termination of the Plan and the
allocation of Plan assets, the Administrative Committee may, in its sole and
absolute discretion, direct the Trustee to convert the Trust Fund into cash
and liquidate it by making Retirement Benefit distributions to Members in
accordance with the modes of distribution provided for in Section 11.
Alternatively, with the consent of the Board of Directors, or its designee,
the Administrative Committee may direct the Trustee to hold the Members'
Retirement Benefits in the Trust Fund until such Members or their
Beneficiaries become eligible to receive Retirement Benefit distributions
under the terms and provisions of this Plan.
If the Plan is liquidated, the Administrative Committee will instruct
the Trustee to purchase nontransferable deferred annuities for each person
entitled to Retirement Benefit distributions, with the monthly payment
provided by the annuity, the form of the annuity, and the date on which
payments will commence under the annuity to be determined in accordance with
the preceding Sections of the Plan. If the assets held in the Trust Fund are
insufficient to purchase all of such annuities, the assets will be allocated
among the Members in the manner prescribed by section 4044(a) of the Act.
However, the Board of Directors, or its designee, and the Administrative
Committee will not instruct the Trustee to liquidate the Trust Fund before
complying with the Act.<PAGE>
SECTION 21 INALIENABILITY OF BENEFITS.
- ---------- --------------------------
21.1 No Assignment Permitted. Except as may otherwise be required by
law, no amount payable at any time under the Plan and the Trust Agreement
will be used or diverted for purposes other than for the exclusive benefit of
Members and their Beneficiaries. No amount payable under the Plan will be
subject in any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any Member,
contingent annuitant, Beneficiary, or Alternate Payee, and any attempt to so
alienate or subject any such amount will be void. If any Member, contingent
annuitant, Beneficiary, or Alternate Payee, attempts to, or alienates, sells,
transfers, assigns, pledges, attaches, charges or otherwise encumbers any
amount payable under the Plan and Trust Agreement, or any part of such
amount, or if by reason of his or her bankruptcy or any other event, such
amount would be made subject to his or her debts or liabilities or would
otherwise not be enjoyed by him or her, then the Administrative Committee, if
it so elects, may direct that such amount be withheld and that such amount or
any portion of such amount be paid or applied to or for the benefit of such
person, his or her spouse, children or other dependents, or any of them, in
such manner and proportion as the Administrative Committee may deem proper.
The following arrangements are not prohibited under the Plan:
(a) Arrangements for the withholding of tax from benefit
distributions;
(b) Arrangements for the recovery of benefit overpayments;
(c) Arrangements for the recovery of amounts described in section
4045(b) of the Act in the event of the termination of the Plan and the
recapture of such amounts; or
(d) Arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided
that such arrangement is not part of an arrangement constituting an
assignment or alienation).
In addition, the return of Company contributions under Section 21.2 and the
creation, assignment or recognition of a right to all or a portion of a
Member's Retirement Benefit under a Qualified Domestic Relations Order under
Section 23.3 will not violate this Section 21.1.
21.2 Return of Contributions. All Company contributions to the Plan
are expressly conditioned upon the deductibility of such contributions under
section 404 of the Code. If the deduction of any Company contribution is
disallowed, then the amount for which a deduction is disallowed will be
returned to the appropriate Participating Company within 12 months after the
date of the disallowance. In addition, if any Company contribution is made
as a result of a mistake of fact, such contribution may be repaid to the
appropriate Participating Company within 12 months after it is made. Any
Company contribution so returned will be reduced to reflect losses, but will
not be increased to reflect gains or income.
21.3 Qualified Domestic Relations Orders. The Administrative Committee
will honor the terms of a Qualified Domestic Relations Order that satisfies
the following requirements.
(a) Requirements. In accordance with section 414(p) of the Code,
a Domestic Relations Order will not be treated as a Qualified Domestic
Relations Order unless it satisfies all of the following conditions:
(i) The Domestic Relations Order clearly specifies the name
and last known mailing address (if any) of the Member and the name and
last known mailing address of each Alternate Payee covered by the order,
the amount or percentage of the Member's Retirement Benefit to be paid
to each Alternate Payee or the manner in which such amount or percentage
is to be determined, and the number of payments or period to which such
order applies.
(ii) The Domestic Relations Order specifically indicates that
it applies to this Plan.
(iii) The Domestic Relations Order does not require this Plan
to provide any type or form of benefit, or any option, not otherwise
provided under the Plan, and it does not require the Plan to provide
increased benefits (determined on the basis of actuarial equivalence
factors in Section 22).
(iv) The Domestic Relations Order does not require the
payment of all or a portion of a Member's Retirement Benefit to an
Alternate Payee which is required to be paid to another Alternate Payee
under another order previously determined to qualify as a Qualified
Domestic Relations Order.
(b) Early Commencement of Payments to Alternate Payees. A
Domestic Relations Order requiring payment to an Alternate Payee before a
Member has separated from employment may qualify as a Qualified Domestic
Relations Order as long as the order does not require payment before the
Member's "Earliest Retirement Age," which is the earliest date on which the
Member could elect to receive a Retirement Benefit under the Plan. If the
order requires payments to begin after a Member's Earliest Retirement Age but
before a Member's actual retirement, the amount of the payments must be
determined as if the Member began receiving benefit payments on the date on
which the payments are to begin under the order, but taking into account only
the Equivalent Actuarial Value of the Member's Retirement Benefit at that
time and not taking into account the Equivalent Actuarial Value of any
Company subsidy for Early Retirement Benefits which may at any time be
provided by the Plan under Section 7. The Retirement Benefit payable to an
Alternate Payee will not be recalculated upon the Member's actual or deemed
retirement.
(c) Alternate Payment Forms. The Domestic Relations Order may
call for the payment of the Retirement Benefit to an Alternate Payee in any
form in which benefits may be paid under the Plan to the Member, other than
in the form of a Qualified Joint and Survivor Annuity with respect to the
Alternate Payee and his or her subsequent spouse.
(d) Actuarial Calculations. The actuarial factors and assumptions
used by the Administrative Committee under Section 22 of the Plan in making
actuarial equivalency determinations for calculating the payment of benefits
before a Member's Normal Retirement Date will be used for purposes of
calculating the Equivalent Actuarial Value of the Retirement Benefit payable
to the Alternate Payee.
(e) Processing of Qualified Domestic Relations Orders. The
Administrative Committee will promptly notify the Member, and any Alternate
Payee (including any Alternate Payee who may be entitled to benefits under a
previously received Qualified Domestic Relations Order) of the receipt of any
Domestic Relations Order which could qualify as a Qualified Domestic
Relations Order. At the same time, the Administrative Committee will advise
the Member and each Alternate Payee of the Plan provisions relating to the
determination of the qualified status of such orders.
Within a reasonable period of time after receipt of a copy of the
Domestic Relations Order, the Administrative Committee will determine whether
the Order is a Qualified Domestic Relations Order and notify the Member and
each Alternate Payee of its determination. The determination of the status
of a Domestic Relations Order as a Qualified Domestic Relations Order will be
made in accordance with such uniform and nondiscriminatory rules and
procedures as may be adopted by the Administrative Committee from time to
time. If monthly benefits are presently being paid with respect to a Member
named in a Domestic Relations Order which may qualify as a Qualified Domestic
Relations Order, or if the Member's Retirement Benefit becomes payable after
receipt of the order, the Administrative Committee will notify the Trustee to
segregate and hold the amounts which would be payable to the Alternate Payee
or payees designated in the order if the order is ultimately determined to be
a Qualified Domestic Relations Order.
If the Administrative Committee determines that the Order is a Qualified
Domestic Relations Order within 18 months of receipt of the order, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the Alternate Payee specified
in the Qualified Domestic Relations Order. Conversely, if within the same 18
month period the Administrative Committee determines that the Domestic
Relations Order is not a Qualified Domestic Relations Order, or if the status
of the order as a Qualified Domestic Relations Order is not resolved, the
Administrative Committee will instruct the Trustee to pay the segregated
amounts (plus any earnings on such amounts) to the person or persons who
would have been entitled to such amounts if the order had not been entered.
If the Administrative Committee determines that a Domestic Relations Order is
a Qualified Domestic Relations Order after the close of the 18 month period
mentioned above, the determination will be applied prospectively only. The
determination of the Administrative Committee as to the status of a Domestic
Relations Order as a Qualified Domestic Relations Order will be binding and
conclusive on all interested parties, present and future, subject to the
claims review provisions of Section 18.
(f) Responsibility of Alternate Payees. Any person claiming to be
an Alternate Payee under a Qualified Domestic Relations Order will be
responsible for supplying the Administrative Committee with a certified or
otherwise authenticated copy of the order and any other information or
evidence that the Administrative Committee deems necessary in order to
substantiate the person's claim or the status of the order as a Qualified
Domestic Relations Order.<PAGE>
SECTION 22 ACTUARIAL EQUIVALENCE FACTORS.
- ---------- -----------------------------
Unless otherwise specified in the Plan, the following actuarial
assumptions will be used for purposes of calculating various forms of benefit
under the Plan:
(a) Mortality:
(i) Except as provided in paragraph (ii), the Mortality
Table used under the Plan will be the 1983 Group Annuity Mortality
Table, assuming a relevant population that consists of 50% males and 50%
females.
(ii) For purposes of determining the Actuarial Equivalent of
benefits which begin to be paid before a Member's Normal Retirement Date
under the Plan, the mortality table used will be the 1951 Group Annuity
table on a female basis. The resulting factors will be rounded to the
next higher percentage.
(b) Interest Rate:
(i) For purposes of calculating a single sum payment made
after November 1, 1992, under Section 11.3 or Section 11.5, the interest
rate used under the Plan will equal the interest rate or rates that
would be used by the PBGC for purposes of determining the present value
of a lump sum distribution on plan termination, determined as of the
first day of the month during which the notice of the optional forms of
benefit payable under the Plan and election form described in Section
13.2 is distributed (or would otherwise be distributed to the Member if
the single sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500) which will not be more than 120 days before the
Annuity Starting Date.
(ii) For single sum distributions made during the period
beginning November 1, 1991, and ending on November 1, 1992, the interest
rate used under the Plan will equal whichever of the rates described in
(A) or (B) below which produces the greater single sum benefit:
(A) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the notice
of the optional forms of benefit payable under the Plan and
election form described in Section 13.2 is distributed to the
Member (or would otherwise be distributed to the Member if the
lump sum Actuarial Equivalent of his or her Retirement Benefit was
not less than $3,500); or
(B) The interest rate used by the PBGC for purposes of
determining the present value of a lump sum on plan termination,
determined as of the first date of the month in which the
distribution occurs.
(iii) For single sum distributions made before November 1,
1991, the interest rate or rates used under the Plan will equal the
interest rate or rates used by the PBGC for purposes of determining the
present value of a lump sum on plan termination, determined as of the
first day of the month in which the distribution occurs.
(iv) For purposes of calculating all other optional forms of
benefit under the Plan, the interest rate used will be 7%.
(v) For purposes of determining the Equivalent Actuarial
Value of Retirement Benefit payments beginning before a Member's Normal
Retirement Date under the Plan, the interest rate used will be 6%.<PAGE>
SECTION 23 TOP HEAVY BENEFITS.
- ---------- ------------------
If the Plan becomes "Top Heavy," the provisions of this Section 23 will
become operative. The Plan will be Top Heavy for a Plan Year if, on the last
day of the prior Plan Year (the "Determination Date"), more than 60% of the
present value of the "Accrued Benefits" under the Plan are credited to or
allocable to "Key Employees." For purposes of determining the present value
of a Member's Accrued Benefit, turnover is to be ignored. The Plan will be
"Super Top Heavy" if, on the Determination Date, more than 90% of the present
value of the Accrued Benefits under the Plan are credited or allocable to Key
Employees.
"Accrued Benefit" means the value of the Member's Retirement Benefit as
determined under Section 5 of the Plan (and the Member's accrued benefit
determined under any other defined benefit plans which are members of a
"Required Aggregation Group" of which this Plan is also a member). The
Member's Accrued Benefit will be increased by any distributions made to the
Member during the 5-year period ending on the Determination Date; except that
the Accrued Benefit of a Member who has not performed any services for the
Company or an Affiliated Company during such 5-year period and the Accrued
Benefit of any Member who was formerly a Key Employee will be disregarded.
The present value will be determined as of the most recent "Valuation Date"
that is within the 12-month period ending on the "Determination Date" and as
described in the Regulations under the Code, using an interest rate of 7% per
year and the 1983 Group Annuity Mortality Table, assuming a relevant
population that consists of 50% males and 50% females. In determining the
present value, benefits not related to retirement benefits will be excluded,
and subsidized early retirement benefits and subsidized benefit options will
be excluded unless deemed to be nonproportional subsidies as described in the
Regulations under the Code. The Valuation Date is the same as the valuation
date used for determining minimum funding standards under section 412 of the
Code, whether or not a valuation was performed during the year.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee determines (in its sole and absolute
discretion, but under the provisions of section 416 of the Code) that the
Plan is a constituent in an "Aggregation Group" this Plan will be considered
Top Heavy or Super Top Heavy only if the Aggregation Group is a "Top Heavy
Group" or a "Super Top Heavy Group." An "Aggregation Group" includes:
(a) Each plan intended to qualify under section 401(a) of the Code
sponsored by the Company or an Affiliated Company in which 1 or more Key
Employees participate;
(b) Each other plan of the Company or an Affiliated Company that
is considered in conjunction with such plans in determining whether or not
the discrimination and coverage requirements of section 401(a)(4) and section
410 of the Code are satisfied; and
(c) In the discretion of the Administrative Committee, any other
such plan of the Company or an Affiliated Company, which, when considered in
conjunction with the plans referred to above, satisfies the nondiscrimination
and coverage requirements of section 401(a)(4) and section 410 of the Code.
A "Top Heavy Group" is an Aggregation Group in which the sum (determined
as of the Determination Date) of the present value of the cumulative Accrued
Benefits for Key Employees (as determined by the Administrative Committee)
under all "defined benefit plans" (as defined in section 414(j) of the Code)
included in such group plus the aggregate of the amounts credited to accounts
of Key Employees under all "defined contribution plans" (as defined in
section 414(i) of the Code) included in such group, exceed 60% of the total
of such amounts for all Employees and Beneficiaries covered by such plans.
A "Super Top Heavy Group" is an Aggregation Group for which the sum so
determined for Key Employees exceeds 90% of the sum so determined for all
Employees and Beneficiaries. Such determination will be made in accordance
with section 416 of the Code.
If the Plan becomes Top Heavy, then the Retirement Benefit credited to
each Participant other than a Key Employee will not be less than the product
of:
(a) The percentage which is the lesser of:
(i) 2% multiplied by the Participant's Years of Service (as
determined in accordance with this Section 23) or
(ii) 20%; and
(b) The Participant's "Average Yearly Compensation."
A Member's Years of Service will not include Years of Service beginning
before January 1, 1984, or Years of Service ending in a Plan Year during
which the Plan is not Top Heavy. The "Average Yearly Compensation" of a
Member will be the average rate of annual Compensation in effect for a Member
during the 5 consecutive calendar years in which the Member's Compensation is
the greatest, excluding Plan Years ending before January 1, 1984, and Plan
Years beginning after the last Plan Year during which the Plan was Top Heavy.
"Compensation" means compensation as defined in section 414(q)(7) of the
Code.
If the Plan becomes Top Heavy, the Vested Retirement Benefit of a Member
who terminates Service with the Company or an Affiliated Company before his
or her Normal Retirement Date or death will be equal to the percentage of his
or her Accrued Benefit determined under the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
If the Plan at any time is Top Heavy and later ceases to be Top Heavy,
each Member who is credited with less than 2 Years of Service as of the last
day of the last Plan Year in which the Plan is Top Heavy will have his or her
Vested Retirement Benefit determined under Section 2.66 (unless and until the
Plan again becomes Top Heavy). If a Member has at least 3 Years of Service
on the last day of the last Plan Year in which the Plan is Top Heavy, for
each future Plan Year his or her Vested Retirement Benefit will be calculated
in accordance with this Section 23 as though the Plan were Top Heavy. If a
Member does not have at least 3 Years of Service on the last day of the last
Plan Year in which the Plan is Top Heavy, his or her Vested Retirement
Benefit for each future Plan Year will be calculated in accordance with
Section 2.66.<PAGE>
SECTION 24 GENERAL LIMITATIONS AND PROVISIONS.
- ---------- ----------------------------------
24.1 No Employment Right. Nothing contained in the Plan will give any
employee the right to be retained in the employment of the Company or any
Affiliated Company or affect the right of any such employer to dismiss any
employee. The adoption and maintenance of the Plan will not constitute a
contract between the Company and any employee or consideration for, or an
inducement to or condition of, the employment of any employee.
24.2 Payments from the Trust Fund. The Trust Fund will be the sole
source of benefits under the Plan and, except as otherwise required by the
Act, the Company, the Administrative Committee and the Investment Committee
assume no liability or responsibility for payment of such benefits. Each
Member, Surviving Spouse, Domestic Partner, Beneficiary or other person who
will claim the right to any payment under the Plan will be entitled to look
only to the Trust Fund for such payment and will not have the right, claim or
demand against the Company, the Administrative Committee or the Investment
Committee or any member of the Committees, or any employee or member of the
Board of Directors.
24.3 Payments to Minors or Incompetents. If the Administrative
Committee finds that any person to whom any amount is payable under the Plan
is unable to care for his or her affairs because of illness or accident, or
is a minor, or has died, then any payment due him or her or his or her estate
(unless a prior claim for such amount has been made by a duly appointed legal
representative) may, if the Administrative Committee so elects, be paid to
his or her spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Administrative
Committee to be a proper recipient on behalf of such person otherwise
entitled to payment. Any such payment will be a complete discharge of the
liability of the Plan and the Trust Fund.
24.4 Lost Members or Beneficiaries. If the Administrative Committee is
unable to locate a Member, Surviving Spouse, Domestic Partner or Beneficiary
who is entitled to receive any amount payable under the Plan, the
Administrative Committee may (but need not) direct that such amount be
applied to reduce the contributions of the Participating Companies to the
Plan. If the Member, Surviving Spouse, Domestic Partner or Beneficiary later
makes a claim for such amount before the date final distributions are made
from the Trust Fund following termination of the Plan, such amount (without
income, gains or other adjustment) will be reinstated and paid to him or her
as provided in Section 11. However, if any amount would have been lost by
reason of escheat under applicable state law, then such amount will not be
subject to reinstatement. If the Plan is terminated and final distributions
are made from the Trust Fund before the applicable escheat period with
respect to a lost Member, Surviving Spouse, Domestic Partner or Beneficiary
has expired, the Administrative Committee may direct the transfer of any such
person's unclaimed benefit to an individual retirement account.
24.5 Personal Data to the Administrative Committee. Each Member must
file with the Administrative Committee such pertinent information concerning
himself or herself, his or her spouse, his or her Domestic Partner, his or
her Beneficiary or any other person as the Administrative Committee may
specify, and no member, Surviving Spouse, Domestic Partner, Beneficiary or
other person will have any rights to any benefit under the Plan unless such
information is filed by or with respect to him or her. The Administrative
Committee is entitled to rely on personal data given to it by a Member.
24.6 Insurance Contracts. If the payment of any benefit under the Plan
is provided for by a contract with an insurance company the payment of such
benefit will be subject to all the provisions of such contract.
24.7 Notice to the Administrative Committee. All elections,
designations, requests, notices, instructions and other communications from
a Participating Company, a Member, Beneficiary, Surviving Spouse, Domestic
Partner or other person to the Administrative Committee, required or
permitted under the Plan, will be:
(a) In such form as is prescribed from time to time by the
Administrative Committee;
(b) Mailed by first-class mail or delivered to such location as
will be specified by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual
receipt by the Administrative Committee at such location.
24.8 Notices to Members and Beneficiaries. All notices, statements,
reports and other communications from a Participating Company or the
Administrative Committee or Investment Committee to any employee, Member,
Beneficiary or other person (other than the Administrative Committee)
required or permitted under the Plan will be deemed to have been duly given
when delivered to, or when mailed by first-class mail, postage prepaid and
addressed to, such employee, Member, Beneficiary or other person at his or
her address last appearing on the records of the Administrative Committee.
24.9 Word Usage. Whenever used in the Plan, the masculine gender
includes the feminine, and wherever the context of the Plan dictates, the
plural will be read as the singular and the singular as the plural. Uses of
the term "Sections" as a cross-reference will be to other Sections contained
in the Plan and not to another instrument, document or publication unless
specifically stated otherwise.
24.10 Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construing the
provisions of the Plan.
24.11 Governing Law. The Plan and all rights under the Plan will be
governed by and construed in accordance with California law except to the
extent such law is preempted by the Code and the Act.
24.12 Heirs and Successors. All of the provisions of the Plan will be
binding upon all persons who will be entitled to any benefits under the Plan,
their heirs and legal representatives.
24.13 Withholding. Payment of benefits under this Plan will be subject
to applicable law governing the withholding of taxes from benefit payments,
and the Trustee and Administrative Committee will be authorized to withhold
taxes from the payment of any benefits under the Plan, in accordance with
applicable law.
IN WITNESS WHEREOF, LEVI STRAUSS ASSOCIATES INC. has caused this Plan to
be executed and its corporate seal to be hereunto affixed by its duly
authorized officers, as of this _____ day of _______________, 1993.
LEVI STRAUSS ASSOCIATES INC.
By:
------------------------------
Its:
------------------------
ATTEST:
By:
---------------------------------------------<PAGE>
<PAGE>
Exhibit 10m
-----------
LEVI STRAUSS & CO.
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
Effective as of July 8, 1992<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . 5
3.1 Eligibility and Participation. . . . . . . . . . . . . . . . 5
ARTICLE IV ELIGIBILITY FOR BENEFITS . . . . . . . . . . . . . . . . . . 5
4.1 Eligibility for a Benefit. . . . . . . . . . . . . . . . . . 5
4.2 Disputed Claims for State System Benefits. . . . . . . . . . 6
4.3 No Vested Right to Benefits. . . . . . . . . . . . . . . . . 6
4.4 One-Week Waiting Period. . . . . . . . . . . . . . . . . . . 6
ARTICLE V AMOUNT OF BENEFITS . . . . . . . . . . . . . . . . . . . 7
5.1 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Benefit Advance. . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Duration of Benefits . . . . . . . . . . . . . . . . . . . . 8
5.4 State System Benefit and Other Compensation. . . . . . . . . 8
5.5 Benefit Overpayments . . . . . . . . . . . . . . . . . . . . 9
5.6 Receipt of Benefits. . . . . . . . . . . . . . . . . . . . . 9
5.7 Termination of Benefits. . . . . . . . . . . . . . . . . . . 9
ARTICLE VI APPLICATION, DETERMINATION OF ELIGIBILITY, AND
APPEAL PROCEDURES FOR BENEFITS . . . . . . . . . . . . . 10
6.1 Applications . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Determination of Eligibility . . . . . . . . . . . . . . . . 11
ARTICLE VII ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . 12
7.1 Powers and Authority of LS&CO. . . . . . . . . . . . . . . . 12
7.2 Powers and Authority of the Administrative Committee . . . . 14
7.3 Responsibilities of the Administrative Committee . . . . . . 16
7.4 Administration Procedures and Authority of the
Administrative Committee . . . . . . . . . . . . . . . . . 16
7.5 Power to Do All Necessary Acts . . . . . . . . . . . . . . . 17
7.6 Determination of Qualifying Layoff . . . . . . . . . . . . . 17
ARTICLE VIII PARTICIPANT ADMINISTRATIVE PROVISIONS. . . . . . . . . . 18
8.1 Personal Data to Administrative Committee. . . . . . . . . . 18
8.2 Address for Notification . . . . . . . . . . . . . . . . . . 18
8.3 Information Available. . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX FIDUCIARY DUTIES . . . . . . . . . . . . . . . . . . . . . . 19
9.1 Fiduciaries. . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2 Allocation of Responsibilities . . . . . . . . . . . . . . . 19
9.3 Procedures for Delegation and Allocation of
Responsibilities . . . . . . . . . . . . . . . . . . . . . 19
9.4 General Fiduciary Standards. . . . . . . . . . . . . . . . . 20
9.5 Allocation of Fiduciary Liability. . . . . . . . . . . . . . 20
9.6 Indemnification of Fiduciaries . . . . . . . . . . . . . . . 21
ARTICLE X FINANCIAL PROVISIONS AND REPORTS . . . . . . . . . . . . . . 22
10.1 Establishment of Trust Fund. . . . . . . . . . . . . . . . . 22
10.2 Maximum Funding. . . . . . . . . . . . . . . . . . . . . . . 22
10.3 Company Contributions. . . . . . . . . . . . . . . . . . . . 22
10.4 Effect of Withholding. . . . . . . . . . . . . . . . . . . . 22
10.5 Liability. . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 No Vested Interest . . . . . . . . . . . . . . . . . . . . . 23
10.7 Cost of Administering the Plan . . . . . . . . . . . . . . . 23
10.8 Benefit Payment Drafts Not Presented . . . . . . . . . . . . 23
ARTICLE XI AMENDMENT AND TERMINATION OF THE PLAN. . . . . . . . . . . . 24
11.1 Amendment and Termination. . . . . . . . . . . . . . . . . . 24
11.2 Effect of Revocation of Federal Rulings. . . . . . . . . . . 24
11.3 Notice of Change in Terms. . . . . . . . . . . . . . . . . . 24
ARTICLE XII CONTROVERSIES AND DISPUTES . . . . . . . . . . . . . . . 24
12.1 Reliance Upon Records. . . . . . . . . . . . . . . . . . . . 24
12.2 Determination by Administrative Committee Binding. . . . . . 25
12.3 Compromise . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.4 Right to Obtain Adjudication of Disputes . . . . . . . . . . 25
ARTICLE XIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 25
13.1 Limitations on Participants' Rights and Nature of Benefits . 25
13.2 No Assignment Permitted. . . . . . . . . . . . . . . . . . . 26
13.3 Payments to Minors and Incompetents. . . . . . . . . . . . . 26
13.4 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . 26
13.5 Execution of Receipts and Releases . . . . . . . . . . . . . 26
13.6 Company Records. . . . . . . . . . . . . . . . . . . . . . . 27
13.7 Interpretations and Adjustments. . . . . . . . . . . . . . . 27
13.8 Uniform Rules. . . . . . . . . . . . . . . . . . . . . . . . 27
13.9 Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . 27
13.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.12 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . 27
13.13 Successors . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.15 Word Usage . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.16 Calculation of Time. . . . . . . . . . . . . . . . . . . . . 28
13.17 Construction . . . . . . . . . . . . . . . . . . . . . . . . 28<PAGE>
ARTICLE I
INTRODUCTION
------------
1.1 Introduction. The Levi Strauss & Co. Supplemental Unemployment
Benefit Plan (the "Plan") has been adopted by Levi Strauss & Co. ("LS&CO.")
to provide for the payment of Benefits as provided hereunder to supplement
the state unemployment benefits of its eligible Employees.
ARTICLE
DEFINITIONS
-----------
2.1 Definitions. When a word or phrase shall appear in the Plan with
the initial letter capitalized, the word or phrase generally shall be a term
defined in this ARTICLE II. Wherever, the following words and phrases occur
in the text of the Plan with the initial letter capitalized, such words and
phrases shall have the meanings set forth in this ARTICLE II, unless a
clearly different meaning is required by the context in which the word or
phrase is used:
(a) "Administrative Committee" means the committee appointed to
administer the Plan as described in Section 7.2.
(b) "Benefit" means a benefit payable to a participant under
Section 5.1 of the Plan for a Week of Layoff.
(c) "Board" means the Board of Directors of LS&CO.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time and any regulations or rulings issued thereunder.
(e) "Company" means LS&CO.
(f) "Compensated or Available Hours" means for a given Week the
sum of:
(1) all hours for which an Employee receives pay from the
Company (excluding pay in lieu of vacation) with each hour paid at other
than base rate or regular rate to be counted as 1 hour; plus
(2) all hours scheduled for or made available to the Employee
by the Company but not worked by him or her after having been given
reasonable notice (including any period on leave of absence).
(g) "Effective Date" means July __, 1992.
(h) "Employee" means an individual receiving remuneration or who
is entitled to remuneration on an hourly basis for services rendered to the
Company in the legal relationship of employer and employee in a category
described on Schedule 1 hereto.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulations or rulings issued thereunder.
(j) "Layoff" means, with respect to any Employee, any absence, on
or after the Effective Date, of Compensated or Available Hours from the
Company for reasons specified in section 501(c)(17) of the Code, subject to
any Schedule hereto.
(k) "LS&CO." means Levi Strauss & Co., a Delaware corporation.
(l) "One-Week Waiting Period" means a Week during which the
Employee is continuously on Qualifying Layoff and no Benefits are paid under
the Plan.
(m) "Other Compensation" means compensation received by the
Participant as determined pursuant to Section 5.4.
(n) "Participant" means an Employee eligible to participate in the
Plan pursuant to ARTICLE III.
(o) "Plan" means the Levi Strauss & Co. Supplemental Unemployment
Benefit Plan set forth in this instrument, and as it may hereafter be
amended.
(p) "Qualifying Layoff" means an Employee's Layoff for all or part
of any Week resulting from inventory balancing, including product line
changes, if:
(1) Such Layoff was not for disciplinary reasons, and was not
a consequence of:
(i) Any strike, slowdown, work stoppage, picketing
(whether or not by Employees), or concerted action, at a Company plant
or plants, or any dispute of any kind involving Employees, whether at a
Company plant or plants or elsewhere;
(ii) Any fault attributable to the Employee or
Employees, including but not limited to vandalism or theft;
(iii) Any war or hostile act of a foreign power (but not
government regulation or controls connected therewith);
(iv) Sabotage (including but not limited to arson) or
insurrection;
(v) Any act of God; or
(vi) Any action or inaction within the control of the
facility at which the Employee is employed;
provided, however, that determination of whether a Qualifying Layoff has
occurred shall be made in accordance with Section 7.6.
(2) With respect to such Week the Employee was not eligible
for and was not claiming;
(i) Any statutory or Company accident or sickness or
any other disability benefit;
(ii) Any Company pension or retirement benefit, except
for a pension or retirement benefit that the Employee was
receiving as of the Layoff; and
(iii) Any benefits based on any federal or state statute,
including without limitation the Worker Adjustment and Retraining
Notification Act, Title VII, and state workers' compensation laws,
excluding State System Benefits; or
(3) With respect to such Week the Employee was not in
military service (other than short term active duty of 30 days or less,
including required military training, in a National Guard, Reserve or
similar unit) or on a military leave.
(q) "Salary" means the average weekly rate of compensation
(including incentive compensation) of the Employee for the preceding calendar
quarter.
(r) "Schedule" means any Schedule attached to this Plan.
(s) "Service" means the Employee's period of continuous employment
with the Company. An Employee shall not be required to work any specified
number of hours for the Company in order to have Service for purposes of this
Plan. For purposes of Section 4.1(e), Service includes periods during which
an Employee is on Qualifying Layoff.
(t) "State System" means any system or program established
pursuant to any state or federal law for paying benefits to persons on
account of their unemployment under which a person's eligibility for benefit
payments is not determined by application of a "means" or "disability" test.
The term "State System" also includes:
(1) Any system or program established by law to supplement,
replace or extend the benefits available under any state or federal laws
for paying benefits to persons on account of their employment; or
(2) Any such system or program established for the primary
purpose of education or vocational training where such programs may
provide for training allowance.
(u) "State System Benefit" means an unemployment benefit payable
under a State System, including any dependency allowances and training
allowances but excluding any allowance for transportation, subsistence,
equipment or other cost of training and excluding any "Back-To-Work" payment
for a week made, in addition to the regular State System Benefit otherwise
payable for such week, to an Employee who has been on Layoff for a prescribed
number of weeks and returns to full-time work within a prescribed period.
"State System Benefits" shall also mean a lost time benefit which an Employee
received under a workers compensation law or other law providing benefits for
occupational injury or disease, while not totally disabled. If an Employee
receives a workers compensation benefit while working full time and a higher
workers compensation benefit while on Layoff from the Company, only the
amount by which the workers compensation benefit is increased shall be
included.
(v) "Trust Agreement" means the trust agreement entered into by
LS&CO. and the Trustee, as amended from time to time, which establishes the
Trust Fund. The Trust Agreement shall constitute a part of the Plan.
(w) "Trust Fund" means the trust fund established under the Plan
to receive and invest Company contributions and to pay Benefits under the
Plan.
(x) "Trustee" means the individual or entity appointed by LS&CO.
as trustee or trustees of the Trust Fund.
(y) "Week" when used in connection with eligibility for and
computation of Benefits with respect to a Participant means a period of
Layoff equivalent to a Work Week. If there is a difference between the
starting time of a Work Week and of a week under an applicable State System,
the Work Week shall be paired with the State System week which corresponds
most closely thereto in time. If a Participant becomes ineligible for a
State System Benefit because of the reasons set forth in Section 4.1(b),
during a continuous period of Layoff, the week under the State System shall
be assumed to continue to be, for the duration of the Layoff period during
which the Participant remains so ineligible, the 7-day period for which a
State System Benefit was last paid to the Participant during such continuous
period of Layoff. Each Week within a continuous period of Layoff will not be
considered a new or separate Layoff.
(z) "Work Week" or "Pay Period" means 7 consecutive days beginning
on Monday at the regular starting time of the shift to which the Participant
is assigned, or was last assigned immediately prior to being laid off.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligibility and Participation. To the extent provided on any
Schedule hereto: (a) Each Employee who is employed by the Company as of the
Effective Date shall become a Participant in the Plan on the Effective Date;
and (b) Each other Employee shall become a Participant in the Plan on the
date he or she commences employment with the Company.
ARTICLE IV
ELIGIBILITY FOR BENEFITS
------------------------
4.1 Eligibility for a Benefit. A Participant will be eligible for a
Benefit for any Week with respect to which Week he or she:
(a) Is on a Qualifying Layoff for all or part of the Week;
(b) Received a State System Benefit not currently under protest by
the Company or was ineligible for a State System Benefit only for one or more
of the following reasons:
(1) The Participant did not have prior to Layoff a sufficient
period of employment or earnings covered by the State System or had not
satisfied any applicable waiting period for State System Benefits; or
(2) The Participant has exhausted his or her State System
Benefit rights;
(c) Met any registration and reporting requirements of an
employment office of the applicable State System;
(d) Did not receive an unemployment benefit under any contract or
program of another employer or under any other plan of the Company (and was
not eligible for such a benefit under a contract or program of another
employer); and
(e) Has completed 6 months of Service with the Company.
4.2 Disputed Claims for State System Benefits. The payment of any
Benefit otherwise payable to a Participant under the Plan will be suspended
with respect to any Week for which the Participant has
(a) been denied a State System Benefit, and the denial is being
protested by the Participant through the procedure provided therefor under
the State System, or
(b) received a State System Benefit, payment of which is being
protested by the Company through the procedure provided therefor under the
State System and such protest has not, upon appeal, been held by the State
System to be frivolous until such dispute shall have been resolved.
If the dispute shall be finally determined in favor of the Participant, the
Benefit otherwise payable to him or her under the Plan shall be paid. If the
dispute shall be finally determined against the Participant, the Benefit
payable to him or her under the Plan shall be recomputed and, if any Benefit
remains payable to the Participant, paid.
4.3 No Vested Right to Benefits. A Participant shall only be entitled
to Benefits under the Plan to the extent provided pursuant to this ARTICLE
IV, as it may be amended from time to time, and such Participant shall in no
way have any vested right to Benefits hereunder.
4.4 One-Week Waiting Period. Notwithstanding any other provision of
the Plan to the contrary, no Benefits shall be payable under the Plan until
the Participant has satisfied a One-Week Waiting Period. The One-Week
Waiting Period requirement is satisfied if the One-Week Waiting Period has
occurred during the 52 consecutive Weeks preceding the Week for which
Benefits are first payable hereunder.
ARTICLE V
AMOUNT OF BENEFITS
------------------
5.1 Benefits. (a) In General. Subject to any Schedule, the
Benefit payable to an eligible Participant for any Week shall be an amount
which, when added to his or her State System Benefit and Other Compensation,
will equal 90% of his or her Salary. The Benefit shall be adjusted for
overpayments pursuant to Section 5.5.
(b) Welfare Plan Benefits.
(1) The Benefit paid to a Participant hereunder shall
be reduced by any amount paid by the Company on the Participant's behalf with
respect to the participation of the Participant (and person eligible to
participate by reason of their relationship to the Participant) in any
welfare benefit plan maintained by the Company pursuant to the Participant's
election under a cafeteria plan, within the meaning of section 125 of the
Code.
(2) As part of the Benefits provided under the Plan and
in addition to the Benefits payable under Section 5.1(a), the Plan may, in
the discretion of the Administrative Committee, pay on behalf of a
Participant any amount required with respect to the participation of the
Participant (and persons eligible to participate by reason of their
relationship with the Participant) in any welfare benefit providing sick or
accident benefits maintained by the Company for any periods (including, but
not limited to, any period for which the Company has not offered to the
Participant the opportunity to elect to have such payment made pursuant to a
cafeteria plan or for which the Employee is on Qualifying Layoff but no
Benefit is payable hereunder because the Employee has not yet satisfied the
One-Week Waiting Period).
5.2 Benefit Advance. (a) Eligibility. A Participant who would be
eligible for a Benefit pursuant to 5.1, except that Section 4.1(b) has not
been satisfied because the Participant has not yet received a determination
of such Employee's State System Benefit, shall be eligible for an advance on
his or her Benefit pursuant to this Section 5.2.
(b) Amount. The Amount of the Benefit advance pursuant to this
Section 5.2 shall be $75 per Week of Qualifying Layoff.
(c) Adjustment. Upon receipt of determination of his or her State
System Benefit, a Participant's benefit for each Week for which he or she
received a Benefit advance shall be calculated pursuant to Section 5.1, and
the Participant shall be entitled to a payment equal to the difference
between the Participant's actual Benefit for such Week and the amount of such
advance. However, to the extent that any Benefit advance received by a
Participant with respect to a Week exceed the Participant's Benefit for such
Week, the difference between such advance and the amount of the recalculated
Benefit shall be deemed a Benefit overpayment, and shall be subject to
Section 5.5.
5.3 Duration of Benefits. Benefits shall be payable for so long as
the Participant satisfies the Benefit Eligibility requirements in ARTICLE IV
up to a maximum of 26 weeks in any period of 52 consecutive weeks.
5.4 State System Benefit and Other Compensation. A Participant's
State System Benefit and Other Compensation for a Week means:
(a) The amount of State System Benefit received or receivable by
the Participant for the Week;
(b) All pay received or receivable by the Participant from the
Company (including vacation pay or pay in lieu of vacation), and any amount
of unearned pay computed, as if payable, for hours made available by the
Company but not worked, after reasonable notice has been given to the
Participant, for such Week;
(c) All pay received or receivable by the Participant from another
employer (excluding pay in lieu of vacation); plus
(d) The amount of all pay received or receivable for such Week
with respect to Service with the military.
For purposes of item (a) above, the amount of the State System Benefit
which would have been received by the Participant, shall be determined as
follows:
(1) If the Participant has an established and currently applicable
weekly benefit rate under the State System, such benefit rate plus any
dependents allowance; or
(2) In all other cases, the State System Benefit amount which
would apply to an individual having the same number of dependents as the
Participant and having weekly earnings equal to the Participant's weekly
Salary.
If the State System Benefit actually received by a Participant for a
Week under the State System shall be for less, or more, than a full Week (for
reasons other than the Participant's receipt of wages or remuneration for
such Week), because:
(i) He or she has been disqualified or otherwise determined
ineligible for a portion of his or her State System Benefit for reasons other
than those set forth in Section 4.1(b),
(ii) The applicable Week includes 1 or more "waiting period
effective days", or
(iii) Of an underpayment or overpayment of a previous State System
Benefit,
the amount of the State System Benefit which would otherwise have been paid
to the Participant for such Week shall be used in the calculation of State
Benefit and Other Compensation for such Week.
5.5 Benefit Overpayments.
(a) Repayment by Participant. If the Administrative Committee or
Trustee determines that any Benefit(s) paid under the Plan should not have
been paid or should have been paid in a lesser amount, written notice thereof
shall be mailed to the Participant receiving the Benefit(s) and he or she
shall return the amount of overpayment to the Trustee.
(b) Reduction of Benefits. If the Participant shall fail to
return such amount of overpayment promptly, the Trustee shall arrange to
reimburse the Trust Fund for the amount of overpayment by making a deduction
from any future Benefits payable to the Participant (not to exceed $10 per
Week (unless the Participant voluntarily agrees in writing to an amount in
excess of $10) or such other amount as required by applicable law, except
that no limit shall apply to the amount of such deductions in cases of fraud
or willful misrepresentation).
(c) Reduction of Salary. If the Participant shall fail to return
such amount of overpayment promptly and is subsequently reemployed by the
Company, the Company shall arrange to reimburse the Trust Fund by making a
deduction from the Participant's salary (not to exceed $10 per pay period
unless the Participant voluntarily agrees in writing to an amount in excess
of $10) until the overpayment has been repaid in full.
5.6 Receipt of Benefits. Neither the Company's contributions nor any
Benefit paid under the Plan shall be considered a part of any Participant's
wages for any purpose. No person who receives any Benefit shall for that
reason be deemed an Employee of the Company during such period.
5.7 Termination of Benefits. A Participant's Benefits under the Plan
will terminate on the earliest of the following events:
(a) The expiration of the 26-week period referenced in
Section 5.3;
(b) The termination of the Plan;
(c) The earlier of the date the Participant begins working for
another employer, resumes employment with the Company or advises the Company
that he or she will not continue employment with the Company;
(d) The date the Participant refuses to return to work with the
Company when offered his or her former job or an equivalent job, unless such
refusal is for good reason as determined by the Administrative Committee in
its sole and absolute discretion; or
(e) The date of the Participant's death.
If the Participant dies before all Benefits payable to him or her under the
Plan have been paid, such Benefits shall be paid to the Participant's estate.
ARTICLE VI
APPLICATION, DETERMINATION OF ELIGIBILITY, AND
APPEAL PROCEDURES FOR BENEFITS
------------------------------
6.1 Applications.
(a) Filing of Applications. An application for a Benefit Payment
may be filed either in person or by mail in accordance with procedures
established by the Administrative Committee. No application for a Benefit
shall be accepted unless it is submitted to the Administrative Committee
within 60 calendar days after the end of the Week with respect to which it is
made; provided, however, that if the amount of the Participant's State System
Benefit is adjusted retroactively with the effect of establishing a basis for
eligibility for a Benefit or for a Benefit in a greater amount than that
previously paid, he or she may apply for a Benefit under the Plan within 60
calendar days after the date on which such basis for eligibility is
established.
(b) Application Information. Except to the extent provided
otherwise by the Administrative Committee, applications filed for a Benefit
under the Plan must be in writing and include:
(1) Any information deemed relevant by the Administrative
Committee with respect to other benefits received, earnings and the
source thereof, dependents, and such other information as the
Administrative Committee may require in order to determine whether the
Participant is eligible to be paid a Benefit and the amount thereof; and
(2) The exhibition of the Participant's State System Benefit
check or other evidence satisfactory to the Company of his or her
receipt of or entitlement to a State System Benefit, and any evidence of
any revision in the amount of such State System Benefit.
6.2 Determination of Eligibility.
(a) Application Processing by Administrative Committee. When an
application is filed for a Benefit under the Plan and the Administrative
Committee is furnished with the evidence and information required, the
Administrative Committee shall determine the Participant's entitlement to a
Benefit.
(b) Notification to Trustee to Pay. If the Administrative
Committee determines that a Benefit is payable, it shall deliver prompt
written notice to the Trustee to pay the Benefit.
(c) Notice of Denial of Benefits. If the Administrative Committee
determines that a Participant is not entitled to a Benefit, it shall notify
him or her in writing, of the reason(s) for the determination within 90 days
unless special circumstances require an extension of time for processing the
claim. Such extension shall not exceed 90 days and no extension shall be
allowed unless, within the initial 90 day period, the Employee is sent an
extension notice indicating the special circumstances requiring the extension
and specifying a date by which the Administrative Committee expects to render
its final decision. The Administrative Committee's notice of denial to the
Employee shall set forth:
(1) the specific reason or reasons for the denial of the
Benefit claim;
(2) the specific references to pertinent Plan provisions on
which the Administrative Committee based its denial;
(3) a description of any additional material and information
needed for the Participant to perfect his or her claim and an
explanation of why the material information is needed;
(4) a statement that the Participant may request a review
upon written application to the Administrative Committee, review
pertinent Plan documents, and submit issues and comments in writing;
(5) a statement that any appeal that the Participant wishes
to make of the adverse determination must be submitted in writing to the
Administrative Committee within 60 days after receipt of the
Administrative Committee's notice of denial of the Benefit Claim;
(6) the name and address of the Administrative Committee to
whom the Participant may forward this appeal; and
(7) a statement that the Participant's failure to appeal the
action to the Administrative Committee in writing within the 60 day
period will render the determination final, binding, and conclusive.
(d) Appeals. If the Participant should appeal to the
Administrative Committee, he or she, or his or her duly authorized
representative may submit in writing, whatever issues and comments he or she,
or his or her duly authorized representative, believe to be pertinent and may
request a hearing before the Administrative Committee. The Administrative
Committee shall re-examine all facts related to the appeal in making a final
determination as to whether the denial of the Benefit is justified under the
circumstances. The Administrative Committee may elect to hold a hearing in
conducting such re-examination of the facts.
The Administrative Committee shall advise the Participant in writing of
its decision on his or her appeal, the specific reasons for the decision and
the specific provisions of the Plan on which the decision is based. Except
as provided below, the notice of the decision shall be given within 60 days
of the Participant's written request for review, unless special circumstances
(such as a hearing) would make the rendering of a decision within the 60 day
period infeasible, but in no event shall the Administrative Committee render
a decision regarding the denial of a claim for a Benefit later than 120 days
after its receipt for request for a review.
(e) Benefits Payable After Appeal. In the event that an appeal
with respect to entitlement to a Benefit is decided in favor of the
Participant, the Benefit shall be paid to him or her.
ARTICLE VII
ADMINISTRATION OF THE PLAN
--------------------------
7.1 Powers and Authority of LS&CO.
(a) LS&CO. LS&CO. shall have such powers and authority as are
necessary or appropriate in order to carry out its duties under this ARTICLE
VII, including, without limitation, the following:
(1) To formulate and adopt a program of benefits consistent
with the purposes of the Plan. Such a program of benefits shall be
described in a benefit schedule, employee benefit booklet, or other form
of written instrument.
(2) To amend the program of benefits at any time, and from
time to time, to the extent LS&CO. deems it appropriate and in the best
interest of Participants. Except to the extent specifically delegated
to the Administrative Committee, LS&CO. shall have full authority to
determine all questions of any nature relating to the benefits to be
provided under the Plan.
(3) To determine the nature, type, character and amount of
benefits to be provided under the Plan, including the ability to reduce
or eliminate benefits entirely under the Plan to the extent permitted by
law, and the medium (i.e., insurance contracts, cash) through which such
benefits shall be provided.
(4) To select and appoint the Administrative Committee.
(5) To the extent permitted by section 410(b) of ERISA, to
purchase insurance for the benefit of the Plan or for the protection of
the Administrative Committee, Plan or LS&CO. employees, or other
Fiduciaries of the Plan against any losses by reason of errors,
omissions, or inadvertent failure to abide by the terms of the Plan.
(6) To enter into any and all contracts and agreements that
LS&CO. may deem necessary or appropriate for carrying out the terms of
the Plan and accomplishing the administration and operation thereof.
Any such contracts and agreements shall be binding and conclusive on the
parties hereto and on Participants.
(7) To borrow money or to guarantee (by guaranty, co-
signature, takeout letter, or otherwise) the borrowing of money by any
person or entity to enable LS&CO. or the Administrative Committee to do
whatever it is hereby expressly, or impliedly authorized to do, and to
secure payment for such indebtedness or contingent indebtedness in such
manner as it shall deem proper.
(8) To employ and compensate accountants, brokers, attorneys-
in-fact, attorneys-at-law, claims administrators, safety engineers, tax
specialists, appraisers or other agents and assistants as LS&CO. deems
necessary or appropriate for the operation of the Plan.
(9) To procure an audit of the books of the Plan and the
Trust Fund by a certified public accountant. A copy of each such audit
shall be made available, upon request, to the Administrative Committee
as soon as is reasonably practicable after it has been prepared, and a
copy of such audit shall be kept available for inspection by authorized
persons during business hours at the office of the Administrative
Committee.
(10) To procure and maintain, at the expense of the Plan, such
bonds as are required by law, together with such additional bonding
coverage as LS&CO. may determine for LS&CO., the Administrative
Committee, and employees of the Plan, any agents acting on behalf of or
retained by the Board and persons to whom fiduciary responsibilities
have been delegated pursuant to Sections 9.2 or 9.3 of the Plan.
(B) LS&CO. Authority. Nothing contained in this Plan shall be
deemed to qualify, limit or alter in any manner LS&CO.'s sole and complete
authority and discretion to establish, regulate, determine, or modify at any
time levels of employment, hours of work, the extent of hiring and Layoff,
production schedules, manufacturing methods, the products to be manufactured,
where and when work shall be done, marketing of its products, or any other
matter related to the conduct of its business or the manner in which its
business is to be managed or carried on, in the same manner and to the same
extent as if this Plan were not in existence.
7.2 Powers and Authority of the Administrative Committee.
(a) Appointment of Administrative Committee. LS&CO. shall appoint
the members of an Administrative Committee, which Members may be
Participants. In the absence of such appointments, LS&CO. shall function as
the Administrative Committee.
(b) Term. Each member of the Administrative Committee shall serve
until his or her successor is appointed. Any member of the Administrative
Committee may be removed by LS&CO., with or without cause, and LS&CO. shall
have the power to fill any vacancy that may occur. An Administrative
Committee member may resign upon written notice to LS&CO..
(c) Compensation. The members of the Administrative Committee
shall serve without compensation for services as such, but LS&CO. shall pay
all expenses of the members of the Administrative Committee, including the
expenses for any bond required under section 412 of ERISA.
(d) Power of the Administrative Committee. The Administrative
Committee shall administer the Plan. Subject to ARTICLE IX, the
Administrative Committee shall have the following powers and duties:
(1) To direct the administration of the Plan in accordance
with the provisions herein set forth;
(2) To adopt rules of procedure and regulations necessary for
the administration of the Plan provided the rules are not inconsistent
with the terms of the Plan;
(3) To determine all questions with respect to rights of
Participants under the Plan, including but not limited to rights of
eligibility of a Participant to participate in the Plan, receive
Benefits under the Plan and the amount of such Benefits;
(4) To enforce the terms of the Plan and the rules and
regulations it adopts;
(5) To review and render decisions with respect to a claim
for or denial of a claim for a Benefit under the Plan;
(6) To furnish the Company with information that the Company
may require for tax or other purposes;
(7) To prescribe procedures to be followed by Participants in
obtaining Benefits;
(8) To receive from the Company and from Employees such
information as shall be necessary for the proper administration of the
Plan;
(9) To select a secretary, who need not be a member of the
Administrative Committee; and
(10) To interpret and construe the Plan, the Trust Agreement
and any insurance contracts purchased under the Plan.
The Administrative Committee shall have no power to add to, subtract from, or
modify any of the terms of the Plan, or to change or add to any Benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a Benefit under the Plan. Nonetheless, the Administrative
Committee shall have absolute discretion in the exercise of its powers in
this Plan. All exercises of power by the Administrative Committee hereunder
shall be final, conclusive and binding on all interested parties, unless
found by a court of competent jurisdiction, in a final judgment that is no
longer subject to review or appeal, to be arbitrary and capricious.
(e) Manner of Action. The decision of a majority of the members
of the Administrative Committee appointed and qualified shall control. In
case of a vacancy in the membership of the Administrative Committee, the
remaining members of the Administrative Committee may exercise any and all of
the powers, authorities, duties, and discretions conferred upon such
Administrative Committee pending the filling of the vacancy. The
Administrative Committee may, but need not, call or hold formal meetings.
Any decisions made or action taken pursuant to written approval of a majority
of the then members shall be sufficient. The Administrative Committee shall
maintain adequate records of its decisions.
(f) Authorized Representative. The Administrative Committee may
authorize any person to sign on its behalf any notices, directions,
applications, certificates, consents, approvals, waivers, letters, or other
documents.
(g) Exclusive Benefit. The Administrative Committee shall
administer the Plan for the exclusive benefit of Participants.
(h) Interested Member. No member of the Administrative Committee
may decide or determine any matter concerning the distribution, nature, or
method of settlement of his or her own Benefits under the Plan unless there
is only one person acting alone in the capacity as the Administrative
Committee.
7.3 Responsibilities of the Administrative Committee. The
Administrative Committee shall be responsible for the operation and
administration of the Plan, and shall conduct the business and activities of
the Plan in accordance with its terms.
7.4 Administration Procedures and Authority of the Administrative
Committee. The Administrative Committee shall have full and complete
authority and control over the operation and administration of the Plan.
Unless the following responsibilities are allocated and delegated in
accordance with the procedures set forth in ARTICLE IX hereof, the
Administrative Committee shall have the following authority:
(a) Claims Procedures: To prescribe procedures to be followed by
persons in filing claims for a Benefit under the Plan, and to designate the
forms of documents, evidence, and such other information as the
Administrative Committee may reasonably deem necessary, desirable, or
convenient to support a claim for a Benefit under the Plan.
(b) Claims Review: To determine the right of any person to
receive a Benefit hereunder or select an agent to make such determinations.
In the event that the Administrative Committee employs an agent to process
claims for Benefits under the Plan, the references to the Administrative
Committee in ARTICLE VI shall be deemed to also refer to such agent.
(c) Records: To maintain books of account, records, and other
data that may be necessary for the proper administration and operation of the
Plan, and a record of all of its transactions, meetings, and actions. All
said books, records, and data shall be available at the office of the
Administrative Committee during business hours for inspection by authorized
representatives of the Company.
(d) Rules, etc.: To adopt such rules, regulations, actuarial
tables, forms, and procedures from time to time as the Administrative
Committee deems advisable and appropriate for the proper administration of
the Plan; provided, however, that such regulations, actuarial tables, forms,
and procedures must be consistent with the terms of the Plan and must not
modify or otherwise increase the obligations and responsibilities of the
Company.
(e) Reporting: To prepare, execute, file, and retain a copy for
the Plan records of all reports required by law that are deemed by the
Administrative Committee to be necessary or appropriate for the proper
administration and operation of the Plan. The Administrative Committee shall
furnish the Company, upon request, such annual reports with respect to the
administration of the Plan as are reasonable and appropriate.
7.5 Power to Do All Necessary Acts. Enumeration of any power herein
shall not be by way of limitation, but shall be cumulative and construed as
full and complete power in favor of the Administrative Committee. In
addition to the authority specifically granted herein, the Administrative
Committee shall have such power to do all acts as may be deemed necessary for
full and complete management and administration of the Plan.
7.6 Determination of Qualifying Layoff. (a) Primary Authority. Any
other provision of this Plan allocating responsibility for actions hereunder
notwithstanding, each of the Senior Vice President of the Company responsible
for the personnel function and the Senior Vice President of the Company
responsible for production in the United States, or in the event that the
title of the person responsible for either of such functions is changed, then
the person who is responsible for such function, shall, in his or her sole
discretion, determine whether:
(1) A Layoff constitutes a Qualifying Layoff within the meaning of
Section 2.1(p); and
(2) A Layoff which would not otherwise constitute a Qualifying
Layoff for reasons other than Sections 2.1(p)(1)(ii) or (vi) shall constitute
a Qualifying Layoff.
(b) Delegation. Any person authorized to determine the
occurrence of a Qualifying Layoff pursuant to Section 7.6(a) may delegate
such authority in writing; provided, however, that no Layoff may be
determined to be a Qualifying Layoff for more than four weeks pursuant to the
authority delegated under this Section 7.6(b).
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
-------------------------------------
8.1 Personal Data to Administrative Committee. Each Participant must
furnish to the Administrative Committee evidence, data, or information as the
Administrative Committee considers necessary or desirable for the purpose of
administering the Plan. The provisions of the Plan are effective for the
benefit of each Participant upon the condition precedent that each
Participant will promptly furnish full, true, and complete evidence, data,
and information when requested by the Administrative Committee, provided the
Administrative Committee shall advise each Participant of the effect of his
or her failure to comply with its request.
8.2 Address for Notification. Each Participant shall file with the
Administrative Committee, in writing, his or her post office address, and
each subsequent change of such post office address. Any payment or
distribution hereunder, and any communication addressed to a Participant
shall be proper if directed to the last address filed with the Administrative
Committee, or if no address has been filed, then the last address indicated
on the records of the Company, and shall be deemed to have been delivered to
the Participant on the date specified in Section 14.11. If the
Administrative Committee, for any reason, is in doubt as to whether Benefit
payments are being received by the Participant, it shall, by registered mail
addressed to the Participant, at his or her address last known to the
Administrative Committee, notify such Participant that all unmailed and
future Benefit payments shall be henceforth withheld until he or she provides
the Administrative Committee with evidence of his or her continued life and
his or her proper mailing address.
8.3 Information Available. Any Participant in the Plan may examine
copies of the Plan description, latest annual report, the Plan, contract, or
any other instrument under which the Plan was established or is operated.
The Administrative Committee shall maintain all of the items listed in this
Section 8.3 in its office, or in such other place or places as it may
designate from time to time in order to comply with the regulations issued
under ERISA, for examination during reasonable business hours. Upon the
written request of a Participant the Administrative Committee shall furnish
him or her with a copy of any item listed in this Section 8.3. The
Administrative Committee may make a reasonable charge to the requesting
Participant for the copy so furnished.
ARTICLE IX
FIDUCIARY DUTIES
----------------
9.1 Fiduciaries. The "Fiduciaries" (herein so called) of the Plan
shall consist of LS&CO.; the Administrative Committee; and such other person
or persons that are designated to carry out fiduciary responsibilities under
the Plan. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan. A Fiduciary may employ one or
more persons to render advice with regard to any responsibility such
Fiduciary has under the Plan.
9.2 Allocation of Responsibilities. The powers and responsibilities
of the Fiduciaries are hereby allocated as indicated below:
(a) LS&CO. LS&CO. shall be responsible for all functions assigned
or reserved to it under the Plan. Any authority assigned or reserved to
LS&CO. under the Plan shall be exercised by resolution of the appropriate
representatives of LS&CO., or action by a delegate thereof.
(b) Administrative Committee. The Administrative Committee shall
have the responsibility and authority to control the operation and
administration of the Plan in accordance with the terms of the Plan, except
with respect to duties and responsibilities specifically allocated to other
Fiduciaries.
(c) Allocations. Powers and responsibilities may be allocated to
other Fiduciaries in accordance with Section 9.3 hereof, or as otherwise
provided in the Plan.
This Section 9.2 is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by
two or more of such Fiduciaries unless such sharing shall be provided by a
specified provision of the Plan.
9.3 Procedures for Delegation and Allocation of Responsibilities.
Fiduciary responsibilities may be allocated as follows:
(a) The Administrative Committee may specifically allocate
responsibilities to a specified member or members of the Administrative
Committee.
(b) LS&CO. may designate a person or persons other than a
Fiduciary to carry out fiduciary responsibilities allocated to LS&CO. or the
Administrative Committee under the Plan; provided, however, that no such
designation shall cause any person or persons employed to perform ministerial
acts and services for the Plan to be deemed Fiduciaries of the Plan.
(c) The Administrative Committee may designate a person or persons
other than a Fiduciary to carry out fiduciary responsibilities allocated to
the Administrative Committee under the Plan; provided, however, that no such
designation shall cause any person or persons employed to perform ministerial
acts and services for the Plan to be deemed Fiduciaries of the Plan.
Any allocation of responsibilities pursuant to this Section 9.3 shall be made
by filing a written notice thereof with the Company and the Administrative
Committee specifically designating the person or persons to whom such
responsibilities or duties are allocated and specifically setting out the
particular duties and responsibilities with respect to which the allocation
or designation is made.
9.4 General Fiduciary Standards. Subject to Section 9.5 hereof, a
Fiduciary shall discharge his or her duties with respect to this Plan solely
in the interest of Participants and:
(a) For the exclusive purpose of providing Benefits to
Participants and defraying reasonable expenses of administering the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity
familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; and
(c) In accordance with the documents and instruments governing the
Plan, insofar as such documents and instruments are consistent with the
provisions of Title I of ERISA.
9.5 Allocation of Fiduciary Liability.
(a) Liability Among Co-Fiduciaries. Except for any liability
which he or she may have under ERISA, a Fiduciary shall not be liable for a
breach of a fiduciary duty or responsibility by another Fiduciary except in
the following circumstances:
(1) He or she participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other Fiduciary,
knowing such act or omission is a breach;
(2) By his or her failure to comply with the general
fiduciary standards set out in Section 9.4 hereof in the administration
of his or her specific responsibilities which give rise to his or her
status as a Fiduciary, he or she has enabled such other Fiduciary to
commit a breach; or
(3) He or she has knowledge of a breach by such other
Fiduciary and he or she does not undertake reasonable efforts under the
circumstances to remedy the breach.
(b) Liability Where Allocation is in Effect. To the extent that
fiduciary responsibilities are specifically allocated by a Fiduciary, or
pursuant to the express terms hereof, to any person or persons, then such
Fiduciary shall not be liable for any act or omission of such person in
carrying out such responsibility except to the extent that the Fiduciary
violated this Section 9.5 with respect to such allocation or designation, the
establishment or implementation of the procedure for making such an
allocation or designation, continuing the allocation or designation, or the
Fiduciary would otherwise be liable in accordance with this Section 9.5.
(c) No Responsibility for LS&CO. Action. The Administrative
Committee shall not have any obligation nor responsibility with respect to
any action required by the Plan to be taken by LS&CO. or for the failure of
LS&CO. to act or make any payment or contribution, or to otherwise provide
any Benefit contemplated under this Plan.
(d) No Responsibility for Administrative Committee Action. LS&CO.
shall not have any obligation or responsibility with respect to any action
required by the Plan to be taken by the Administrative Committee, or for the
failure of the Administrative Committee to act or make any payment or
contribution, or to otherwise provide any Benefit contemplated hereunder.
(e) No Duty to Inquire. The Administrative Committee shall not
have any obligation to inquire into or be responsible for any action or
failure to act on the part of the others.
(f) Successor Fiduciary. No Fiduciary shall be liable with
respect to any breach of fiduciary duty if such breach was committed before
he or she became a Fiduciary or after he or she ceased to be a Fiduciary.
9.6 Indemnification of Fiduciaries. LS&CO. indemnifies and saves
harmless the members of the Administrative Committee, and each of them, and
any and all other individual Fiduciaries from and against any and all loss
resulting from liability to which any Fiduciary may be subjected by reason of
any act or conduct (except willful or reckless misconduct) in their official
capacities in the administration of this Plan, including all expenses
reasonably incurred in their defense, in case LS&Co. fails to provide such
defense. The indemnification provisions of this Section 9.6 shall not
relieve the members of the Administrative Committee or any other Fiduciary
from any liability he or she may have under the terms of the Plan or under
ERISA for breach of a fiduciary duty.
ARTICLE X
FINANCIAL PROVISIONS AND REPORTS
--------------------------------
10.1 Establishment of Trust Fund. LS&CO. shall establish and maintain
a Trust Fund in accordance with the terms of this Plan and the Trust
Agreement. The Company's contributions shall be made into the Trust Fund by
the Company. Benefits payable under the Plan shall be payable from the
assets of the Trust Fund to the extent that such assets are sufficient. If
the assets of the Trust Fund are not sufficient to pay for all Benefits under
the Plan, the remainder of such Benefits shall be paid by the Participating
Company whose Employees are entitled to Benefits under the Plan. In no event
shall any Participating Company be obligated to pay for the contributions or
Benefits of any other Participating Company under the Plan.
10.2 Maximum Funding. Nothing in the Plan or the Trust Agreement shall
require the Company to make contributions to the Trust Fund in any year to
the extent that such contributions would not be allowed as deductions by the
Company in such taxable year pursuant to section 419(a) of the Code.
10.3 Company Contributions. The Company shall contribute to the Trust
Fund, from time to time, the amounts which the Company, in its discretion,
determines are necessary to provide the Benefits which become payable under
the Plan. In the event that the Administrative Committee determines that the
amounts in the Trust Fund are insufficient to provide unpaid Benefits which
have become payable under the Plan, or are reasonably expected to become
payable under the Plan during the four consecutive pay periods following such
determination, the Administrative Committee shall advise the Company of the
amount of the contribution required, when added to existing amounts in the
Trust Fund, to pay such Benefits, and the Company shall contribute such
amounts to the Trust Fund.
10.4 Effect of Withholding. If the Company at any time shall be
required to withhold any amount from any contribution to the Trust Fund by
reason of any federal, state or municipal law or regulation, the Company
shall have the right to deduct such amount from the contribution and pay only
the balance to the Trust Fund.
10.5 Liability.
(a) The provisions of these ARTICLES I through XII, together with
the provisions of the Trust Agreement constitute the entire Plan. The
provisions of this ARTICLE X with respect to contributions express each and
every obligation of the Company with respect to the financing of the Plan and
providing for Benefits.
The Company shall not be obligated to make up, or to provide for making
up, any depreciation or loss arising from depreciation, in the value of the
securities held in the Trust Fund and none of the Trustee, the Administrative
Committee or any Participant shall call upon the Company to make up, or to
provide for making up, any such depreciation or loss.
Notwithstanding the above provisions, nothing in this Section 10.5 shall
be deemed to relieve any person from liability for willful misconduct or
fraud.
10.6 No Vested Interest. No Participant shall have any right, title,
or interest in or to any of the assets of the Trust Fund, or in or to any
Company contribution thereto.
10.7 Cost of Administering the Plan.
(a) Expense of Trustee. The cost and expenses incurred by the
Trustee under the Plan and the fees charged by the Trustee shall be charged
to the Trust Fund; provided, however, that the Company may, in its
discretion, directly pay administration fees (including fees of the Trustee).
(b) Cost of Services. To the extent requested by the Company, the
Company shall be reimbursed each year from the Trust Fund for the cost to the
Company of bank fees and auditing fees.
(c) Cost of Recovery. The Trust Fund shall be authorized to
receive payments from an approved collection agency employed to recover Plan
overpayments. The Trustee shall be authorized to pay reasonable fees to the
collection agency for services rendered. A summary of payments received and
fees paid shall be provided to the Company by the agency.
10.8 Benefit Payment Drafts Not Presented. If the Trustee has
segregated any portion of the Fund in connection with any determination that
a Benefit is payable under the Plan and the amount of such Benefit is not
claimed within a period of 2 years from the date of such determination, such
amount shall revert to the Trust Fund.
ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
11.1 Amendment and Termination. LS&CO. specifically reserves the right
at any time by an instrument in writing, to modify, alter or amend this Plan,
in whole or in part, prospectively or retroactively. LS&CO. intends to
continue the Plan described herein; however, LS&CO. specifically reserves the
right to increase, reduce or eliminate Benefits provided pursuant to the Plan
as they currently exist, or may hereafter exist, by amendment, suspension or
termination of the Plan described herein at any time and for any reason,
except that no modification, alteration, amendment, suspension or termination
of the Plan may be made which would diminish any accrued Benefits (arising
from incurred but unpaid claims) of Participants existing prior to the
effective date of the amendment, suspension or termination.
Upon any termination of the Plan, the Plan shall terminate in all
respects except that the assets then remaining in the Trust Fund shall be
used to pay expenses of administration and to pay Benefits to eligible
Participants. The remainder of the assets of the Trust Fund, if any, shall
be returned to LS&CO. or the appropriate Participating Company.
11.2 Effect of Revocation of Federal Rulings. If any rulings which
have been or may be obtained by LS&CO. holding that contributions to the
Trust Fund shall constitute currently deductible expenses under the Code, as
now in effect or as it may be hereafter amended, or under any other
applicable federal income tax law shall be revoked or modified in such manner
as no longer to be satisfactory to LS&CO., all obligations of the Company
under the Plan shall cease and the Plan shall thereupon terminate and be of
no further effect except for the purposes of disposing of the assets of the
Trust Fund as set forth in this Section 12.2.
11.3 Notice of Change in Terms. The Administrative Committee, within
the time prescribed by ERISA and applicable regulations, shall furnish all
Participants a summary description of any material amendment to the Plan or
notice of discontinuance of contributions or termination of the Plan and all
other information required by ERISA to be furnished without charge.
ARTICLE XII
CONTROVERSIES AND DISPUTES
--------------------------
12.1 Reliance Upon Records. In any controversy, claim, demand, suit at
law or in equity, or other proceeding between any Participant or any other
person or the Administrative Committee, the Administrative Committee shall be
entitled to rely upon any facts appearing in the records maintained pursuant
to the Plan, any facts that are certified to the Administrative Committee,
any facts which are of public record, and any other evidence pertinent to the
issues involved.
12.2 Determination by Administrative Committee Binding. All questions
or controversies of whatever character arising in any manner or between any
parties or persons in connection with the Plan, or the operation thereof,
whether relating to Benefits claimed hereunder, the construction of
provisions, the interpretation of the Plan, the rules and regulations adopted
by the Administrative Committee hereunder, any writing, decision, instrument,
or accounts relating to the operation or administration of the Plan, or
otherwise, shall be submitted to the Administrative Committee or its designee
for decision pursuant to Section 6.1 hereof, and shall be binding upon all
persons dealing with the Plan or claiming any Benefit thereunder, subject to
only such judicial review as may be in harmony with ERISA.
12.3 Compromise. The Administrative Committee may, in its sole and
absolute discretion, compromise or settle any claim or controversy, and any
decision made by the Administrative Committee in compromise or settlement of
a claim or controversy, or any compromise or settlement agreement entered
into by the Administrative Committee shall be binding and conclusive upon all
parties, subject only to such judicial review as may be in harmony with
ERISA.
12.4 Right to Obtain Adjudication of Disputes. In the event that any
question or dispute shall arise as to the proper person or persons to whom
any Benefit payments shall be made hereunder, the Administrative Committee
may withhold such payment until an adjudication of such question or dispute,
satisfactory to the Administrative Committee, in its sole discretion, shall
have been made, or the Administrative Committee shall have been adequately
indemnified against any loss that may result from such payment.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Limitations on Participants' Rights and Nature of Benefits. The
Plan shall not be deemed to constitute a contract of employment between the
Company and any Participant or to be a consideration for or an inducement for
the employment of any Participant by the Company. Participation in the Plan
shall not give any Participant the right to be retained in the Company's
employ.
13.2 No Assignment Permitted. No Participant or creditor of a
Participant shall have any right to assign, pledge, hypothecate, anticipate
or in any way create a lien upon amounts payable pursuant to the terms of the
Plan, except as provided under this Section 13.2 or ERISA. All payments to
be made to Participants shall be made only upon their personal receipt or
endorsement, and no interest in the Plan shall be subject to assignment or
transfer or otherwise alienable, either by voluntary or involuntary act or by
operation of law, or subject to attachment, execution, garnishment,
sequestration or other seizure under any legal, equitable or other process,
or be liable in any way for the debts or defaults of Participants, except as
provided in this Section 13.2 or ERISA. This Section 13.2 shall not preclude
arrangements for the recovery of overpayments, or arrangements for direct
deposits of payments to an account in a bank, savings and loan association
or credit union (provided that such arrangement is not part of an arrangement
constituting an assignment or alienation). In addition, this Section 13.2
shall not preclude the Administrative Committee from distributing any
Benefits payable hereunder pursuant to the terms of a decree of court of
competent jurisdiction to the extent that complying with such decree does not
violate ERISA.
13.3 Payments to Minors and Incompetents. If a Participant entitled to
receive any Benefits under the Plan is a minor or is deemed by the
Administrative Committee or is adjudged to be legally incapable of giving
valid receipt and discharge for such Benefits, such Benefits shall be paid
to such person, to his or her duly appointed guardian, or to his or her
spouse or to another person charged with the legal obligation of his or her
support, to be expended for his or her benefit, as the Administrative
Committee shall designate, in its sole and absolute discretion. Such payment
shall, to the extent made, be deemed a complete discharge of any liability
for such payment under the Plan. Neither the Company or the Administrative
Committee shall be obligated to verify that any such payment was actually
made to or on behalf of the Participant.
13.4 Withholding. The Administrative Committee reserves the right to
withhold, or authorize the Trustee to withhold, from payments under the Plan
amounts attributable to Federal and state income tax, FICA and FUTA taxes,
and other taxes or charges required by law or regulation to be withheld from
amounts payable under the Plan. The Administrative Committee's determination
as to whether such withholding is required shall be binding and conclusive
upon all persons whomsoever; provided that the Administrative Committee may
review and revise its determination, in its sole and absolute discretion.
13.5 Execution of Receipts and Releases. Any payment to any
Participant, or to his or her legal representative, in accordance with the
provisions of the Plan, shall to the extent thereof, be in full satisfaction
of all claims hereunder against the Company and the Plan. To the extent
permitted by law, the Administrative Committee may require such Participant
or legal representative, as a condition precedent to such payment, to execute
a receipt and release therefor in such form as it shall determine.
13.6 Company Records. Records of the Company as to an Employee's
period of employment, termination of employment and the reason therefor,
leaves of absence, reemployment, and Salary are presumed correct and will be
conclusive on all persons, unless manifestly incorrect.
13.7 Interpretations and Adjustments. Except as herein provided with
respect to claims for Benefits under the Plan, an interpretation of the Plan
and a decision on any matter within a Fiduciary's discretion made in good
faith is binding on all persons. A misstatement or other mistake of fact
shall be corrected when it becomes known and the person responsible shall
make such adjustment on account thereof as he or she considers equitable and
practicable.
13.8 Uniform Rules. In the administration of the Plan, uniform rules
will be applied to all Participants similarly situated.
13.9 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information that the person acting
on it considers pertinent and reliable, and signed, made, or presented by the
proper party or parties.
13.10 Severability. In the event any provision of the Plan shall be
held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of the Plan, but shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein.
13.11 Notice. Any notice required to be given herein shall be deemed
delivered, when personally delivered or placed in the United States mails,
addressed with postage prepaid.
13.12 Waiver of Notice. Any person entitled to notice under the Plan
may waive the notice.
13.13 Successors. The Plan shall be binding upon all persons entitled
to Benefits under the Plan, their respective heirs and legal representatives,
the Company and its successors and assigns, and the Administrative Committee
and its respective successor.
13.14 Headings. The titles and headings of ARTICLES and Sections are
included for convenience of reference only and are not to be considered in
construing the provisions of the Plan.
13.15 Word Usage. Words used in the masculine gender shall apply to the
feminine gender where applicable, and wherever the context of the Plan
dictates, the plural shall be read as the singular and the singular as the
plural. The words "herein", "hereof", "hereinafter" and other conjunctive
uses of the word "here" shall be construed as a reference to another portion
of the Plan. Uses of the terms "Section" or "ARTICLES" as a cross-reference
will be to other Sections or ARTICLES contained in the Plan and not to
another instrument, document or publication unless specifically stated
otherwise.
13.16 Calculation of Time. In determining time within which an event or
action is to take place for purposes of the Plan, no fraction of a day shall
be considered, and any act, the performance of which would fall on a
Saturday, Sunday, holiday or other non-business day, may be performed on the
next following business day.
13.17 Construction. LS&CO. intends that the Plan be qualified under the
applicable provisions of ERISA and all provisions hereof shall be construed
to that result. To the extent that ERISA is not applicable, all questions
arising with respect to the provisions of the Plan shall be determined by
application of the laws of the State of California.
IN WITNESS WHEREOF, LS&CO. has caused this Plan to be executed and its
corporate seal to be hereunto affixed by its duly authorized officers, this
9 day of July, 1992.
LEVI STRAUSS & CO.
By:
------------------------------
Its:
----------------------<PAGE>
SCHEDULE I
Effective as of the date set forth below, the provisions of the Plan
apply without modification for Employees at the following locations:
Location Date
-------- ----
a. All LS&CO. locations a. Effective Date
within the State of Texas<PAGE>
MERGER AND AMENDMENT
-------------
LEVI STRAUSS & CO.
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
WHEREAS, Levi Strauss & Co. (the "Company") has adopted and amended the
Levi Strauss & Co. Supplemental Unemployment Benefit Plan (the "SUB Plan") to
provide certain supplemental unemployment benefits ("SUB benefits") to
eligible employees at specified facilities;
WHEREAS, the Board of Directors of the Company has approved the
establishment of a supplemental unemployment benefit plan or plans to expand
the availability of SUB benefits to additional employees;
WHEREAS, the Company has established the Levi Strauss & Co. Supplemental
Unemployment Benefit Plan - Tennessee (the "Tennessee SUB Plan") to provide
SUB benefits to eligible employees at the Company's facilities in the State
of Tennessee;
WHEREAS, the Company desires to standardize the SUB benefits provided to
its employees and simplify the administration of such benefits by merging the
Tennessee SUB Plan into the SUB Plan and amending the SUB Plan to provide SUB
benefits thereunder to employees at the Company's Tennessee facilities;
WHEREAS, the Board of Directors of the Company has authorized any
officer to take any and all actions necessary to establish and implement such
plan or plans;
NOW, THEREFORE,
1. The Tennessee SUB Plan is merged into the SUB Plan.
2. Schedule I at the end of the existing SUB Plan is amended
in its entirety to read as follows:<PAGE>
SCHEDULE I
Effective as of the date set forth below, the provisions of the Plan
apply without modification for Employees at the following locations:
Location Date
-------- ----
a. All LS&CO. locations a. Effective Date
within the State of Texas
b. All LS&CO. locations b. Effective Date
within the State of Georgia
c. All LS&CO. locations c. August 1, 1992*
within the State of Arkansas
d. All LS&CO. locations d. August 1, 1992*
within the State of North Carolina
e. All LS&CO. locations e. August 1, 1992*
within the State of Virginia
f. All LS&CO. locations f. August 1, 1992*
within the State of New Mexico
g. All LS&CO. locations g. August 1, 1992*
within the State of Kentucky
h. All LS&CO. locations h. August 1, 1992*
within the State of Mississippi
i. All LS&CO. locations i. November 30, 1992*
within the State of Tennessee
* or, if later, the effective date, if any, of the appropriate state
agency's approval of the Plan or the state agency's policy decision
regarding the Plan<PAGE>
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on
November __, 1992.
-----------------------
Donna J. Goya
Senior Vice President<PAGE>
AMENDMENT
-------------
LEVI STRAUSS & CO.
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
WHEREAS, Levi Strauss & Co. (the "Company") has adopted and amended the
Levi Strauss & Co. Supplemental Unemployment Benefit Plan (the "SUB Plan") to
provide certain supplemental unemployment benefits ("SUB benefits") to
eligible employees at specified facilities;
WHEREAS, the Company desires to amend the SUB Plan to clarify the
circumstances under which SUB Benefits are offset by imputed state
unemployment benefits;
WHEREAS, the Board of Directors of the Company has approved the
establishment of a supplemental unemployment benefit plan or plans to expand
the availability of SUB benefits to additional employees;
WHEREAS, pursuant to collective bargaining, the Company has negotiated
the provision of SUB Benefits, under certain circumstances, to employees at
its Customer Service Centers in Florence, Kentucky; Little Rock, Arkansas;
Henderson, Nevada and Canton, Mississippi;
WHEREAS, the Company desires to amend the SUB Plan to provide such SUB
benefits to employees at the Company's Florence, Little Rock, Henderson and
Canton Customer Service Centers; and
WHEREAS, the Board of Directors of the Company has authorized any
officer to take any and all actions necessary to establish and implement such
plan or plans;
NOW, THEREFORE,
1. The final paragraph of Section 5.4 of the SUB Plan is amended in its
entirety to read as set forth below:
If the State System Benefit actually received by a Participant for
a Week under the State System shall be for less, or more, than a full
Week (for reasons other than the Participant's receipt of wages or
remuneration for such Week), because:
(i) He or she has been disqualified or otherwise determined
ineligible for a portion of his or her State System Benefit for
reasons other than those set forth in Section 4.1(b); or
(ii) Of an underpayment or overpayment of a previous State
System Benefit,
the amount of the State System Benefit which would otherwise have been
paid to the Participant for such Week shall be used in the calculation
of State Benefit and Other Compensation for such Week.
2. The SUB Plan is hereby amended by the addition of a new Schedule II, to
read as set forth below:
SCHEDULE II
-----------
1. Scope. (a) Participants. The provisions of this Schedule apply to
any Employee employed at the Company's Customer Service Centers
identified in Section 4 below (each such Customer Service Center, the
"CSC"), as of the date specified in Section 4.
(b) Application. Any other provisions of the Plan
notwithstanding, the provisions of this Schedule shall apply with
respect to the Participants described in (a) above. Participants
described in (a) above who are not eligible for a Benefit pursuant to
this Schedule shall not otherwise be entitled to a Benefit under this
Plan. However, the provisions of the Plan, including, but not limited
to, Articles IV and V, shall apply with respect to matters not addressed
in this Schedule.
2. Eligible Layoff. A Participant under this Schedule shall be deemed
to be on Layoff only if such Participant's absence from work is for
reasons of mandatory layoff with the right of recall.
3. Determination of Qualifying Layoff. Section 7.6 of the Plan
notwithstanding, a Layoff shall constitute a Qualifying Layoff only if
the Layoff is caused by (a) the addition of a major product line to the
products handled at the CSC, (b) the removal of a major product from
line the CSC, or (c) a change in technology.
4. Applicable CSCs and Effective Dates. This Schedule II is effective
for the employees of each of the CSCs identified below as of the date
provided opposite such CSC:
CSC Effective Date
--- --------------
a. Florence, Kentucky February 25, 1993
(Location 15S)
b. Little Rock, Arkansas February 25, 1993
(Location 11S)
c. Henderson, Nevada February 25, 1993
(Location 4S)
d. Canton, Mississippi February 15, 1994
(Location 2S)
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on May __,
1993.
-----------------------
Donna J. Goya
Senior Vice President<PAGE>
<PAGE>
Exhibit 10z
-----------
WRITTEN DESCRIPTION OF HOME OFFICE
INTERIM CASH PERFORMANCE SHARING PLAN
The Company adopted its Home Office Interim Cash Performance Sharing Plan in
1991 to replace the previous profit sharing plan that benefitted Home Office
payroll employees. All eligible Home Office payroll employees can
participate in this plan. The Home Office Interim Cash Performance Sharing
Plan is designed to be a transition program through 1994, when an alternative
performance plan may be implemented.
The Home Office Interim Cash Performance Sharing Plan may annually reward all
eligible Home Office payroll employees with a lump sum amount that cannot be
tax deferred. Payment, if any, will be made in February following the
related fiscal performance year. Any such payment is equal to a percentage
(zero to twelve percent) of covered compensation based on a defined earnings
formula, measured on Company performance against plan. Participants in the
Home Office Plan who participate in certain other incentive plans can only
earn up to eight percent of their covered compensation.
Neither participation in or payments under this plan are intended to or does
imply any promise of continued employment by Levi Strauss & Co. (LS&CO.) or
any subsidiary of LS&CO. Employment may be terminated with or without
notice, at any time, at the option of the employer or the employee.<PAGE>
<PAGE>
Exhibit 10aa
------------
WRITTEN DESCRIPTION OF
FIELD PROFIT SHARING AWARD PLAN
The Company adopted the Field Profit Sharing Award Plan to replace the
previous profit sharing plan that benefitted Field payroll employees. All
eligible Field payroll employees can participate in this plan.
The Field Profit Sharing Award Plan provides for a minimum distribution
(determined by a defined earnings formula) in the form of a lump sum payment
(generally in December) to all eligible Field payroll employees. Amounts
above those indicated by the formula, if any, may be determined by the Board
of Directors.
Neither participation in or payments under this award are intended to or does
imply any promise of continued employment by Levi Strauss & Co. (LS&CO.) or
any subsidiary of LS&CO. Employment may be terminated with or without
notice, at any time, at the option of the employer or the employee.<PAGE>
<PAGE>
Exhibit 10dd
------------
FIRST AMENDMENT TO SUPPLY AGREEMENT
-----------------------------------
THIS IS A FIRST AMENDMENT TO SUPPLY AGREEMENT dated as of April 15,
1992 (the "First Amendment"), between CONE MILLS CORPORATION, a North
Carolina corporation ("Cone"), and LEVI STRAUSS & CO., a Delaware corporation
("LS&CO.").
B A C K G R O U N D
-------------------
Cone and LS&CO. are parties to a Supply Agreement, dated as of
March 30, 1992 (the "Agreement"). They wish to amend the Agreement in the
manner described in this First Amendment. This First Amendment is intended
to be and is an "instrument in writing signed by both parties" as
contemplated by Section 9 (captioned "Entire Agreement; Amendment") of the
Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Amendment to Section 1.3
------------------------
Section 1.3 of the Agreement is amended in its entirety as follows:
"Order Documentation" means the purchase orders, confirmations of
sales, invoices, releases, electronic data interchange protocols
and communications and other documents and communications
customarily used by Cone and LS&CO. in documenting orders by, and
shipments to, LS&CO., of XXX Denim.
2. Amendment to Section 9
----------------------
Section 9 of the Agreement is amending by amending its last
sentence in its entirety as follows:
This Agreement may not be amended or modified except by an
instrument in writing signed by both parties. The Order
Documentation may not be amended or modified except as approved by
both parties, it being understood that Cone and LS&CO. have and
continue to work cooperatively in adapting new technologies and
practices in order to improve the efficiency of ordering and
shipment of XXX Denim.
3. Conforming Changes
------------------
The signature page of the Agreement is amended by deleting the
phrase "Exhibit A Order Documentation" appearing below the signatures, it
being understood that the Agreement now has only one exhibit, the form of
lease agreement identified as "Exhibit B."
4. No Other Modifications
----------------------
Except as expressly described in this First Amendment, Cone and
LS&CO. do not intend to and are not modifying any other provisions of the
Agreement, and the Agreement, as amended by this First Amendment, remains in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this First Amendment to
be executed by their duly authorized officers as of the date and year first
above written.
CONE MILLS CORPORATION
By:
------------------------------
Title:
----------------------
LEVI STRAUSS & CO.
By:
------------------------------
Title:
----------------------<PAGE>
<PAGE>
Exhibit 21
----------
SUBSIDIARIES
As of November 28, 1993
State or Country
Name of Incorporation
- ---- ----------------
Levi Strauss Associates Inc. Delaware
Brittania Sportswear Ltd. California
Brittsport Limited Hong Kong
Caliman Company Limited* Hong Kong
Levi Strauss & Co. Delaware
Battery Street Enterprises, Inc. Delaware
Koracorp Industries (Hong Kong) Ltd.* Hong Kong
Koracorp Management Company, Inc. California
LS Reconveyance Corporation California
Koratron Company, Inc. California
MCO, Inc. Texas
Jeans Tech, Inc. Ohio
Levi Strauss Employee Purchase Plan, Inc. Arkansas
Levi Strauss Eximco (Ltd.) Hong Kong
Levi Strauss Eximco Chile Limitada Chile
Levi Strauss Eximco Columbia Columbia
Levi Strauss Eximco (Asia) Pte. Ltd. Singapore
Levi Strauss Eximco Europe Belgium
Levi Strauss Eximco (Hellas) E.P.E. Greece
Levi Strauss Eximco Mauritius Mauritius
Levi Strauss Export Sales Corp. California
Levi Strauss Foreign Sales Corp. Barbados
Levi Strauss (Geneva) S.A. Switzerland
Levi Strauss Eximtex, S.A.*** Switzerland
Levi Strauss (Budapest) Jeanswear Co. Ltd. Hungary
Levi Strauss Japan K.K. Japan
Levi's Only Stores, Inc. Delaware
Majestic Insurance International Ltd. Bermuda
Miratrix, S.A. Costa Rica
NF Industries, Inc. Nevada
Wharf Clothiers, Inc. California
Zenith International Insurance Limited Bermuda
Levi Strauss Associates Inc.
Levi Strauss & Co.
Levi Strauss International California
Creative Apparel Enterprises, S.A. Belgium
Dockers Germany Vertriebs GmbH Germany
Levi Strauss (Asia) Ltd. Hong Kong
Levi Strauss (Australia) Pty. Ltd. New South Wales
Levi Strauss Belgium, S.A. Belgium
Levi Strauss & Co. (Canada), Inc. Canada
Levi Strauss Chile Limitada Chile
Levi Strauss Continental, S.A. Belgium
Levi Strauss & Co. - Europe, S.A. Belgium
Levi Strauss Financial Services, S.A. Belgium
(Belgian Finserv or Finserv S.A.)
Levi Strauss de Espana, S.A. Spain
Confecciones Olvega, S.A. Spain
Levi Strauss (Far East) Ltd. Hong Kong
Levi Strauss do Brasil Industria e
Comercio Ltda. Brazil
Levi Strauss France, S.A. France
Levi Strauss Germany GmbH Germany
Levi Strauss (Hungary) Ltd. Hungary
Levi Strauss International Finance Company.,
N.V. Netherlands Antilles
Levi Strauss Istanbul Konfeksiyon Sanayi ve
Ticaret A.S. Turkey
Levi Strauss Italia Srl Italy
Levi Strauss Korea Korea
Levi Strauss Latin America, Inc. Delaware
Levi Strauss Latin America, Inc. & C.I.A.
(Partnership) Brazil
Levi Strauss (Malaysia) Sdn. Bhd. Malaysia
Levi Strauss de Mexico, S.A. de C.V. Mexico
Levi Strauss Nederland B. V. Netherlands
Levi Strauss Hellas, S.A. Greece
Levi Strauss Poland Z.o.o. (=Ltd.) Poland
Levi Strauss Praha, spol. s r.o. Czech Republic
Levi Strauss (New Zealand) Ltd. New Zealand
Levi Strauss Norway A/S Norway
Buksehjornet A/S (joint stock company) Norway
Buva A/S Norway
Buva Ans A/S (Joint Partnership) Norway
Levi Strauss Overseas Finance, N.V. Netherland Antilles
Levi Strauss del Peru S.A. Peru
Levi Strauss (Philippines) Inc. Philippines
Levi Strauss (Philippines) Inc. II Philippines
Levi Strauss (Russia) Ltd. Russia
Levi Strauss (Singapore) Pte. Ltd. Singapore
Levi Strauss (Suisse) S.A. Switzerland
Levi Strauss Sweden AB**** Sweden
Levi Strauss Trading Limited Liability Company Hungary
Levi Strauss (U.K.) Ltd. United Kingdom
Levi Strauss de Venezuela, C.A.* Venezuela
Saddleman South America, Inc. Delaware
Silvergrove Limited* Hong Kong
Soumen Levi Strauss OY Finland
The Exact Clothing Company Limited* United Kingdom
Tops and Bottoms International, C.A.
(40% owned)** Venezuela
* In process of liquidation
** Tops and Bottoms International, C.A. is now a licensee following the
sale in 1988 of LS&CO. stock in Tops and Bottoms International C.A.
*** No longer an affiliate of LS&Co.
**** Liquidated
All subsidiaries of the Company are 100% owned (except as noted) and are
included in the consolidated financial statements. Indirect subsidiaries are
noted by indention.<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Directors of
Levi Strauss Associates Inc.:
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-8, File Nos. 33-40947 and 33-41332.
ARTHUR ANDERSEN & CO.
San Francisco, California,
February 23, 1994
