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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 26, 1995 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 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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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]
The aggregate value of the registrant's voting stock held by non-affiliates, at
$189 per share (based on the latest independent valuation), was approximately
$94.5 million at February 2, 1996.
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 February 2, 1996
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Class E common stock, $.10 par value 1,489,159 shares
Class L common stock, $.10 par value 51,351,158 shares
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Documents incorporated by reference: None
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FORM 10-K
TABLE OF CONTENTS
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Page
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PART I
Item 1. Business................................................................................. 3
Item 2. Properties............................................................................... 17
Item 3. Legal Proceedings........................................................................ 18
Item 4. Submission of Matters to a Vote of Security Holders (in the 1995 fourth quarter)......... 18
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.................... 19
Item 6. Selected Financial Data.................................................................. 20
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 21
Item 8. Financial Statements and Supplementary Data.............................................. 29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..... 59
PART III
Item 10. Directors and Executive Officers of the Registrant....................................... 60
Item 11. Director and Executive Compensation...................................................... 65
Item 12. Security Ownership of Certain Beneficial Owners and Management........................... 75
Item 13. Certain Relationships and Related Transactions........................................... 78
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 80
SIGNATURES.......................................................................................... 85
Corporate Directory................................................................................. 88
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All percentage changes in this report are based on unrounded amounts.
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PART I
ITEM 1. BUSINESS
General
Levi Strauss Associates Inc. (the "Company") is the world's largest brand-name
apparel manufacturer. The Company designs, manufactures and markets branded
jeans and casual sportswear for men, women and youth, including jeans, slacks,
shirts, jackets, skirts and fleecewear. Its products are manufactured and sold
in numerous countries throughout the world and are primarily marketed under the
Levi's(R) and Dockers(R) trademarks.
In February 1996, the Company entered into a transaction designed to create a
new, refocused Company which would be dedicated to remaining privately-held and
managed with an explicit commitment to achieving superior financial returns
while operating in a values-oriented manner. In the transaction, participating
holders of the Company's Class L Common Stock (Class L Shares) would acquire
shares of a new corporation by contributing Class L Shares. The new corporation
would then buy, for cash in a merger, all of the remaining shares of the
Company's Class L Common Stock and all outstanding shares of the Company's Class
E Common Stock. (See Note 20 to the Consolidated Financial Statements contained
in this Form 10-K for further information.)
The Company is a leader in the apparel industry; its brands are among the
strongest in the industry and the most widely recognized by consumers in its
markets worldwide. Sales of jeans (made of denim, corduroy, twill and other
fabrics) and jeans-related products, primarily marketed under the Levi's(R)
brand, are the predominant source of revenue for the Company. Worldwide revenues
of jeans and jeans-related products for 1995 were $5.2 billion, or 78% of total
revenues. Casual sportswear, primarily natural fiber pants and tops marketed
under the Dockers(R) brand, are also an important source of revenue in the U.S.
and continue to be introduced in selected non-U.S. markets.
Industry Overview
The worldwide apparel market is greatly affected by demographic trends, frequent
shifts in prevailing fashions and styles, international trade and economic
developments, and retailer practices. The Company's market success is dependent
on its ability to quickly and effectively initiate and/or respond to changes in
market trends and other consumer preferences. Further, as consumers worldwide
become more price and value conscious and competitors offer lower priced and
innovative products, the Company actively promotes brand awareness and product
loyalty and continues to focus on product innovation and development. 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 market success is also dependent on the quality of service that it
provides to its customers. Retailers are striving to maintain lower inventory
positions and place orders closer in time to requested delivery dates.
Additionally, retailers are demanding increasing levels of floor-ready and
receipt-ready programs and enhanced store merchandising support. Recent changes
in the U.S. retail industry, including an increasing number of retail failures
and consolidations, have resulted in more centralized buying practices and
potentially greater credit exposures from customers. In response, the Company
emphasizes the importance of developing effective business partnerships with
retail customers, focused on customer service and well-defined product and
marketing programs.
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Organization Structure
The Company's current operating structure consists of two principal
organizations: Levi Strauss North America (LSNA) and Levi Strauss International
(LSI). LSNA is comprised of the Company's businesses in the U.S., Canada and
Mexico. The operating structure of LSNA is organized along brand lines: the
Levi's(R) brand, Dockers(R) brand and Brittania(R) brand. The Company recently
introduced the SLATES(TM) brand for which sales are expected to commence in the
U.S. during fiscal year 1996.
LSI manufactures and markets jeans and casual apparel outside of North America
and is organized regionally into the Europe, Latin America and Asia Pacific
divisions. Each international division is responsible for manufacturing,
marketing, sales, distribution, finance and information systems activities.
Principal Brands
Levi's(R) Brand
The Levi's(R) brand is comprised primarily of jeans and jeans-related products
that traditionally have been the Company's key products. In addition to the
501(R) family of jeans, the Levi's(R) products include Red Tab(TM), Orange
Tab(TM) and silverTab(TM) jeans and related products for men, women and youth.
Sales of Levi's(R) products in the U.S. for fiscal years 1995, 1994 and 1993
were $3.1 billion, $2.8 billion, and $2.6 billion, respectively.
Record dollar sales were established for fiscal year 1995 by the Levi's(R)
brand. The men's jeans business established record levels of unit and dollar
sales, with favorable comparisons to prior year levels in all major product
categories. Recently, strong performance in Levi's(R) Women's jeans contributed
to record 1995 sales. Major areas of growth continue to be in basic jeans
products (501(R), Red Tab(TM) and Orange Tab(TM)), silverTab(TM) products and
shirts for jeans. In the Europe division, led by Germany and Italy, high demand
for basic denim products, most notably the 501(R) family of jeans, drove sales
increases for 1995. The Asia Pacific division, primarily Japan, experienced
conflicting consumer demand for core heavy weight denim products versus
alternative lighter weight fabric products. Further, continuing growth
opportunities exist in the Asia Pacific division as evidenced by the strong
performance in South Korea which contributed to increased unit sales during
fiscal year 1995.
The Company anticipates sales growth in 1996 across all markets served by the
Levi's(R) brand. Sales of Levi's(R) jeans for women are expected to be higher in
1996 compared to 1995 due to increased market demand and expanded product
offerings. Traditional blue denim and colored denim bottoms and shorts, loose
silhouettes and coordinating tops are expected to continue as prominent products
sold to the youth market in 1996.
Dockers(R) Brand
The Dockers(R) brand consists of casual sportswear for men, women and youth.
The principal products under the Dockers(R) brand are men's casual and dress
slacks, including wrinkle-resistant products. Although the Dockers(R) brand is
driven by the men's category, the brand also serves the women's and youth casual
slacks markets and offers complementing tops. U.S. sales of Dockers(R) products
for 1995, 1994 and 1993 were $876.4 million, $808.3 million and $953.7 million,
respectively.
Sales of Dockers(R) brand increased in fiscal year 1995 as a result of the
continued popularity of men's products in North America, specifically the
wrinkle-resistant products. Offsetting these sales were the continued decreased
sales of women's and youthwear products. During 1995, positive response to the
Dockers(R) brand was seen in most European markets, although Germany did not
produce anticipated sales levels. The Dockers(R) line of products was launched
in Japan and Australia during 1995, adding to the list
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of non-U.S. markets which currently offer Dockers(R) products, including several
western European countries, the Philippines and Hong Kong.
During 1996, the Company intends to continue its focus on the Dockers(R)
"khakiwear" vision which it began executing in 1995. Within the U.S., this
vision emphasizes the broad continuum of casual products, designed and
merchandised to fit a specific niche in the consumer's wardrobe. Outside of the
U.S., the Company will continue to launch the Dockers(R) line of products into
major metropolitan cities.
SLATES(TM) Brand
The Company announced the SLATES(TM) brand in late 1995 and plans to launch the
brand in the Fall of 1996. This brand will add a third component to the
Company's presence in the men's pants business by occupying a position between
casual pants and tailored clothing and offering a younger attitude than
traditional dress pants.
Brittania(R) Brand
The Brittania(R) brand is the Company's value-priced line of jeans and casual
apparel that competes in the value-oriented, growing mass merchant category.
Products include men and women's jeans, tops and casual sportswear manufactured
and marketed under the Brittania(R) and Brittgear(TM) labels.
Fiscal year 1995 Brittania(R) product sales decreased from fiscal year 1994.
While demand for men's products has increased slightly, women's products have
shown an overall slowdown in sales.
Markets
U.S. Operations
The U.S. retail industry in recent years has experienced substantial
transformation through consolidations or closure of a number of major retailers.
As a result, major retailers are larger, resulting in more centralized buying
practices and greater leverage with suppliers (including the Company), and
potentially greater credit exposure for those suppliers. Relationships with
these customers are important to the Company; Levi's(R) and Dockers(R) products
sold to the Company's top 25 customers in the U.S. accounted for approximately
67% and 65% of total U.S. revenues in fiscal years 1995 and 1994, respectively.
Retailers are also seeking more services and support from those suppliers.
Changes in the U.S. retail environment may also have favorable implications for
the Company. Major U.S. department stores increasingly are carrying only the
top performing national brands as they expand shelf space devoted to lower-
priced, private label products. As a result, although the Company faces various
pressures from the consolidation of the customer base and the growth of private
label, it may benefit from the strength and popularity of Levi's(R) and
Dockers(R) products relative to its principal national competitors. This
possible emergence of the Levi's(R) and Dockers(R) brands as two of but a few
national brands widely carried by major U.S. retailers illustrates the
importance of having strong brands and developing effective business
partnerships with retail customers, focused on customer service, rapid
replenishment and well-defined product and marketing programs.
The Levi's(R) brand products witnessed continued market expansion during fiscal
year 1995. The Company experienced increased demand for men's jeans across all
product lines, and notable growth in jeans for women. 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 coordination 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.
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The Dockers(R) brand continues to be the most highly recognized and regarded
brand among male consumers of casual slacks. The women's and youth Dockers(R)
product lines have suffered from a very weak retail environment for moderately
priced sportswear products and from a lack of consumer interest in some
products. The Company hopes to see long-term benefits from its newly
repositioned core pants strategy which was developed in 1994 and began to be
executed in 1995. This strategy stems from an emphasis on "khakiwear" and will
depend on effective communication to consumers and emphasis on the display of
product to enable consumers to quickly recognize the product offerings. The
concept is designed to support a young image for the Dockers(R) brand.
The SLATES(TM) brand, which will be launched in 1996, is targeted towards the
male consumer in the dress pants category. The brand fits a niche between
casual pants and tailored clothing and is intended to offer a younger attitude
than traditional dress pants. The target market for this brand will be male
consumers aged 40 and over.
The Brittania(R) brand represents the Company's presence in the growing mass
merchant channel. This channel currently comprises over 40% of the jeans market.
The Brittania(R) brand offers low-priced, high quality products to major mass
merchant accounts and is a component of the overall U.S. marketing strategy.
Non-U.S. Operations
The Company has the largest and most successful international business among its
principal competitors. The Company markets products in over 40 countries outside
of the U.S., with recent entries in India and South Africa, and explores and
evaluates new markets on an ongoing basis. Non-U.S. operations produced 39% of
the Company's net sales in fiscal years 1995 and 1994 and contributed 48% and
50% to earnings before corporate expenses and interest during 1995 and 1994,
respectively. Currently, the Company has the largest brand share and strongest
brand image in virtually all of its established markets outside of the U.S. The
success in these markets is believed to be due to 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.
In many countries, jeans are generally perceived as a fashion item rather than a
basic, functional product and, like many apparel items, are higher-priced
relative to the U.S. market. Core denim jeans, especially the 501(R) family of
products, continue as key products in Europe and Canada. In Western Europe,
mainly the U.K., France and Spain, higher volumes and more favorable pricing
strategies were realized in 1995. Italy and Poland also experienced favorable
performance due to the strong demand for basic jeans products. In the Asia
Pacific division, particularly in Japan, sales were flat due to the continued
depressed economy and retail conditions. Sales in other Asia Pacific affiliates,
namely the Philippines and Korea, have also increased. In Mexico, the Levi's(R)
brand continues to be the market share leader with sales remaining stable in
spite of the continuing recession. Brazil maintains the highest level of sales
activity within the Company's Latin America division. The Company entered into
the Argentina market in late 1995.
Risks of Non-U.S. Operations
The Company's non-U.S. operations, including its use of non-U.S. manufacturing
sources, are subject to the usual risks of doing business outside the U.S. These
risks include adverse fluctuations in currency exchange rates, varying degrees
of socio-economic and political instability and other risks similar to those
seen in the U.S. including changes in import duties or quotas, disruptions or
delays in shipments and transportation and labor disputes. The Company is also
exposed to risks associated with changes in the laws and policies that govern
foreign investment in countries where it has operations and, to a lesser extent,
changes in U.S. laws and regulations relating to foreign trade and investment.
The Company continually evaluates the risk of
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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 many non-U.S. countries, the appeal of Levi's(R) products, particularly the
501(R) family of products, has generated higher prices for those products than
those in the U.S. This encourages diversion of Levi's(R) products sold in the
U.S. to countries where the products command higher prices. The Company is
taking steps to discourage diversion, however, the recent weakening of the U.S.
dollar compared to certain European currencies has reduced in some measure the
effectiveness of these steps. In addition, the approach may result in U.S.
retailer and consumer resistance to the higher pricing for the U.S. products, a
factor of particular concern given increased retailer and consumer value-
consciousness. More recently, certain currencies within Europe have weakened
against the German mark and French franc, resulting in cross-border diversion.
This occurrence adversely affects pricing strategy in Europe.
Across many markets, a growing problem faced by the Company is the
counterfeiting of its Levi's(R) brand products. Counterfeit products primarily
originate in Asia and the most lucrative market for the sale of these products
is Europe. The Company pursues and prosecutes counterfeiters because of the
serious negative effects which could result from the presence of these products
in the markets, including erosion of brand image and consumer confidence.
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 four principal brands, Wrangler(R), Lee(R), Rustler(R)
and Lee Riders(R). As a result of the changing retail environment, competition
is also emerging from some of the Company's customers who have developed
private-label products. The Company is seeking to strengthen relationships and
consumer loyalty through the use of dedicated channels (i.e., Original Levi's
Stores in the U.S. and overseas), by utilizing targeted consumer marketing and
maintaining a presence on the Internet.
The Company believes that the Dockers(R) brand has surpassed its traditional
competitors in market share. As these traditional competitors have begun to lose
retail space, specialty stores, mail-order marketers and fully integrated lines
are presenting new competition for the Dockers(R) products. Further, 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 to some
extent by U.S. trade policies that restrict apparel imports through quotas and
tariffs.
In the Company's principal markets outside of the U.S., although there is no
single competitor in the jeans market with a comparable global market presence,
there are numerous local competitors of varying strengths which are beginning to
exert greater pressures. In Japan, the Levi's(R) brand faces strong competitors
who have gained market share by reducing prices in response to the growing
number of value-oriented consumers. Additionally, as in the U.S., competition
from retailers' house brands is increasing in many countries.
Distribution
The Company distributes its Levi's(R) and Dockers(R) 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. The Company believes
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that industry leadership and brand strength of its core products are maintained
through the use of traditional distribution channels including department
stores, specialty stores and national chains.
The Company distributes Brittania(R) products principally through mass merchant
channels, including Kmart Corporation and Target Stores. Mass merchandisers
comprise approximately 5% of the Company's U.S. unit sales.
Outside of the U.S., the retail industry differs from country to country. In
some regions the Company's primary customers are large chain retailers with
centralized buying power. In other countries, the retail industry is comprised
of numerous smaller, less centralized shops. The Company also distributes to
approximately 1,100 independently owned 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 special retail fixtures and visual merchandising. The Company
believes these stores are of strategic importance in enhancing the brand image
of Levi's(R) products.
Company-Owned Retail and Outlet Stores/Retail Joint Venture
In order to enhance the image and values of the Levi's(R) and Dockers(R) brands,
the Company has begun implementation of a five-year plan to open up to 100
Original Levi's Stores and 50 Dockers Shops at various locations throughout the
U.S. Of the 100 Original Levi's Stores planned, up to 50 are to be established
through a joint venture relationship with Designs, Inc., in which the Company
has a 30% equity interest, and the remaining stores will be owned and operated
by the Company. This joint venture was established in January 1995. The
Original Levi's Stores and Dockers Shops sell only Levi's(R) and Dockers(R)
branded products. The Company believes that by managing these stores directly,
management will learn the needs of both retailers and consumers. Premier stores
will be operated only in key markets and locations most able to help the Company
achieve its primary focus of maintaining a high brand image, such as downtown
urban locations and selected high visibility regional malls. The Company's five-
year plan also includes the operation of up to 90 outlet stores, seven of which
were open as of November 26, 1995, dedicated to each brand in key outlet malls
outside major markets. The Company has authorized projects with capital
expenditures totaling approximately $177.0 million during the next few years in
connection with this program.
As of the end of fiscal year 1995, 21 Original Levi's Stores were open, of which
12 were established with the Company's joint venture partner and eight are
Company owned and operated. These stores offer the largest and most
comprehensive selection of Levi's(R) products in the U.S. and also currently
offer Levi's(R) Personal Pair(TM) jeans, a personal-fit service available to
Levi's(R) Jeans for Women customers. During the fourth quarter of 1995, the
Company acquired Custom Clothing Technology Corp. (CCTC), the software company
responsible for creating the technology behind Personal Pair(TM) products.
Personal Pair(TM) jeans are also available at Original Levi's Stores in Canada.
The consumer response to the Personal Pair(TM) product has been very favorable,
and as such, the Company plans to expand this offering to women's Dockers(R)
products, and men's jeans and Dockers(R) products.
The Company had 10 Dockers Shops throughout the U.S. as of the end of fiscal
year 1995. As with the Original Levi's Stores, a New York Flagship Dockers Shop
was opened in September 1995. These Dockers Shops offer the largest selection of
Dockers(R) products in the U.S., including the men and women's Dockers(R) line,
Dockers(R) Golf and Dockers(R) Authentics.
To further enhance the Levi's(R) brand image outside of the U.S., the Company
opened one owned and operated "flagship" store in London during 1994 and expects
to open several other flagship stores in major metropolitan areas outside of the
U.S. in 1996.
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Advertising and Marketing
The Company devotes substantial resources to advertising and marketing programs
which differ according to the conditions of the country targeted. In the U.S.,
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 and point of sale costs with
retailers. The Company is increasing its use of in-store presentations 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, promote its quality and present a consistent brand
message directly to the consumer. Outside the U.S., advertising themes and
strategies vary depending on the culture of the country, however, these themes
and strategies seek to maintain consistency in the global positioning of the
Levi's(R) brand. In addition to media and point of sale advertising, the
Company sponsors international concerts and events.
In 1995, the Levi's(R) brand launched a major 501(R) product line campaign in
the U.S. entitled "501 Reasons" and continued several other advertising
initiatives supporting women's and youthwear product lines as well as a new
Levi's(R) brand trademark campaign. These campaigns continue the Levi's(R)
brand's commitment to a strong consumer marketing focus. Initially launched in
Europe, the animated "Clayman" campaign became the Company's first global
commercial designed to communicate a consistent image for the Levi's(R) brand.
During 1995 the U.S. Dockers(R) brand launched national, regional and outdoor
advertising campaigns for men's, women's and youth Dockers(R) products.
Specifically, in the Fall of 1995, the Dockers(R) brand launched its "Nice
Pants" media campaign designed to create a consistent, younger image for the
brand.
In 1995, U.S. and non-U.S. advertising expense was $276.1 million and $175.5
million, respectively, compared to 1994 expenses of $233.5 million and $139.2
million, respectively.
Strategic Initiatives
The importance of customer service, both inside and outside the U.S., prompted
the Company to undertake a significant reengineering effort, particularly in the
U.S., referred to as its customer service initiative. The U.S. customer service
initiative involves development and implementation of new business processes
intended to enable the Company to meet a number of defined customer service
targets. The Company is also involved in a similar effort in its businesses
outside of the U.S.
U.S. Customer Service Initiative
In November 1995, U.S. management re-examined its customer service initiative
effort in its entirety. Management reviewed a number of factors, including
positive developments in U.S. sales and delivery performance and the complexity
of the initiative, resource requirements, escalating costs and business
disruption. Management concluded that a continued effort to meet the original
customer service targets within the planned timetable was inappropriate due to a
lack of cost-effectiveness and business disruption risks. Accordingly, U.S.
management has revised the customer service goals, timetable and approach, which
is intended to reduce the costs and business disruption risks of the initiative
while permitting the Company to maintain a competitive advantage.
Since 1993 and over the next several years, the Company has and plans to incur
total capital expenditures of over $400.0 million to support the new U.S.
distribution network, expanded system requirements, organization and
manufacturing changes. Included in this total capital expenditure projection is
over $300.0 million related to the construction, renovation and retrofitting of
new and existing customer service centers. The total capital expenditure
projection amount includes previously recognized capital expenditures of
approximately $280.0 million.
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Additionally, the Company plans to spend approximately $450.0 million for
transitional expenses, including costs related to the implementation of new
software applications, reengineering design and planning, implementation of
organization and process changes, training, education and other related
expenses. The total amount for transitional expenses include previously
recognized expenses of approximately $150.0 million. These costs will be
expensed as incurred.
LSI Customer Service Initiatives
The LSI customer service initiatives encompass the Company's affiliates in the
Europe, Latin America and Asia Pacific divisions. The objective of the LSI
initiatives is to build the capabilities within the LSI organization to make
customer service a competitive advantage. Scheduled to begin in 1996, the
initiatives will follow a gradual and phased implementation over an extended
time-frame and will be integrated into the normal business operations. Based in
part upon U.S. experience, LSI management, in reviewing proposed business
process designs, is focusing on cost-effectiveness, the anticipated benefits of
the initiative, and the impact on business disruption. The Company plans total
expenditures (including capital expenditures) related to the customer service
initiatives in the Europe, Latin America and Asia Pacific divisions to be
approximately $71.0 million during 1996.
Risks of Strategic Initiatives
Although the Company has revised the original objectives, scope and timing of
the customer service initiatives, the Company continues to assume substantial
risks in undertaking these initiatives. Business and employee disruption,
escalating costs and schedule slippage still pose risks to the Company during
the reengineering effort. Successful transition to and training of employees
for new positions, development and integration of essential information systems,
effective completion of new customer service centers and management of
manufacturing facility redesign efforts are critical factors leading to the
success of the service initiatives.
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. 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 reengineering initiative is essential to maintain its global
competitive position.
Information Systems
The Company continues to face challenges in developing the information systems
necessary to support new business processes and customer service requirements.
The complexities and cost of planning, developing, implementing and integrating
new systems were key factors in the Company's decision to refocus its customer
service initiative. Inadequate systems occasionally hinder and may adversely
affect the Company's decision making processes and execution including, for
example, demand forecasting and the use of automated product replenishment
arrangements.
The Company is devoting substantial resources to technology acquisition and
development, including a major effort to upgrade personal computers throughout
both the U.S. and non-U.S. organizations, and development of the systems needed
to support the business. In addition, the Company must install new materials
handling technologies in the new customer service centers and integrate the
software that operates that equipment with the Company's business systems. The
Company considers development of flexible, cost-effective technology a critical
strategic business issue.
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Global Sourcing
Sourcing is a key strategic issue and is critical to the Company's success. In
1995 and 1994, approximately 54% and 50%, respectively, of the apparel
production units of the Company's U.S. operations were manufactured by
independent contractors. Approximately 42% and 45% of non-U.S. products were
manufactured by independent contractors in 1995 and 1994, respectively. In 1995
and 1994, independent contractors were used for the finishing process for
approximately 72% and 70%, respectively, of the finished units of U.S.
operations. Approximately 47% and 53% of the finishing process for non-U.S.
finished units in 1995 and 1994, respectively, was performed by independent
contractors.
The Company has a few long-term contracts with certain of its manufacturing
sources and competes with other companies for production facilities and import
quota capacity. Inability to obtain quality production could adversely affect
incremental volume gains in a period of strong sales, a problem experienced from
time to time by the Company. 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.
In line with the Company's efforts to conduct its business in a responsible
manner, the Company established its Global Sourcing and Operating Guidelines
(GSOG) to provide direction for the selection of contractors and suppliers. The
GSOG is comprised of two parts: 1) the Business Partner Terms of Engagement
which address workplace issues that are substantially controllable by individual
business partners and 2) the Country Assessment Guidelines which address larger,
external issues beyond the control of individual business partners.
The Terms of Engagement assist in selecting business partners that operate work
places where ethical, legal, environmental, employment and community involvement
standards and practices are consistent with those of the Company. The Country
Assessment Guidelines assist in making practical and principled business
decisions in balancing the potential risks and opportunities associated with
conducting business in a particular country. In making these decisions, issues
of brand image, health and safety, the human rights environment, the legal
system and the political, economic and social environment are considered in an
attempt to determine the degree to which the Company's global corporate
reputation and commercial success may be exposed to unreasonable risk.
Cost is also a key component of sourcing. Currently, there is a substantial
disparity between U.S. and offshore cost of production. The Company is engaged
in various efforts to reduce the costs of U.S. manufacturing (for example, by
redesigning processes within individual facilities and worker training), and has
a long-term sourcing plan for its U.S. operations. In addition, the Company is
rationalizing its supplier base, with development of business partnerships based
on terms of engagement, service, financial stability, community support and
long-term mutual profitability, not simply low cost, as the key objective. The
businesses outside of the U.S. are undertaking similar measures to reduce costs,
including using cost-benefit analysis to evaluate sourcing alternatives.
The General Agreement on Tariffs and Trade (GATT) Uruguay Round agreement was
implemented on January 1, 1995. The major provision of the agreement which may
impact the Company is the phase-out of the textile and apparel quota system, the
Multifiber Arrangement (MFA). Most quotas are scheduled to be eliminated after
10 years.
The North American Free Trade Agreement (NAFTA) became effective January 1,
1994. Quota and tariffs are being phased out on apparel products of North
American origin over a six to seven year period. Tariffs on the Company's
products produced in Mexico from U.S. fabric have had immediate duty-free and
quota-free access to the U.S. market.
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<PAGE>
Trade legislation which may significantly impact the Company in 1996 would be
the passage of NAFTA-like preferential tariffs for the Caribbean Basin countries
(CBI countries). A "CBI Parity" Bill was introduced in Congress in 1995 but has
been opposed by Unions and other groups. At this time, the future of this
legislation is uncertain.
Raw Materials
The Company's flagship product is the 501(R) jean. Cone Mills Corp.
historically has been and remains the sole worldwide supplier of the denim used
in 501(R) jeans. The Company has a long-term supply contract with Cone Mills
Corp. but has no other long-term raw materials contracts. The loss of Cone Mill
Corp. or other principal suppliers could have an adverse effect on the Company's
results and operations. Increases in denim prices would also directly affect
the Company's cost and earnings. As part of its U.S. reengineering 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.
Cone Mills Corp. and Burlington Industries supplied approximately 28% and 16%,
respectively, of the total volume of fabrics purchased by the Company for U.S.
operations in 1995. Cone Mills Corp. supplied approximately 30% of the Company's
fabric purchases for non-U.S. operations in 1995.
Unshipped Orders
As of November 26, 1995 and November 27, 1994, the Company's unshipped order
position for all products was approximately 112 million and 105 million units,
respectively. The increase is attributable to the anticipation of a strong first
quarter of 1996 for the Levi's(R) brand.
Unit cancellations in 1995 increased 7% from 1994. Although improved inventory
management was experienced in the U.S., Canada and Mexico, resulting in lower
unit cancellations, slightly higher unit cancellations were seen in the Europe
and Asia Pacific divisions. Despite the increase in unit cancellations, unit
sales continued to increase.
Trademarks and Licensing Agreements
The Company has a general program concerning the protection and enforcement of
its trademark rights. The Levi's(R) trademark, one of the Company's most
valuable assets, is registered 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), Tab Device(R) and Arcuate Stitching Design(R) 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.
In the Fall of 1995, the Company introduced a new brand of dress slacks under
the SLATES(TM) trademark. The Company is in the process of registering this
trademark in several countries.
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
12
<PAGE>
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 affected
by the general seasonal trends that are characteristic of the apparel industry.
Customers
No customers of the Company accounted for 10% or more of net sales for fiscal
year 1995. The Company has no long-term contracts or commitments with any of its
customers other than with its retail joint venture partnership.
U.S. sales to the Company's top five retail customers accounted for 39% and 38%
of total U.S. revenues for fiscal year 1995 and 1994, respectively. The loss of
any of these customers could have a material adverse effect on the Company's
results of operations.
The sale of Brittania(R) products to two customers accounted for approximately
71% and 64% of 1995 and 1994 Brittania(R) revenues, respectively. The loss of
either of these customers could have an adverse effect on Brittania Sportswear
Ltd.'s operations, but not a material effect on the Company's results of
operations.
Employees
The Company employs approximately 37,700 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.
Environmental Laws
Compliance with United States federal, state and local laws enacted for the
protection of the environment has to date had no material effect upon the
Company's capital expenditures, earnings, or competitive position. Although the
Company does not anticipate any material adverse effects in the future based on
the nature of its operations and the thrust of such laws, no assurance can be
given that such laws, or any future laws enacted for the protection of the
environment, will not have a material adverse effect on the Company.
Foreign and Domestic Operations and Geographic Data
See Note 2 to the Consolidated Financial Statements for information regarding
financial data by geographic area.
Social Responsibility
Social responsibility is a matter of strong conviction on the part of the
Company. The Company has a long-standing 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
1995, the Company made a donation of $19.0 million to the Levi Strauss
Foundation. The Company also contributed $.1 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 current grant commitments totaling
approximately $10.8 million in 1995 and the Company made additional corporate
charitable contributions of $5.0 million, primarily for
13
<PAGE>
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 social justice (Project Change, a
race relations program in four 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 Social Benefits Program (matching gifts and volunteer service programs).
Contributions by the Levi Strauss Foundation have averaged over $9.3 million for
each of the last three years.
Mission Statement and Aspirations Statement
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 "Mission Statement" and "Aspirations Statement":
Mission Statement
The mission of the Company is to sustain responsible commercial success as
a global marketing company of branded 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 by fair treatment, teamwork, open
communications, personal accountability and opportunities for growth and
development.
Aspirations Statement
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.
The type of leadership that is necessary to make these Aspirations a
reality is as follows:
Teamwork and Trust: 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.
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<PAGE>
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.
Communications: Internally, leadership that builds an environment
where information is actively shared, sought and used in ways that
lead to empowerment that works, improved performance, and meaningful
feedback. Externally, leadership that strengthens our corporate
reputation with key stakeholders. All communications should be clear,
timely and honest.
Empowerment: Leadership that promotes ways of working in which
responsibility, authority and accountability for decision making are
held by those closest to our products and customers, and every
employee has the necessary perspective, skills and knowledge to be
successful in his or her job. We all share responsibility for
creating the environment that will nurture empowerment at all levels
of the organization.
The Company is providing Aspirations training to employees and attempts to hold
managers and employees accountable for behaviors that are in accordance with
these objectives.
Business Vision
The Company developed its Business Vision to identify its goals and provide
direction for prioritizing 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 our efforts. The quality of our
products, services and people is critical to the realization of our
business vision.
Products
We will market value-added, branded apparel with Levi's(R) branded jeans
continuing to be the cornerstone of our business. Our brands will be
positioned 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
15
<PAGE>
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.
Service
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 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.
People
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.
16
<PAGE>
ITEM 2. PROPERTIES
At November 26, 1995, the Company owned or leased various manufacturing,
warehousing, distribution and office facilities throughout the U.S. and abroad.
Corporate headquarters are located at Levi's Plaza in San Francisco, California,
where the Company currently leases 668,005 square feet of office space, of which
75,992 square feet is subleased to third parties. Additionally, the adjacent
Company owned "Icehouse Building" is used as office facilities and encompasses
194,765 square feet, of which 6,264 square feet is subleased. Further, 384,578
square feet of office space is leased by the Company throughout the U.S. for use
as sales offices, data centers and other general purposes. The manufacturing,
warehousing and distribution facilities utilized in the Company's operations are
described below.
<TABLE>
<CAPTION>
Owned * 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. 26 2,709,864 18 1,123,953 44 3,833,817
Non-U.S. 14 1,264,794 8 495,500 22 1,760,294
-- --------- -- --------- -- ----------
40 3,974,658 26 1,619,453 66 5,594,111
Distribution:
U.S. 7 3,998,850 1 170,875 8 4,169,725
Non-U.S. 3 447,203 18 1,233,400 21 1,680,603
-- --------- -- --------- -- ----------
10 4,446,053 19 1,404,275 29 5,850,328
-- --------- -- --------- -- ----------
Total 50 8,420,711 45 3,023,728 95 11,444,439
== ========= == ========= == ==========
</TABLE>
- -------------------------------------------
* Includes properties under capital lease.
U.S. Operations
The manufacturing and warehousing facilities are principally located in Texas
and Tennessee. Approximately 122,364 of the total space was idle and available
for sublease. The sole leased distribution facility, 170,875 square feet, is
used by the Brittania(R) division. Owned distribution centers for U.S.
operations are located in Mississippi, Arkansas, Kentucky, Nevada and Texas.
Construction is in process on three distribution centers, with a total square
footage of 2,522,904 in conjunction with the Company's customer service
initiatives. These centers were not in operation as of November 26, 1995.
Non-U.S. Operations
Manufacturing and warehousing facilities outside the U.S. are located
primarily in Canada, Spain, the United Kingdom, Brazil and Belgium. The largest
distribution facilities outside of the U.S. are located in Belgium, Germany and
Canada.
In management's opinion, these facilities are well maintained and provide
adequate capacity for current and future operations of the Company. However,
the Company continues to evaluate the facility needs of its operations given
changing U.S. and non-U.S. markets.
17
<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.
The Company evaluates environmental liabilities on an ongoing basis and, based
on currently available information, does not consider any environmental exposure
to be material to the Company's consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None, during the 1995 fourth quarter.
18
<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. Additionally, management Class
L stockholders are parties to contracts with the Company providing for in-
service, employment separation-related and post-separation stock purchases (see
Note 16 to the Consolidated Financial Statements for information relating to the
Management Liquidity Program). The outstanding shares of Class E common stock
are subject to restrictions on transfer imposed by the EIP, ELTIS and ESAP. On
February 2, 1996, there were approximately 250 Class L stockholders and 1,237
Class E stockholders.
During February 1996, the Company entered into an Agreement and Plan of Merger
(the "Merger") with LSAI Holding Corp. ("Holdings") and LSAI Acquisition Corp.
Pursuant to the Merger, each share of the Company's Class L Common Stock (other
than shares contributed to Holdings by Class L holders) and each share of the
Company's Class E Common Stock will be converted into the right to receive $265
per share in cash. See Note 20 to the Consolidated Financial Statements for
further discussion.
See Note 18 to the Consolidated Financial Statements for stock valuation
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 LLP, independent public accountants. Unless otherwise
indicated, references to years in this Form 10-K refer to the fiscal years of
the Company.
<TABLE>
<CAPTION>
Fiscal Years * 1995 1994 1993 1992 1991
=====================================================================================================================
(Dollars in Millions, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Operating Results:
Net sales $ 6,707.6 $ 6,074.3 $ 5,892.5 $ 5,570.3 $ 4,902.9
Gross profit 2,777.5 2,441.9 2,254.3 2,138.8 1,878.6
Percentage of net sales 41.4% 40.2% 38.3% 38.4% 38.3%
Stock option charge -- -- -- 158.0 --
Operating income 987.2 969.1 851.7 677.4 750.0
Income from continuing operations 734.7 557.5 492.4 360.8 366.5
Cumulative effects of changes in accounting principles/(1)/ -- (236.5) -- -- --
Net income 734.7 321.0 492.4 358.9 345.1
- ---------------------------------------------------------------------------------------------------------------------
Per Common Share Data:
Income from continuing operations $ 13.94 $ 10.59 $ 9.38 $ 6.91 $ 6.44
Cumulative effects of changes in accounting principles/(1)/ -- (4.49) -- -- --
Net income 13.94 6.10 9.38 6.91 6.26
Cash dividends declared/(2)/ 1.50 1.30 1.10 3.40 .20
- ---------------------------------------------------------------------------------------------------------------------
Financial Position:
Total assets $ 4,709.2 $ 3,925.3 $ 3,108.7 $ 2,880.7 $ 2,633.4
Long-term debt and capital lease obligations 16.4 16.7 93.1 262.0 432.7
Employee Stock Purchase and Award Plan common stock 66.5 49.7 33.5 16.4 --
Management Liquidity Program common stock 180.1 138.6 -- -- --
Stockholders' equity 2,115.3 1,471.6 1,251.0 768.2 558.3
Working capital $ 1,673.6 $ 1,567.5 $ 1,017.2 $ 609.5 $ 648.0
Current ratio 2.2 2.4 1.9 1.5 1.6
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Fiscal years 1995, 1994, 1993 and 1991 each contained 52 weeks and ended
on November 26, 1995, November 27, 1994, November 28, 1993 and November
24, 1991, respectively. Fiscal year 1992 contained 53 weeks and ended on
November 29, 1992.
/(1)/ Effective November 29, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and SFAS No. 109, "Accounting
for Income Taxes."
/(2)/ For fiscal years 1995, 1992 and 1991, dividends were declared on Class E
Common Stock and Class L Common Stock. For fiscal years 1994 and 1993,
dividends were declared on Class E Common Stock only.
20
<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 1995, 1994, and 1993 comparisons and
includes analyses of major components of net income, specific balance sheet
items, liquidity and capital resources.
Results of Operations
- --------------------------------------------------------------------------------
Summary
The Company achieved record net income in 1995, mainly due to record sales, a
one-time $100.0 million reversal of previously recorded taxes on unremitted non-
U.S. earnings, lower costs of goods sold as a percentage of sales, favorable
currency hedging transactions and higher interest income due to higher levels of
cash investments in 1995. Negatively affecting record earnings were marketing,
general and administrative expenses which increased as a percentage of net sales
for 1995. Net income results exceeded 1994 results by 129%, however, 1994
results included the adoption of Statement of Financial Accounting Standards
(SFAS) No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 109 "Accounting for Income Taxes" which caused a net of
tax negative impact of $236.5 million on 1994 earnings. Excluding the net
impact of these one-time charges, 1995 net income would have been 32% higher
than 1994.
The Company anticipates that sales in 1996 will exceed 1995 record figures based
primarily on the continued market expansion and growth of the Levi's(R) brand
products. Net income for 1996, however, is expected to decrease from 1995 as a
result of planned increases in expenses related to the customer service
initiatives, information systems expansion, the start-up of new businesses, an
increase in certain non-U.S. advertising campaigns, the 1995 one-time reversal
of $100.0 million of previously recorded taxes on unremitted non-U.S. earnings
and the 1995 reversal of $103.0 million of previous years' workers' compensation
accruals. Also expected to contribute to the lower 1996 earnings, is higher
interest expense related to debt which would be required to fund a proposed
merger transaction. (See "Subsequent Events - Proposed Merger Transaction"
within this item of the Form 10-K.)
Net Sales
Net sales for fiscal year 1995 reached a record level of $6.7 billion, an
increase of 10% over 1994, compared to the 1994 increase of 3% over 1993. The
increase in 1995 was attributable to a 6% increase in unit sales and by a 4%
increase in average unit selling prices. Sales from U.S. operations were $4.1
billion, an increase from 1994 of 9%, principally due to strong performance in
Levi's(R) jeans for men and women. Dockers(R) products also achieved increases
in sales due to the strong sales of men's products offset by a continued
decrease in the performance of women's and youthwear products.
In the U.S., the top five and top 25 customers comprised approximately 39% and
67%, respectively, of total U.S. net sales for 1995. In 1994, the top five and
top 25 customers comprised approximately 38% and 65%, respectively, of total
U.S. net sales for the year.
Non-U.S. sales for 1995 were a record at $2.6 billion, an increase of 12% over
1994 and were driven by consumer demand for basic denim products, particularly
the 501(R) family of products. Due to higher overall average unit selling prices
and a greater proportion of sales of higher margin denim bottoms, businesses
outside of the U.S. continue to enjoy higher gross margins than U.S. businesses.
Sales in Europe increased 16% from the prior year, led by strong sales in
Germany and Italy, and high growth in France and certain affiliates in Eastern
Europe. In the Asia Pacific division, predominantly Japan,
21
<PAGE>
consumer demand continued to vacillate between core heavy weight denim products
and alternative lighter weight blended fabric products. Continued strong growth
was experienced in South Korea. Dockers(R) products for men were offered in
numerous markets within Europe and Asia Pacific in 1995. Although unit volume
was low, consumer acceptance was high in most markets. The Company anticipates
higher unit volume in 1996. Furthermore, dollar sales were favorably impacted by
foreign currency translation rates for certain European currencies and the
Japanese yen.
Dollar sales for 1994 of $6.1 billion increased 3% over 1993 sales of $5.9
billion mostly due to a 6% increase in average unit selling prices that offset a
3% decrease in unit sales. Contributing to the 1994 results was strong
performance in the Europe division and the U.S. Levi's(R) brand product line.
Cost of Goods Sold
Cost of goods sold as a percentage of net sales was 59% in 1995, a slight
decrease from 60% in 1994 and 62% in 1993. Due to the performance of the
Levi's(R) brand, markdowns of inventories were lower, helping to maintain
margins. Furthermore, the Company continued its efforts to focus on overall cost
effectiveness in line with its strategic initiatives. These efforts were
reflected in the implementation of alternative manufacturing systems and greater
utilization of production capacity at certain U.S. owned and operated
manufacturing facilities. Although benefits of the alternative manufacturing
systems included reduced absenteeism and turnover, decreased injuries and lower
workers' health and safety costs, the implementation did not lower production
costs at the rate originally anticipated. The 1995 cost of goods sold benefited
from the reversal of approximately $103.0 million of previous years' workers'
compensation accruals in the U.S. compared to a similar reversal of $85.9
million in 1994.
Costs of goods sold per average unit produced outside of the U.S. was slightly
higher due to the high cost of labor in certain non-U.S. markets, particularly
Western Europe. Although the average cost per unit produced outside the U.S. is
higher when compared to U.S. produced goods, the gross margins experienced
outside of the U.S. are greater due to higher average unit selling prices. In
1995, while non-U.S. operations produced 39% of the Company's net sales, they
contributed 48% to consolidated earnings before corporate expenses and interest.
Marketing, General and Administrative
Marketing, general and administrative expenses in 1995 increased to $1.8 billion
from $1.5 billion the prior year. As a percentage of net sales, these costs were
27% in 1995 and 25% in 1994. The largest increase in costs was reflected in
administrative expenses which increased 30% in 1995 compared to 1994. The
increase was mainly due to compensation expense increases resulting from the
Company's long-term performance plan and a new performance and pay program,
Partners in Performance, both of which were based on actual results that
exceeded pre-established targets for the year. Furthermore, stock based
compensation expense was negatively impacted by the significant appreciation in
the value of the Company's common stock. (See Note 16 to the Consolidated
Financial Statements for additional information.)
Information resources expense increased 29% from the prior year as a result of
expansion of the Company's information systems infrastructure. The increase in
these costs on a global basis, stemmed from the Company's continued efforts to
devote substantial resources to technology acquisition and development,
including a major effort to upgrade personal computers and develop the systems
needed to effectively support the Company's operations.
Advertising expenses increased 21% from the prior year primarily due to
increased cinema, television, print and billboard advertising to support the
Dockers(R) brand repositioning in the U.S. and new television and cinema
campaigns for the Levi's(R) brand in Europe. In 1995 the Company launched the
"Clayman"
22
<PAGE>
campaign in Europe, and as a result of highly favorable consumer response, the
Company introduced the campaign in numerous other markets, making it the
Company's first global campaign. Additionally, the "501 Reasons" campaign was
launched to support the Levi's(R) brand in the U.S.
As a percentage of sales, marketing, general and administrative expense for 1994
was 25% compared to 24% in 1993. Administrative expense for 1994 increased 12%
from the comparable 1993 period mostly due to compensation expense related to
the adoption of the Management Liquidity Program, expenses related to customer
service initiatives in the U.S. and higher earnings-related compensation costs.
Selling expense for 1994 increased 22% over 1993 primarily due to higher 1994
sales and increased staffing required to support new and existing product lines
in the U.S.
The Company is experiencing an upward trend in marketing, general and
administrative expenses as a percentage of sales. These expenses represented
27%, 25% and 24% of sales in 1995, 1994 and 1993, respectively. The Company
believes it faces a growing inability to pass on cost increases to retailers in
the form of higher prices. It considers cost-effectiveness a critical strategic
issue and is developing and using various measures to manage costs, including
changes in the customer service initiatives, more widespread use of cost-benefit
analysis, negotiating lower costs with suppliers, redesign of production
facilities and processes and using the Partners in Performance compensation
system to involve employees more directly in cost-effectiveness. (See Note 13 to
the Consolidated Financial Statements for additional information on Partners in
Performance.)
Other Operating (Income) Expense, Net
Other operating income, net decreased slightly from the prior year despite a 20%
increase in net licensee income compared to 1994. Higher 1995 start-up costs
associated with Company-owned and operated retail stores in the U.S. and new
businesses outside of the U.S., 1995 losses recognized on the disposal of
capital assets and the 1994 adjustment for idle facilities all contributed to
the slight 1995 decrease. This decrease was partially offset by the 1994
recognition of environmental-related expenses.
Other operating income, net for 1994 increased $28.9 million from 1993 mostly
due to expenses incurred in 1993 for idle facilities, relocation of certain
operations and costs recognized for a decline in value on existing capital
assets as a result of the Company's U.S. initiative to improve customer service.
The increase was offset by the 1994 recognition of costs associated with
environmental-related soil remediation.
Interest Expense
Interest expense for 1995 decreased 21% from 1994 due a decrease in average debt
balances for the same period of 69%. Early in fiscal year 1995, the Company
repaid the fourth and final series of dividend notes to Class L stockholders
with cash from operations, thereby reducing debt balances. The average interest
rate for long-term and short-term borrowings outstanding during 1995 was 23%
compared to 18% in 1994. Interest expense levels were largely affected by the
high interest rate markets of non-U.S. countries, particularly Eastern Europe
and Latin America, where a high proportion of debt resided. The Company expects
to incur higher interest expense in 1996 due to the proposed merger transaction.
(See "Subsequent Event - Proposed Merger Transaction" within this item of the
Form 10-K.)
Interest expense for 1994 decreased 47% from 1993 primarily due to lower 1994
average debt balances. Cash flows from operations were used to reduce debt
levels throughout 1994. The average interest rate in 1994 was approximately 18%
compared to 9% in 1993, due to the high interest rate markets of non-U.S.
countries where most of the Company's debt resided.
23
<PAGE>
Other (Income) Expense, Net
Other income, net increased $81.7 million from 1994 mostly due to losses on
foreign currency transactions in 1994 and higher interest income on investments
in 1995. However, 1995 other income was reduced by the amortization of foreign
currency option premiums. The Company also had foreign currency forward and
option contracts with third parties which resulted in unrealized transaction
gains of $19.4 million and realized transaction losses of $29.5 million. The
recognition of gains on option contracts is deferred until maturity of the
contracts. (See "Risk Management" within this item of the Form 10-K.)
In 1994, other expense, net increased $35.1 million from the 1993 amount mostly
due to greater 1994 net foreign currency transaction losses and costs associated
with foreign currency exchange contracts. The net foreign currency transaction
losses primarily resulted from the weakening of the U.S. dollar compared to
European currencies and the Japanese yen during 1994.
Provision for Taxes
The decrease in the 1995 provision for taxes compared to 1994 was due mostly to
a $100.0 million one-time reversal of previously recorded taxes on unremitted
non-U.S. earnings related to foreign royalty payments. (See Note 3 to the
Consolidated Financial Statements for additional information.) The 1995
effective tax rate was 29% compared to 40% in 1994 and 41% in 1993. Excluding
this one-time reversal, the 1995 effective tax rate would have been 39%. This
one percentage point decrease from 1994 was primarily due to a change in the mix
of U.S. and non-U.S. earnings and a decrease in taxes on the undistributed
earnings of non-U.S. subsidiaries.
The increase in the 1994 provision for taxes compared to 1993 was due to higher
1994 earnings. The 1994 effective tax rate fell to 40% from 41% in 1993 due to a
change in the mix of U.S. and non-U.S. earnings, lower state taxes and a
decrease in taxes on the undistributed earnings of non-U.S. subsidiaries.
The Company complied with the provisions of SFAS No. 109 "Accounting for Income
Taxes", which requires an asset and liability approach for financial accounting
and reporting of income taxes as of November 29, 1993. The adoption resulted in
an $11.9 million credit to income, which was recorded as a cumulative effect of
changes in accounting principles on the Consolidated Statement of Income. Upon
adoption, deferred tax assets and deferred tax liabilities were adjusted
accordingly. (See Note 3 to the Consolidated Financial Statements for additional
information.)
Postretirement Benefits
The Company recorded a one-time, non-cash charge against 1994 earnings of $402.3
million before taxes and $248.4 million after taxes due to the adoption of SFAS
No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions"
effective November 29, 1993. This charge was recorded as a cumulative effect of
a change in accounting principles, net of income tax effects, on the
Consolidated Statement of Income with a corresponding amount recorded to
employee related benefits on the Consolidated Balance Sheet. The adoption of
SFAS No. 106 also resulted in additional ongoing expenses for service and
interest costs related to postretirement benefits, which were $38.6 million in
1995 and $43.0 million in 1994.
24
<PAGE>
Financial Condition and Liquidity
- --------------------------------------------------------------------------------
The following table sets forth certain measures of the Company's financial
condition and liquidity.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------
1995 1994 1993
====================================================================================================
(Dollars in Millions)
<S> <C> <C> <C>
Cash and cash equivalents, net of short-term borrowings $1,066.7 $ 789.6 $ 242.6
Cash provided by operating activities 749.3 769.3 495.7
Cash used for investing activities 363.8 152.3 103.8
Cash used for financing activities 105.3 71.1 374.1
Working capital 1,673.6 1,567.5 1,017.2
====================================================================================================
</TABLE>
Cash and Cash Equivalents, Net of Short-Term Borrowings
The Company's financial position at November 26, 1995 with respect to cash and
cash equivalents, net of short-term borrowings, increased $277.1 million from
1994 primarily due to cash provided by operations that was partially used for
the purchase of property, plant and equipment related to the Company's customer
service initiatives. Remaining cash balances were invested in money market
interest bearing investments maturing within three months. The Company
anticipates utilizing most of this cash to fund the proposed 1996 merger
transaction. (See "Subsequent Event - Proposed Merger Transaction" within this
item of the Form 10-K.) The increase in cash and cash equivalents, net of short-
term borrowings at November 27, 1994 of $547.0 million from 1993 was the result
of increased cash provided by operations that was partially offset by capital
expenditures and the repayment of debt.
Cash Provided by Operating Activities
Less cash was provided by operations in 1995 compared with 1994 primarily due to
an increase in trade receivables and inventories, partially offset by increases
in various current liabilities. Trade receivables increased 7% from 1994 due to
increased sales levels. Due to continually improving management of receivables,
the balances did not increase at the rate of the related sales. Inventories,
predominantly finished goods, increased 12% from 1994 mostly due to higher
inventory levels in the U.S. in anticipation of strong first quarter 1996 sales.
Inventory management outside of the U.S. improved from the prior year, with the
greatest improvement in Europe, resulting in quicker inventory turns. Year-end
1994 inventories decreased 1% from year-end 1993 reflecting lower U.S.
inventories, due to improved U.S. Levi's(R) brand production planning, partially
offset by higher non-U.S. inventories. The increase in accounts payable and
accrued liabilities in 1995 contributed to cash provided by operations. Accounts
payable were higher in 1995 due to the increased purchase of materials related
to increased sales. The increase in other liabilities was greatly attributable
to significant accruals of consulting and professional fees for services related
to the customer service initiatives.
Cash Used for Investing Activities
Cash used for investing activities was $211.5 million higher for fiscal year
1995 than 1994 primarily due to purchases of property, plant and equipment.
Capital expenditures of $333.9 million were higher in 1995, resulting in a
property, plant and equipment balance which was 35% higher at the end of 1995
versus 1994. Approximately $199.0 million of 1995 capital expenditures were
related to the Company's U.S. customer service initiative and included
construction costs and equipment purchases for customer service centers and
purchases of desk-top computer systems. Outside the U.S., capital expenditures
of $46.7 million were incurred that related primarily to the Europe division and
included upgrades to certain distribution centers
25
<PAGE>
and three new flagship stores. The 13% increase in property, plant and equipment
from year-end 1993 to 1994 reflected capital expenditures related to the U.S.
customer service initiative and the purchase of equipment and leasehold
improvements in connection with the data center relocation outside of
California, in accordance with the Company's disaster recovery plan.
At year-end 1995, the Company had capital expenditure purchase commitments
outstanding of approximately $100.0 million. Commitments related to the U.S.
customer service initiatives were approximately $60.0 million and included an
equipment contract with Computer Aided Systems, Inc. and a design, engineering,
procurement and construction services agreement with Fluor Daniel, Inc. These
contracts relate to the installation of materials handling systems and the
design and construction of the U.S. customer service centers. The remaining
commitments relate primarily to general operational needs in the U.S. business.
The Company anticipates authorizations for capital expenditures of approximately
$265.8 million for new 1996 projects. Spending on capital projects during the
1996 year (which included authorizations from previous years) is expected to be
$325.0 million, including capital expenditures of approximately $109.9 million
related to the LSNA customer service initiatives. The Company plans for capital
expenditures of approximately $10.0 million during 1996 related to the LSI
customer service initiatives.
Cash Used for Financing Activities
The Company used $34.2 million more cash for financing activities in fiscal year
1995 compared to 1994. Dividends were declared and paid twice during fiscal year
1995 on shares of both Class E and Class L common stock at a total for the year
of $1.50 per share or $86.4 million. Also affecting the cash used for financing
activities was the 1995 repurchase of 70,842 shares of management Class L common
stock, pursuant to the Management Liquidity Program, at the appraised stock
value at the time of repurchase of $134 per share totaling $9.5 million. (See
Note 16 to the Consolidated Financial Statements for additional information.)
During 1995, the Company repaid its fourth and final series of dividend notes to
Class L stockholders, which originated in 1993, for an aggregate amount of $20.6
million, plus interest accrued of $1.9 million.
The decrease for 1994 in cash used for financing activities of $303.0 million
compared to year-end 1993 relates mostly to a significant paydown of debt during
fiscal year 1993.
During 1995, the Company extended its primary credit agreement to a term of five
years and negotiated certain other items including lower commitment fees, lower
interest rate basis points and less stringent covenants. At November 27, 1995,
with no borrowings outstanding on its primary credit agreement, the Company had
a total outstanding debt balance of $38.1 million (mostly outside the U.S.), 43%
lower than year-end 1994.
Working Capital
Working capital was higher at the end of fiscal year 1995 compared to 1994 due
to the significant increase in cash and cash equivalents. However, this
increase was partially offset by a reclassification from long-term deferred tax
liability to current taxes payable in connection with an anticipated settlement
with the Internal Revenue Service relating to its examination of the Company's
consolidated U.S. income tax returns for 1983 through 1985.
Risk Management
A large portion of the Company's revenue and income is derived from its
operations outside of the U.S. As a result, the Company's operations and
financial results could be significantly affected by international factors, such
as changes in foreign currency exchange rates or weak economic conditions in the
foreign
26
<PAGE>
markets in which the Company does business. When the U.S. dollar strengthens
against other currencies, the U.S. dollar value of non-U.S. dollar-based sales
decreases. When the U.S. dollar weakens, the U.S. dollar value of non-U.S.
dollar-based sales increases. Correspondingly, the U.S. dollar value of non-U.S.
dollar-based costs increases when the U.S. dollar weakens and decreases when the
U.S. dollar strengthens. Accordingly, changes in exchange rates may positively
or negatively affect the Company's consolidated sales and gross margins.
To mitigate the short-term impact of fluctuating currency exchange rates on the
Company's non-U.S. dollar-based sales, product procurement, and operating
expenses, the Company regularly manages its non-U.S. dollar-based exposures.
Specifically, the Company enters into foreign exchange forward and option
contracts to hedge foreign currency exposures, as warranted. Currently, these
contracts do not extend beyond one year. (See Notes 1, 6, 7 and 8 to the
Consolidated Financial Statements for additional information.)
Subsequent Events
Proposed Merger Transaction
In February 1996, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with LSAI Holding Corp. ("Holdings") and LSAI Acquisition
Corp., a wholly-owned subsidiary of Holdings ("Merger Sub"). The Merger
Agreement provides for the merger (the "Merger") of Merger Sub with and into the
Company. The Company's Board of Directors and stockholders approved the Merger
in February 1996. Completion of the Merger is subject to satisfaction of
certain conditions, including receipt of necessary financing and regulatory
approvals; completion is expected during the second quarter of 1996.
In the Merger, each share of the Company's Class L Common Stock (other than
shares contributed to Holdings by Class L holders) and each share of the
Company's Class E Common Stock will be converted into the right to receive $265
per share in cash. As a result of the Merger, the Company will become a wholly-
owned subsidiary of Holdings. The cash consideration will be provided through
bank borrowings by Holdings, which are expected to be assumed by the Company
after the Merger, and through cash generated by the Company. The total cash
consideration is expected to be approximately $2.3 billion, however, this
amount may change depending on the number of shares of Class L Common Stock
ultimately contributed to Holdings. The final amount will not be determined
until early March 1996.
Holdings is a Delaware corporation organized and owned by a group of holders of
the Company's Class L Common Stock. Holders of Holdings common stock will place
their shares in a voting trust, giving the trustees voting power over most
matters subject to stockholder vote, and will be subject to restrictions on
share transfers.
Based upon Subscription Agreements received from Class L stockholders on January
25, 1996, 44,738,958 shares of Class L Common Stock will be contributed to
Holdings and 7,016,950 shares of Class L Common Stock will be converted into the
right to receive cash upon the Merger. A Participating Stockholder who enters
into a Subscription Agreement has until February 26, 1996 (the "Adjustment
Date") to reduce his or her investment level or withdraw the subscription
completely. Assuming that no subscription reductions or withdrawals occur prior
to the Adjustment Date, the transaction would result in a decrease in cash and
cash equivalents of $1,047.1 million, an increase in debt of $1,269.0 million, a
decrease in ESAP and Management Liquidity Program Common Stock of $246.6 million
and a decrease in stockholders' equity of $2,023.8 million.
Other than Management Holders who participate in the Offering, the Company's
management and employees will have no continuing equity interest in Holdings or
the Company following the Merger. In
27
<PAGE>
lieu of an equity interest, it is expected that all Company employees worldwide
will participate in new arrangements designed to align employee and
stockholders' interests in the post-Merger entity by providing one or more cash
payments to employee participants based upon the future value created after the
Merger. There can be no assurances that the new arrangements will be adopted in
the form described or that they will result in such alignment of interests.
However, it is the intention of Holdings' management to cause such a cash-based
plan to be adopted in connection with the Merger.
The operation of the EIP and ELTIS plans will remain essentially the same as
before the Merger, except that participants will no longer have the option to
invest in Company stock. The ESAP plan will cease to exist after the Merger.
The Management Liquidity Program will not be assumed by Holdings and will
therefore not apply to Holdings' Common Stock. The stock options outstanding at
November 26, 1995 are expected to be exercised prior to the Merger and will, at
the option of the holder, be contributed to Holdings or converted to cash in the
Merger. No options will be assumed by Holdings. The Stock Appreciation Rights
effectively will remain in place but appreciation will be based on a measure
other than Company stock.
The financial statements included in this Form 10-K do not give effect to the
Merger.
28
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and related Notes are located on pages 30
through 57, with the Report of Independent Public Accountants on page 58.
All Financial Statement Schedules have been omitted, since the required
information is not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the Consolidated Financial Statements and Notes thereto.
29
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
For the Years Ended November 26, 1995, November 27, 1994 and November 28, 1993
30
<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 26, 1995 November 27, 1994 November 28, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net sales $ 6,707,631 $ 6,074,321 $ 5,892,479
Cost of goods sold 3,930,132 3,632,406 3,638,152
----------- ----------- -----------
Gross profit 2,777,499 2,441,915 2,254,327
Marketing, general and administrative
expenses 1,809,633 1,493,234 1,394,170
Other operating (income) expense, net (19,373) (20,448) 8,418
----------- ----------- -----------
Operating income 987,239 969,129 851,739
Interest expense 15,659 19,824 37,144
Other (income) expense, net (63,257) 18,410 (16,718)
----------- ----------- -----------
Income before taxes and cumulative
effects of changes in accounting
principles 1,034,837 930,895 831,313
Provision for taxes 300,101 373,402 338,902
----------- ----------- -----------
Income before cumulative effects of
changes in accounting principles 734,736 557,493 492,411
Cumulative effects of changes in
accounting principles:
Postretirement benefits other than
pensions (SFAS 106), net of
applicable income tax benefits of
$153,885 -- 248,429 --
Income taxes (SFAS 109) -- (11,912) --
----------- ----------- -----------
Net income $ 734,736 $ 320,976 $ 492,411
=========== =========== ===========
Income per common share:
Income before cumulative effects of
changes in accounting principles $ 13.94 $ 10.59 $ 9.38
Postretirement benefits other than
pensions (SFAS 106) -- 4.72 --
Income taxes (SFAS 109) -- (0.23) --
----------- ----------- -----------
Net income $ 13.94 $ 6.10 $ 9.38
=========== =========== ===========
Average common shares outstanding 52,696,492 52,639,433 52,513,160
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
Page 1 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
November 26, November 27,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $1,088,032 $ 813,320
Trade receivables, net of allowance for doubtful accounts of
$34,939 in 1995 and $28,066 in 1994 969,849 908,690
Inventories:
Raw materials 127,010 122,947
Work-in-process 143,301 165,180
Finished goods 608,772 494,636
---------- ----------
Total inventories 879,083 782,763
Deferred tax assets 16,821 66,160
Other current assets 117,387 95,005
---------- ----------
Total current assets 3,071,172 2,665,938
Property, plant and equipment, net of accumulated depreciation
of $525,037 in 1995 and $454,376 in 1994 906,755 669,606
Goodwill and other intangibles, net of accumulated
amortization of $191,361 in 1995 and $180,920 in 1994 336,356 341,355
Noncurrent deferred tax assets 337,146 204,574
Other assets 57,728 43,836
---------- ----------
$4,709,157 $3,925,309
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt and capital lease
obligations $ 389 $ 25,974
Short-term borrowings 21,302 23,701
Accounts payable 346,594 286,675
Accrued liabilities 361,563 339,395
Salaries, wages and employee benefits 293,606 279,038
Taxes payable 374,082 142,348
Dividends payable -- 1,266
---------- ----------
Total current liabilities 1,397,536 1,098,397
Long-term debt and capital lease obligations, less current maturities 16,366 16,720
Long-term employee related benefits 317,242 301,546
Postretirement medical benefits 448,084 418,622
Long-term tax liability 134,470 393,360
Minority interest 33,557 36,837
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
Page 2 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
November 26, November 27,
1995 1994
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (continued)
Common Stock - Employee Stock Purchase and Award Plan and
Management Liquidity Program:
Class E common stock - $.10 par value; issued: 1995 -
543,140 shares; 1994 - 431,123 shares (Redemption value
$102,653) 54 43
Class L common stock - $.10 par value; issued: 1995 - 571,688
shares; 1994 - 547,531 (Redemption value $183,130) 57 55
Additional paid-in capital, common 246,498 188,144
----------- -----------
Total common stock - Employee Stock Purchase and
Award Plan and Management Liquidity Program 246,609 188,242
----------- -----------
Stockholders' Equity:
Class E common stock - $.10 par value; authorized
100,000,000 shares; issued and outstanding: 1995 - 953,058
shares; 1994 - 939,747 shares 95 94
Class L common stock - $.10 par value;
authorized 170,000,000 shares; issued: 1995 -
51,184,220 shares; 1994 - 51,279,219 shares 5,118 5,128
Additional paid-in capital, common 188,933 187,369
Retained earnings 1,853,982 1,227,897
Translation adjustment 82,940 71,623
Pension liability -- (701)
Treasury stock, at cost - Class E: 1995 - 5,014 shares;
1994 - 10,221 shares; Class L: 1995 - 404,750 shares;
1994 - 499,749 shares (15,775) (19,825)
----------- -----------
Total stockholders' equity 2,115,293 1,471,585
----------- -----------
$ 4,709,157 $ 3,925,309
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<TABLE>
<CAPTION>
Class E Class L Additional
Common Common Paid-In Retained Translation Pension Treasury Total
Stock Stock Capital Earnings Adjustment Liability Stock Equity
------- ------- ---------- ----------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at November 29, 1992 $ 79 $ 5,191 $ 230,222 $ 499,043 $ 57,427 $ (5,060) $ (18,669) $ 768,233
Sale and Company contribution of
Class E stock to employee plans
(104,642 shares) 10 -- 12,350 -- -- -- 536 12,896
Purchase of Class E stock from ESAP
(4,638 shares) -- -- -- -- -- -- (563) (563)
Cash dividends on Class E stock
($1.10 per share) -- -- -- (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 at November 28, 1993 89 5,191 242,572 990,130 48,322 (16,574) (18,696) 1,251,034
Purchase and retirement of
management Class L stock (83,949
shares) -- (8) (193) (9,369) -- -- -- (9,570)
Adoption of Class L management
liquidity program (547,531 shares
and 499,749 options) -- (55) (60,477) (72,057) -- -- -- (132,589)
Sale and Company contribution of
Class E stock to employee plans
(52,502 shares) 5 -- 5,467 -- -- -- 826 6,298
Purchase of Class E stock from ESAP
(15,769 shares) -- -- -- -- -- -- (1,955) (1,955)
Cash dividends on Class E stock
($1.30 per share) -- -- -- (1,775) -- -- -- (1,775)
Net income -- -- -- 320,976 -- -- -- 320,976
Net loss on sale and purchase of
subsidiary's treasury stock -- -- -- (8) -- -- -- (8)
Translation adjustment -- -- -- -- 23,301 -- -- 23,301
Pension liability -- -- -- -- -- 15,873 -- 15,873
------- ------- ---------- ----------- ----------- ---------- --------- -----------
Balance at November 27, 1994 94 5,128 187,369 1,227,897 71,623 (701) (19,825) 1,471,585
Reclassification of Class L and
retirement of Treasury stock
related to exercise of 94,999
stock options -- (10) (218) (3,290) -- -- 3,518 --
Sale and Company contribution of
Class E stock to employee plans
(13,311 shares) 1 -- 1,782 -- -- -- 2,276 4,059
Purchase of Class E stock from ESAP
(12,159 shares) -- -- -- -- -- -- (1,744) (1,744)
Increase in value of Class L shares
under management liquidity program -- -- -- (26,218) -- -- -- (26,218)
Cash dividends on Class E and Class
L stock ($1.50 per share) -- -- -- (79,143) -- -- -- (79,143)
Net income -- -- -- 734,736 -- -- -- 734,736
Translation adjustment -- -- -- -- 11,317 -- -- 11,317
Pension liability -- -- -- -- -- 701 -- 701
------- ------- ---------- ----------- ----------- ---------- --------- -----------
Balance at November 26, 1995 $ 95 $ 5,118 $ 188,933 $ 1,853,982 $ 82,940 $ -- $ (15,775) $ 2,115,293
======= ======= ========== =========== =========== ========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
Page 1 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 26, November 27, November 28,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Income before cumulative effects of changes
in accounting principles $ 734,736 $ 557,493 $ 492,411
Adjustments to reconcile net cash provided by
operating activities:
Depreciation and amortization 115,382 114,986 111,818
Foreign exchange (gains) losses (6,887) 30,144 (593)
Provision for deferred employee benefits 136,324 97,326 35,115
Payment of deferred employee benefits (34,285) (32,099) (25,436)
Provision (benefit) for workers'
compensation claims (5,661) 39,859 102,428
Payment of workers' compensation claims (43,943) (49,077) (58,665)
Increase in trade receivables (136,399) (42,639) (139,329)
(Increase) decrease in inventories (58,119) 34,743 (67,428)
(Increase) decrease in other current assets (7,471) 6,340 (9,309)
Decrease in deferred taxes (82,846) (2,242) (30,380)
Increase (decrease) in accounts payable and
accrued liabilities 128,184 (38,254) 51,262
Increase in salaries, wages and employee
benefits 7,358 46,330 41,376
Increase (decrease) in taxes payable 237,307 (2,774) (33,789)
Increase (decrease) in long-term employee
related benefits 27,744 (28,190) 568
Increase (decrease) in long-term tax
liabilities (263,187) 46,931 44,949
Other, net 1,082 (9,550) (19,323)
--------- --------- ---------
Net cash provided by operating activities 749,319 769,327 495,675
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (333,949) (176,357) (142,841)
Proceeds from sale of property, plant and
equipment 863 29,586 6,290
Increase (decrease) of net investment hedge (11,027) (5,487) 32,757
Investment in joint venture (6,614) -- --
Other, net (13,114) -- --
--------- --------- ---------
Net cash used for investing activities (363,841) (152,258) (103,794)
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
Page 2 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
November 26, November 27, November 28,
1995 1994 1993
----------- ------------ ------------
<S> <C> <C> <C>
Cash Flows from Financing Activities:
Repayments of long-term debt (25,948) (92,358) (415,716)
Proceeds from sale of common stock to
employee plans 18,647 21,622 29,512
Net increase (decrease) in short-term
borrowings (2,651) 13,952 (128,792)
Purchase of management Class L common
stock (9,493) (9,570) --
Dividends paid (87,343) (3,181) (82,210)
Proceeds from issuance of long-term debt -- 11 227,952
Other, net 1,483 (1,593) (4,893)
----------- --------- ---------
Net cash used for financing activities (105,305) (71,117) (374,147)
----------- --------- ---------
Effect of exchange rate changes on cash (5,461) 14,695 (2,763)
----------- --------- ---------
Net increase in cash and cash equivalents 274,712 560,647 14,971
Beginning cash and cash equivalents 813,320 252,673 237,702
----------- --------- ---------
Ending cash and cash equivalents $ 1,088,032 $ 813,320 $ 252,673
=========== ========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for:
Interest $ 19,411 $ 18,841 $ 36,787
Income taxes 410,490 328,121 364,064
Non-cash investing and financing
activities:
Capital lease obligations incurred -- -- 409
Dividends declared, not paid - common
stock -- 1,266 688
Increase in Management Liquidity
Program Class L common stock due to
increase in valuation 50,664 138,587 --
Decrease in stockholders' equity due
to Management Liquidity Program (26,218) (132,589) --
Notes issued for payment of dividends -- -- 77,116
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<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. The
consolidated financial statements do not give effect to the Proposed Merger
Transaction. (See Note 20.)
Cash Equivalents. All highly liquid investments with an original maturity of
three months or less are included as cash equivalents.
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
a normal gross margin for each product.
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
not provided on the undistributed earnings of non-U.S. subsidiaries to the
extent that taxes on the distribution of such earnings are expected to be offset
by tax credits.
Effective November 29, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". 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 was recorded as a
cumulative effect of a change in accounting principles on the Consolidated
Statements of Income and resulted in an $11.9 million credit to 1994 income.
Depreciation and Amortization Methods. Property, plant and equipment is carried
at cost, less accumulated depreciation. Goodwill and other intangibles are
carried at cost, less accumulated amortization. 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.
Postretirement Benefit Plans. The Company adopted SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions" effective November
29, 1993. SFAS No. 106 requires the Company to 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 adoption was recorded as a cumulative effect of a change in
accounting principles, net of income taxes, on the Consolidated Statements of
Income and resulted in a one-time charge of $402.3 million before taxes and
$248.4 million after taxes. Additionally, the Company recorded an expense for
1995 and 1994 net periodic costs of $38.6 million and $43.0 million,
respectively.
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Common Stock - Employee Stock Purchase and Award Plan and Management Liquidity
Program. Stock held by participants of the Employee Stock Purchase and Award
Plan (ESAP) and Management Liquidity Program are classified outside
stockholders' equity due to the put rights attached to Class E and Class L
common stock, respectively. (See Notes 12, 16 and 20.)
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) expense,
net.
Foreign Exchange Contracts. The Company enters into foreign exchange contracts
to manage its foreign currency exposures, particularly inventory purchases,
intercompany royalties, loans and other transactions from its non-U.S.
affiliates and licensees. Market value gains and losses on hedge contracts are
recognized currently or are deferred until realized depending on the nature of
the underlying transaction and the type of hedge instrument used. These gains
and losses in market value on hedge instruments offset foreign exchange gains or
losses on the underlying 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 26, 1995, the net effect
of exchange rate changes due to net investment hedge transactions was a $10.8
million decrease to translation adjustment.
Gains or losses resulting from foreign currency exchange transactions (including
certain foreign currency hedge transactions) and translation adjustments of
foreign operations in countries with highly inflationary economies are included
in other (income) expense, net, and amounted to (gains) losses of $(10.3)
million, $51.6 million and $10.0 million for 1995, 1994 and 1993, respectively.
The recognition of gains on option contracts is deferred until maturity of the
contracts. These gains are then included in other (income) expense, net.
Advertising Costs. The Company expenses advertising costs as incurred. For
fiscal years 1995, 1994 and 1993 total advertising expense was $451.6 million,
$372.7 million and $375.6 million, respectively.
Restructuring Costs. Restructuring costs for severance are accrued when formal
plans to restructure are adopted, the information has been communicated to
affected employees, the plan specifically identifies certain employee
information and involuntary terminations are expected to occur within one year
from the date the plan was approved. In absence of a formal plan of
restructuring for severance, costs are expensed as incurred. Employee retraining
and relocation costs are not considered restructuring costs and are expensed as
incurred. Other costs will be expensed as incurred or earlier depending on their
nature.
Reclassifications. Certain prior year amounts have been classified to conform
to 1995 presentation.
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2: Industry Segment and Geographic Information
The Company operates in one principal industry segment: the design, manufacture
and marketing of apparel for men, women and youth.
Geographical financial information is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
(000s)
<S> <C> <C> <C>
Net Sales to Unaffiliated Customers:
United States $ 4,063,314 $ 3,721,348 $ 3,715,054
Europe 1,785,458 1,542,802 1,332,433
Other non-U.S. 858,859 810,171 844,992
----------- ----------- -----------
$ 6,707,631 $ 6,074,321 $ 5,892,479
=========== =========== ===========
Sales Between Operations:
United States $ 108,383 $ 124,001 $ 163,627
Europe 269 149 32
Other non-U.S. 40,840 39,767 36,730
----------- ----------- -----------
$ 149,492 $ 163,917 $ 200,389
=========== =========== ===========
Total Sales:
United States $ 4,171,697 $ 3,845,349 $ 3,878,681
Europe 1,785,727 1,542,951 1,332,465
Other non-U.S. 899,699 849,938 881,722
Eliminations (149,492) (163,917) (200,389)
----------- ----------- -----------
$ 6,707,631 $ 6,074,321 $ 5,892,479
=========== =========== ===========
Contribution to Income Before Other
Charges:
United States $ 602,946 $ 572,097 $ 465,889
Europe 443,348 409,227 365,821
Other non-U.S. 122,300 154,529 171,440
----------- ----------- -----------
1,168,594 1,135,853 1,003,150
Other Charges:
Corporate expenses, net 118,098 185,134 134,693
Interest expense 15,659 19,824 37,144
----------- ----------- -----------
Income Before Taxes and Cumulative
Effects of Changes in Accounting
Principles: $ 1,034,837 $ 930,895 $ 831,313
=========== =========== ===========
Assets:
United States $ 2,022,613 $ 1,669,954 $ 1,643,230
Europe 663,518 597,617 490,904
Other non-U.S. 318,548 350,437 361,361
Corporate 1,704,478 1,307,301 613,165
----------- ----------- -----------
$ 4,709,157 $ 3,925,309 $ 3,108,660
=========== =========== ===========
</TABLE>
39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3: Income Taxes
The U.S. and non-U.S. components of income before taxes and cumulative effects
of changes in accounting principles are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
(000s)
<S> <C> <C> <C>
U.S. $ 611,883 $ 582,321 $ 474,895
Non-U.S. 422,954 348,574 356,418
----------- --------- ---------
$ 1,034,837 $ 930,895 $ 831,313
=========== ========= =========
<CAPTION>
The provision for taxes consists of the following:
Federal State Non-U.S. Total
--------- ---------- --------- ---------
(000s)
<S> <C> <C> <C> <C>
1995
- ----
Current $ 164,069 $ 25,578 $ 186,125 $ 375,772
Deferred (25,803) (4,170) (45,698) (75,671)
--------- ---------- --------- ---------
$ 138,266 $ 21,408 $ 140,427 $ 300,101
========= ========== ========= =========
1994
- ----
Current $ 208,119 $ 20,037 $ 141,215 $ 369,371
Deferred (1,070) 2,296 2,805 4,031
--------- ---------- --------- ---------
$ 207,049 $ 22,333 $ 144,020 $ 373,402
========= ========== ========= =========
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
========= ========== ========= =========
</TABLE>
During the fourth quarter of 1995, the Company recognized a $100.0 million one-
time reversal of previously recorded taxes on unremitted non-U.S. earnings as a
result of a resolution with U.S. and foreign tax authorities regarding foreign
royalty payments.
At November 26, 1995, cumulative non-U.S. operating losses of $30.2 million
generated by the Company were available to reduce future taxable income
primarily between the years 1997 and 2003. The Company utilized all of its
remaining foreign tax credit carryforwards in 1993.
Income tax expense (benefit) included in translation adjustment was $(3.1)
million, $3.3 million and $(0.1) million for 1995, 1994 and 1993, respectively.
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Under SFAS No. 109, adopted as of November 29, 1993, temporary differences which
give rise to deferred tax assets and liabilities at November 26, 1995 and
November 27, 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
(000s)
<S> <C> <C> <C> <C>
Postretirement benefits $ 183,734 $ -- $ 173,634 $ --
Employee compensation and benefit plans 170,856 -- 163,587 --
Inventory 48,407 -- 40,657 --
Depreciation and amortization 30,983 42,600 28,390 36,669
Foreign exchange gains/losses 16,278 56,119 16,683 53,764
Restructuring charges 4,194 -- 7,347 --
Tax on unremitted non-U.S. earnings -- 11,873 -- 75,373
State income tax -- 11,812 -- 5,364
Other 21,919 -- 11,607 --
--------- --------- --------- ---------
$ 476,371 $ 122,404 $ 441,905 $ 171,170
========= ========= ========= =========
</TABLE>
The net deferred tax assets at November 26, 1995 and November 27, 1994 were
$354.0 million and $270.7 million, respectively.
Under the provisions of APB No. 11, the approximate tax effects of timing
differences giving rise to deferred income tax expense (benefit) resulted from:
<TABLE>
<CAPTION>
1993
---------
(000s)
<S> <C>
Employee compensation and benefits $(24,739)
Accrued strategic organization costs (9,888)
Undistributed non-U.S. earnings (8,221)
Inventory capitalization and adjustments 6,008
Depreciation, amortization and other 2,976
---------
$(33,864)
=========
</TABLE>
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company's effective income tax rate for fiscal years 1995, 1994 and 1993
differs from the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
Changes resulting from:
State income taxes, net of federal income tax benefit 1.3 1.5 2.7
Non-U.S. earnings taxed at different rates,
including withholding taxes 0.9 1.4 2.2
Acquisition-related book and tax bases differences 0.5 1.3 1.3
Reversal of prior years' accruals (9.7) -- --
Other, net 1.1 0.9 (0.4)
---- ---- ----
Effective rate 29.1% 40.1% 40.8%
==== ==== ====
</TABLE>
The consolidated U.S. income tax returns of the Company for 1983 through 1989
are under examination by the Internal Revenue Service (IRS). The examination for
1983 through 1985 includes the review of certain transactions relating to the
1985 leveraged buyout by the Company of Levi Strauss & Co. An agreement in
principle has been reached with the IRS on the major issues raised during the
examination for 1983 through 1985 and is expected to be resolved in 1996. The
IRS has not yet concluded its examination for 1986 through 1989. The Company
believes it has made adequate provision for income taxes and interest for all
prior periods.
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>
1995 1994
---------------------- ----------------------
Owned Leased Owned Leased
----------- --------- ----------- ---------
(000s)
<S> <C> <C> <C> <C>
Land $ 48,133 $ 5,134 $ 47,228 $ 5,134
Buildings and leasehold
improvements 414,149 21,599 356,263 24,718
Machinery and equipment 688,275 3,507 565,686 6,632
Construction in progress 250,995 -- 118,321 --
---------- -------- ---------- --------
1,401,552 30,240 1,087,498 36,484
Accumulated depreciation (513,423) (11,614) (437,296) (17,080)
---------- -------- ---------- --------
$ 888,129 $ 18,626 $ 650,202 $ 19,404
========== ======== ========== ========
</TABLE>
Depreciation expense, which includes amortization of assets under capital lease,
for 1995, 1994 and 1993 was $97.8 million, $94.2 million and $85.5 million,
respectively.
The 1995 increase in construction in progress relates to the Company's customer
service initiatives. The Company plans to spend over $400.0 million for capital
expenditures in conjunction with these initiatives. (See Item 1 of this Form 10-
K for additional information.)
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5: Intangible Assets
The components of intangible assets are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(000s)
<S> <C> <C>
Goodwill $ 351,722 $ 351,722
Acquisition intangibles 67,606 67,606
Tradenames 79,322 79,322
Intangible pension asset -- 2,518
Other intangibles 29,067 21,107
--------- ---------
527,717 522,275
Accumulated amortization related to goodwill (90,164) (81,377)
Other accumulated amortization (101,197) (99,543)
--------- ---------
$ 336,356 $ 341,355
========= =========
</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. Acquisition intangibles and tradenames were valued as
a result of the 1985 acquisition.
Intangible pension asset is not amortized, but is adjusted each year to
correspond to changes in the minimum pension liability.
Amortization expense for 1995, 1994 and 1993 was $17.5 million, $20.5 million
and $24.0 million, respectively.
43
<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>
1995 1994
--------- ---------
(000s)
<S> <C> <C>
Long-Term Debt:
Unsecured:
Dividend notes payable $ -- $ 20,564
Other unsecured indebtedness 111 2,138
--------- ---------
111 22,702
Secured:
Notes payable, at various rates, due in
installments through 1999 6,606 7,465
--------- ---------
6,717 30,167
Current maturities (348) (22,981)
--------- ---------
$ 6,369 $ 7,186
========= =========
Unused Lines of Credit:
Long-term (all U.S.): $ 200,000 $ 200,000
Short-term:
U.S. 305,000 230,067
Non-U.S. 374,379 345,854
</TABLE>
Primary Credit Agreement
During 1995, the Company renegotiated and amended its $200.0 million revolving
line of credit to a term of five years. The amendment allows for lower
commitment fees, lower interest rate basis points and less stringent covenants
than the original facility. This primary credit agreement requires the Company
to maintain minimum levels of net worth, leverage and interest coverage. 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. No borrowings were taken
on this line during 1995. Commitment fees of $250,000 were paid on the unused
portion of the amounts available for borrowing.
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 were payable in four semi-annual
installments commencing June 15, 1993 and ending December 15, 1994 and bore an
interest rate incrementally above the six-month Treasury Bill rate. The Company
repaid all scheduled payments on the dividend notes to Class L stockholders for
an aggregate amount of $77.1 million, plus accrued interest of $4.3 million.
44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Principal Debt Payments
The required aggregate long-term debt principal payments, excluding capitalized
leases, for the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Year Principal Payments
---- -------------------
(000s)
<S> <C>
1996 $ 348
1997 6,140
1998 --
1999 --
2000 --
Thereafter 229
</TABLE>
Short-Term Credit Lines and Stand-By Letters of Credit
The Company has unsecured and uncommitted short-term credit lines available
totaling $679.0 million at various interest rates from various U.S. and non-U.S.
banks. These credit arrangements may be canceled by the lenders upon notice and
generally have no compensating balance requirements or commitment fees.
The Company has $105.2 million of standby letters of credit with various
international banks, $92.6 million of which serves 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 occasionally 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 1994, due to lower debt levels, the Company terminated its remaining $100.0
million of interest rate swap agreements that hedged floating-rate liabilities
for fixed rates. The termination resulted in a loss of $2.6 million that was
included in other (income) expense, net.
Interest Rates on Borrowings
The weighted average interest rate on short-term borrowings outstanding at year-
end 1995 and 1994 was 14% and 19%, respectively. These rates were relatively
high in 1995 and 1994 as approximately 46% and 65% of the short-term borrowings
balance outstanding at the end of 1995 and 1994, respectively, were related to
borrowings in Eastern Europe and Latin America, where the average interest rates
were substantially higher than other Company borrowings. Excluding the short-
term borrowings in Eastern Europe and Latin America, the weighted average
interest rate on short-term borrowings outstanding at year-end 1995 would have
been 8%.
Note 7: Commitments and Contingencies
The Company enters into foreign currency forward and option contracts primarily
to manage foreign currency exposures. At November 26, 1995, the Company has U.S.
dollar forward currency contracts to sell the aggregate equivalent of $631.0
million and to buy the aggregate equivalent of $118.6 million of various foreign
currencies. These contracts hedge currency exposures resulting from sourcing
operations, net investment positions and intercompany royalties. The Company
also has Belgian franc and German mark
45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
forward currency contracts to sell the aggregate equivalent of $215.2 million of
various European currencies in order to hedge currency exposures resulting from
intercompany receivables and payables.
Additionally at November 26, 1995, the Company has option contracts to sell the
aggregate equivalent of $354.0 million of various foreign currencies.
These contracts are at various exchange rates and expire at various dates
through 1996.
Realized and unrealized transaction (gains) losses on the forward and option
currency contracts included in other (income) expense, net in 1995 were $29.5
million and $(19.4) million, respectively, and in 1994 were $17.7 million and
$26.7 million, respectively.
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 were to fail 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.)
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
The estimated fair value amounts of certain financial instruments 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 at November 26, 1995 and November 27, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------- -------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
-------- --------- -------- ---------
(000s)
<S> <C> <C> <C> <C>
Balance sheet financial instruments:
Long-term debt $ 6,369 $ 6,369 $ 7,186 $ 7,186
Common stock:
Employee Stock Purchase and Award
Plan 63,479 102,653 49,655 57,770
Management Liquidity Program 183,130 183,130 138,587 138,587
Off-balance sheet financial
instruments:
Foreign exchange forward contracts
(gain)/loss position -- 2,532 -- 20,744
Foreign exchange option contracts
(gain)/loss position -- (13,480) -- --
</TABLE>
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Quoted market prices or dealer quotes are used to determine the estimated fair
value of the majority of 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 Employee Stock Purchase and Award Plan and Management Liquidity Program
common stock is based on the latest valuation of common stock. (See Note 18:
Common Stock - Valuation.)
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 26, 1995 and November 27, 1994. 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 26, 1995 and November 27, 1994 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.
Note 9: Leases
The Company is obligated under both capital and operating leases for facilities,
office space, showrooms and equipment.
At November 26, 1995, obligations under long-term leases are as follows:
<TABLE>
<CAPTION>
Type of Lease
-------------------------
Capital Operating
------------- ---------
(000s)
<S> <C> <C>
Minimum Lease Payments:
1996 $ 44 $ 61,878
1997 2 54,612
1998 2 48,546
1999 1 43,551
2000 -- 38,926
Remaining years 10,000 41,439
------- --------
Total minimum lease payments 10,049 $288,952
========
Amount representing interest (11)
-------
Present value of net minimum lease payments 10,038
Current maturities (41)
-------
$ 9,997
=======
</TABLE>
The total minimum lease payments on capital and operating leases have not been
reduced by estimated future income of $10.6 million from noncancelable
subleases.
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In general, leases relating to real estate include renewal options of up to 20
years. Some leases contain escalation clauses relating to increases in operating
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 1995, 1994 and 1993 was $93.0 million, $84.3 million and
$75.1 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, which may be denominated in
foreign currencies and issued by foreign issuers, are invested in a diversified
portfolio of securities including stocks, bonds, real estate investment funds
and cash equivalents. The weighted average expected long-term rate of return on
assets is 9.0%. 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 26, 1995 and November 27, 1994,
reconciles with amounts recognized on the balance sheet as follows:
<TABLE>
<CAPTION>
Plans in Which Plans in Which
Accumulated Benefits Assets Exceed
Exceed Assets Accumulated Benefits
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
(000s)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 155,843 $ 119,998 $ 99,398 $ 71,996
Non-vested benefits 6,036 5,011 5,245 4,675
---------- ---------- ---------- ----------
Accumulated benefit obligation 161,879 125,009 104,643 76,671
Impact of future salary increases 117,590 112,598 5,440 4,489
---------- ---------- ---------- ----------
Projected benefit obligation 279,469 237,607 110,083 81,160
Less plan assets at fair value 186,178 145,640 124,451 91,917
---------- ---------- ---------- ----------
Plan assets less than (in excess
of) projected benefit obligation 93,291 91,967 (14,368) (10,757)
Unrecognized net loss from
plan experience (48,340) (47,590) (9,436) (3,547)
Unrecognized prior service cost (6,379) (8,110) (2,662) (2,092)
Unrecognized net asset (liability)
at transition (10,998) (12,381) 4,889 5,263
Adjustment required to recognize
minimum liability -- 1,763 -- --
---------- ---------- ---------- ----------
Accrued (prepaid) pension cost $ 27,574 $ 25,649 $ (21,577) $ (11,133)
========== ========== ========== ==========
</TABLE>
Unrecognized net liabilities at transition (established 1988) are 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.
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 7.6% and 6.5%, respectively,
for 1995, 8.0% and 7.0%, respectively, for 1994 and 6.6% and 6.0%, respectively,
for 1993. Changes in the discount rate and the rate of increase in future
compensation levels used to measure the 1995 pension obligations resulted in
increases to those obligations as compared to the prior year.
During 1994, the Company recorded a minimum liability of $1.8 million for one of
its pension plans. The Company also recorded a corresponding intangible asset of
$1.1 million and, since the required intangible asset exceeded the related prior
service cost, an adjustment was made to stockholders' equity of $.7 million. No
such minimum liability existed at November 26, 1995 and, accordingly, the
pension liability within stockholders' equity was adjusted to zero.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- ---------
(000s)
<S> <C> <C> <C>
Service cost of benefits earned during the period $ 32,519 $38,181 $ 29,225
Interest cost on the projected benefit obligations 25,419 22,169 18,722
Gain on plan assets (43,875) (8,062) (22,046)
Net amortization and deferrals 26,623 (63) 15,162
-------- ------- --------
Net pension expense $ 40,686 $52,225 $ 41,063
======== ======= ========
</TABLE>
Note 11: Postretirement Benefit Plans
The Company adopted SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" effective November 29, 1993. The statement
requires the Company to accrue postretirement benefits (other than pensions)
over the period that an employee becomes fully eligible for benefits.
Previously, the Company used a "pay-as-you-go" method whereby expenses were
recorded as claims were incurred.
Upon adoption of SFAS No. 106, the Company recorded 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 retirees and employees in prior periods. The transition obligation was
recorded in 1994 as a cumulative effect of a change in accounting principles,
net of income tax effects, on the Consolidated Statements of Income.
The Company maintains two plans that provide postretirement defined benefits,
principally health care benefits, to substantially all domestic retirees and
their qualified dependents. These plans have been established with the intention
and expectation that they will continue indefinitely. However, the Company
retains the right to amend, curtail or discontinue any aspect of the plans at
any time. Under the Company's current policies, employees become eligible for
these benefits when they reach age 55 with 15 years of credited service. The
plans are contributory and contain certain cost-sharing features, such as
deductibles and coinsurance. The plans also provide for reimbursement of
Medicare Part B premiums to participants over age 65. The accounting for retiree
health care benefits anticipates future cost-sharing changes to the written plan
consistent with the Company's expressed intent to limit, over time, the Medicare
Part B
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
premium reimbursement to 50% of the annual increase in the premium cost.
The Company's policy is to fund postretirement benefits as claims and premiums
are paid.
Postretirement benefit costs for fiscal years 1995 and 1994, exclusive of the
transition obligation, include the following components:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(000s)
<S> <C> <C>
Service cost of benefits earned during the period $ 14,037 $ 17,515
Interest cost on the accumulated benefits obligation 27,354 25,494
Amortization of actuarial gains (2,750) --
---------- ----------
Net postretirement benefit costs $ 38,641 $ 43,009
========== ==========
</TABLE>
The actuarial present value of the Accumulated Postretirement Benefits
Obligation (APBO) and amounts recognized on the Company's Consolidated Balance
Sheets at November 26, 1995 and November 27, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(000s)
<S> <C> <C>
APBO attributed to:
Retirees $ 180,075 $ 163,542
Fully eligible active participants 49,509 43,792
Other active participants 169,073 145,969
---------- ----------
APBO 398,657 353,303
Less plan assets at fair value -- --
---------- ----------
APBO in excess of plan assets 398,657 353,303
Unrecognized net gain 60,347 79,324
---------- ----------
Accrued postretirement benefit costs $ 459,004 $ 432,627
========== ==========
</TABLE>
The discount rate used to determine the APBO was 7.5% and 8.0% at November 26,
1995 and November 27, 1994, respectively. An 11.3% and 5.7% annual rate of
increase in the health care trend rate and Medicare Part B trend rate,
respectively, was assumed for 1995, declining gradually to 5.0% and 2.5% by the
year 2008 and remaining at those rates thereafter. A one percentage point
increase in the assumed health care trend rate for each future year would have
increased the service cost and interest cost components of net postretirement
benefit costs by approximately $10.6 million and would have increased the APBO
as of November 26, 1995 by approximately $57.9 million.
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.
50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ESAP
Under the ESAP, eligible employees may invest up to 10% 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% of the contributions made by employees in stock.
Employees are always 100% vested in the Company match. Employees may elect to
have their withholding taxes deducted from the 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. (See Note 18: Common
Stock - Valuation.)
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. The redemption value at the time of repurchase is based on the latest
valuation of Class E common stock.
The following summary presents ESAP activity for the years ended November 26,
1995, November 27, 1994 and November 28, 1993:
<TABLE>
<CAPTION>
Common Additional
Stock Paid-in Capital Total
-------- ---------------- ---------
(000s)
<S> <C> <C> <C>
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
Sale of Class E stock to ESAP (30,233 shares
at $114 per share; 49,375 shares at $129
per share)/(1)/ 8 9,849 9,857
Company contribution of Class E stock to
ESAP (16,234 shares at $114 per share;
34,433 shares at $129 per share) 5 6,288 6,293
------- ------------ ---------
Balance at November 27, 1994 43 49,612 49,655
Sale of Class E stock to ESAP (22,984 shares
at $134 per share; 41,115 shares at $157
per share)/(1)/ 6 9,741 9,747
Company contribution of Class E stock to
ESAP (17,675 shares at $134 per share;
30,243 shares at $157 per share) 5 7,112 7,117
------- ------------ ---------
Balance at November 26, 1995 $ 54 $ 66,465 $ 66,519
======= ============ =========
</TABLE>
- --------------------------
/(1)/ includes adjustment due to the reissuance of treasury stock purchased in
1995, 1994 and 1993, respectively
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
EIP/ELTIS
Under the Company's two qualified plans, eligible employees may contribute up to
10% of their annual compensation to various investment funds, including a fund
that invests in Class E common stock. The Company may match 50% of the
contributions made by employees to all funds maintained under the qualified
plans. In prior years, the Company matched 50% of the contributions made by
employees to the fund that invested in Class E common stock only.
Employees are always 100% 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 and the ELTIS allow employees a choice of either
pre-tax or after-tax contributions. Prior to June 1, 1995, employee
contributions under the ELTIS were on a pre-tax basis only.
Effective March 1, 1995, certain assets of the ELTIS were transferred to, held
by and under the control of a new trustee, Fidelity Management Trust Company.
During 1994, certain assets of the EIP were similarly transferred to Fidelity
Management Trust Company. ELTIS participants may currently direct investments
among a series of mutual funds offered under the ELTIS and managed by the new
trustee. These mutual funds provide participants additional investment
alternatives which were not previously available under the ELTIS, thereby
increasing participant flexibility in managing their investments.
During 1995, ELTIS purchased 2,109 shares of Class E common stock from the
Company at $134 per share as determined by the valuation of an independent
investment banking firm. There were no shares purchased by the EIP due to cash
needs of the plan. In addition, the Company contributed 11,202 shares and $3.8
million in cash to these plans.
During 1994, the qualified plans collectively purchased 10,208 shares at $114
per share as determined by the valuation of an independent investment banking
firm at the time of purchase. In addition, the Company contributed 35,367 shares
and $.3 million in cash to these plans. 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 in 1993.
The aggregate cost of providing all aspects of these plans in 1995, 1994 and
1993 was $14.4 million, $14.7 million and $12.8 million, respectively. The
aggregate cost of providing all other employee savings and compensation plans in
1995, 1994 and 1993 was $20.9 million, $18.1 million and $16.0 million,
respectively. (See Note 20 for the possible future impact of the Proposed Merger
Transaction on these plans.)
Note 13: Partners in Performance Plan
In 1995, the Company implemented the Partners in Performance Plan (PIP) to
immediately replace the previous Cash Performance Sharing Plan, the Management
Incentive Plan and all other plans with regards to short-term incentives, and to
replace the Long-Term Performance Plan in 1996 with regards to long-term
incentives. This program is for all salaried employees worldwide and is
intended to align the objectives of all employees with the strategic objectives
of the Company and interests of the Company shareholders.
52
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Annual Incentive Plan
The Annual Incentive Plan (AIP), the short-term portion of PIP, began in 1995
and is intended to reward individual and team contributions to the Company's
objectives during the year. The amount of incentive earned depends upon the
performance and salary grade level of the individual and also depends on
corporate, group, division and affiliate financial results against pre-
established targets. The cost of the AIP for fiscal year 1995 was $74.6 million.
The Cash Performance Sharing Plan, replaced by AIP for fiscal year 1995, was for
all Home Office payroll employees, and paid out based on a percentage of base
salary and certain Company earnings criteria. Home Office employees could
receive up to 12 percent of their covered compensation (fiscal year salary and
non-long-term performance plan bonus) under this plan. Similar plans were
available to employees outside of the U.S. The cost of providing the Cash
Performance Sharing Plan and related non-U.S. plans in 1994 and 1993 was $19.4
million and $16.6 million, respectively.
The Company's Management Incentive Plan (MIP), replaced by AIP in fiscal year
1995, provided selected senior level employees with incentive compensation and
provided a tool for recruiting and retaining these employees. Under the MIP, the
Personnel Committee of the Board of Directors, as administrator of the MIP,
could award discretionary cash payments to eligible employees. Such awards were
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 1994 and 1993 were $15.8 million and $13.8 million,
respectively.
Long-Term Incentive Plan
The Long-Term Incentive Plan (LTIP), the portion of PIP related to long-term
incentives, will begin in 1996 and is intended to reward individual and team
contributions to the future success of the Company and to encourage all
employees to take a long-term perspective of the business. These incentives are
based on a performance unit plan measured by a three-year cumulative earnings
performance calculation, individual salary grade level and relative total
shareholder return.
The Company's Long-Term Performance Plan (LTPP), to be replaced by LTIP in
fiscal year 1996, is intended to provide incentive and reward performance over
time for certain directors, officers and key employees. Under this plan, a
number of performance units were granted to each participant. The value assigned
to each unit was 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 were 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 1995, 1994 and 1993 were $47.0 million, $29.8 million and $25.7
million, respectively.
Note 14: Executive Stock Appreciation Rights Plan
The Levi Strauss Associates Inc. Executive Stock Appreciation Rights Plan was
established in 1992. There were no SAR grants during 1995. During 1995, 14,000
SARs were exercised resulting in a cash disbursement by the Company of $1.0
million.
In 1994, 170,000 SARs were granted to certain executives at an initial grant
value of $129 per SAR. These SARs vest over several years and become exercisable
commencing in 1997. Additionally in 1994, 17,000 SARs granted in 1992 were
forfeited. There were no SAR grants during 1993.
53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The amounts charged to expense for the plan (net of forfeitures) in 1995, 1994
and 1993 were $7.7 million, $1.8 million and $.9 million, respectively. (See
Note 20 for the possible future impact of the Proposed Merger Transaction on
this plan.)
Note 15: Stock Option Plan
The Company has a 1985 Stock Option Plan (the Plan) for Class L common stock
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. During the fourth quarter of 1994, all outstanding options became
subject to the terms of the management liquidity program. (See Note 16.)
The following summary presents stock option activity for the years ended
November 28, 1993, November 27, 1994 and November 26, 1995:
<TABLE>
<CAPTION>
Options Exercise/Surrender Exercise
Outstanding Price Bonus
------------ ------------------ ----------
<S> <C> <C> <C>
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
No activity during 1994 -- -- --
------------
Outstanding and exercisable at
November 27, 1994 499,749 $ 3.50
Exercised during 1995 (94,999) $ 3.50 $2,960,216
------------
Outstanding and exercisable at
November 26, 1995 404,750 $ 3.50
============
</TABLE>
(See Note 20 for the possible future impact of the Proposed Merger Transaction
on this plan.)
Note 16: Management Liquidity Program
During 1994, the Board of Directors and stockholders approved a stock liquidity
program (the Liquidity Program) for management holders of Class L common stock.
The Liquidity Program allowed the Company to enter into contracts with then-
existing management holders of Class L common stock relating to in-service,
employment separation-related and post-separation stock purchases. Holders of
1,047,280 shares of Class L common stock (including outstanding options)
initially participated in this program. They may annually sell a specified
amount of their stock to the Company, subject to certain limitations and
conditions. The program also entitles the Company to purchase all of the shares
held by a management holder at the time of separation from employment.
Participating shares were classified on the balance sheet outside of
stockholders' equity due to the liquidity feature. The redemption value at the
time of repurchase is based on the latest valuation of common stock.
In December 1995, an independent investment banking firm appraised the Company's
stock value at $189 per share, an increase of $55 per share from the prior year
end. (See Note 18: Common Stock - Valuation.) As a result of the increased
value, the Company recorded compensation expense in 1995 for participating stock
options and related exercise bonus totaling $29.4 million, decreased retained
earnings by $26.2 million for participating shares and increased Management
Liquidity Program Class L common stock by $50.7 million. Future changes in stock
valuation will result in periodic adjustments to compensation
54
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
expense for participating stock options, participating share balances and
retained earnings. (See Note 20 for the possible future impact of the Proposed
Merger Transaction on this program.)
During 1994, the Company incurred a pre-tax compensation expense for
participating stock options of $6.0 million and for the related exercise bonus
of $13.2 million, based on the then-current appraised stock value of $134 per
share.
The following summary presents Management Liquidity Program activity of the
participating shares for the years ended November 26, 1995, November 27, 1994
and November 28, 1993:
<TABLE>
<CAPTION>
Common Additional
Stock Paid-in Capital Total
-------- ---------------- -----------
(000s)
<S> <C> <C> <C>
Balance at November 28, 1993 $ -- $ -- $ --
Reclassification of participating shares
from stockholders' equity 55 138,532 138,587
-------- -------------- -----------
Balance at November 27, 1994 55 138,532 138,587
Repurchase and retirement of 70,842
shares (7) (9,486) (9,493)
Increase in value to $189 per
participating share -- 53,704 53,704
Reclassification from stockholders'
equity due to exercise of 94,999 options 9 323 332
-------- -------------- -----------
Balance at November 26, 1995 $ 57 $ 183,073 $ 183,130
======== ============== ===========
</TABLE>
Note 17: Long-Term Employee Related Benefits
The components of long-term employee related benefits are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(000s)
<S> <C> <C>
Workers' compensation $ 121,796 $ 148,445
Other deferred employee benefits 195,446 153,101
---------- ----------
$ 317,242 $ 301,546
========== ==========
</TABLE>
Included in the liability for workers' compensation are accrued expenses related
to the Company's program that provides for early identification and treatment of
employee injuries. During 1995 and 1994, alternative manufacturing systems were
implemented by the Company resulting in significant improvements in the
Company's safety programs and, accordingly, workers' compensation costs have
decreased substantially from prior years. Accruals for workers' compensation of
$97.3 million and $125.9 million were recorded during fiscal years 1995 and
1994, respectively. Furthermore, the Company reduced its workers' compensation
expense in 1995 and 1994 by $103.0 million and $85.9 million, respectively,
related to reversals of previously estimated costs. Other deferred employee
benefits include accrued liabilities for the Company's long-term performance
plan, deferred compensation, benefit restoration, pension and other plans.
55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 18: Common Stock
Certificate of Incorporation
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. Additionally, management
Class L stockholders are parties to contracts with the Company providing for in-
service, employment separation-related and post-separation stock purchases. (See
Note 16.) The outstanding shares of Class E common stock are subject to
restrictions on transfer imposed by the EIP, ELTIS and ESAP. (See Note 20:
Subsequent Event - Proposed Merger Transaction.)
Common Stock - Valuation
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, including
participating shares of the Management Liquidity Program. 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 investment banking firm valuation had there been a public
trading market for the shares on the valuation date. (See Note 20: Subsequent
Event - Proposed Merger Transaction.)
Common Stock - Employee Investment Plans (see Note 12)
Common Stock - Management Liquidity Program (see Note 16)
Note 19: Related Parties
See Item 13, Other Transactions, of this Form 10-K for related party
information.
Note 20: Subsequent Events
Proposed Merger Transaction
In February 1996, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with LSAI Holding Corp. ("Holdings") and LSAI Acquisition
Corp., a wholly-owned subsidiary of Holdings ("Merger Sub"). The Merger
Agreement provides for the merger (the "Merger") of Merger Sub with and into the
Company. The Company's Board of Directors and stockholders approved the Merger
in February 1996. Completion of the Merger is subject to satisfaction of
certain conditions, including receipt of necessary financing and regulatory
approvals; completion is expected during the second quarter of 1996.
In the Merger, each share of the Company's Class L Common Stock (other than
shares contributed to Holdings by Class L holders) and each share of the
Company's Class E Common Stock will be converted into the right to receive $265
per share in cash. As a result of the Merger, the Company will become a wholly-
owned subsidiary of Holdings. The cash consideration will be provided through
bank borrowings by Holdings, which are expected to be assumed by the Company
after the Merger, and through cash
56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
generated by the Company. The total cash consideration is expected to be
approximately $2.3 billion, however, this amount may change depending on the
number of shares of Class L Common Stock ultimately contributed to Holdings. The
final amount will not be determined until early March 1996.
Holdings is a Delaware corporation organized and owned by a group of holders of
the Company's Class L Common Stock. Holders of Holdings common stock will place
their shares in a voting trust, giving the trustees voting power over most
matters subject to stockholder vote, and will be subject to restrictions on
share transfers.
Based upon Subscription Agreements received from Class L stockholders on January
25, 1996, 44,738,958 shares of Class L Common Stock will be contributed to
Holdings and 7,016,950 shares of Class L Common Stock will be converted into the
right to receive cash upon the Merger. A Participating Stockholder who enters
into a Subscription Agreement has until February 26, 1996 (the "Adjustment
Date") to reduce his or her investment level or withdraw the subscription
completely. Assuming that no subscription reductions or withdrawals occur prior
to the Adjustment Date, the transaction would result in a decrease in cash and
cash equivalents of $1,047.1 million, an increase in debt of $1,269.0 million, a
decrease in ESAP and Management Liquidity Program Common Stock of $246.6 million
and a decrease in stockholders' equity of $2,023.8 million.
Other than Management Holders who participate in the Offering, the Company's
management and employees will have no continuing equity interest in Holdings or
the Company following the Merger. In lieu of an equity interest, it is expected
that all Company employees worldwide will participate in new arrangements
designed to align employee and stockholders' interests in the post-Merger entity
by providing one or more cash payments to employee participants based upon the
future value created after the Merger. There can be no assurances that the new
arrangements will be adopted in the form described or that they will result in
such alignment of interests. However, it is the intention of Holdings'
management to cause such a cash-based plan to be adopted in connection with the
Merger.
The operation of the EIP and ELTIS plans will remain essentially the same as
before the Merger, except that participants will no longer have the option to
invest in Company stock. The ESAP plan will cease to exist after the Merger.
The Management Liquidity Program will not be assumed by Holdings and will
therefore not apply to Holdings' Common Stock. The stock options outstanding at
November 26, 1995 are expected to be exercised prior to the Merger and will, at
the option of the holder, be contributed to Holdings or converted to cash in the
Merger. No options will be assumed by Holdings. The Stock Appreciation Rights
effectively will remain in place but appreciation will be based on a measure
other than Company stock.
The financial statements included in this Form 10-K do not give effect to the
Merger.
57
<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 26,
1995 and November 27, 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for the years ended November 26, 1995,
November 27, 1994 and November 28, 1993. 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 26, 1995 and November 27, 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended November 26, 1995, in conformity with generally accepted accounting
principles.
As explained in Notes 3 and 11 to the Consolidated Financial Statements, at the
beginning of the fiscal year 1994 the Company changed its method of accounting
for income taxes and postretirement benefit plans.
ARTHUR ANDERSEN LLP
San Francisco, California,
January 5, 1996
58
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
59
<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>
Peter E. Haas, Sr./(1)//(2)/............ 77 Director, Chairman of the Executive Committee of
the Board of Directors
Robert D. Haas/(1)//(2)/................ 53 Director, Chairman of the Board of Directors and
Chief Executive Officer
Thomas W. Tusher/(2)/................... 54 Director, President and Chief Operating
Officer
Angela Glover Blackwell/(2)//(3)/....... 50 Director
Tully M. Friedman/(2)//(3)/............. 54 Director
James C. Gaither/(2)//(4)/.............. 58 Director
Rhoda H. Goldman/(1)//(2)//(4)/......... 71 Director
Peter E. Haas, Jr./(1)//(2)//(3)/....... 48 Director
Walter J. Haas/(1)//(2)//(3)/........... 45 Director (Effective November 16, 1995)
F. Warren Hellman/(3)//(4)/............. 61 Director
James M. Koshland/(2)//(4)/............. 44 Director
Patricia Salas Pineda/(3)//(4)/......... 44 Director
Thomas J. Bauch......................... 52 Senior Vice President, General Counsel and Secretary
R. William Eaton, Jr.................... 52 Senior Vice President, Chief Information Officer
Donna J. Goya........................... 48 Senior Vice President, Human Resources
Peter A. Jacobi......................... 52 Senior Vice President, President of Levi Strauss
International
George B. James......................... 58 Senior Vice President, Chief Financial Officer
Robert D. Rockey, Jr.................... 54 Senior Vice President, President of Levi Strauss
North America
</TABLE>
- --------------------------
* Walter A. Haas, Jr./(1)/ served as Honorary Chairman of the Board of
Directors until his death on September 20, 1995.
/(1)/ Robert D. Haas and Walter J. Haas are the sons of Walter A. Haas, Jr.;
Walter A. Haas, Jr. was the brother of Peter E. Haas, Sr. and Rhoda H.
Goldman; Peter E. Haas, Sr. is the father of Peter E. Haas Jr.
/(2)/ Member, Corporate Ethics and Social Responsibility Committee
/(3)/ Member, Audit Committee
/(4)/ Member, Personnel Committee
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. J. Haas, Mr. Hellman and Ms. Pineda
and the term of office expires at the 1997 annual meeting. The third class
consists of Mr. Tusher, Mr. P. E. Haas, Sr., Mr. Gaither and Mr. Koshland and
the term of office expires at the 1998 annual meeting of stockholders. (See
Note 20 to the Consolidated Financial Statements.)
60
<PAGE>
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 descendants of the
founder of LS&CO., Levi Strauss.
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 a former Associate of the Smithsonian National Board and a
former 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 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 Evelyn and Walter A. Haas, Jr. 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, the California Business Roundtable and a
former Director of the American Apparel Association.
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.
61
<PAGE>
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 and a member of the Bay Area Sports
Hall of Fame Committee.
Angela Glover Blackwell, a director since February 1994, is the founder and
former President of Urban Strategies Council, established in 1987. As of January
23, 1995, she assumed the vice-presidency of the Rockefeller Foundation in New
York. Ms. Blackwell currently serves on the Board of the Foundation for Child
Development. Previously, she served as staff attorney and managing attorney for
Public Advocates, Inc. and served on the Boards of Common Cause, the James
Irvine Foundation, Children Now, the Center on Budget and Policy Priorities, the
Urban Institute and Public Advocates, Inc. She formerly co-chaired the
Commission for Positive Change in the Oakland Public Schools
Tully M. Friedman, a director since 1985, has been a general 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 on the Advisory Board of Tevecap, S.A.,
on the Board of Directors of American President Companies, Ltd., Mattel, Inc.,
McKesson Corporation and MobileMedia Corporation and is a member of the Board of
Representatives of Falcon Holding Group, L.P.
Mr. Friedman is a member of the Executive Committee and a Trustee of the
American Enterprise Institute, a director of Stanford Management Company and a
Director of Nueva School. He is also 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 of the Carnegie 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.
and Amylin Pharmaceuticals, Inc., and has served as a director of several other
public, private and non-profit companies.
Rhoda H. Goldman, a director since 1985, devotes substantial time to public
service. She is a director of Mount Zion Health Systems and a former trustee of
Mount Zion Medical Center of the University of California, San Francisco, Vice
President of the Board of Governors of the San Francisco Symphony, a member of
Foster McGaw Prize Committee, 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,
62
<PAGE>
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 Directors of the Red Tab Foundation and former
President and current member of the Board of Trustees of Marin Academy.
Additionally, he is director of the following Boards: Levi Strauss Foundation
and The Stern Grove Festival Foundation, honorary director of the Novato Youth
Center (former President) and trustee of the Walter and Elise Haas Fund. He was
formerly on the Boards of Vassar College and North Bay Bancorp.
Walter J. Haas, a director since November 1995, served as Chairman and Chief
Executive Officer of the Oakland A's Baseball Company from January 1, 1993 after
holding the title of President and Chief Executive Officer for two years. W.J.
Haas had also served as the club's Executive Vice President from 1980 through
1987 and then as the Chief Operating Officer from 1988 through 1989. Prior to
joining the Athletics, he served as Grants Manager for Levi Strauss & Co. He
also served as business manager for Sons of Champlin, Inc. and as President of
Goldmine Records. W.J. Haas currently serves as the Vice Chairman of the Board
of Trustees of the Marin County Day School and is a trustee for the Evelyn and
Walter A. Haas, Jr. Fund and Elise and Walter Haas Fund. He is a former
Director of the Major League Promotions Corporation and the United States
International Sports Committee, and was honorary Chairman of the San Francisco
Chapter of the Legal Assistance to the Elderly, Inc.
F. Warren Hellman, a director since 1985, has been a managing partner of the
private investment firm of Hellman & Friedman since its inception in 1984.
Previously, he was a 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, Eller Media Company and University of California San
Francisco (UCSF) Foundation. He is a trustee of the Brookings Institution and
the San Francisco Foundation.
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. Mr. Koshland is a member of the
Executive Board of the firm. He is a director of the Giarretto Institute, the
Foundation for the Future of Menlo-Atherton High School, the Senior Coordinating
Council of the Palo Alto area, and the Executive Committee of the Board of
Visitors of Stanford Law School.
Patricia Salas Pineda, a director since 1991, is currently 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 at the
James Irvine Foundation, the Oakland Museum and The RAND Corporation. 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, the San Francisco
Ballet Association and the Mills College Board of Trustees.
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 has served 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, the
American Corporate Counsel Association, and the Medical Research Institute, and
as a legal advisor to the City of Belvedere and the Multicultural Alliance. He
was Chairman of the Bay Area General Counsel Association in 1984.
63
<PAGE>
R. William Eaton, Jr., Senior Vice President and Chief Information Officer,
joined LS&CO. in 1978 as Manager of Information Systems. 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
former 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 INROADS and is a member of the
Human Resources Roundtable and the National Academy of Human Resources.
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, Advisory Board to the University of
Michigan School of Engineering and the U.C. Berkeley/St. Petersburg (Russia)
School of Management Project.
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., Crown Vantage, Inc., the World
Affairs Council, California Pacific Medical Center Foundation and the Committee
for Economic Development. 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 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.
64
<PAGE>
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 (Mr. 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. The payments also include 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. Mr. Gaither and Mss. Blackwell
and Pineda each received grants of 350 performance units under the LTPP in 1995.
In 1995, Mr. Gaither and Ms. Pineda received payments under the LTPP of $93,297
and $58,183, respectively. These directors will be eligible to receive
performance units under the Long-Term Incentive Plan (LTIP) which will replace
the LTPP in 1996. 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 Long-Term Performance Plan and
Deferred Compensation Plan captions.)
Pursuant to the Proposed Merger Transaction (See Note 20 to the Consolidated
Financial Statements), the Company's Board of Directors appointed a Special
Committee, which consists solely of independent Company directors who will not
be participating in the Merger. The members of the Special Committee, Mr.
Gaither and Mss. Blackwell and Pineda, must review and approve the terms of the
Merger Agreement prior to approval by the Company's Board. The Company will pay
each member of the Special Committee $30,000 for service on the Committee, and
will enter into indemnification agreements with each member under which the
Company will indemnify the member for certain losses, claims, damages and
liabilities arising from service on the Committee. In addition, the Company
will provide indemnification under its by-laws to the Committee members.
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 $300,917 for
such services in 1995. At November 26, 1995 Messrs. Hellman and Friedman and
their families and other partners of Hellman & Friedman beneficially owned an
aggregate of 1,418,842 shares of Class L common stock. See Item 12, Security
Ownership of Certain Beneficial Owners and Management, for additional
information concerning Mr. Hellman's and Mr. Friedman's beneficial ownership of
Class L common stock.
(See Note 20 to the Consolidated Financial Statements for discussion of Proposed
Merger Transaction.)
65
<PAGE>
Summary Compensation Table for Executive Officers
The following table sets forth summary compensation information for 1995, 1994
and 1993 for each of the five most highly compensated executive officers of the
Company:
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------------------
Annual Compensation Awards Payouts
-------------------------------------- ----------- -----------
Securities
Other Annual Underlying LTIP All Other
Name and Salary Bonus Compensation SAR's Payouts Compensation
Principal Position Year ($) ($) ($) (#) ($) ($)
- ---------------------------- ------ ---------- ----------- ------------- ----------- ----------- -------------
/(1)/ /(2)/ /(3)/ /(4)/ /(5)/
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Haas 1995 $1,094,818 $1,600,000 $ -- $ -- $2,133,065 $1,001,435
Chairman of the Board and 1994 1,044,184 1,374,058 -- -- 1,356,521 990,861
Chief Executive Officer 1993 998,460 1,162,795 -- -- 506,667 871,060
Thomas W. Tusher 1995 744,218 900,000 2,960,216 -- 1,312,207 522,182
President, Chief Operating 1994 709,852 785,953 -- -- 1,196,220 465,924
Officer 1993 680,056 677,063 -- -- 944,985 624,510
George B. James 1995 426,122 380,000 -- -- 570,566 203,891
Senior Vice President, 1994 387,260 356,039 -- -- 556,482 188,199
Chief Financial Officer 1993 369,292 313,231 -- -- 481,539 160,633
Robert D. Rockey, Jr. 1995 417,554 457,978 -- -- 574,440 277,199
Senior Vice President, 1994 406,419 447,043 -- 40,000 521,830 240,240
President of Levi Strauss 1993 354,959 317,724 -- -- 432,805 179,570
North America
Peter A. Jacobi 1995 360,158 420,200 -- -- 583,185 255,855
Senior Vice President, 1994 336,156 376,656 -- 40,000 543,386 234,186
President of Levi Strauss 1993 311,692 281,413 -- -- 453,071 163,712
International
</TABLE>
- --------------------
/(1)/ In 1995, bonuses were determined pursuant to the Company's Annual
Incentive Plan and will be paid in 1996 or deferred to later years (see
Partners in Performance caption). In 1994 and 1993, bonuses were
determined pursuant to the Company's Management Incentive Plan (MIP) and
Cash Performance Sharing Plan. The bonuses include amounts based upon 1994
and 1993 performance that were paid in 1995 and 1994, respectively, or
deferred to later years (see Partners in Performance caption). Amounts
paid to Mr. Haas relating to MIP bonuses were $1,197,500 and $1,010,000
for 1994 and 1993, respectively. Amounts paid to Mr. Haas relating to Cash
Performance Sharing bonuses were $176,558 and $152,795 for 1994 and 1993,
respectively. Amounts paid to Mr. Tusher relating to MIP bonuses were
$675,000 and $580,000 for 1994 and 1993, respectively. Amounts paid to Mr.
Tusher relating to Cash Performance Sharing bonuses were $110,953 and
$97,063 for 1994 and 1993, respectively. Amounts paid to Mr. James
relating to MIP bonuses were $300,000 and $265,000 for 1994 and 1993,
respectively. Amounts paid to Mr. James relating to Cash Performance
Sharing bonuses were $56,039 and $48,231 for 1994 and 1993, respectively.
Amounts paid to Mr. Rockey, Jr. relating to MIP bonuses were $389,112 and
$271,188 for 1994 and 1993, respectively. Amounts paid to Mr. Rockey, Jr.
relating to Cash Performance Sharing bonuses were $57,931 and $46,536 for
1994 and 1993, respectively. Amounts paid to Mr. Jacobi relating to MIP
bonuses were $327,250 and $240,043 for 1994 and 1993, respectively.
Amounts paid to Mr. Jacobi relating to Cash Performance Sharing bonuses
were $49,406 and $41,370 for 1994 and 1993, respectively.
/(2)/ Other annual compensation represents cash bonuses related to certain stock
option exercises under the 1985 Stock Option Plan (see 1985 Stock Option
Plan caption).
/(3)/ See table under 1992 Stock Appreciation Rights Plan section.
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<PAGE>
/(4)/ 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 1990, 1991 and 1992 that were paid in 1993, 1994 and 1995
or deferred to later years (see Long-Term Performance Plan caption).
/(5)/ All other compensation consists of amounts contributed under the Company's
Employee Stock Purchase and Award Plan (ESAP) and amounts contributed
under the Company's benefit restoration plans (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. (See Benefits Plans section for more information about both
plans.) Amounts contributed to Mr. Haas relating to ESAP were $143,655,
$165,295 and $155,958 for 1995, 1994 and 1993, respectively. Amounts
contributed to Mr. Haas relating to BRP were $857,780, $825,566 and
$715,102 for 1995, 1994 and 1993, respectively. Amounts contributed to Mr.
Tusher relating to ESAP were $86,507, $103,808 and $99,054 for 1995, 1994
and 1993, respectively. Amounts contributed to Mr. Tusher relating to BRP
were $435,675, $362,116 and $525,456 for 1995, 1994 and 1993,
respectively. Amounts contributed to Mr. James relating to ESAP were
$42,390, $52,403 and $49,140 for 1995, 1994 and 1993, respectively.
Amounts contributed to Mr. James relating to BRP were $161,501, $135,796
and $111,493 for 1995, 1994 and 1993, respectively. Amounts contributed to
Mr. Rockey, Jr. relating to ESAP were $48,984, $54,214 and $47,424 for
1995, 1994 and 1993, respectively. Amounts contributed to Mr. Rockey, Jr.
relating to BRP were $228,215, $186,026 and $132,146 for 1995, 1994 and
1993, respectively. Amounts contributed to Mr. Jacobi relating to ESAP
were $41,605, $46,270 and $42,072 for 1995, 1994 and 1993, respectively.
Amounts contributed to Mr. Jacobi relating to BRP were $214,250, $187,916
and $121,640 for 1995, 1994 and 1993, respectively. The Company typically
matches contributions to the ESAP and BRP twice per fiscal year. However,
in 1995, the second match was postponed due to the proposed merger
transaction. (See Note 20 to the Consolidated Financial Statements for
further discussion.)
Stock Option and Stock Appreciation Rights Plans
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 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 1995, 1994 or 1993. Pursuant to the plan, no grants can be made after
fiscal year 1995.
During 1995, 94,999 stock options were exercised at a price of $3.50 per share.
Class L Treasury Stock was reissued and reclassified as Management Liquidity
Program Class L common stock. The Company disbursed $2.9 million for the
related exercise bonus. (See Management Liquidity Program caption under Item
13., Certain Relationships and Related Transactions.)
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
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<PAGE>
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 of SARs (e.g., acceleration or
elimination of vesting requirements).
During 1995, 14,000 SARs were exercised resulting in a cash disbursement by the
Company of $1.0 million.
No SARs were granted in 1995. A total of 170,000 SARs were granted in 1994 to
certain executives at an initial grant value of $129 per SAR. The 1994 grant of
SARs vest and become exercisable over several years commencing in 1997. Twenty
percent of these SARs will be exercisable in 1997, an additional 30 percent in
1998 and the remaining 50 percent in 1999.
Also during 1994, 17,000 SARs granted in 1992 were forfeited. There were no SAR
grants during 1993.
68
<PAGE>
The following table presents information for the year ended November 26, 1995
regarding aggregated options/SARs of executive officers of the Company listed in
the Summary Compensation Table.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option/SAR Values
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Dollar Value
Securities of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
at Year-End (#) at Year-End ($)
Number of --------------- --------------------
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 94,999 $14,582,347 404,750/-- $75,081,125/--
President, Chief Operating
Officer
George B. James -- -- -- --
Senior Vice President,
Chief Financial Officer
Robert D. Rockey, Jr. -- -- 8,333/56,667 $874,965/$4,150,035
Senior Vice President,
President of Levi Strauss
North America
Peter A. Jacobi 8,333 $608,309 --/56,667 --/$4,150,035
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 1995 and 1994 is
$100 and $220 per unit, respectively, and the final value of the units granted
in 1993 is $264 per unit. 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. The Company will
implement a new performance management and pay program replacing this program in
1996. (See Partners in Performance caption for additional information.)
69
<PAGE>
The following table sets forth information relating to Long-Term Performance
Plan units granted in 1995 for the executive officers of the Company listed in
the Summary Compensation Table:
Long-Term Performance Plan - Awards in Last Fiscal Year
-------------------------------------------------------
<TABLE>
<CAPTION>
Estimated Future
Payments
Under Non-Stock
Price-Based Plans
-------------------------
Performance /(2)//(3)/
or
Other Period
Number Until
Name and of Units Maturation Dollar Dollar
Principal Position Granted or Payout Threshold Target
- --------------------------- -------- ------------- --------- ----------
/(1)/
<S> <C> <C> <C> <C>
Robert D. Haas 15,000 3-5 years $0 $1,500,000
Chairman of the Board and
Chief Executive Officer
Thomas W. Tusher 8,400 3-5 years 0 840,000
President, Chief Operating
Officer
George B. James 2,500 3-5 years 0 250,000
Senior Vice President,
Chief Financial Officer
Robert D. Rockey, Jr. 3,250 3-5 years 0 325,000
Senior Vice President,
President of Levi Strauss
North America
Peter A. Jacobi 3,000 3-5 years 0 300,000
Senior Vice President,
President of Levi Strauss
International
</TABLE>
- --------------------
/(1)/ The units vest in three years and are paid out in cash in one-third
increments payable in June 1998, June 1999 and June 2000.
/(2)/ Each LTPP unit is valued at $100 if the Company achieves a target level of
corporate earnings performance over a three-year period. 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). 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.
/(3)/ Under the terms of the 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.
Partners in Performance
In 1995, the Company implemented a new performance and pay program, Partners in
Performance, for all salaried employees worldwide. This program was designed to
align the objectives of all employees with the strategic objectives of the
Company and interests of the Company's shareholders.
To accomplish this goal, all eligible employees have the opportunity to earn
incentives, both short and long term. The short-term incentive plan, the Annual
Incentive Plan (AIP), began in 1995 and rewards
70
<PAGE>
performance measured by business unit and corporate financial results against
pre-established targets. The AIP replaces the MIP and Cash Performance Sharing
Plan in 1995. The long-term incentives, the Long-Term Incentive Plan (LTIP),
will begin in 1996 and are based on a performance unit plan measured by a three-
year cumulative earnings performance calculation and relative total shareholder
return. The LTIP will replace the LTPP in 1996.
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% of their base salary and 100% of their bonus. The amounts deferred
under this plan, plus interest, may be paid prior to termination in certain
hardship circumstances specified in the plan. When electing to defer a bonus,
eligible employees may also elect to receive in-service payments of the deferred
bonus in five annual installments. Additionally, amounts deferred under this
plan are considered compensation covered for defined benefit pension purposes.
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 limitations, provides pension benefits based on an individual's years of
service and final average covered compensation (generally, base salary plus
bonuses awarded 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.
71
<PAGE>
The following table shows the estimated annual benefits payable upon retirement
under the Pension Plan, the benefit restoration plans and Deferred Compensation
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>
$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
2,250,000 675,000 900,000 1,125,000 1,153,125 1,181,250
2,325,000 697,500 930,000 1,162,500 1,191,563 1,220,625
2,400,000 720,000 960,000 1,200,000 1,230,000 1,260,000
2,475,000 742,500 990,000 1,237,500 1,268,438 1,299,375
</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 1995, the credited
years of service for Messrs. R.D. Haas, Tusher, James, Rockey, Jr. and Jacobi
were 22, 26, 10, 16 and 25, respectively. The 1995 compensation covered by the
Pension Plan, benefit restoration plans and Deferred Compensation Plan for
Messrs. R.D. Haas, Tusher, James, Rockey, Jr. and Jacobi was $2,468,876,
$1,530,171, $782,161, $864,597, and $736,814, respectively. The 1995
compensation covered by the Pension Plan consists of fiscal year 1995 cash
salary and 1994 bonus paid in 1995 (not including LTPP). These amounts
correspond to the amounts on the Summary Compensation table (see Summary
Compensation Table for Executive Officers caption).
The Internal Revenue Code (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 separate unfunded benefit restoration plans (see the Benefit
Restoration Plans 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 plans.
72
<PAGE>
The Company has unfunded supplemental pension agreements with Messrs. Tusher and
James which provide specific benefits upon retirement. The cost to the Company
in 1995 of the agreements for Messrs. Tusher and James was $237,200 and
$124,300, respectively.
Benefit Restoration Plans
The Company has two unfunded benefit restoration plans, the Supplemental Benefit
Restoration Plan and the Excess Benefit Restoration Plan, collectively called
the BRP, that provide eligible employees with benefits that would have been
payable from tax-qualified plans (both defined benefit and defined contribution)
of the Company except for limitations imposed on such benefits under 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 15 to the Consolidated Financial Statements. See Note 20 for
discussion of the possible future impact of the Proposed Merger Transaction on
these plans.
73
<PAGE>
Contracts with Management Holders of Class L Common Stock
The management liquidity program (the Liquidity Program) was approved by the
Board of Directors and stockholders in 1994. The Liquidity Program allows the
Company to enter into contracts with management holders of Class L common stock
relating to in-service, employment separation-related and post-separation stock
purchases. This program allows participating management stockholders to annually
sell a specified amount of their stock to the Company, subject to certain
limitations and conditions. The program also entitles the Company to purchase
all of the shares held by a management holder at the time of separation from
employment. (See Management Liquidity Program caption under Item 13., Certain
Relationships and Related Transactions.)
74
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1995, 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% of the
outstanding shares of either of those classes, 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. Shares listed as beneficially
owned by the executive officers include shares of Class E common stock acquired
through the Employee Stock Purchase and Award Plan. 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 Total Shares Percentage
or Number of Number of Exist or May Be Beneficially of Shares
Persons in Group Shares Owned Deemed to Exist Owned Outstanding
- ------------------------------- ------------------- ---------------------- ------------- ------------
<S> <C> <C> <C> <C>
Robert D. Haas 3,788,453 /(2)/ 392,070 /(3)/ 4,180,523 7.91%
Thomas W. Tusher 193,644 /(4)/ 404,750 /(5)/ 598,394 1.13%
Peter E. Haas, Sr. 8,726,426 /(6)/ 2,733,167 /(7)/ 11,459,593 21.69%
Estate of Walter A. Haas, Jr. 3,741,116 600,000 /(8)/ 4,341,116 8.22%
Angela Glover Blackwell -- -- -- --
Tully M. Friedman 352,100 /(9)/ 90,000 /(10)/ 442,100 /(1)/
James C. Gaither -- -- -- --
Rhoda H. Goldman 2,672,697 /(11)/ -- 2,672,697 5.06%
Peter E. Haas, Jr. 4,466,391 /(12)/ 361,981 /(13)/ 4,828,372 9.14%
Walter J. Haas -- -- -- --
F. Warren Hellman 574,742 /(14)/ 402,000 /(15)/ 976,742 1.85%
James M. Koshland/(16)/ 45,000 96,000 /(17)/ 141,000 /(1)/
Patricia Salas Pineda -- -- -- --
Frances K. Geballe 2,739,760 /(18)/ -- 2,739,760 5.18%
Josephine B. Haas 3,194,449 /(19)/ 1,175,294 /(20)/ 4,369,743 8.27%
Miriam L. Haas 3,000,200 /(21)/ -- 3,000,200 5.68%
Margaret E. Jones/(22)/ 2,895,710 -- 2,895,710 5.48%
Daniel E. Koshland, Jr. 2,865,744 152 /(23)/ 2,865,896 5.42%
Peter A. Jacobi 24,796 /(24)/ -- 24,796 /(1)/
George B. James 78,688 /(25)/ -- 78,688 /(1)/
Robert D. Rockey, Jr. 18,899 -- 18,899 /(1)/
Directors and executive
officers of the
Company as a group
(18 persons)/(26)//(27)/ 21,058,362 4,479,968 25,538,330 48.33%
</TABLE>
- -----------
Note: Class E common stock represents approximately 3% 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 64% of all outstanding Class E
75
<PAGE>
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 526,674 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.
/(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 159,250 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 2,733,167 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 grandnephew 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.
/(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)/ Does not include 1,000,000 shares owned by Richard Goldman's 1995 trust
for the benefit of Mr. & Mrs. Goldman's issue. Mrs. Goldman disclaims
beneficial ownership of such shares. Does not include 2,891,267 shares
held by trusts for the benefit of Mrs. Goldman's children, grandchildren
and great-grandchildren. Mrs. Goldman has neither voting nor investing
rights with respect to such shares.
/(12)/ Includes 2,372,751 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 102 shares by the spouse of Mr. Haas.
Mr. Haas disclaims beneficial ownership of such shares.
/(13)/ Includes 61,709 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. Also includes 300,272
shares held by The Josephine B. Haas Family Limited Partnership with Mr.
Haas as General Partner with voting and investing powers.
/(14)/ Mr. Hellman's shares are held in trusts.
/(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)/ James M. Koshland is the son of Daniel E. Koshland, Jr.
/(17)/ Represents shares held by trusts for the benefit of James M. Koshland's
children, nieces and nephew. Mr. Koshland disclaims beneficial ownership
of such shares.
/(18)/ Includes 333,000 shares owned by the spouse of Mrs. Geballe. Mrs. Geballe
disclaims beneficial ownership of such shares.
/(19)/ Includes 2,733,167 shares in which Mrs. Haas has sole investing powers
and Mr. Peter E. Haas, Sr. has sole voting rights.
/(20)/ Includes 1,447,855 shares in which Mrs. Haas has shared voting and
investing powers and 777,439 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.
/(21)/ Does not include 8,726,426 shares owned by Peter E. Haas, Sr., the spouse
of Mrs. Haas. Mrs. Haas disclaims beneficial ownership of such shares.
/(22)/ Margaret E. Jones is the daughter of Peter E. Haas, Sr. and Josephine B.
Haas.
/(23)/ Represents shares owned by The Koshland Foundation in which Mr. Koshland
has sole voting rights.
/(24)/ Includes 9,300 shares held by trusts for the benefit of Mr. Jacobi's
children.
/(25)/ Includes 63,096 shares held by The James Family Trust and 11,600 shares
held by The James Family Limited Partnership in which Mr. James shares
voting and investing powers.
/(26)/ Includes 404,750 shares subject to presently exercisable options.
/(27)/ As of December 31, 1995, the Company has 211 and 1,252 record owners of
Class L and Class E common stock, respectively.
76
<PAGE>
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 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 stockholders
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. Additionally,
management Class L stockholders are parties to contracts with the Company
providing for in-service, employment separation-related and post-separation
stock purchases. See Management Liquidity Program caption under Item 13.,
Certain Relationships and Related Transactions. See Note 20 to the Consolidated
Financial Statements for discussion of the Proposed Merger Transaction.
77
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Liquidity Program
During 1994, the Board of Directors and stockholders approved a stock liquidity
program (the Liquidity Program) for management holders of Class L common stock.
The Liquidity Program allowed the Company to enter into contracts with then-
existing management holders of Class L common stock relating to in-service,
employment separation-related and post-separation stock purchases. They may
annually sell a specified amount of their stock to the Company, subject to
certain limitations and conditions. The program also entitles the Company to
purchase all of the shares held by a management holder at the time of separation
from employment.
Participating shares were classified on the balance sheet outside of
stockholders' equity due to the liquidity feature. Future changes in the stock
valuation will result in periodic adjustments to compensation expense for
participating stock options currently outstanding, participating share balances
and retained earnings. See Note 20 to the Consolidated Financial Statements for
a discussion of the impact of the Proposed Merger Transaction on the Liquidity
Program.
The following table presents information as of November 26, 1995 regarding the
interests of the five most highly compensated executive officers of the Company
in the Management Liquidity Program. The value of the shares listed were
calculated using the most recent valuation by Morgan Stanley & Co. Incorporated
($189 per share).
<TABLE>
<CAPTION>
Name and
Principal Position Number of Shares Value
- ------------------------------ ---------------- -------------
<S> <C> <C>
Robert D. Haas -- --
Chairman of the Board and
Chief Executive Officer
Thomas W. Tusher 749,749/(1)/ $141,702,561
President, Chief Operating
Officer
George B. James 63,096 11,925,144
Senior Vice President,
Chief Financial Officer
Robert D. Rockey, Jr. 15,540 2,937,060
Senior Vice President,
President of Levi Strauss
North America
Peter A. Jacobi 12,315 2,327,535
Senior Vice President,
President of Levi Strauss
International
</TABLE>
- -----------
/(1)/ This amount includes outstanding options held by Mr. Tusher to purchase
404,750 shares. Those shares, if acquired, are subject to the Program.
78
<PAGE>
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 18 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
John Goldman, the son of Rhoda H. Goldman, a director of the Company, is the
controlling person of Richard N. Goldman and Company (RNG), which acts as an
insurance broker for the Company. In 1995, the Company paid RNG approximately
$375,550 in fees and commissions for the placement of insurance programs. RNG's
insurance programs represent approximately 56% of worldwide annual premiums
paid by the Company for 1995 property casualty coverage, not including workers'
compensation coverage. The Company believes the premiums paid to RNG are
competitive. At November 26, 1995, Rhoda H. Goldman had no equity interest in
RNG and beneficially owned 2,672,697 shares of the Company's Class L common
stock.
James C. Gaither is a partner of the law firm of Cooley, Godward, Castro,
Huddleson & Tatum which provided legal services to the Company in 1995. James M.
Koshland is a partner of the law firm of Gray Cary Ware & Freidenrich which
provided legal services to the Company in 1995.
See Compensation Committee Interlocks and Insider Participation under Item 11
for additional information.
79
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements of the Company included in Part II, Item 8 of
this Form 10-K are as follows:
Consolidated Statements of Income - Years Ended November 26, 1995,
November 27, 1994 and November 28, 1993
Consolidated Balance Sheets - November 26, 1995 and November 27,
1994
Consolidated Statements of Stockholders' Equity - Years Ended
November 26, 1995, November 27, 1994 and November 28, 1993
Consolidated Statements of Cash Flows - Years Ended November 26,
1995, November 27, 1994 and November 28, 1993
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
2. Financial Statement Schedules
All schedules have been omitted because they are inapplicable, not
required or the information is included in the financial statements or
notes thereto.
3. Exhibits
2 Agreement and Plan of Merger incorporated by reference from Exhibit
(c)(1) of the Company's Rule 13E-3 Transaction Statement on
Schedule 13E-3, filed with the Securities and Exchange Commission
on February 14, 1996.
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.
4 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.
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 * 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).
10c * 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).
80
<PAGE>
10d * 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.
10e * 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.
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, incorporated by
reference from Exhibit 10d of Form 10-Q filed with the Securities
and Exchange Commission on July 13, 1993.
10g * Levi Strauss Associates Inc. Deferred Compensation Plan for
Executives (as amended and restated through August 22, 1994),
incorporated by reference from Exhibit 10b of Form 10-Q filed with
the Securities and Exchange Commission on October 11, 1994.
10h * Amendment and Restatement dated August 22, 1994 to the Levi Strauss
Associates Inc. Deferred Compensation Plan for Executives,
incorporated by reference from Exhibit 10h of Form 10-K filed with
the Securities and Exchange Commission on February 22, 1995.
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.,
incorporated by reference from Exhibit 10j of Form 10-K filed with
the Securities and Exchange Commission on February 23, 1994.
10k * Amendment dated November 22, 1994 to the Revised Home Office
Pension Plan, incorporated by reference from Exhibit 10k of Form
10-K filed with the Securities and Exchange Commission on
February 22, 1995.
10l * Revised Employee Retirement Plan, incorporated by reference from
Exhibit 10k of Form 10-K filed with the Securities and Exchange
Commission on February 23, 1994.
10m * Amendment dated January 10, 1995 to the Revised Employee Retirement
Plan, incorporated by reference from Exhibit 10m of Form 10-K filed
with the Securities and Exchange Commission on February 22, 1995.
10n Levi Strauss Associates Inc. Retirement Plan for Over-the-Road
Truck Drivers and Dispatchers, incorporated by reference from
Exhibit 10l of Form 10-K filed with the Securities and Exchange
Commission on February 23, 1994.
10o Levi Strauss & Co. Supplemental Unemployment Benefit Plan and
related amendments, incorporated by reference from Exhibit 10m of
Form 10-K filed with the Securities and Exchange Commission on
February 23, 1994.
10p * 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).
81
<PAGE>
10q * 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.
10r * 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.
10s * 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.
10t * 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).
10u * 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).
10v * 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).
10w 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).
10x * Home Office Cash Performance Sharing Plan of Levi Strauss
Associates Inc., incorporated by reference from Exhibit 10z of Form
10-K filed with the Securities and Exchange Commission on February
23, 1994.
10y Field Profit Sharing Award Plan of Levi Strauss Associates Inc.,
incorporated by reference from Exhibit 10aa of Form 10-K filed with
the Securities and Exchange Commission on February 23, 1994.
10z * 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.
10aa 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.
10bb First Amendment to Supply Agreement dated as of March 30, 1992,
between Levi Strauss & Co. and Cone Mills Corporation, incorporated
by reference from Exhibit 10dd of Form 10-K filed with the
Securities and Exchange Commission on February 23, 1994.
82
<PAGE>
10cc Master Trust Agreement between Levi Strauss Associates Inc. and
Fidelity Management Trust Company, incorporated by reference from
Exhibit 10a of Form 10-Q filed with the Securities and Exchange
Commission on October 11, 1994.
10dd Materials Handling System Agreement dated October 31, 1994,
between Levi Strauss & Co. and Computer Aided Systems, Inc.,
incorporated by reference from Exhibit 10ii of Form 10-K filed
with the Securities and Exchange Commission on February 22, 1995.
10ee * Form of Stock Purchase Agreement between Levi Strauss Associates
Inc. and Individual Management Holder of Class L common stock,
incorporated by reference from Exhibit 10jj of Form 10-K filed
with the Securities and Exchange Commission on February 22, 1995.
10ff * Form of Manager Family Member Stock Purchase Agreement between
Levi Strauss Associates Inc. and Thomas W. Tusher, incorporated
by reference from Exhibit 10kk of Form 10-K filed with the
Securities and Exchange Commission on February 22, 1995.
10gg * Form of Manager Family Member Stock Purchase Agreement between
Levi Strauss Associates Inc. and George B. James, incorporated by
reference from Exhibit 10ll of Form 10-K filed with the
Securities and Exchange Commission on February 22, 1995.
10hh * Partners in Performance Annual Incentive Plan of Levi Strauss
Associates Inc. and Subsidiaries, incorporated by reference from
Exhibit 10mm of Form 10-K filed with the Securities and Exchange
Commission on February 22, 1995.
10ii * Partners in Performance Long-Term Incentive Plan of Levi Strauss
Associates Inc. and Subsidiaries, incorporated by reference from
Exhibit 10nn of Form 10-K filed with the Securities and Exchange
Commission on February 22, 1995.
10jj * Amendment dated December 31, 1994 to the Deferred Compensation
Plan for Outside Directors, incorporated by reference from
Exhibit 10a of Form 10-Q filed with the Securities and Exchange
Commission on April 10, 1995.
10kk * Amendment dated January 24, 1995 to the Revised Employee
Retirement Plan, incorporated by reference from Exhibit 10b of
Form 10-Q filed with the Securities and Exchange Commission on
April 10, 1995.
10ll Amendment dated May 15, 1995 to the Employee Investment 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 11, 1995.
10mm Amendment dated July 6, 1995 to the Employee Investment Plan of
Levi Strauss Associates Inc., incorporated by reference from
Exhibit 10a of Form 10-Q filed with the Securities and Exchange
Commission on October 10, 1995.
10nn 1995 Amended and Restated Credit Agreement dated September 22,
1995 among the Company, Bank of America N.T. & S.A. and other
financial institutions named therein, incorporated by reference
from Exhibit 10b of Form 10-Q filed with the Securities and
Exchange Commission on October 10, 1995.
10oo * Form of Indemnification Agreement dated November 30, 1995 for
members of the Special Committee of the Board of Directors
created by the Board of Directors on November 30, 1995.
83
<PAGE>
10pp Employee Investment Plan of Levi Strauss Associates Inc. as
Amended and Restated Effective November 27, 1989, with main text
reflecting certain changes as of September 1, 1994.
10qq Amendments dated December 7, 1995 and December 21, 1995 to the
Employee Investment Plan of Levi Strauss Associates Inc.
10rr Levi Strauss Associates Inc. Employee Long-Term Investment and
Savings Plan as Amended and Restated Effective November 27, 1989,
with main text reflecting changes as of April 1, 1995.
10ss Amendments dated December 7, 1995 and December 21, 1995 to the
Levi Strauss Associates Inc. Employee Long-Term Investment and
Savings Plan.
10tt Amendment dated November 22, 1995 to the Levi Strauss Associates
Inc. Retirement Plan for Over-the-Road Truck Drivers and
Dispatchers.
10uu Amendment dated November 22, 1995 to the Revised Home Office
Pension Plan of Levi Strauss Associates Inc.
10vv Amendments dated January 10 and November 22, 1995 to the Levi
Strauss Associates Inc. Revised Employee Retirement Plan.
10ww * Amendment dated December 7, 1995 to the Employee Stock Purchase
and Stock Award Plan of Levi Strauss Associates Inc.
10xx * Amendment dated November 6, 1995 to the Levi Strauss Associates
Inc. Excess Benefit Restoration Plan and the Levi Strauss
Associates Inc. Supplemental Benefit Restoration Plan.
10yy * Amendment dated November 6, 1995 to the Levi Strauss Associates
Inc. Deferred Compensation Plan for Executives.
10zz * Amendment dated November 6, 1995 to the Levi Strauss Associates
Inc. Long-Term Performance Plan for Executives.
10aaa * Amendment dated November 6, 1995 to the Levi Strauss Associates
Inc. 1992 Executive Stock Appreciation Rights Plan.
21 Subsidiaries of Levi Strauss Associates Inc.
23 Consent of Independent Public Accountants.
27 Financial Data Schedules.
- --------------------
* Management contracts or compensatory plans or arrangements
covering executive officers or directors of the Company.
(b) Reports on Form 8-K
There were no Reports on Form 8-K filed with the Commission during the
fourth quarter of 1995.
84
<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 8, 1996.
LEVI STRAUSS ASSOCIATES INC.
By Robert D. Haas
--------------------------------------
Robert D. Haas
Chairman of the Board of Directors 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 8, 1996.
Signature Title
--------- -----
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)
Angela G. Blackwell Director
- -------------------------------------
(Angela G. Blackwell)
Tully M. Friedman Director
- -------------------------------------
(Tully M. Friedman)
85
<PAGE>
Signature Title
--------- -----
James C. Gaither Director
- -------------------------------------
(James C. Gaither)
Rhoda H. Goldman Director
- -------------------------------------
(Rhoda H. Goldman)
Peter E. Haas, Jr. Director
- -------------------------------------
(Peter E. Haas, Jr.)
Walter J. Haas Director
- -------------------------------------
(Walter J. Haas)
F. Warren Hellman Director
- -------------------------------------
(F. Warren Hellman)
Patricia S. Pineda Director
- -------------------------------------
(Patricia S. Pineda)
86
<PAGE>
Signature Title
--------- -----
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)
87
<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
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 -- Vice President, Rockefeller Foundation/(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/(2)//(3)/
Peter E. Haas, Sr./(3)/
Peter E. Haas, Jr./(1)//(3)/
Robert D. Haas/(3)/
Walter J. Haas /(1)//(3)//
F. Warren Hellman -- General Partner, Hellman & Friedman/(1)//(2)/
James M. Koshland -- Partner, Gray Cary Ware & Freidenrich/(2)//(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 LLP
88
<PAGE>
Exhibit 10oo
------------
INDEMNIFICATION AGREEMENT
-------------------------
INDEMNIFICATION AGREEMENT (the "Agreement") between Levi Strauss
Associates Inc., a Delaware corporation (the "Company"), and
_______________________________________________, a director of the Company (the
"Indemnitee"), dated as of November 30, 1995.
WHEREAS, the Indemnitee has been requested to serve on a special
committee of the Company's Board of Directors (the "Special Committee") to be
formed on November 30, 1995 for the purpose of evaluating an acquisition
proposal from certain shareholders of the Company;
WHEREAS, the Restated Certificate of Incorporation of the Company (the
"Charter") contains various exculpatory provisions with respect to the personal
liability of the Company's directors (the "Relevant Charter Provisions") and
certain provisions of the By-Laws of the Company (the "By-Laws") provide for
certain indemnification of the officers and directors of the Company (the
"Relevant By-Law Provisions");
WHEREAS, in order to induce the Indemnitee to serve on the Special
Committee, the Company wishes to grant and secure to the Indemnitee
indemnification rights to the fullest extent permitted by Delaware law as the
same exists or may hereafter be revised (but, in the case of any such revision,
only to the extent that such revision permits the Company to provide broader
indemnification rights than Delaware law permitted the Company to provide prior
to such revision), whether or not expressly provided for in the Bylaws or,
pursuant to Section 145(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), whether or not expressly provided for by the other
provisions of Section 145 of the DGCL (such Delaware law, the "Delaware Law");
NOW, THEREFORE, in consideration of the Indemnitee's agreement to
serve on the special committee and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to the following:
Section 1. (a) In the event that the Indemnitee was or is made a
party or is threatened to be made a party to or is otherwise involved, whether
or not a party thereto, in any action, suit, demand, arbitration or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding") or otherwise incurs or suffers any expense, liability, damage,
costs, obligations, penalties or loss (including, without limitation, attorneys'
fees, judgments, fines, Employee Retirement and Income Security Act excise taxes
or penalties and amounts paid or to be paid in settlement) (collectively,
"Losses"), by reason of the fact that the Indemnitee is or was serving at the
request of the Company on the Special Committee, or otherwise relating to the
establishment or functions of the Special Committee, whether the basis of such
<PAGE>
2
proceeding is alleged action in an official capacity as a member of the Special
Committee or in any other capacity while serving as a member of the Special
Committee, the Indemnitee shall be indemnified and held harmless by the Company
to the fullest extent permitted by Delaware Law against all Losses incurred or
suffered by the Indemnitee in connection therewith and such indemnification
shall continue as to the Indemnitee after the Indemnitee has ceased to be a
member of the Special Committee and shall inure to the benefit of the
Indemnitee's heirs, executors, administrators, conservators and guardians;
provided, however, that except as provided in Section 2 hereof with respect to
- -------- -------
proceedings to enforce rights to indemnification or advancement of expenses, the
Company shall indemnify the Indemnitee in connection with the proceeding (or
part thereof) initiated by the Indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Company (such
authorization not to be unreasonably withheld).
(b) The right to indemnification conferred hereunder shall be a
contract right and shall include the right to be paid or reimbursed by the
Company for any Losses from time to time incurred or suffered by the Indemnitee,
including, without limitation, the expenses incurred in defending or otherwise
being involved in any such proceeding or other action in advance of its final
disposition (hereinafter an "advancement of expenses"); provided, however, that
-------- -------
if Delaware Law requires an undertaking in connection with an advancement of
expenses (hereafter an "undertaking"), such advancement of expenses shall be
made only upon delivery to the Company of an undertaking, by or on behalf of the
Indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by a final judicial decision of a court having jurisdiction pursuant
to Section 12 hereof from which there is no further right to appeal (hereinafter
a "final adjudication"), that the Indemnitee is not entitled to be indemnified
for such Losses under Delaware Law.
Section 2. If a claim under Section 1 of this Agreement is not paid
in full by the Company within 15 days after a written claim has been received by
the Company in the case of advancement of expenses or 30 days after a written
claim has been received by the Company in the case of any other right to
indemnification hereunder, the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim. In any such suit
or in a suit brought by the Company seeking to recover an advancement of
expenses, the Indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit, unless a final adjudication of a court
having jurisdiction pursuant to Section 12 hereof finds that each of the claims
and/or defenses of the Indemnitee in any such proceeding was frivolous or made
in bad faith. In (i) any suit brought by the Indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the Indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit by the Company to
<PAGE>
3
recover an advancement of expenses pursuant to the terms of an undertaking, the
Company shall be entitled to recover such expenses only if, in the case of each
of (i) and (ii), there has been a final adjudication of a court having
jurisdiction pursuant to Section 12 hereof that such indemnification or
advancement of expenses is not permitted by Delaware Law. Neither the failure
of the Company (including its Board of Directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met any applicable standard of conduct set forth
under Delaware Law, nor an actual determination by the Company (including its
Board of Directors, independent legal counsel, or its stockholders) that the
Indemnitee has not met any such applicable standard of conduct, shall be a
defense to the suit or create a presumption that the Indemnitee has not met any
applicable standard of conduct.
Section 3. The right to indemnification and the advancement of
expenses conferred in this Agreement shall not be exclusive of any other right
which the Indemnitee may have or hereafter acquire under any statute, provision
of the Charter or By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise; and the Company hereby agrees not to amend the Relevant
Charter Provisions or the Relevant By-Law Provisions after the date hereof in a
manner applicable and adverse to the Indemnitee and to honor and observe the
Relevant Charter Provisions and the Relevant By-Law Provisions, including,
without limitation, by affirmatively providing the advancement of expenses
thereunder.
Section 4. (a) Promptly after receipt by the Indemnitee of notice of
the commencement or the threat of commencement of any proceeding with respect to
which the Indemnitee believes that the Indemnitee may be entitled to
indemnification or the advancement of expenses under this Agreement, the
Indemnitee shall notify in writing the Company of the commencement or the threat
of commencement thereof, provided, that, failure of the Indemnitee to give the
-------- ----
Company notice shall not relieve the Company of its obligations hereunder.
(b) Within thirty (30) calendar days after the receipt by the Company
of a notice pursuant to Section 4(a) hereof of the commencement of a proceeding,
the Company may elect by written notice to the Indemnitee to assume the defense
of such proceeding, with counsel approved by the Indemnitee. After the approval
of any such counsel by the Indemnitee, the Company will not be liable to the
Indemnitee for any fees or disbursements of counsel incurred by the Indemnitee
in connection with such proceeding, provided, however, that (i) the Indemnitee
shall have the continued right to employ counsel at the expense of the
Indemnitee and (ii) the Company shall pay the fees and disbursements of counsel
selected by the Indemnitee in the event that the Indemnitee at any time during
the course of such
<PAGE>
4
proceeding reasonably concludes that there may be a conflict of interest in the
defense of such proceeding between the Indemnitee and any other party
represented by the counsel selected by the Company. The Company shall not
settle any such proceeding unless such settlement provides for no adverse
consequence or obligation against the Indemnitee other than monetary damages to
be indemnified hereunder and includes as an unconditional term thereof the
giving by the claimant or plaintiff of a release of the Indemnitee from all
liability with respect to such proceeding.
Section 5. In the event that the Company maintains insurance to
protect itself and any director or officer of the Company against any expense,
liability or loss, such insurance shall cover the Indemnitee to at least the
same extent as any other director or officer of the Company.
Section 6. The right to indemnification and the advancement of
expenses conferred in this Agreement is a contractual right and shall not be
altered or abrogated in any manner adverse to the Indemnitee by virtue of
amendments to the Charter or By-Laws, or applicable law.
Section 7. The parties hereto intend for this Agreement to be
interpreted and enforced so as to provide indemnification and advancement of
expenses to the Indemnitee to the fullest extent now or hereafter permitted by
Delaware Law and, in the event that the validity, legality or enforceability of
any provision of this Agreement is in question, such provision shall be
interpreted in a manner such that the provision will be valid, legal and
enforceable.
Section 8. No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by both of the parties hereto and no
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof nor shall such waiver
constitute a continuing waiver.
Section 9. If any provision of this Agreement is held by a court
having jurisdiction pursuant to Section 12 hereof to be invalid, illegal or
unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without
limitation, all portions of any Sections of this Agreement containing any such
provision held to be invalid, illegal, or unenforceable that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby, and (ii) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the
<PAGE>
5
intent manifested by the provision held invalid, illegal or unenforceable and to
give effect to Section 7 hereof.
Section 10. If the Indemnitee is entitled under this Agreement to
indemnification by the Company for some or a portion of any Losses but is not
entitled, however, to indemnification for the full amount thereof, the Company
shall nevertheless indemnify the Indemnitee for such full amount thereof less
the portion thereof which a court having jurisdiction pursuant to Section 12
hereof and in a final adjudication determines the Indemnitee is not entitled.
Section 11. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
Section 12. (a) The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the Court of Chancery of the State of
Delaware for all purposes in connection with any dispute, action or proceeding
which arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in that Court (subject to
the right of appeal to the appropriate appellate court); provided, however, that
if the Court of Chancery determines that it lacks subject matter jurisdiction
despite this Section 12 and 8 Del. C. (S) 145(k), then any dispute, action or
proceeding instituted under this Agreement shall be transferred to the Superior
Court of the State of Delaware.
(b) In the event of any dispute of any type whatsoever under this
Agreement involving the obligations of the Company to indemnify or advance
expenses to the Indemnitee, the Company shall have the burden of proving by
clear and convincing evidence that the Company is not so obligated to indemnify
or advance expenses to the Indemnitee.
Section 13. The Company agrees that the Company will pay (and
indemnify the members of the Special Committee against) all the costs and
expenses of the Special Committee in performing its function, including, without
limitation, the costs and expenses of the legal and financial advisors retained
by the Special Committee.
<PAGE>
6
IN WITNESS WHEREOF, the Company and the Indemnitee have executed this
Indemnification Agreement in duplicate on the day and year first above written.
LEVI STRAUSS ASSOCIATES INC.
By:_____________________________
Name:
Title:
______________________________
[Name of Indemnitee]
<PAGE>
Exhibit 10pp
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of September 1, 1994)
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of September 1, 1994)
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 "Accounts"......................................................... 3
2.2 "Act".............................................................. 3
2.3 "Administrative Committee"......................................... 3
2.4 "Affiliated Company"............................................... 3
2.5 "Alternate Payee".................................................. 4
2.6 "Annual Additions"................................................. 4
2.7 "Annuity Starting Date"............................................ 4
2.8 "Beneficiary"...................................................... 4
2.9 "Board of Directors"............................................... 4
2.10 "Break in Service"................................................ 5
2.11 "Code"............................................................ 5
2.12 "Committee"....................................................... 5
2.13 "Company"......................................................... 5
2.14 "Compensation".................................................... 5
2.15 "Domestic Relations Order"........................................ 7
2.16 "Effective Date".................................................. 7
2.17 "Employee"........................................................ 7
2.18 "ESP"............................................................. 9
2.19 "Fair Market Value"............................................... 9
2.20 "Forfeiture"...................................................... 9
2.21 "FPSP"............................................................ 9
2.22 "Fund"............................................................ 9
2.23 "Highly Compensated Employee"..................................... 9
2.24 "Highly Compensated Former Employee".............................. 11
2.25 "Home Office Salary Grade"........................................ 11
2.26 "Hour of Service"................................................. 11
EMPLOYEE INVESTMENT PLAN
1
<PAGE>
Page
----
2.27 "Inactive Member"................................................. 11
2.28 "Insider"......................................................... 11
2.29 "Investment Committee"............................................ 11
2.30 "Investment Manager".............................................. 11
2.31 "IRS"............................................................. 11
2.32 "Labor Department"................................................ 11
2.33 "LSAI Stock"...................................................... 11
2.34 "LS&CO.".......................................................... 12
2.35 "Matching Account"................................................ 12
2.36 "Matching Contribution"........................................... 12
2.37 "Member".......................................................... 12
2.38 "Member Contributions"............................................ 12
2.39 "Membership Date"................................................. 12
2.40 "Misconduct"...................................................... 12
2.41 "Mutual Fund"..................................................... 12
2.42 "Nonelective Account"............................................. 12
2.43 "Nonelective Contribution"........................................ 13
2.44 "Normal Retirement Age"........................................... 13
2.45 "Participating Company"........................................... 13
2.46 "Plan"............................................................ 13
2.47 "Plan Benefit".................................................... 13
2.48 "Plan Year"....................................................... 13
2.49 "Post-Tax Account"................................................ 13
2.50 "Post-Tax Contributions".......................................... 13
2.51 "Pre-Tax Account"................................................. 13
2.52 "Pre-Tax Contributions"........................................... 13
2.53 "Profit Sharing 401(k) Account"................................... 13
2.54 "Profit Sharing Regular Account".................................. 13
2.55 "Profit Sharing Contribution"..................................... 14
2.56 "PSP"............................................................. 14
2.57 "Qualified Domestic Relations Order".............................. 14
2.58 "Qualified Member"................................................ 14
2.59 "Quarter"......................................................... 14
2.60 "Registration Rights Agreement"................................... 14
2.61 "Regulations"..................................................... 14
2.62 "Required Beginning Date"......................................... 14
2.63 "Retiree Coordinator"............................................. 14
2.64 "Rollover Account"................................................ 14
2.65 "Rollover Contributions".......................................... 15
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2.66 "Service"......................................................... 15
2.67 "Surviving Spouse"................................................ 16
2.68 "Total Compensation............................................... 16
2.69 "Totally and Permanently Disabled"................................ 17
2.70 "Trust Agreement"................................................. 17
2.71 "Trust Fund"...................................................... 18
2.72 "Trustee"......................................................... 18
2.73 "Valuation Date".................................................. 18
2.74 "Vested Interest"................................................. 18
2.75 "Year of Service"................................................. 18
SECTION 3 MEMBERSHIP AND TRANSFER....................................... 19
3.1 Commencement of Membership......................................... 19
3.2 Rehired and Transferred Employees.................................. 19
3.3 Suspension of Membership........................................... 19
3.4 Termination of Membership.......................................... 19
3.5 Highly Compensated Employees....................................... 19
SECTION 4 MEMBER CONTRIBUTIONS.......................................... 21
4.1 Election to Make Contributions..................................... 21
4.2 Maximum Pre-Tax Contributions...................................... 21
4.3 Change or Suspension of Contributions.............................. 21
4.4 Resumption of Contributions........................................ 21
4.5 Withholding and Deposit With Trustee; Crediting Accounts........... 21
4.6 Distribution of Excess Contributions and Deferrals................. 22
4.7 Rollover Contributions............................................. 22
SECTION 5 MATCHING AND NONELECTIVE CONTRIBUTIONS........................ 24
5.1 Matching Contribution.............................................. 24
5.2 Nonelective Contribution........................................... 24
5.3 Deposit with Trustee; Crediting Accounts........................... 25
5.4 Curtailment or Distribution from Plan of Excess Aggregate
Contributions...................................................... 26
SECTION 6 PROFIT SHARING CONTRIBUTION................................... 27
6.1 Amount and Form.................................................... 27
6.2 Cash Election by Members........................................... 27
6.3 Deposit With Trustee; Crediting Accounts........................... 27
6.4 Distribution of Excess Contributions and Deferrals................. 28
SECTION 7 TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS............. 29
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7.1 Trust Fund......................................................... 29
7.2 Investment of Contributions........................................ 29
7.3 Reinvestment of Accounts........................................... 30
7.4 Investment by Alternate Payees..................................... 31
7.5 Allocation of Voting Rights........................................ 31
7.6 Exercise of Voting Rights.......................................... 32
7.7 Other Instructions by Members...................................... 33
7.8 Participant Directed Accounts...................................... 34
SECTION 8 VALUATIONS AND STATEMENTS..................................... 35
8.1 Valuation of Accounts.............................................. 35
8.2 Statements......................................................... 35
SECTION 9 WITHDRAWALS................................................... 36
9.1 Withdrawals from Post-Tax Accounts................................. 36
9.2 Withdrawals from Rollover Accounts................................. 36
9.3 Hardship Withdrawals............................................... 36
9.4 Withdrawals From Stock Fund........................................ 38
9.5 Payment of Withdrawals............................................. 39
9.6 Valuation Date..................................................... 39
9.7 Source of Withdrawals.............................................. 39
9.8 Limitation on Withdrawals by Insiders.............................. 39
9.9 Additional Limitations on Withdrawals.............................. 40
9.10 Withdrawals by Alternate Payees................................... 40
SECTION 10 LOANS......................................................... 41
10.1 Amount of Loans................................................... 41
10.2 Terms of Loans.................................................... 42
10.3 Source of Loans; Application of Loan Payments..................... 43
10.4 Default........................................................... 44
SECTION 11 PLAN BENEFITS................................................. 45
11.1 Vesting in Accounts............................................... 45
11.2 Amount of Plan Benefit............................................ 45
11.3 Valuation of Plan Benefit......................................... 45
11.4 Rehire Before Five One-Year Breaks in Service..................... 45
11.5 Form of Payment................................................... 45
11.6 Time of Payment................................................... 48
11.7 Death Benefit..................................................... 49
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11.8 Limitation on Time of Payment..................................... 49
11.9 Undeliverable Checks.............................................. 49
SECTION 12 ALLOCATION LIMITATIONS........................................ 50
12.1 Limitation on Annual Additions.................................... 50
12.2 Combined Limitation on Benefits and Contributions................. 50
12.3 Disposition of Excess Annual Additions............................ 50
SECTION 13 FUNDING POLICY AND METHOD..................................... 52
13.1 Contributions..................................................... 52
13.2 Trust Fund........................................................ 52
13.3 Expenses of the Plan.............................................. 52
13.4 Cash Requirements................................................. 52
13.5 Independent Accountant............................................ 52
13.6 Loans from Parties-In-Interest.................................... 53
SECTION 14 BENEFICIARIES................................................. 54
SECTION 15 ADMINISTRATION AND OPERATION OF THE PLAN...................... 55
15.1 Plan Administrator................................................ 55
15.2 Control and Management of Plan Assets............................. 55
15.3 Trustees and Investment Managers.................................. 55
15.4 Committee Membership.............................................. 56
15.5 Reports to Board of Directors..................................... 56
15.6 Employment of Advisers............................................ 56
15.7 Limitations on Committee Actions.................................. 56
15.8 Committee Meetings................................................ 57
SECTION 16 CLAIMS AND REVIEW PROCEDURES.................................. 58
16.1 Applications for Benefits......................................... 58
16.2 Denial of Applications............................................ 58
16.3 Requests for Review............................................... 58
16.4 Decisions on Review............................................... 59
16.5 Exhaustion of Administrative Remedies............................. 59
SECTION 17 TERMINATION OF EMPLOYER PARTICIPATION......................... 60
17.1 Termination by Participating Company.............................. 60
17.2 Effect of Termination............................................. 60
17.3 IRS Termination Procedure......................................... 60
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17.4 Termination of the Plan........................................... 60
SECTION 18 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND
TRUST......................................................... 61
18.1 Right to Amend.................................................... 61
18.2 Plan Merger or Consolidation...................................... 61
18.3 Termination of the Plan........................................... 61
18.4 Partial Termination of the Plan................................... 61
18.5 Manner of Distribution............................................ 61
18.6 Restrictions on Liquidation of Trust Upon Termination............. 62
SECTION 19 INALIENABILITY OF BENEFITS.................................... 63
19.1 No Assignment Permitted........................................... 63
19.2 Return of Contributions........................................... 63
19.3 Qualified Domestic Relations Orders............................... 64
SECTION 20 TOP-HEAVY PROVISIONS.......................................... 66
20.1 Determination of Top-Heavy Status................................. 66
20.2 Minimum Allocations............................................... 66
20.3 Minimum Vesting................................................... 67
20.4 Effect of Change in Top-Heavy Status on Vesting................... 67
20.5 Impact on Maximum Benefits........................................ 67
SECTION 21 GENERAL LIMITATIONS AND PROVISIONS............................ 68
21.1 No Employment Rights.............................................. 68
21.2 Payments from the Trust Fund...................................... 68
21.3 Payments to Minors or Incompetents................................ 68
21.4 Lost Members or Other Persons..................................... 68
21.5 Personal Data to the Administrative Committee..................... 68
21.6 Insurance Contracts............................................... 69
21.7 Notice to the Administrative Committee............................ 69
21.8 Notices to Members and Beneficiaries.............................. 69
21.9 Word Usage........................................................ 69
21.10 Headings......................................................... 69
21.11 Governing Law.................................................... 69
21.12 Heirs and Successors............................................. 69
21.13 Withholding...................................................... 69
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APPENDIX A PRIOR PLAN PROVISIONS..................................... A-1
APPENDIX B BLACKOUT PROVISIONS....................................... B-1
APPENDIX C FUNDS..................................................... C-1
APPENDIX D ADDITIONAL ELIGIBLE WITHDRAWALS AND LOANS................. D-1
7
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of September 1, 1994)
INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
---------------------------------------------
Introduction. Effective November 27, 1953, the Profit Sharing Plan
------------
of Levi Strauss & Co. (the "PSP") was established to provide eligible employees
("Employees") with a beneficial interest in the profits of Levi Strauss & Co.
Effective August 6, 1985, the Frozen Profit Sharing Plan of Levi Strauss & Co.
(the "FPSP") was established to hold certain accounts previously held under the
Stock Purchase and Investment Plan of Levi Strauss & Co. (the "SPIP"). Effective
August 6, 1985, the Employee Savings Plan of Levi Strauss & Co. (the "ESP") was
established to provide Employees with a program of regular savings supplemented
by Matching Contributions that was similar to aspects of the SPIP.
Effective October 1, 1988, the PSP and the FPSP were merged into the ESP.
Effective August 1, 1989, the ESP was amended, restated and renamed the Employee
Investment Plan of Levi Strauss Associates Inc. (the "EIP"). The EIP was
amended from time to time after August 1, 1989, to comply with certain
provisions of relevant law or implement other changes desired by Levi Strauss
Associates Inc.
By this amendment and restatement (the "Plan"), Levi Strauss Associates
Inc. intends to amend the EIP (1) to comply with the Tax Reform Act of 1986 and
other applicable legislation and (2) effective September 1, 1994, to effect
certain plan design changes, including changes relating to a change in
recordkeeper. Levi Strauss Associates Inc. intends that the Plan continue to
qualify as a profit sharing plan under section 401(a) and related sections of
the Code and as a cash or deferred arrangement under section 401(k) of the Code
and that the trust established under the Plan continue to qualify as a tax-
exempt trust under section 501(a) of the Code.
This amended and restated Plan is generally effective on November 27, 1989.
Certain provisions of the Plan which were in effect on or after November 27,
1989, but which were amended before September 1, 1994 are included in Appendix
A.
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,
EMPLOYEE INVESTMENT PLAN
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of each Member who is an Employee on and after the Effective Date, or of persons
claiming benefits 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 Levi Strauss Associates Inc. or an Affiliated
Company, 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, or unless the Member again becomes an Employee on or
after the Effective Date. This amended and restated Plan will not reduce any
Member's Plan Benefit under the Plan, as determined on the date immediately
preceding the Effective Date, and this Plan will be construed accordingly.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
DEFINITIONS.
- -----------
When used in this Plan document the following terms will have the following
meanings:
"Accounts" means, to the extent applicable to a Member, one or more of
--------
the following accounts:
Matching Account;
Nonelective Account;
Post-Tax Account;
Pre-Tax Account;
Profit Sharing 401(k) Account;
Profit Sharing Regular Account; and
Rollover Account.
"Act" means the Employee Retirement Income Security Act of 1974, as
---
amended, and any Regulations or rulings issued under the Act.
"Administrative Committee" means the committee appointed to administer
------------------------
the Plan as described in Section 15.4.
"Affiliated Company" means:
------------------
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.;
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.;
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.;
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Any other entity required to be aggregated with Levi Strauss
Associates Inc. under section 414(o) of the Code; or
Any other entity designated as an Affiliated Company by the Board
of Directors.
"Alternate Payee" means the spouse, former spouse, child or other
---------------
dependent of a Member who is recognized by a Domestic Relations Order as having
a right to receive all, or a portion, of a Member's Plan Benefit.
"Annual Additions" means the sum of the following additions to the
----------------
Member's Accounts for the Plan Year:
The amount of employer contributions and forfeitures allocated to
the Member under any qualified defined contribution plan maintained by the
Company and any Affiliated Company, including Profit Sharing Contributions,
Matching Contributions, Nonelective Contributions and Forfeitures under this
Plan;
The aggregate employee contributions which the Member contributes
to all qualified retirement plans maintained by the Company and all Affiliated
Companies, including Post-Tax Contributions to this Plan;
The amount of contributions made on behalf of the Member to any
qualified defined contribution plan maintained by the Company and all Affiliated
Companies under an election by the Member under a qualified cash or deferred
arrangement, including Pre-Tax Contributions to this Plan; and
Contributions allocated to any individual medical benefit account
(within the meanings of sections 415(l) and 419A(d)(2) of the Code) that is
established for the Member.
Employee contributions will be determined without regard to any rollover
contributions (as defined in sections 402(a)(5), 403(a)(4), 403(b)(8) and
403(d)(3) of the Code) and without regard to any employee contributions to a
simplified employee pension plan which are excludable from income under section
408(k)(6) of the Code. In addition, the 25% of compensation limitation
described in section 415(c)(1)(B) of the Code will not apply to any contribution
for medical benefits (within the meaning of section 419A(f)(2) of the Code)
after the Member's separation from Service which is treated as an Annual
Addition.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
"Annuity Starting Date" means the first day of the first month for
---------------------
which an amount is payable 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 Plan Benefit in a form other than an
annuity in accordance with Section 11.5, 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.
"Beneficiary" means the beneficiary or beneficiaries designated by a
-----------
Member under Section 3.1 and Section 14 (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.
"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.
"Break in Service" means a period of at least 12 consecutive 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 2.66, as
determined by the Administrative Committee.
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
Regulations or rulings issued under the Code.
"Committee" means the Administrative Committee or Investment
---------
Committee, as applicable.
"Company" means Levi Strauss Associates Inc., LS&CO. and each other
-------
Participating Company or any of them.
"Compensation" means a Member's compensation for a Plan Year paid by
------------
the Company for services while an Employee and a Member during that Plan Year,
including salary, wages, fees, commissions, bonuses, incentive compensation and
overtime pay. "Compensation" also includes the Member's Member Contributions to
the Plan for the Plan Year and any amounts contributed by the Member 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
EMPLOYEE INVESTMENT PLAN
5
<PAGE>
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 a Member is a territory manager, an account manager or an account
executive, or any of the 3, for the entire Plan Year (or portion of the Plan
Year during which he or she is a Member), his or her Compensation for purposes
of determining the Member's share of any allocation of Matching Contributions,
Profit Sharing Contributions and Forfeitures will not exceed the following
limits, as determined by the Administration Committee:
(a) The Compensation of a territory manager at the time as of which
the allocation is made will not exceed the maximum for the Home Office Salary
Grade 5 salary range in effect at the end of such Plan Year;
(b) The Compensation of an account manager at the time as of which the
allocation is made will not exceed the maximum for the Home Office Salary Grade
6 salary range in effect at the end of such Plan Year; and
(c) The Compensation of an account executive at the time as of which
the allocation is made will not exceed the maximum for the Home Office Salary
Grade 7 salary range in effect at the end of such Plan Year.
In the case of a Member 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 that would have been paid to the
Member had he or she been on a domestic payroll of the Company.
"Compensation" will not include:
-----------
Matching Contributions, Nonelective Contributions or Profit
Sharing Contributions to the Plan under Sections 5 and 6 or amounts paid to the
Member according to an election under Section 6.2;
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;
Relocation expenses;
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Ordinary income recognized by the employee related to the
exercise of any right granted under a stock option plan maintained by the
Company or an Affiliated Company;
Compensation paid by the Company or an Affiliated Company as a
nonrecurring or special bonus, tax reimbursement or award;
Payments under the Company's long-term performance plan;
Severance payments;
Payments from the Company's Long Term Disability Plan;
"Imputed income;" or
"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 the 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 November 27, 1989, 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. In determining the
Compensation of a Member, the family aggregation rules of section 414(q)(6) of
the Code will apply, except that in applying these rules, the term "family" will
include only the spouse of the Member and any lineal descendants of the Member
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.
"Domestic Relations Order" means any judgment, decree or order
------------------------
(including approval of a property settlement agreement) that:
EMPLOYEE INVESTMENT PLAN
7
<PAGE>
Relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other dependent of
a Member; and
Is entered or made under the domestic relations or community
property laws of any state.
"Effective Date" means November 27, 1989, except as expressly stated
--------------
otherwise in this document or as required to comply with the Tax Reform Act of
1986, as amended, and other applicable legislation.
"Employee" means any person who is employed by the Company excluding:
-------- ---------
Any employee of LS&CO, who is not paid from the home office of
Levi Strauss Associates Inc.
Any employee of a Participating Company other than LS&CO. who is
not paid on a salary or commission basis; or
Any stocktaker, service representative, Retiree Coordinator or
"Temporary Employee;"
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);
Any alien who:
Receives remuneration from the Company which constitutes
income from sources within the United States (within the meaning of section
861(a)(3) of the Code); and
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 retirement plan established or maintained outside
of the United States by a foreign subsidiary (including a domestic
subsidiary operating abroad) or foreign division of the Company; or
EMPLOYEE INVESTMENT PLAN
8
<PAGE>
The Levi Strauss International Retirement Plan for
Third Country National Employees or any successor or similar plan
maintained by the Company or any Affiliated Company;
A United States citizen locally hired by a foreign subsidiary
(including a domestic subsidiary operating abroad) or foreign division of the
Company;
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;
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;
Any employee who is covered by an individual employment contract
that expressly provides he or she will not be eligible for membership in the
Plan;
An employee who is included in a group or classification of
employees on the payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan; or
A Highly Compensated Employee, with respect to the eligibility to
make Member Contributions or receive an allocation of Matching Contributions,
Nonelective Contributions, Profit Sharing Contributions and Forfeitures only.
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.
A "Temporary Employee" means a person who:
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; or
Is subject, as a condition of such employment, to
termination without prior notice at any time.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
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.
"ESP" means the Employee Savings Plan of Levi Strauss & Co. as in
---
effect before August 1, 1989.
"Fair Market Value" means the value of a share of LSAI Stock,
-----------------
determined by the latest independent appraisal of the value of LSAI Stock
obtained by the Investment Committee. If LSAI Stock is offered to the public
under the Registration Rights Agreement, "Fair Market Value" will mean the net
proceeds realized by the Trustee in selling shares of LSAI Stock under such
offering until LSAI Stock is reappraised or until a public market for LSAI Stock
arises.
"Forfeiture" means the portion of a Member's Matching Account and
----------
Profit Sharing Regular Account which is forfeited under Section 11.1. The term
"Forfeiture" also includes that portion of a Member's Profit Sharing Account
that was forfeited on account of the Member's separation from service before
November 26, 1990, and amounts forfeited under the ESP and PSP before August 1,
1989.
"FPSP" means the Frozen Profit Sharing Plan of Levi Strauss & Co. as
----
in effect before October 1, 1988.
"Fund" means any of the investment funds described in Section 7.1.
----
"Highly Compensated Employee" means an Employee who:
---------------------------
During the preceding Plan Year:
Was at any time a 5% owner of the Company or an
Affiliated Company (as defined in section 416(i)(1) of the Code);
Received "compensation" from the Company or an Affiliated
Company in excess of $75,000 (as adjusted under Regulations or rulings
issued by the IRS);
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
EMPLOYEE INVESTMENT PLAN
10
<PAGE>
when ranked on the basis of "compensation" paid during such Plan Year
(referred to as the "Top Paid Group" under IRS Regulations); or
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
During the Plan Year:
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
Satisfies the requirements of paragraphs (ii), (iii), or
(iv) of Section 2.23(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
for a Plan Year, the following employees, as described in section 414(q)(8) and
section 414(q)(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 section 414(q)(8) and section 414(q)(11) of
the Code) will be treated as officers. Further, if no officer receives the
level of "compensation" described in Section 2.23(a)(iv), the highest paid
officer of the Company
EMPLOYEE INVESTMENT PLAN
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<PAGE>
and all Affiliated Companies will be treated as a Highly Compensated Employee
described in Section 2.23(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 the person and any Company or
Employee contributions made on behalf of the 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.
"Compensation" for purposes of this Section 2.23 means Total Compensation
as defined in Section 2.68 of the Plan, 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) (regarding annuity contracts).
"Highly Compensated Former Employee" means a former employee who
----------------------------------
separates from Service before the beginning of the Plan Year and who was a
Highly Compensated Employee for either:
The employee's year of separation from Service; or
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.
"Home Office Salary Grade" means the LS&CO. job classification system
------------------------
for home office employees as in effect from time to time.
EMPLOYEE INVESTMENT PLAN
12
<PAGE>
"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.
"Inactive Member" means an individual participating in the Plan under
---------------
Sections 3.3, 3.5 and 4.7.
"Insider" means a Member who is subject to Section 16(a) of the
-------
Securities Exchange Act of 1934, as amended.
"Investment Committee" means the committee appointed to manage and
--------------------
control the Plan's assets as described in Section 15.4.
"Investment Manager" means a person who is appointed to direct the
------------------
investment of all or any part of the Trust Fund under Section 15.2 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.
"IRS" means the United States Internal Revenue Service.
---
"Labor Department" means the United States Department of Labor.
----------------
"LSAI Stock" means shares of common or preferred stock of Levi Strauss
----------
Associates Inc. that have been authorized for issuance to or ownership by the
Trustee.
"LS&CO." means Levi Strauss & Co., a Delaware corporation.
------
"Matching Account" means the account maintained for a Member to hold
----------------
the Member's Matching Contributions.
"Matching Contribution" means the contribution made by the Company
---------------------
under Section 5.1.
"Member" means a person who is either an "Active Member" who
------
participates in all features of the Plan or an "Inactive Member" who only
participates in certain features of the Plan under Sections 3.3, 3.5 or 4.7.
"Member Contributions" means Post-Tax Contributions and/or Pre-Tax
--------------------
Contributions.
EMPLOYEE INVESTMENT PLAN
13
<PAGE>
"Membership Date" means the first day of each payroll period.
---------------
"Misconduct" means that a person:
----------
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;
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;
Has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or an Affiliated Company;
Has engaged in any conduct that constitutes unfair competition
with the Company or an Affiliated Company;
Has induced any person to breach any contract with the Company or
an Affiliated Company; or
Has sold Company or an Affiliated Company products to an
unauthorized account or has assisted an authorized account in wholesaling
Company or an Affiliated Company products.
"Mutual Fund" means a regulated investment company, as defined in
-----------
section 851 of the Code.
"Nonelective Account" means the account maintained for a Member to
-------------------
hold the Member's Nonelective Contributions.
"Nonelective Contribution" means the contribution made by the Company
------------------------
under Section 5.2.
"Normal Retirement Age" means age 65.
---------------------
"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
EMPLOYEE INVESTMENT PLAN
14
<PAGE>
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 as its exclusive agents to exercise on its behalf all of the
power and authority conferred under this Plan, 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 17.2.
"Plan" means this Employee Investment Plan of Levi Strauss Associates
----
Inc., as amended from time to time.
"Plan Benefit" means the benefit distributable to a Member or
------------
Beneficiary under Section 11.
"Plan Year" means the annual period corresponding to LS&CO.'s fiscal
---------
year for federal income tax purposes.
"Post-Tax Account" means the account maintained for a Member to hold
----------------
the Member's Post-Tax Contributions.
"Post-Tax Contributions" means the post-tax contributions made by a
----------------------
Member under Section 4.1.
"Pre-Tax Account" means the account maintained for a Member to hold
---------------
the Member's Pre-Tax Contributions.
"Pre-Tax Contributions" means the contributions made to the Plan on
---------------------
behalf of a Member under Section 4.
"Profit Sharing 401(k) Account" means the account maintained for the
-----------------------------
Member consisting of Profit Sharing Contributions which the Member could have
elected to receive in cash under Section 6.2.
"Profit Sharing Regular Account" means the account maintained for a
------------------------------
Member consisting of Profit Sharing Contributions which the Member could not
have elected to receive in cash under Section 6.2.
EMPLOYEE INVESTMENT PLAN
15
<PAGE>
"Profit Sharing Contribution" means the contribution made by the
---------------------------
Company under Section 6.
"PSP" means the Profit Sharing Plan of Levi Strauss & Co. as in effect
---
before October 1, 1988.
"Qualified Domestic Relations Order" means a Domestic Relations Order
----------------------------------
that satisfies the requirements described in Section 19.3.
"Qualified Member" means a Member who has reached age 63, or who has
----------------
reached age 53 and completed at least 13 Years of Service.
"Quarter" means each quarter of the calendar year.
-------
"Registration Rights Agreement" means the registration rights
-----------------------------
agreement entered into by Levi Strauss Associates Inc. and the Trustee, as
amended from time to time, under which the Trustee may require Levi Strauss
Associates Inc. under certain circumstances to register LSAI Stock under the
Securities Act of 1933.
"Regulations" means the applicable regulations issued under the Code
-----------
or the Act by the IRS or the Labor Department or any other governmental
authority and any temporary rules promulgated by such authorities pending the
issuance of such regulations.
"Required Beginning Date" generally means April 1 of the calendar year
-----------------------
following the calendar 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.
"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
EMPLOYEE INVESTMENT PLAN
16
<PAGE>
of providing personal relations type services to other retired employees of the
Company or an Affiliated Company.
"Rollover Account" means the account maintained for a Member to hold
----------------
the Member's Rollover Contributions.
"Rollover Contributions" means the rollover contributions made by a
----------------------
Member under Section 4.7.
"Service" means employment (whether or not as an Employee) with the
-------
Company or an Affiliated Company. Service will begin on the date an Employee
first performs 1 Hour of Service for the Company or an Affiliated Company.
Service will end on the earlier of:
-------
The date the Employee retires;
The date the Employee dies;
The date the Employee terminates employment; or
The first anniversary of the date the Employee is absent from
Service for any other reason (e.g. an authorized leave of absence as described
in paragraphs (i) and (ii), etc. below).
Subject to any applicable rules of the Administrative Committee (which
rules will be uniformly applicable to all Employees similarly situated), Service
includes:
Periods of vacation;
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;
Periods of service in the Armed Forces of the United States,
if and to the extent required by the Military Selective Services 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
EMPLOYEE INVESTMENT PLAN
17
<PAGE>
Any period of 12 consecutive months or less, beginning on
the first day of a 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.
If an Employee is on a leave of absence for more than 12 months, the
Employee will be deemed to have quit and terminated Service as of the end of
such 12 month period if the Employee fails to abide by the terms and conditions
of such leave (which may include a requirement of reemployment), as established
from time to time by the Administrative Committee. If an Employee retires, dies
or terminates employment while on leave of absence, vacation, holiday or jury
duty or while disabled or sick, his or her Service will terminate on the earlier
-------
of:
(i) The date of such retirement, death or termination; or
(ii) 12 months after the start of a leave, vacation or holiday
or onset of disability or sickness.
All Service will be aggregated, whether or not such Service is performed
consecutively, and every partial month will be deemed to be one full month of
Service.
An Employee's Period of Service will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
"Surviving Spouse" means, with respect to any deceased member, the
----------------
individual (if any) who is considered to be the spouse of such Member under
local law at the time of such Member's death.
"Total Compensation" means all wages, salaries, and fees for
------------------
professional services and other amounts received during the Plan Year for
personal services actually rendered in the course of employment with the Company
or an Affiliated Company (including, but not limited to, commissions paid sales
representatives, account executives and account managers, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, reimbursements and other expenses
under a nonaccountable plan as described in section 1.62 of the Code) determined
without regard to any exclusions from income under section 931 and section 933
of the Code. "Total Compensation" will also include:
-------
EMPLOYEE INVESTMENT PLAN
18
<PAGE>
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 any exclusions from
gross income similar to those under section 931 and section 933 of the Code;
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 Member under section 911 of the Code;
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 Member;
Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Member, but only to the extent that
such amounts are not deductible by the Member under section 217 of the Code;
The value of a nonqualified stock option granted to the Member 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 Member for the taxable year
when granted; and
The amount includable in the gross income of the Member upon
making an election described in section 83(b) of the Code.
"Total Compensation" will not include:
-----------
(a) Company contributions to a plan of deferred compensation that, to
the extent that before the application of the limitations under section 415 of
the Code to that plan, the contributions are not includable in the Member's
gross income for federal income tax purposes in the taxable year of the Member
in which the contributions are made;
(b) Company contributions under 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 plan of deferred compensation regardless
of whether such amounts are includable in gross income of the Member for federal
income tax purposes in the taxable year of distribution;
(d) Amounts realized from the exercise of a nonqualified stock
option;
EMPLOYEE INVESTMENT PLAN
19
<PAGE>
(e) Amounts realized when restricted stock (or property) held by the
Member either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(f) Amounts realized from the sale, exchange or other distribution of
stock acquired under an incentive stock option; and
(g) Other amounts that receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the premiums are not
includable in the gross income of the Member) or contributions made by an
employer (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 excluded from the gross income of the Member.
For Plan Years beginning on and after the Effective Date, Total
Compensation 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. In determining the Total
Compensation of a Member, the family aggregation rules under section 414(q) of
the Code will apply, except that in applying those rules, the term "family" will
only include the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
"Totally and Permanently Disabled" 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.
"Trust Agreement" means the trust agreement or agreements between Levi
---------------
Strauss Associates Inc. and a Trustee under which the assets of the Plan are
managed.
"Trust Fund" means the trust fund or funds consisting of the assets of
----------
the Plan and maintained by the Trustee under the Plan and Trust Agreement.
"Trustee" means the trustee or trustees of the Trust Fund.
-------
"Valuation Date" means any business day.
--------------
"Vested Interest" means the nonforfeitable interest of a Member in a
---------------
particular Account, determined in accordance with Section 11.1.
EMPLOYEE INVESTMENT PLAN
20
<PAGE>
"Year of Service" means a 12 month period of Service in which the
---------------
Member has Service under Section 2.66. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
EMPLOYEE INVESTMENT PLAN
21
<PAGE>
MEMBERSHIP AND TRANSFER.
- -----------------------
Commencement of Membership. Each Employee who was a Member in the
--------------------------
Plan on the Effective Date will continue to be a Member. Each Employee who was
not a Member in the Plan on the Effective Date, will become a Member in the Plan
on the first day of the pay period coinciding with or next following the day on
which he or she completes a Year of Service. Upon becoming a Member, an
Employee will designate a Beneficiary under Section 2.8 and Section 14.
Rehired and Transferred Employees. A former Employee who is rehired,
---------------------------------
will be eligible to begin or resume membership in the Plan on the first day of
the first pay period coinciding with or next following the date he or she
attains or returns to the status of an Employee and has completed a Year of
Service. Similarly, an employee of the Company or an Affiliated Company who
becomes an Employee after the Membership Date following his or her completion of
a Year of Service, will be eligible to begin or resume membership in the Plan on
the first day of the first pay period coinciding with or next following the date
he or she attains or returns to the status of an Employee.
Suspension of Membership. A Member's membership in the Plan will be
------------------------
suspended under the applicable paragraph (a) or (b) below.
Change in Employment Status. A Member's membership in the Plan
---------------------------
will be suspended for any period during which the Member is an employee of the
Company or an Affiliated Company but not an Employee. A Member whose
participation is suspended under this Section 3.3(a) may not make Member
Contributions or receive any allocation of Nonelective Contributions, Profit
Sharing Contributions or Forfeitures with respect to the period of suspension.
Withdrawals from Post-Tax Account. A Member's membership in the
---------------------------------
Plan will be suspended for at least 3 fiscal months following certain
withdrawals from his or her Post-Tax Account as provided in Section 9.1. A
Member whose Membership is suspended under this Section 3.3(b) may not make
Member Contributions, but may receive an allocation of Nonelective
Contributions, Profit Sharing Contributions or Forfeitures with respect to the
period of suspension.
A suspended Member's Accounts will continue to share in the income, gains,
losses and expenses of the Trust Fund.
EMPLOYEE INVESTMENT PLAN
22
<PAGE>
Termination of Membership. A Member's membership in the Plan will
-------------------------
end when his or her Plan Benefit has been distributed or on the date of his or
her death, whichever occurs first.
Highly Compensated Employees. Any Employee who is a Highly
----------------------------
Compensated Employee will only be eligible for membership in the Plan as an
Inactive Member, provided that he or she otherwise satisfies the eligibility
requirements of Section 3.1. An Inactive Member will not be eligible to make
Member Contributions under Section 4 of the Plan or to receive any allocation of
Matching Contributions, Nonelective Contributions, Profit Sharing Contributions
or Forfeitures under Section 5 and Section 6 of the Plan. An Inactive Member
will, however, be eligible to:
Make Rollover Contributions to the Plan under Section 4.7;
Direct the investment of his or her Accounts under Section 7;
Make withdrawals from his or her Accounts under Section 9;
and
Obtain Plan loans under Section 10.
An Inactive Member will continue to be subject to the remaining provisions of
the Plan. The Administrative Committee will periodically determine whether
Members in the Plan are Highly Compensated Employees and any such Member's
status will change from an Active Member to an Inactive Member as soon as
practicable after the Administration Committee makes such determination.
EMPLOYEE INVESTMENT PLAN
23
<PAGE>
MEMBER CONTRIBUTIONS.
- --------------------
Election to Make Contributions. A Member whose membership is not
------------------------------
suspended under Section 3.3 or Section 3.5 may elect, as of the first day of any
pay period in any month, to begin making Member Contributions to the Plan in 1%
increments, up to a maximum of 10% of his or her Compensation. The Member may
elect to make such Member Contributions either as Pre-Tax Contributions or as
Post-Tax Contributions. A Member's election to make Pre-Tax Contributions will
constitute an election (for federal tax purposes and, wherever permitted, for
state and local tax purposes) to have his or her taxable Compensation reduced by
the amount of all Pre-Tax Contributions.
Maximum Pre-Tax Contributions. The sum of a Member's Pre-Tax
-----------------------------
Contributions to the Plan for any calendar year and the portion of the Member's
Profit Sharing Contribution which the Member could have received in cash during
such calendar year (if the Member does not elect to receive such portion under
Section 6.2) will not exceed $7,000 (as adjusted under section 402(g)(5) of the
Code for cost of living increases). If any Member's Pre-Tax Contributions are
affected by this limitation, the Member will continue to make such contributions
as Post-Tax Contributions to the Plan unless the Member elects to suspend such
Contributions as provided in Section 4.3.
Change or Suspension of Contributions. A Member, at any time, may
-------------------------------------
change the rate of his or her Member Contributions within the percentage
limitation described in Section 4.1 or may change the nature of such Member
Contributions as Pre-Tax Contributions or Post-Tax Contributions by filing the
prescribed form with the Administrative Committee, or by utilizing such other
notification procedure as is prescribed by the Administrative Committee. A
Member may suspend all Member Contributions by filing the prescribed form with
the Administrative Committee, or by utilizing such other notification procedure
as is prescribed by the Administrative Committee. Such changes in rate or
nature of contributions or suspension will be effective as soon as reasonably
practicable after the date the form is filed with or notice is received by the
Administrative Committee.
Resumption of Contributions. A Member who has suspended all Member
---------------------------
Contributions under Section 4.3 may resume Member Contributions at any time by
filing the prescribed advance notice with the Administrative Committee. The
resumption in contributions will be effective as soon as reasonably practicable
after the applicable notice is received by the Administrative Committee.
Withholding and Deposit With Trustee; Crediting Accounts. All Member
--------------------------------------------------------
Contributions to the Plan will be withheld through payroll deductions from the
Member's
EMPLOYEE INVESTMENT PLAN
24
<PAGE>
Compensation and will be paid to the Trustee as soon as reasonably practicable
following the end of the pay period in which they are withheld. A Member's Pre-
Tax Contributions will be credited to his or her Pre-Tax Account and the
Member's Post-Tax Contributions will be credited to his or her Post-Tax Account.
Distribution of Excess Contributions and Deferrals.
--------------------------------------------------
Excess Contributions. If a Member who is a Highly Compensated
--------------------
Employee makes Pre-Tax Contributions which constitute "Excess Contributions" (as
defined in section 401(k)(8)(B) of the Code and the Regulations issued under
such Code section which are expressly incorporated by this reference) with
respect to a Plan Year, such Excess Contributions (and the earnings on such
contributions) will be distributed to the Member after the end of such Plan
Year. Such distribution will be made as soon as administratively practicable,
but in no event later than the end of the next Plan Year. Pre-Tax Contributions
and any earnings on such contributions directed by the Highly Compensated
Employees having the highest rate of Pre-Tax Contributions (as a percentage of
Compensation) will be refunded first under the provisions of the applicable
Regulations. Any refund of Pre-Tax Contributions and earnings on such
contributions will be limited to the amount that, in the judgment of the
Administrative Committee, will result in the Plan satisfying the requirements of
section 401(k)(3)(A) of the Code. Nonelective Contributions which are
considered elective contributions under section 1.401(k)-1(g)(7)(i) of the Code
shall be handled as Pre-Tax Contributions under this Section 4.6(a).
Excess Deferrals. If a Member makes Pre-Tax Contributions which
----------------
constitute "Excess Deferrals" (as defined in section 402(g)(2)(A) of the Code
and the Regulations issued under such Code section which are expressly
incorporated by this reference) to one or more plans with respect to a calendar
year, the Member may allocate the Excess Deferrals among the plans to which such
deferrals were made and notify the Administrative Committee in writing by
March 1 of the next calendar year of the Excess Deferrals allocated to the Plan.
Upon the Administrative Committee's receipt of such notice, the amount of the
Excess Deferrals designated by the Member (and any earnings on such amount) will
be distributed to the Member by April 15 of such year.
Excess Aggregate Contributions. If a Member who is a Highly
------------------------------
Compensated Employee makes Post-Tax Contributions which constitute "Excess
Aggregate Contributions" (as defined in section 401(m)(6)(B) of the Code and the
Regulations issued under such Code section which are expressly incorporated by
this reference) with respect to a Plan
EMPLOYEE INVESTMENT PLAN
25
<PAGE>
Year, such Excess Aggregate Contributions (and any earnings on such
contributions) will be distributed to the Member by the end of the next Plan
Year. Post-Tax Contributions and any earnings on such contributions directed by
the Highly Compensated Employees having the highest rate of Post-Tax
Contributions (as a percentage of Compensation) will be refunded first under the
provisions of applicable Regulations. Any refund of Post-Tax Contributions and
earnings will be limited to the amount that, in the judgment of the
Administrative Committee, will result in the Plan satisfying the requirements of
section 401(m)(3) of the Code.
Rollover Contributions. An Employee may make a Rollover
----------------------
Contribution to the Plan in an amount equal to all or part of a previous
distribution from a plan that, at the time of the distribution, met the
requirements of section 401(a) of the Code. The Rollover Contribution must be
made in cash within 60 days after its receipt by the Employee either from the
qualified plan or from an individual retirement account which meets the
requirements of section 408 of the Code and has only been used to hold qualified
plan distributions. A Rollover Contribution will be permitted only if the
Employee establishes that:
The Rollover Contribution includes no assets other than those
attributable to employer contributions, earnings on employer contributions and
earnings on employee contributions under plans qualified under section 401(a) of
the Code; and
If the amount was received by the Employee from a qualified
plan, the Rollover Contribution qualifies as an "eligible rollover distribution"
under section 402(c)(4) of the Code; or
If the amount was received by the Employee from an individual
retirement account, which contains funds described in Section 4.7(a) only, the
distribution from such account represented a total distribution of such account.
The Rollover Contribution will be paid to the Trustee as soon as practicable,
credited to the Employee's Rollover Account and invested as described in
Section 7. If it is determined that a Member's Rollover Contribution mistakenly
failed to qualify under the Code as a tax-free rollover, then the balance in the
Member's Rollover Account attributable to the mistaken contribution immediately
will be segregated from all other Plan assets, treated as a nonqualified trust
established by and for the benefit of the Member, and distributed to the Member.
Such a mistaken contribution will be deemed never to have been a part of the
Plan.
EMPLOYEE INVESTMENT PLAN
26
<PAGE>
MATCHING AND NONELECTIVE CONTRIBUTIONS.
- ---------------------------------------
Matching Contribution. Except as provided below, for each period (an
---------------------
"Accumulation Period") during a Plan Year with respect to which a transfer of
Member Contributions to the Stock Fund is permitted in accordance with
Section 7.2(b), the Company will make a Matching Contribution to the Plan in an
amount equal to 50% of each Member's Member Contributions for the Accumulation
Period. The Matching Contribution will be reduced by any amount which cannot be
allocated to the Member because of the contribution limitation described in
Section 12.1, or with respect to territory managers, account executives and
account managers only, the limit on Compensation under Section 2.14. The Board
of Directors may determine in its sole discretion that:
No Matching Contribution will be made for a particular Plan Year
or portion of a Plan Year;
A lesser Matching Contribution will be made, in view of Company
performance, and economic and financial conditions prevailing and anticipated at
the time; or
A greater Matching Contribution will be made for a particular
Plan Year or portion of a Plan Year.
No Matching Contribution will be made for a Member unless he or she:
(a) Is an Employee on the last day of the final preceding payroll
period with respect to which a Member may make a Contribution which would be
matched by a portion of such Matching Contribution; or
(b) Ceased to be an Employee during the Plan Year:
After attaining age 55 and completing 15 years of Service;
After attaining Normal Retirement Age;
By reason of death; or
By reason of Total and Permanent Disability,
and his or her Accounts have not been distributed under Section 11.
EMPLOYEE INVESTMENT PLAN
27
<PAGE>
The Matching Contribution may be made in the form of cash or in the form of
shares of LSAI Stock, or a combination of both.
Nonelective Contribution. In order to enable the Plan to satisfy
------------------------
the provisions of section 401(k) or section 401(m) of the Code, the Company may
elect to make a Nonelective Contribution to the Plan for each Plan Year in an
amount, if any, as the Board of Directors in its sole discretion may determine.
Except to the extent necessary to satisfy the requirements of section 401(k) or
section 401(m) of the Code, no Nonelective Contribution will be made for a
Member unless he or she:
Is an Employee on the date as of which a Nonelective
Contribution is allocated; or
Ceased to be an Employee during the Plan Year:
After attaining age 55 and completing 15 years of
Service;
After attaining age 65;
By reason of death; or
By reason of Total and Permanent Disability,
and his or her Accounts have not been distributed under Section 11.
The Nonelective Contribution may be made in the form of cash or in the form
of shares of LSAI Stock, or a combination of both.
Deposit with Trustee; Crediting Accounts. The Matching
----------------------------------------
Contribution for any Accumulation Period will be paid to the Trustee at the time
when Member Contributions designated for investment in the Stock Fund may be
transferred to the Stock Fund under Section 7.2 and will be allocated among
Members in proportion to their Member Contributions during the Accumulation
Period to any Fund. A Member's share of the Matching Contribution will be
allocated and credited to the Member's Matching Account as of the earlier of:
-------
The date the Matching Contribution is made to the Plan; or
The end of the Plan Year during which the Member
Contributions with respect to which such Matching Contribution is made.
EMPLOYEE INVESTMENT PLAN
28
<PAGE>
Forfeitures arising under Section 11.1 with respect to any Member's Matching
Account during a Plan Year will be allocated among other Members as an
additional Matching Contribution for such Plan Year and credited to such
Members' Matching Accounts.
The Nonelective Contribution will be paid to the Trustee after such
contribution is authorized by the Board of Directors, but no later than 12
months after the end of the Plan Year in which such contribution is made. The
amount allocated to each Member's Nonelective Account will be determined by the
Board of Directors, or if the Board declines to make such determination, the
Administrative Committee. A Member's Nonelective Contribution will be allocated
and credited to the Member's Nonelective Account as of the end of the Plan Year
with respect to which the Nonelective Contribution is made. Nothing in this
Section 5.3 will be construed as requiring an allocation of a Nonelective
Contribution to be made on behalf of any Highly Compensated Employee within the
meaning of section 401(k) or section 401(m) of the Code.
Curtailment or Distribution from Plan of Excess Aggregate
---------------------------------------------------------
Contributions. If any Matching Contribution and/or Nonelective Contribution
- -------------
otherwise allocable to a Member who is a Highly Compensated Employee would
constitute an "Excess Aggregate Contribution" (as defined in
section 401(m)(6)(B) of the Code and the Regulations issued under such Code
section which are expressly incorporated by this reference) with respect to the
Plan Year, then:
The Matching Contribution and/or Nonelective Contribution will
not be made to the Plan, if the Matching Contribution and/or Nonelective
Contribution has not been made to the Plan as of the date on which the Matching
and/or Nonelective Contributions are determined to constitute an Excess
Aggregate Contribution; or
The Matching Contribution and/or Nonelective Contribution (and
any earnings on such contributions) will be distributed to the Member by the end
of the next Plan Year, if the Matching Contribution and/or Nonelective
Contribution has been made to the Plan before the date on which the Matching
and/or Nonelective Contributions are determined to constitute an Excess
Aggregate Contribution.
The Matching Contribution and/or Nonelective Contribution made on behalf of
Highly Compensated Employees having the highest rate of Matching Contribution
and/or Nonelective Contribution will be reduced and/or distributed first, under
the terms of the applicable Regulations. Any reduction and/or distribution of a
Matching Contribution and/or Nonelective Contribution made will be limited to
the amount which, in the judgment of the Administrative Committee, is expected
to meet the requirements of section 401(m)(6)(B) of the Code.
EMPLOYEE INVESTMENT PLAN
29
<PAGE>
PROFIT SHARING CONTRIBUTION.
- ---------------------------
Amount and Form. The Company may make a Profit Sharing Contribution
---------------
to the Plan for each Plan Year in such amount as may be determined by the Board
of Directors. The Profit Sharing Contribution will be reduced by:
-------
An amount equal to the Forfeitures attributable to Members'
Profit Sharing Accounts that were allocated to Members for the preceding Plan
Year; and
The amount which Members elect to receive directly in cash under
Section 6.2.
No Profit Sharing Contribution will be made for any Plan Year if such
contribution would result in the Plan failing to satisfy the requirements of
section 410(b) of the Code. The Profit Sharing Contribution may be made in the
form of cash, in the form of other property acceptable to the Trustee, or a
combination of both.
Cash Election by Members. Each Member who is an Employee may elect to
------------------------
receive as a direct cash payment from the Company an amount the Administrative
Committee estimates would equal 1/3 of the Profit Sharing Contribution and
Forfeitures, if any, otherwise allocable to the Member's Profit Sharing Account
for such Plan Year under Section 6.3. A Member must make an election to receive
a cash payment by filing the prescribed form with the Administrative Committee
by a date determined by the Administrative Committee which is no later than the
last day of a Plan Year. No cash payment will be made to a Member who does not
make a timely election to receive such payment. A Member will be deemed to have
elected to have received a cash payment if the Member ceases to be an employee
after the last working day of the Plan Year but before the date such cash
payment is made or, alternatively, is receiving no Compensation from the Company
or an Affiliated Company for services as an employee on such date.
Deposit With Trustee; Crediting Accounts. The Profit Sharing
----------------------------------------
Contribution for any Plan Year will be paid to the Trustee on or before the due
date (including extensions) for filing the Company's consolidated federal income
tax return for such Plan Year. The Profit Sharing Contribution for a Plan Year
will be allocated among Members who are Employees on the last working day of
such Plan Year in proportion to each such Member's Compensation for such Plan
Year including, in the case of a Member who was a Member for only part of the
Plan Year, amounts that would have been Compensation if the Member had been a
Member for the full Plan Year. Subject to Section 6.2, a Member's share of the
Profit Sharing Contribution will
EMPLOYEE INVESTMENT PLAN
30
<PAGE>
be credited to the Member's Profit Sharing 401(k) Account and/or Profit Sharing
Regular Account, as appropriate.
Except as provided in the next following sentence, forfeitures arising
under Section 11.1 with respect to any Member's Profit Sharing Account during a
Plan Year will be allocated among other Active Members who are Employees on the
last working day of such Plan Year as a Profit Sharing Contribution for such
Plan Year and, will be credited to such Active Members' Profit Sharing 401(k)
Account or Profit Sharing Regular Account, as appropriate. However, in the Plan
Year ending in 1994, forfeitures under Section 11.1 as of June 30, 1994, will be
allocated among Active Members who are employees on June 30, 1994 (and credited
as provided in the immediately preceding sentence), and forfeitures under
Section 11.1 with respect to a Member's Profit Sharing Account as of the end of
the Plan Year ending in 1994 will be allocated among Active Members who are
employees on the last working day of the Plan Year (and credited as provided in
the immediately preceding sentence).
Distribution of Excess Contributions and Deferrals.
--------------------------------------------------
Excess Contributions. To the extent that a Member who is a Highly
--------------------
Compensated Employee does not elect to receive a portion of the Profit Sharing
Contribution for a Plan Year in cash under Section 6.2 and such portion would
constitute an "Excess Contribution" (as defined in section 401(k)(8)(B) of the
Code and the Regulations under such Code section which are expressly
incorporated by this reference) with respect to such Plan Year, the amount of
the Member's Profit Sharing Contribution as may constitute an Excess
Contribution will be paid directly to the Member after the end of such Plan Year
as if the Member had elected to receive such portion in cash under Section 6.2.
Such distribution will be made as soon as administratively practicable, but in
no event later than the end of the next Plan Year. The Profit Sharing
Contribution and any earnings on such contribution allocated to Highly
Compensated Employees having the highest rate of Profit Sharing Contribution (as
a percentage of Compensation) will be distributed first under the provisions of
the applicable Regulations. Any distribution of the Profit Sharing Contribution
and earnings will be limited to the amount that, in the judgement of the
Administrative Committee, will result in the Plan satisfying the requirements of
section 401(k)(8)(B) of the Code.
Excess Deferral. To the extent that a Member does not elect to
---------------
receive a portion of the Profit Sharing Contribution otherwise payable directly
to the Member during a calendar year under Section 6.2 and such portion would
constitute an "Excess Deferral" (as defined in section 402(g)(2)(A) of the Code)
with respect to such calendar year, such portion as
EMPLOYEE INVESTMENT PLAN
31
<PAGE>
may constitute an Excess Deferral will be paid directly to the Member as if the
Member had elected to receive such portion in cash under Section 6.2. Such
distribution will be made by April 15 of the next calendar year.
EMPLOYEE INVESTMENT PLAN
32
<PAGE>
TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS.
- -------------------------------------------------
Trust Fund.
----------
In General. All contributions to the Plan will be held by the
----------
Trustee for investment and reinvestment as part of the Trust Fund under the
Trust Agreement. The Trust Fund will consist of the Funds designated on Appendix
C to the Plan. One of such Funds will be designated as the Fund which will hold
Member Contributions designated for potential investment in the Stock Fund (the
"Holding Account").
Stock Fund. One of the Funds available for investment of the
----------
Trust Funds will be the Stock Fund. The Stock Fund will be invested and
reinvested in LSAI Stock to the extent LSAI Stock is available for purchase by
the Trustee in accordance with Section 7.2, and in cash or interest-bearing
short-term debt obligations of any kind (i) pending investment in LSAI Stock or
(ii) to the extent required to pay expenses of the Plan or meet anticipated cash
distributions to Members and Beneficiaries, as determined and directed by the
Administrative Committee. The Stock Fund will consist of all Stock Fund
investments held by the Trustee and all cash held by the Trustee which is
derived from dividends, interest or other income from Stock Fund investments,
contributions to be invested in the Stock Fund and proceeds from the sale or
redemption of Stock Fund investments.
Investment of Contributions. A Member's share of any Profit Sharing
---------------------------
Contribution and Forfeitures under Section 5.3 allocated to his or her Profit
Sharing 401(k) Account and Profit Sharing Regular Account and all Member
Contributions will be deposited in the Fund designated by the Member for such
investment in 1% increments (provided, however that these allocations will be in
20% increments until the end of the Blackout Period commencing on August 1,
1994) of such contribution as directed by the Member in accordance with
procedures established by the Administrative Committee. A Member's investment
directions will remain in effect until changed by the Member. If the Member
fails to file any investment directions, his or her share of any Profit Sharing
Contribution allocated to his or her Profit Sharing 401(k) Account and Profit
Sharing Regular Account and his or her Member Contributions will be deposited in
the Fund designated in Appendix C for investment of contributions for which no
investment direction has been received. All Matching Contributions and
Forfeitures under Section 6.3, if any, and Nonelective Contributions will be
deposited in the Stock Fund.
Generally, twice each Plan Year, the Investment Committee will obtain an
independent appraisal of the Fair Market Value of LSAI Stock. The Investment
Committee will notify the Trustee of such Fair Market Value promptly after
completion of the appraisal.
EMPLOYEE INVESTMENT PLAN
33
<PAGE>
If Fair Market Value of LSAI Stock Exceeds Adequate
---------------------------------------------------
Consideration. If the Trustee determines that the Fair Market Value of LSAI
- -------------
Stock exceeds "Adequate Consideration" for such LSAI Stock within the meaning of
section 3(18) of the Act, all Member Contributions that are held in the Holding
Account and any earnings on such contributions will be transferred to an
alternative Fund as designated by the Member, and no Matching Contribution will
be made with respect to such Member Contributions unless the Investment
Committee effects a "Suspension" as described below.
The Investment Committee will effect a Suspension, in its sole discretion,
by determining that the Member Contributions held in the Holding Account and
earnings on such contributions will remain in the Holding Account rather than be
transferred to another Fund. If the Investment Committee effects a Suspension,
the Administrative Committee, in such manner and under such procedures as it
deems appropriate, will promptly provide Members whose Member Contributions and
earnings are subject to the Suspension the opportunity to elect whether such
amounts will remain held in the Holding Account. If the Member fails to file an
election on the prescribed form by the date determined by the Administrative
Committee, such amounts will remain in the Holding Account subject to the
remaining provisions of the Plan. If a Member elects to have such amounts
transferred to another Fund, such amounts will be transferred to such other
Fund.
If Fair Market Value of LSAI Stock Does Not Exceed Adequate
-----------------------------------------------------------
Consideration. Conversely, if the Trustee determines that the Fair Market Value
- -------------
of LSAI Stock does not exceed Adequate Consideration for such stock, the
Administrative Committee will notify Members of such Fair Market Value. Each
Member who has Member Contributions held in the Holding Account will have the
opportunity to elect to have such Member Contributions and any earnings on such
contributions transferred to any Fund in 1% increments of such Member
Contributions and earnings. If a Member files such an election in the
prescribed manner by the date determined by the Administrative Committee, the
Member's Member Contributions that are invested in the Holding Account and any
earnings on such contributions will be transferred to the Fund or Funds elected
by the Member. If a Member fails to file such an election by the date
determined by the Administrative Committee, the Member's Member Contributions
that are held in the Holding Account and any earnings on such contributions
automatically will be transferred to the Stock Fund. At the time when Member
Contributions and earnings are transferred to the Stock Fund, the Company will
make a Matching Contribution under Section 5.1 unless the Board of Directors
determines that no Matching Contribution will be made.
EMPLOYEE INVESTMENT PLAN
34
<PAGE>
The Trustee will seek to acquire LSAI Stock for the Stock Fund at a price
no greater than Fair Market Value, to the extent that any cash Matching
Contributions and Forfeitures and Nonelective Contributions deposited in the
Stock Fund and Member Contributions transferred to Stock Fund exceed the cash
requirements of the Stock Fund as determined by the Administrative Committee.
The Trustee may acquire LSAI Stock from a "Party-in-Interest" (as defined in
section 3(14) of the Act) or a "Disqualified Person" (as defined in section
4975(e)(2) of the Code) for no more than Adequate Consideration in accordance
with the requirements of section 408(e) of the Act.
Reinvestment of Accounts. A Member may elect to change the investment
------------------------
of his or her Accounts under the applicable paragraph (a) or (b), subject to the
limitations of paragraphs (c) and (d).
General Rules Regarding Reinvestment of Accounts. On any
------------------------------------------------
business day, a Member may elect to transfer amounts invested in any Fund other
than the Stock Fund among such Funds in 1% increments of the balance credited to
the Member's Accounts invested in such Funds as of such day. A Member's election
must be made in a manner prescribed by the Administrative Committee.
Rules Regarding Reinvestment of Accounts by Qualified Members.
-------------------------------------------------------------
As of any business day, a Qualified Member (i.e., any Member who has reached age
----
63, or attained age 53 and completed at least 13 Years of Service) may elect
to have amounts credited to his or her Accounts invested in the Stock Fund
transferred to any other Fund in 1% increments by filing the notice prescribed
by the Administrative Committee. A Qualified Member may make only 1 such
election in any Plan Year.
Certain Limitations on Reinvestments by Insiders. A Qualified
------------------------------------------------
Member who is an Insider may reinvest amounts credited to his or her Accounts
invested in the Stock Fund only by making an irrevocable election to reinvest
within the period beginning on the 3rd business day following the date for the
release of the financial data specified in paragraph (e)(1)(ii) of Rule 16b-3
under the Securities Exchange Act of 1934 and ending on the 12th business day
following such date.
Certain Limitations on Reinvestments Due to Liquidity of the
------------------------------------------------------------
Trust Fund. The Investment Committee may determine that it is not feasible
- ----------
for the Trustee to prudently liquidate and transfer the necessary amount from
one Fund to another in accordance with Members' reinvestment elections. If the
Investment Committee so determines, it will advise the Administrative Committee
which will direct that such steps be taken as it considers necessary or
desirable for the protection of Members' Accounts, including a pro rata
reduction in the
EMPLOYEE INVESTMENT PLAN
35
<PAGE>
amount transferred with respect to each Member, or the scheduling of transfers
over a period consistent with prudent liquidation.
Investment by Alternate Payees. The Administrative Committee will
------------------------------
determine, in its sole and absolute discretion, if an Alternate Payee is
entitled to a portion of a Member's Accounts under the terms of a Qualified
Domestic Relations Order. If the Administrative Committee so determines, it
will segregate the Alternate Payee's portion of the Member's Accounts into a
separate Matching Account, Nonelective Account, Post-Tax Account, Pre-Tax
Account, Profit Sharing Account and Rollover Account as appropriate. The
Alternate Payee will only be entitled to direct the investment of his or her
Accounts under the provisions of this Section 7 in the same manner, at the same
times, and subject to the same conditions as Members in the Plan.
Allocation of Voting Rights. Except as specifically authorized in
---------------------------
this Section 7.5, the Trustee will vote all shares of LSAI Stock held in the
Trust Fund at the direction of the Investment Committee.
If the stockholders of Levi Strauss Associates Inc. are entitled to vote
with respect to any of the following matters, then only in connection with such
matters, the Trustee will vote the shares of LSAI Stock held in the Trust Fund
in accordance with the Members' directions to the Trustee as provided in Section
7.6:
Any merger or consolidation of Levi Strauss Associates Inc. with
any other corporation, unless the stockholders of Levi Strauss Associates Inc.
immediately before the merger or consolidation would own (immediately after the
merger or consolidation) equity securities of the surviving corporation or
acquiring corporation or a parent entity possessing more than 5/6 of the voting
power of the surviving corporation or acquiring corporation or parent entity;
Any plan of complete liquidation of Levi Strauss Associates Inc.;
Any dissolution of Levi Strauss Associates Inc.; or
Any plan or agreement for the sale or disposition by Levi Strauss
Associates Inc. of all or substantially all of its assets, unless the
stockholders of Levi Strauss Associates Inc. immediately before the sale or
disposition would own (immediately after the sale or disposition) equity
securities of the acquiring entity or a parent entity possessing more than 5/6
of the voting power of the acquiring entity or parent entity.
EMPLOYEE INVESTMENT PLAN
36
<PAGE>
Exercise of Voting Rights. When Members are entitled to direct the
-------------------------
voting of LSAI Stock under Section 7.5, each Member will be entitled to direct
the Trustee with respect to the voting of all whole and fractional shares of
LSAI Stock which are allocated to his or her Accounts (or represented by units
allocated to such Accounts) as of the last Valuation Date coinciding with or
preceding the applicable record date. The Administrative Committee will
conclusively determine the number of the shares of LSAI Stock that are subject
to each Member's voting instructions and will advise the Trustee accordingly.
Before any annual or special meeting at which LSAI Stock will be voted on
the matters described in Section 7.5, the Board of Directors will cause to be
delivered to each Member the proxy statement and any related materials prepared
for holders of LSAI Stock, a request for written voting instructions, and the
voting instructions form prescribed by the Board of Directors for this purpose.
Each Member who wishes to exercise his or her voting rights must complete and
return such form to the Trustee before the date prescribed by the Board of
Directors. Once received by the Trustee, a Member's voting instructions may be
revoked, subject to such conditions as the Trustee may impose.
Any shares of LSAI Stock with respect to which the Trustee receives timely,
written voting instructions from Members will be voted by the Trustee in
accordance with such instructions on the matters described in Section 7.5. The
Trustee also will determine the ratio of affirmative votes, negative votes and
abstentions with respect to each matter described in Section 7.5 for which it
has received timely voting instructions from Members. The Trustee will then
vote on such matters all shares of LSAI Stock allocated to Members' Accounts
with respect to which it has not received timely voting instructions in
accordance with the ratios so determined. If the Trustee determines that voting
such shares in accordance with such ratios would violate its fiduciary
responsibilities under the Act, it will vote such shares of stock in accordance
with such fiduciary requirements. The Trustee will aggregate any fractional
shares and, after rounding down to the next lower integer if the total is not a
whole number, will vote an equivalent number of whole shares of LSAI Stock.
For purposes of this Section 7.6, each Member will be a "Named Fiduciary"
as defined under section 402(a) of the Act with respect to the shares of LSAI
Stock allocated to his or her Accounts.
Other Instructions by Members.
-----------------------------
Sale to Levi Strauss Associates Inc. of LSAI Stock. Except as
--------------------------------------------------
provided in this Section 7.7 and in the Registration Rights Agreement, the
Trustee may sell LSAI Stock held in the Trust Fund only to Levi Strauss
Associates Inc.
EMPLOYEE INVESTMENT PLAN
37
<PAGE>
Acquisition Offers. If any person or group makes an offer to acquire
------------------
all or part of the outstanding LSAI Stock ("Acquisition Offer"), the Trustee
will tender the LSAI Stock held in the Trust Fund to such person or group only
to the extent that it has been directed to do so by Members. "Acquisition
Offers" will not include:
-----------
Any offer to purchase LSAI Stock by Levi Strauss Associates Inc.;
Any offer to purchase less than 5% of all of the outstanding
shares of common stock of Levi Strauss Associates Inc., including LSAI
Stock held in the Trust Fund; or
Any public offering of LSAI Stock under the Registration Rights
Agreement.
In the event of an Acquisition Offer, each Member will be entitled to
instruct the Trustee confidentially (on a form to be prescribed by the
Administrative Committee) with respect to the disposition of those shares of
LSAI Stock which then would be subject to the Member's voting instructions under
Section 7.6. If the Trustee receives such an instruction by a date determined
by the Trustee and communicated to Members, the Trustee will tender such LSAI
Stock in accordance with such instruction. Any LSAI Stock as to which the
Trustee does not receive instructions within such period will not be tendered by
the Trustee.
The Trustee will obtain and distribute to each Member all appropriate
materials pertaining to the Acquisition Offer, including any statement of the
position of Levi Strauss Associates Inc. with respect to such offer issued under
Regulation 14e-2 promulgated under the Securities Exchange Act of 1934, as soon
as practicable after such materials are issued. If Levi Strauss Associates Inc.
is not required to or fails to issue such statement within 5 business days after
the commencement of such offer, the Trustee will distribute such materials to
each Member without such statement by Levi Strauss Associates Inc. and will
separately distribute such statement, if any, as soon as practicable after it is
issued. Levi Strauss Associates Inc. may require verification of the Trustee's
compliance with the Members' confidential voting instructions by an independent
auditor selected by Levi Strauss Associates Inc.
For purposes of this Section 7.7(b), each Member will be a "Named
Fiduciary" as defined under section 402(a) of the Act with respect to the shares
of LSAI Stock allocated to his or her Accounts.
EMPLOYEE INVESTMENT PLAN
38
<PAGE>
Acquisitions by Levi Strauss Associates Inc. If Levi Strauss
--------------------------------------------
Associates Inc. makes an offer to purchase LSAI Stock the Investment Committee
will determine whether, and to what extent, the Plan will sell LSAI Stock to
Levi Strauss Associates Inc. in connection with such offer.
Participant Directed Accounts. It is intended that transactions by
-----------------------------
Members pursuant to this Section 7 satisfy the conditions set forth in
Department of Labor Regulation Section 2550.404c-1, except to the extent that
such transactions are not covered by such regulation.
EMPLOYEE INVESTMENT PLAN
39
<PAGE>
VALUATIONS AND STATEMENTS.
- -------------------------
Valuation of Accounts. As of each Valuation Date, the Administrative
---------------------
Committee will value each Member's Accounts at fair market value and will adjust
such Accounts to reflect the Member's share of any realized or unrealized
investment income, gains, losses and expenses of the Fund or Funds in which the
Accounts were invested which have accrued since the preceding Valuation Date.
For this and all other purposes under the Plan, LSAI Stock will be taken into
account at its Fair Market Value.
Statements. The Administrative Committee will prepare and distribute
----------
a statement to each Member at least annually. Such statement will reflect the
status of the Member's Accounts (including the fair market value thereof) and
will contain such other information as the Administrative Committee may
prescribe.
EMPLOYEE INVESTMENT PLAN
40
<PAGE>
WITHDRAWALS.
- -----------
Withdrawals from Post-Tax Accounts. A Member may withdraw all or part
----------------------------------
of the balance credited to his or her Post-Tax Account invested in any Fund or
combination of such Funds. In addition, unless the withdrawal is for:
The purchase of the Member's primary residence; or
The payment of expenses relating to the post-secondary education
of the Member or the Member's spouse or children, including expenses for tuition
fees, room, board or books, the Member will be suspended from making Member
Contributions for at least 3 fiscal months following any such withdrawal. The
Member may resume making Member Contributions following the suspension period as
of the first pay period following the suspension period by filing the prescribed
form with the Administrative Committee in advance.
Withdrawals from Rollover Accounts. A Member may withdraw all or part
----------------------------------
of the balance credited to his or her Rollover Account invested in any Fund or
combination of such Funds. The Member will not be suspended from making Member
Contributions for making any withdrawal under this Section 9.2.
Hardship Withdrawals. A Member may make withdrawals from his or her
--------------------
Accounts for reasons of hardship as specified in paragraphs (a), (b), and (c)
below.
Post-Tax Account, Rollover Account, Pre-Tax Account and Profit
--------------------------------------------------------------
Sharing 401(k) Account. A Member may withdraw all or part of the Member's
- -----------------------
Post-Tax Account, Rollover Account, Pre-Tax Account (excluding earnings credited
to such Account after November 27, 1988) and Profit Sharing 401(k) Account
(excluding earnings credited to such Account after November 27, 1988) invested
in any Fund or any combination of such Funds (excluding contributions made with
respect to any period during which the Member was a resident of the United
Kingdom), if the Member becomes Totally and Permanently Disabled or if the
amount of the withdrawal is needed to meet an "Immediate and Heavy Financial
Need" of the Member arising solely from one or more of the following:
Expenses for extraordinary and unreimbursed medical or
hospital expenses incurred by the Member, the Member's spouse, any
dependent of the Member or a nondependent parent or child of the Member;
EMPLOYEE INVESTMENT PLAN
41
<PAGE>
Amounts necessary for the Member, the Member's spouse, any
dependent of the Member, or a nondependent parent or child of the Member to
obtain medical or hospital care;
The payment of tuition and related educational expenses for the
next 12 months of post-secondary education for the Member, the Member's
spouse or child, or any dependent of the Member;
The payment of expenses incurred by the Member in purchasing his
or her primary residence;
The need to prevent the eviction of the Member from his or her
primary residence or foreclosure on the Member's primary residence;
The payment of funeral expenses for a family member or relative
of the Member;
The loss of income resulting from an abbreviated work schedule
required by the Member's health, the loss of employment by the Member's
working spouse, garnishment of the Member's wages or material reduction in
the compensation of the Member or the Member's working spouse from such
Member's or spouse's primary employer;
The loss of income, real property or personal property as a
result of any natural disaster as specified on Appendix D to the Plan by
any individual or entity empowered to amend the Plan; or
Effective July 1, 1995, the need to pay attorney's fees, fines,
penalties, judgments, assessments or other costs related to legal
proceedings on behalf of the Member or the Member's spouse or dependents.
Matching Account and Profit Sharing Regular Account. In addition,
---------------------------------------------------
a Member may withdraw:
All or part of the Member's Matching Account and the Vested
Interest in his or her Profit Sharing Regular Account (excluding
contributions made with respect to any period during which the Member was a
resident of the United Kingdom)
EMPLOYEE INVESTMENT PLAN
42
<PAGE>
invested in any Fund or any combination of such Funds, if the amount of the
withdrawal is needed to meet an Immediate and Heavy Financial Need of the
Member due to:
Funeral Expenses for a family member or relative of the
Member;
An abbreviated work schedule required by the Member's
health, a loss of income due to health, the loss of employment by the
Member's working spouse or garnishment of the Member's wages;
The payment of extraordinary and unreimbursed medical or
hospital expenses incurred by a nondependent parent or child of the
Member; or
(D) Effective July 1, 1995, the need to pay attorney's fees,
fines, penalties, judgments, assessments or other costs related to
legal proceedings on behalf of the Member or the Member's spouse or
dependents.
All or part of the Member's Vested Interest in his or her Profit
Sharing Regular Account (excluding any Profit Sharing Contributions made
with respect to any period during which the Member was a resident of the
United Kingdom) invested in any Fund or any combination of such Funds, if
the amount of the withdrawal is needed to meet Immediate and Heavy
Financial Needs of the Member arising from:
Foreclosure on the primary residence of the Member; or
The loss of income, real property or personal property as a
result of any other natural disaster as specified on Appendix D to the
Plan by any individual or entity empowered to amend the Plan.
General Limits on Hardship Withdrawals. A Member will not be
--------------------------------------
suspended from making Member Contributions for making any such withdrawal. An
amount will be considered necessary to satisfy the Member's Immediate and Heavy
Financial Need only if the Administrative Committee determines that the need
cannot be relieved by any of the following:
---
Reimbursement or compensation by insurance or otherwise;
Reasonable liquidation of the Member's assets, including
assets of the Member's spouse and minor children that are reasonably
available to
EMPLOYEE INVESTMENT PLAN
43
<PAGE>
the Member, to the extent such liquidation would not itself cause an
immediate and heavy financial need;
Cessation of Member Contributions; or
A loan from the Member's Accounts under Section 10.1 or a
loan from a commercial source on reasonable commercial terms.
Unless the Member requests otherwise, the amount of the Member's hardship
withdrawal will include the amount of any federal, state or local taxes or any
penalties reasonably anticipated to result from the withdrawal. Such sums will
be withheld at the time such hardship withdrawal is distributed to the Member.
Withdrawals From Stock Fund. The portion of a Member's Accounts
---------------------------
invested in the Stock Fund (except for amounts credited to the Member's
Nonelective Account) may be withdrawn under Section 9.1 or 9.3 upon receipt of
the prescribed notice by the Administrative Committee (except that no such
withdrawal will be permitted on and from the date the Company is advised of the
new value for LSAI Stock under Section 7 and until either the Trustee confirms
that such new value does not exceed Adequate Consideration pursuant to Section
7.2(a) or the Investment Committee instructs that the new value shall be
utilized), but only to the extent the Administrative Committee determines that
there is sufficient cash available in the Stock Fund to permit such withdrawal.
Payment of Withdrawals. A Member may request a withdrawal by
----------------------
providing the prescribed notice with the Administrative Committee. A withdrawal
will be paid to the Member in cash as soon as reasonably practicable after the
Administrative Committee receives the prescribed notice and determines that the
withdrawal request meets the requirements of Section 9.1 (regarding withdrawals
from Post-Tax Accounts), Section 9.2 (regarding withdrawals from Rollover
Accounts), Section 9.3 (regarding hardship withdrawals) or Section 9.4
(regarding withdrawals from the Stock Fund), as applicable.
Valuation Date. The value of a Member's Accounts will be determined
--------------
as of the Valuation Date which occurs on or most recently prior to the effective
date of the withdrawal.
Source of Withdrawals. A Member's Accounts, to the extent available
---------------------
with respect to such Hardship withdrawal, will be liquidated to the extent
necessary to fund a hardship withdrawal under Section 9.3 in the following order
of priority:
--------
Post Tax-Account;
EMPLOYEE INVESTMENT PLAN
44
<PAGE>
Rollover Account;
Pre-Tax Account;
Profit Sharing 401(k) Account;
Profit Sharing Regular Account; and
Matching Account.
Except as provided above, within any Account, amounts invested in each Fund will
be liquidated in order from the lowest risk Fund to the highest risk Fund. The
determination of the relative risk of each Fund shall be made by the Investment
Committee, in its sole discretion, from time to time.
If the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any Fund in
accordance with Members' withdrawal requests, the Investment Committee will so
advise the Administrative Committee which will direct that such steps be taken
as it considers necessary or desirable for the protection of Members' Accounts,
including the reordering of liquidation priorities or a pro rata reduction in
the amount of each Member's withdrawal.
Limitation on Withdrawals by Insiders. A Member who is an Insider may
-------------------------------------
withdraw as of any date amounts credited to his Accounts invested in the Stock
Fund only by making an irrevocable election to make such a withdrawal at least 6
months before the last day on which a Member other than an Insider must submit
an election to make a withdrawal as of such date.
Additional Limitations on Withdrawals. In no event may a Member
-------------------------------------
withdraw any amount under this Section 9 which at the time of the intended
withdrawal funds a loan under Section 10.
Withdrawals by Alternate Payees. An Alternate Payee who is entitled
-------------------------------
to a portion of a Member's Accounts under the terms of a Qualified Domestic
Relations Order may withdraw amounts from his or her Accounts under this Section
9 in the same manner, at the same times and subject to the same conditions as
Members in the Plan.
EMPLOYEE INVESTMENT PLAN
45
<PAGE>
LOANS.
-----
Amount of Loans.
---------------
Profit Sharing Regular Account. A Member may borrow up to 100%
------------------------------
of the Member's Vested Interest in his or her Profit Sharing Regular Account
to the extent that such amount may be used to secure the promissory note with
respect to such loan under Section 10.2(a). Such a loan will be permitted only
if the Administrative Committee determines that:
The proceeds of the loan will be used to acquire, construct
or rehabilitate the Member's primary residence, or to refinance any loan or
loans previously made to the Member by a third party for any of these
purposes;
The loan is required by the Member for the payment of
expenses relating to the post-secondary education of the Member or the
Member's spouse or children, including expenses for tuition, fees, room,
board or books; or
The loan is required by the Member due to the loss of
income, real property or personal property as a result of any natural
disaster as specified on Appendix D to the Plan by any individual or entity
empowered to amend the Plan.
Profit Sharing 401(k) Account. A Member may borrow up to 100%
-----------------------------
of the balance credited to his or her Profit Sharing 401(k) Account for expenses
relating to the post-secondary education of the Member or the Member's spouse or
children, including expenses for tuition, fees, room, board or books.
Post-Tax, Pre-Tax, Matching and Rollover Accounts.
-------------------------------------------------
Effective on and after a date determined by the
Administrative Committee and announced to Members, a Member may borrow up
to 100% of the balance credited to his or her Matching Account and/or Pre-
Tax Account. A loan from the Member's Pre-Tax Account will be permitted
only if the Administrative Committee determines that the Member is Totally
and Permanently Disabled or that the proceeds will be used to satisfy a
hardship described in Section 9.3(a)(i) through Section 9.3(a)(viii).
A Member may borrow up to 100% of the balance credited to
his or her Post-Tax Account and/or Rollover Account. Such loans will be
permitted for any reason, but will be subject to Section 10.1(d) (regarding
the maximum loan amount),
EMPLOYEE INVESTMENT PLAN
46
<PAGE>
Section 10.2 (regarding loan terms), Section 10.3 (regarding source of
loans) and Section 10.4 (regarding events of default), in addition to other
applicable provisions of the Plan. In no case will a Member be permitted to
borrow any portion of such Accounts invested in the Stock Fund or the
Holding Account.
Additional Limitations. No loan will be permitted from the
----------------------
portion of any Account invested in the Stock Fund. No loan will be granted to
the extent it would cause the aggregate balance of all loans a Member has
outstanding under the Plan to exceed the lesser of:
------
$50,000, less the amount by which such aggregate balance has
been reduced by repayments of principal during the one-year period ending
on the day before the new loan is made; or
50% of the Member's Vested Interest in all of the Member's
Accounts.
The amount of any loan must be a multiple of $100 and may not be less than
$1,000. Only 4 loans to a Member may be outstanding at any time (no more than 2
of which may be for the acquisition, construction or rehabilitation of the
Member's primary residence, or to refinance any loan or loans previously made by
a third party for these purposes).
Vested Interest and Value of Accounts. The Member's Vested
-------------------------------------
Interest in an Account and the value of the balance credited to such Account
will be determined as of the latest Valuation Date preceding the date the loan
application is submitted for which information is then available.
Terms of Loans. All loans will be on such terms and conditions as the
--------------
Administrative Committee may determine, and must satisfy the following
requirements:
Adequate Security. All loans will be made under a promissory
-----------------
note secured by:
The residence of the Member, in the case of a loan under
Section 10.1(a)(i) (regarding the acquisition, construction or
rehabilitation of the Member's primary residence);
The residence of the Member to the extent agreed upon by the
Member and the Administrative Committee, in the case of a loan for expenses
for the post-secondary education of the Member or the Member's spouse or
children which is
EMPLOYEE INVESTMENT PLAN
47
<PAGE>
made from the Member's Profit Sharing Regular Account under 10.1(a)(ii), or
the Member's Post-Tax Account or the Member's Rollover Account under
Section 10.1(c)(ii); and
The Account or Accounts that funded the loan to the extent that
such Account or Accounts fund the loan.
No loans will be secured by the Member's Account or Accounts in an amount
greater than 50% of the Vested Interest and value of the balance of the Account
of such Member at the time such loan was made.
Substantially Level Payment. All loans will be subject to a
---------------------------
substantially level payment schedule, as determined by the Administrative
Committee, with payments to be made at least quarterly and whenever possible to
be made through semi-monthly payroll deductions. If loan payments are not made
for a period of up to 365 days due to the Member's temporary absence from active
work, such missed payments may be made:
In a single sum after the Member returns to active work;
Ratably over the remaining period of the loan;
In a single sum together with the final payment provided for
under the note; or
In another manner mutually agreed upon by the Member and the
Administrative Committee.
However, loan repayments by a Member who has been absent temporarily must
recommence by the end of the one-year period following the date the Member's
temporary absence began or, if earlier, upon the first paycheck after the
Member's return to active work.
Reasonable Rate of Interest. All loans will bear interest at a fixed
---------------------------
rate determined by the Administrative Committee based upon the prime interest
rate in effect at a commercial bank as of the first day of the month immediately
preceding the date on which the loan application is received plus 1%, unless
such rate would not be "reasonable" as defined by section 408(b)(3) of the Act,
in which case a "reasonable" rate of interest will be used.
Repayment in Full. All loans will provide for repayment in full,
-----------------
whether from the Member's Accounts or otherwise, on or before the earlier of:
-------
EMPLOYEE INVESTMENT PLAN
48
<PAGE>
5 years after the date the loan is made (15 years after the date
the loan is made if the loan is used to acquire the Member's principal
residence); or
The date the Member's Plan Benefit is distributed under Section
11.
Source of Loans; Application of Loan Payments. As soon as
---------------------------------------------
administratively practical following the approval of a loan by the
Administrative Committee, the amount of the loan will be distributed to the
Member from the vested portion of the Member's Accounts that are being used to
fund the loan, in the following order of priority:
Post-Tax Account;
Rollover Account;
Pre-Tax Account;
Profit Sharing 401(k) Account;
Profit Sharing Regular Account; and
Matching Account.
If less than the entire amount of any Account is required to fund the loan,
amounts invested in the Funds will be liquidated to fund the loan in order from
the lowest risk Fund to the highest risk Fund. The determination of the
relative risk of each Fund shall be made by the Investment Committee, in its
sole discretion, from time to time.
If the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any Fund in
accordance with Members' loan requests, the Investment Committee will so advise
the Administrative Committee. The Administrative Committee will direct that
such steps be taken as it considers necessary or desirable for the protection of
Members' Accounts, including the reordering of liquidation priorities or a pro
rata reduction in the amount of each Member's loan. The promissory note
executed by the Member will be reflected in reporting the balance of the
Member's Account or Accounts that funded the loan. Principal and interest
payments will be credited to the Member's Account or Accounts in proportion to
the extent that such Account or Accounts funded the loan. Such principal and
EMPLOYEE INVESTMENT PLAN
49
<PAGE>
interest payments shall be invested in Funds in proportion to the extent that
the funds loaned to the Member were invested in such Funds at the time such loan
was made to the Member.
Default. If the Administrative Committee determines that a Member's
-------
loan obligation is in default, it will take such actions as it deems necessary
or appropriate to cause the Plan to realize on its security for the loan. Those
actions may include, without limitation, a demand for payment in full, and a
distribution of the Member's promissory note to the Member, which will be deemed
an involuntary withdrawal from the Member's Accounts in an amount equal to the
principal balance of the loan, whether or not the withdrawal would otherwise be
permitted on a voluntary basis. No distribution of a Member's promissory note
and involuntary withdrawal will occur with respect to a loan from the Member's
Pre-Tax Contributions Account or Nonelective Account before the earliest of the
events specified in Section 18.6. Any loss caused by the nonpayment or other
default on a Member's loan obligation will be borne solely by the Member's
Accounts. A Member who is temporarily absent from work will not be considered
to be in default for the period which is the lesser of (i) 365 days from the
date the Member begins the temporary leave of absence on (ii) the date the
Member is no longer considered to be temporarily absent from work.
EMPLOYEE INVESTMENT PLAN
50
<PAGE>
PLAN BENEFITS.
-------------
Vesting in Accounts. A Member's Vested Interest in his or her
-------------------
Accounts shall be 100% at all times.
Amount of Plan Benefit. If a Member ceases to be an Employee for any
----------------------
reason or becomes Totally and Permanently Disabled while an Employee, the Member
(or, in the event of a Member's death, the Member's Beneficiary) will be
entitled to receive a Plan Benefit equal to the Member's Vested Interest in his
or her Accounts.
Valuation of Plan Benefit. The value of the Vested Interest in a
-------------------------
Member's Accounts to be distributed as a Plan Benefit will be determined as of
the Valuation Date which occurs on or most recently prior to the later of the
date of termination of the Member's employment or the date on which the
distribution is requested.
Rehire Before Five One-Year Breaks in Service. If a Member who
---------------------------------------------
suffered a Forfeiture of his or her Profit Sharing Regular Account before the
Effective Date for reasons other than Misconduct, or suffered Forfeiture of
amounts accumulated under the ESP or PSP, is rehired as an Employee before the
date on which the Member incurs a 60 consecutive month Break in Service, an
amount equal to the amount which became a Forfeiture will be restored to the
Member's Profit Sharing Account or Matching Account, as appropriate. In the
case of a Member who ceased to be an Employee and suffered a Forfeiture due to
the Employee's pregnancy, the birth of the Employee's child, the placement of a
child with the Employee in connection with the adoption of the child by the
Employee or the care of the Employee's child immediately following the child's
birth or adoption, "84" will be substituted for "60" in the preceding sentence.
The first source for amounts restored under this Section 11.4 will be recent
Forfeitures of other Members which have not yet been reallocated under Section
5.3 or Section 6.1. To the extent such Forfeitures are insufficient, the
Participating Company that employed the Member will make a special contribution
in the amount required.
Form of Payment. Unless a Member (or Beneficiary) elects otherwise,
---------------
the Member's Plan Benefit will be paid in the form of a lump sum in cash. If
the value of the Member's Plan Benefit exceeds $3,500, the Member (or
Beneficiary) may elect to have all or a portion of such Plan Benefit paid in one
of the following forms by filing the prescribed form with the Administrative
Committee:
EMPLOYEE INVESTMENT PLAN
51
<PAGE>
Installments. The Member (or Beneficiary) may elect to have the
------------
Member's Plan Benefit paid in the form of monthly or annual installments, as
determined under Section 11.5(a)(i) or Section 11.5(a)(ii) below:
Monthly Installments. The Member's Plan Benefit will be paid in
--------------------
monthly installments over a period not exceeding the reasonable life
expectancy of the Member (or Beneficiary), as determined under the
mortality table specified in Section 25 of the Revised Home Office Pension
Plan of Levi Strauss Associates Inc. The amount of each monthly
installment will be determined by dividing the value of the portion of the
Member's Plan Benefit remaining in the Trust Fund by the number of
installments elected less the number of installments already paid.
Annual or Monthly Installments. The Member's Plan Benefit will
------------------------------
be paid in annual installments over the life expectancy of the Member (or
Beneficiary) or the joint life expectancy of the Member and the Member's
Beneficiary, where the amount of each annual installment is determined by
dividing the value of the Member's Plan Benefit remaining in the Trust Fund
by the applicable life expectancy. Alternatively, such payment may be made
in monthly installments not exceeding the life expectancy of the Member (or
Beneficiary) or the joint life expectancy of the Member and the Member's
Beneficiary at the request of the Member (or Beneficiary). The applicable
life expectancy for purposes of this Section 11.5(a)(ii) will be determined
annually in a manner consistent with section 401(a)(9)(D) of the Code.
Annuity Contract. The Member (or Beneficiary) may elect to have the
----------------
Member's Plan Benefit paid in the form of a single premium annuity contract
purchased from an insurer. The normal form of annuity contract for a single
Member will be a life annuity contract which will provide the Member with a
monthly income for his or her life. The normal form of annuity contract for a
married Member will be a joint and survivor annuity contract which will provide
the Member with a monthly income for his or her life, and upon his or her death,
a monthly income to his or her spouse, in an amount not less than 50% nor more
than 100% of the amount that was payable to the Member. If the Member dies
before the Annuity Starting Date, his or her spouse will be entitled to a
survivor's annuity contract which will provide the spouse with a monthly income
for his or her life equal to 50% of the amount that would have been paid to the
Member if his or her annuity payments had begun on the date of the Member's
death.
If the Member elects that only a portion of his Plan Benefit be paid in the
form of installments or an annuity, then the remainder of such benefit will be
paid in a lump sum.
EMPLOYEE INVESTMENT PLAN
52
<PAGE>
A married Member may elect another form of annuity or may designate another
joint annuitant with his or her spouse's consent. The spouse's consent must:
Be in writing;
Acknowledge the effect of the alternate form of annuity or
specifically identify the alternate joint annuitant;
Be witnessed by a notary public; and
Be given within 90 days before the Annuity Starting Date.
The spouse's consent to receive an alternate form of annuity or the designation
of a Beneficiary will not be binding on a subsequent spouse if the Member
remarries. The Member may revoke such an election at any time before the
Annuity Starting Date in which case the Member's benefit will be paid in the
form of a joint and survivor annuity to the Member and his or her spouse, unless
the Member elects an alternate form of benefit or Beneficiary designation with
his or her spouse's consent. If benefits are payable to a joint annuitant other
than the Member's spouse, the present value of the benefits payable to the joint
annuitant will not exceed 50% of the present value of the benefits payable to
the Member (determined as of the Annuity Starting Date).
The Administrative Committee will provide to each Member who elects to
receive an annuity a written explanation in nontechnical language containing the
following information:
(i) A description of the terms and conditions of the joint and
survivor annuity and the single life annuity;
(ii) A statement that the Member may elect during the Election
Period described below to waive the joint and survivor annuity or life
annuity by electing any optional form of benefit provided under the Plan;
(iii) A statement that the Member may revoke the waiver of the
joint and survivor annuity or life annuity during the Election Period and
the effect of such revocation;
(iv) Notice of the requirement that the Member's spouse must
consent to the waiver of the joint and survivor annuity and election of any
optional form of benefit;
EMPLOYEE INVESTMENT PLAN
53
<PAGE>
(v) A general explanation of the financial effect of election
of each of the optional forms of benefit provided under the Plan; and
(vi) A statement that the Member may request an explanation of
the specific financial effect, in terms of monthly payments, on the
Member's Plan Benefit of making an election.
The Election Period will begin 90 days before the Annuity Starting Date and
end on the Annuity Starting Date, unless the Member requests additional
information from the Administrative Committee, in which case it will end no
later than 90 days after the Member receives such additional information.
During the Election Period any election not to take the joint and survivor
annuity or life annuity will be revocable. Upon the expiration of the Election
Period, any election made will be irrevocable and the Member will not be
required nor eligible to make an election if no election had been made.
Direct Transfer. Effective January 1, 1993, a Member (or
---------------
eligible Beneficiary) may elect to have the Member's Plan Benefit paid by a
direct transfer 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. The Member (or
Beneficiary) may elect to have his or her Plan Benefit paid in the form of a
direct transfer at any time after the Administrative Committee provides the
Member with notice of the direct transfer option as required by section 402(f)
of the Code (the "Section 402(f) Notice").
Time of Payment. A Member's Plan Benefit will be paid in full or will
---------------
begin to be paid on the Member's Required Beginning Date. However, subject to
the rules stated in paragraphs (a), (b), and (c) below, a Member may elect to
receive his or her Plan Benefit earlier, on or as soon as reasonably practicable
after the Member ceases to be an Employee.
The following rules will govern benefit payments from the Plan.
Mandatory Cashout of Benefits Less than $3,500. Except as
----------------------------------------------
provided in Section 11.6(b), a Member's Plan Benefit will be paid in a lump sum
cash payment as soon as reasonably practicable after the Member ceases to be an
Employee if the value of his or her Plan Benefit does not exceed $3,500.
Alternatively, effective January 1, 1993, a Member may elect to have his or her
Plan Benefit paid by a direct transfer to a plan qualified under section 401(a)
EMPLOYEE INVESTMENT PLAN
54
<PAGE>
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.
The Member may elect to have his or her Plan Benefit paid in the form of a
direct transfer at any time after the Administrative Committee provides the
Member with notice of the direct transfer option as required by section 402(f)
of the Code (the "Section 402(f) Notice").
Insufficient Cash in the Stock Fund. If the Administrative Committee
-----------------------------------
determines that the cash available in the Stock Fund is insufficient for the
payment of a Member's Plan Benefit, the payment will be delayed until the
Administrative Committee determines that sufficient cash is available. Except
as provided in Section 11.6(c) (regarding Code section 401(a)(9) compliance) and
in Section 11.8 (regarding limitations on the time of distribution), no benefit
payment delayed under the Plan will be made later than:
-----
1 year after the last day of the Plan Year in which the Member
ceases to be an Employee by reason of reaching Normal Retirement Age, Total
and Permanent Disability or death;
5 years after the last day of the Plan Year in which the Member
ceases to be an Employee for any other reason; or
The Member's Required Beginning Date.
If a payment with respect to an Account invested in the Stock Fund has been
delayed to the Member's Required Beginning Date and the Administrative Committee
determines that the cash in the Stock Fund is insufficient to make such payment,
LSAI Stock will be paid to the Member or Beneficiary unless the Company redeems
sufficient shares of LSAI Stock at Fair Market Value to make such payment in
cash.
Section 401(a)(9) Compliance. All benefit payments under the Plan
----------------------------
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 paid to the Member each calendar year, beginning with
the calendar year in which the Member's Required Beginning Date occurs, 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.
EMPLOYEE INVESTMENT PLAN
55
<PAGE>
Furthermore, any payment option required by section 401(a)(9) of the Code will
override and supersede any inconsistent payment provision provided for in the
Plan.
Death Benefit. If a Member dies before the payment of his or her Plan
-------------
Benefit has begun, then the Member's Beneficiary will be entitled to receive the
Member's Plan Benefit as soon as reasonably practicable after the Beneficiary
files a claim with the Administrative Committee on the prescribed form. If the
Beneficiary fails to file the prescribed claim form, the Member's Plan Benefit
will be paid in full to the Beneficiary no later than the last day of the
calendar year which is 5 years after the Member's death. If the Member dies
after installment payments have begun under Section 11.5(a), the remainder of
the Member's Plan Benefit will be paid to the Member's Beneficiary in a single
lump sum as soon as reasonably practicable after the Member's death.
Limitation on Time of Payment. Unless a Member elects otherwise,
-----------------------------
payment of his or her Plan Benefit will occur or begin not later than 60 days
after the latest of the following:
------
The last day of the Plan Year in which the Member reaches Normal
Retirement Age;
The last day of the Plan Year in which the Member ceases to be an
Employee;
The earliest date on which the Administrative Committee can reasonably
ascertain the amount of the Member's Plan Benefit; or
The earliest date on which the Administrative Committee can
reasonably locate the Member (or his or her Beneficiary).
In no event, however, will the payment of a Member's Plan Benefit begin later
than the Member's Required Beginning Date.
Undeliverable Checks. In the event that a Benefit cannot be
--------------------
delivered, the Account of the Member (or Beneficiary, as applicable) shall be
recredited with the amount of the Benefit which cannot be delivered, but such
Account shall be allocated to the money market fund referenced in Appendix C, or
in such fund referenced in Appendix C as the Administrative Committee, in its
sole discretion, determines is most similar to a money market fund with respect
to its risk characteristics.
EMPLOYEE INVESTMENT PLAN
56
<PAGE>
ALLOCATION LIMITATIONS.
----------------------
Limitation on Annual Additions. The Annual Additions allocated to a
------------------------------
Member for any Plan Year will not exceed the lesser of the following:
------
$30,000 (or, if greater, 1/4 of the dollar limitation for defined
benefit plans in effect under section 415(b)(1)(A) of the Code) as adjusted to
take into account changes in the cost of living;
25% of the Member's Total Compensation for such Plan Year.
If a Member's Annual Additions would exceed the above limitation, then such
Annual Additions will be reduced by reducing the components of such additions,
as necessary, in the order in which they are listed in Section 2.6.
The Plan Year will be the "limitation year" (as defined under section 415
of the Code) unless the Board of Directors designates another 12 consecutive
month period as the limitation year under a written resolution adopted by the
Board of Directors.
Combined Limitation on Benefits and Contributions. If a Member also
-------------------------------------------------
participates in one or more qualified defined benefit plans (as defined in
section 414(j) of the Code) maintained by the Company or any Affiliated Company,
the Member's benefits under any of the qualified defined benefit plans will be
reduced to the extent necessary to ensure that the sum of the "Defined Benefit
Fraction" (as defined in section 415(e)(2) of the Code) for the Plan Year plus
the "Defined Contribution Fraction" (as defined in section 415(e)(3) of the
Code) for the Plan Year does not exceed 1.0.
Disposition of Excess Annual Additions. Any Annual Additions under
--------------------------------------
this Plan that cannot be allocated to a Member because of the limitation in
Section 12.1 will be processed as follows:
Any Profit Sharing Contribution and Forfeitures attributable to
Profit Sharing Accounts that cannot be allocated to the Member will be deducted
from the amount of the Profit Sharing Contribution which otherwise would be made
under Section 6, but such reduction will not affect the amounts allocable under
Section 6.3 to Members whose Profit Sharing Contribution component of Annual
Additions is not reduced.
EMPLOYEE INVESTMENT PLAN
57
<PAGE>
Any Matching Contribution and Forfeitures attributable to
Matching Accounts that cannot be allocated to the Member will be deducted from
the amount of the Matching Contribution which otherwise would be made under
Section 5.1, but such reduction will not affect the amounts allocable under
Section 5.3 to Members whose Matching Contribution component of Annual Additions
is not reduced.
Any Nonelective Contribution that cannot be allocated to the
Member will be deducted from the amount of any Nonelective Contribution which
otherwise would be made under Section 5.2, but such reduction will not affect
the amounts allocable under Section 5.3 to Members whose Nonelective
Contribution portion of Annual Additions is not reduced.
Any Post-Tax Contributions made by the Member (increased by any
income or reduced by any losses allocable to such Contributions) will be
returned to the Member in cash.
Any Pre-Tax Contributions will be credited to a suspense account
on behalf of the Member. All amounts credited to such account will be treated as
Pre-Tax Contributions for successive Plan Years and will be allocated annually
to the Member under Section 4 (to the extent such allocation is not prohibited
by Section 12.1) until exhausted. No gains or losses will be credited to the
suspense account and no additional Pre-Tax Contributions, or any Matching
Contribution, Nonelective Contribution or Profit Sharing Contribution will be
made by or on behalf of the Member so long as any amount remains in the suspense
account.
EMPLOYEE INVESTMENT PLAN
58
<PAGE>
FUNDING POLICY AND METHOD.
-------------------------
Contributions. The Administrative Committee will make arrangements
-------------
for the collection of Member Contributions as provided in Section 4. The
Company will make Matching Contributions, Nonelective Contributions and Profit
Sharing Contributions to the Plan as provided in Sections 5 and 6.
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.
Expenses of the Plan. The expenses of administering the Plan will
--------------------
include but not be limited to:
The fees and expenses of any employee and of the Trustee for the
performance of their duties under the Trust Agreement;
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 for the Plan); and
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).
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. An election by the
Participating Companies to pay all or a part of the above expenses directly will
not bind such 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.
Cash Requirements. From time to time the Administrative Committee
-----------------
will estimate the Plan Benefits, withdrawals and administrative expenses to be
paid out of the Trust Fund during the period for which the estimate is made and
will also estimate the contributions to
EMPLOYEE INVESTMENT PLAN
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<PAGE>
be made to the Plan during that period. The Administrative Committee will inform
the Trustee and each Investment Manager of the estimated cash needs of, and
contributions to, the Plan during the periods for which the estimates are made.
The estimates will be made on an annual, quarterly, monthly or other basis, as
the Administrative Committee may determine.
Independent Accountant. The Administrative Committee will engage an
----------------------
independent qualified public accountant to conduct such examinations and to
express such opinions as may be required by section 103(a)(3) of the Act. The
Administrative Committee may remove and discharge the person so engaged, in
which event it will engage a successor independent qualified public accountant
to perform such examinations and to express such opinions.
Loans from Parties-In-Interest. The Investment Committee, in its sole
------------------------------
discretion, may borrow money or receive credit from a party-in-interest (within
the meaning of Section 3(14) of ERISA), providing such loan or extension of
credit satisfies the applicable conditions of Department of Labor Prohibited
Transactions Class Exemption No. 80-26, or such successor exemption which may
from time to time be applicable, and otherwise satisfies the prohibited
transactions provisions of ERISA and the Code. The proceeds of such a loan
shall be allocated to such investment fund or funds as the Investment Committee
deems appropriate. In connection with such a loan or extension of credit, the
Investment Committee or its designee may execute such promissory notes or loan
or other documents as it deems appropriate.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
BENEFICIARIES.
-------------
If no Beneficiary designation is in effect under Section 2.8 at the time of
a Member's death, or if no designated Beneficiary survives the Member, the
payment of the Member's Plan Benefit, if any, will be made to the following
persons in the order listed:
To the Member's Surviving Spouse, if any;
If the Member has no Surviving Spouse, then to his or her living
children;
If the Member has no living children, then to his or her living
parents;
If the Member has no living parents, then to his or her living
brothers and sisters; or
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 Member's Plan Benefit, if
any. If the Administrative Committee is in doubt as to the right of any person
to receive such benefit, the Administrative Committee may direct the Trustee to
retain such benefit, without liability for any interest, until the rights to
such benefit are determined, or, alternatively, may direct the Trustee to pay
such benefit into any court of appropriate jurisdiction and such payment will be
a complete discharge of the liability of the Plan and the Trust Fund.
EMPLOYEE INVESTMENT PLAN
61
<PAGE>
ADMINISTRATION AND OPERATION OF THE PLAN.
----------------------------------------
Plan Administrator. The Administrative Committee is the "Plan
------------------
Administrator" of the Plan (as such term is defined in the Act) and the "Named
Fiduciary" as defined in section 402(a) of the Act with respect to the operation
and administration of 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 under
the objective criteria described in the Plan. The Administrative Committee's
rules, interpretations, computations 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 described in section 404(a)(1) of the Act.
Control and Management of Plan Assets. The Investment Committee is
-------------------------------------
the "Named Fiduciary" as defined in section 402(a) 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:
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;
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;
Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
Perform such other functions as are specifically assigned to the
Investment Committee under the Plan.
Trustees and Investment Managers. Each trustee appointed under
--------------------------------
Section 15.2 will have the exclusive authority and discretion to manage and
control the Plan assets held in trust by it, except to the extent that:
The Investment Committee directs how those assets will be
invested;
EMPLOYEE INVESTMENT PLAN
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<PAGE>
The Investment Committee allocates the authority to manage those
assets to one or more Investment Managers; or
The Plan prescribes how those assets will be invested.
Each Investment Manager appointed under Section 13.2 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 Plan 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.
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.
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, concerning the
matters for which it is responsible under the Plan.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Employment of Advisers. The Administrative Committee and the
----------------------
Investment Committee may make use of employees of the Company or outside agents
as they 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 by actuaries or accountants
engaged by the Administrative Committee. Either Committee may delegate to any
such agent or to any subcommittee or member of the Committee 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.
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
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 an
administrator) with respect to the Plan.
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, telegraph or telephone of their
right to vote on the proposal and of the outcome of the vote. "Mail" will
include any written or electronic interoffice communication.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
CLAIMS AND REVIEW PROCEDURES.
----------------------------
Applications for Benefits. Any application for a Plan Benefit must be
-------------------------
submitted to the Administrative Committee at the Company's principal office.
Such application must be in writing on the prescribed form and must be signed by
the applicant.
Denial of Applications. In the event that any application for a Plan
----------------------
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:
The specific reasons for the denial;
The specific references to the Plan provisions on which the
denial was based;
A description of any information or material necessary to perfect
the application;
An explanation of why such material is necessary; and
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 given to the applicant before the end of the initial 90-day
period. The notice will indicate the special circumstances requiring an
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 16.3) upon the expiration of such period.
Requests for Review. Any person whose application for a Plan 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. 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
EMPLOYEE INVESTMENT PLAN
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<PAGE>
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.
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 the 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 benefits 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 Plan
Benefit, such benefit will be paid to the applicant.
Exhaustion of Administrative Remedies. No legal or equitable action
-------------------------------------
for a Plan Benefit will be brought unless and until the claimant has:
Submitted a written application for a Plan Benefit in accordance
with Section 16.1;
Been notified that the application is denied;
Filed a written request for a review of the application in
accordance with Section 16.3; and
Been notified in writing that the Administrative Committee has
affirmed the denial of the application.
A Member 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 16.2 and Section 16.4.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
TERMINATION OF EMPLOYER PARTICIPATION.
-------------------------------------
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 such 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, 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 and other appropriate
governmental authorities under Sections 17.3 and 18.3 of the Plan.
Effect of Termination. Upon termination of the Plan as to any
---------------------
Participating Company, the interest in the Accounts of any Members who were or
are currently employed by such Participating Company will become fully vested
and nonforfeitable and no amount will subsequently be payable under the Plan to
or with respect to such Members except as provided in this Section 17.2.
Subject to any conditions which the IRS or any other governmental authority may
impose, the Administrative Committee will direct the Trustee to segregate that
portion of the Trust Fund attributable to the Members' Accounts of that
Participating Company. To the maximum extent permitted by the Code and the Act,
any rights of Members or former Members of that Participating Company and their
Beneficiaries and other eligible survivors will be unaffected by a termination
of the Plan as to such Participating Company.
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 affect
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.
EMPLOYEE INVESTMENT PLAN
67
<PAGE>
Termination of the Plan. If the Plan is terminated with respect to
-----------------------
all Participating Companies, the provisions of this Section 17 will be applied
to each of the Participating Companies individually or collectively as
determined by the Administrative Committee in its sole and absolute discretion.
EMPLOYEE INVESTMENT PLAN
68
<PAGE>
AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
------------------------------------------------------
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 Member's Plan 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.
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 such 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).
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 terminate the Plan or to
completely discontinue contributions under the Plan. As required by law, before
the termination or discontinuance of contributions, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, or any
other fiduciary of its intent to terminate the Plan or to discontinue
contributions under the Plan. Upon such termination or discontinuance of
contributions, the interest of each Member in his or her Accounts will become
fully vested and nonforfeitable.
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" under section 411(d)(3) of the Code, the
interest of each Member in his or her Accounts will become fully vested and
nonforfeitable. If a Partial Termination occurs, the Accounts of the Members
affected by the Partial Termination will be segregated by the Trustee and used
to pay benefits under the Plan to such Members in accordance with Section 18.5
as
EMPLOYEE INVESTMENT PLAN
69
<PAGE>
though the Plan had been completely terminated. Alternatively, the
Administrative Committee may postpone benefit payments to those Members until
their subsequent termination of Service with the Company in accordance with
other provisions of the Plan.
Manner of Distribution. Upon termination of the Plan, 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 benefit
payments to Members in accordance with the modes of payment provided for in
Section 11.5. Alternatively, with the consent of the Board of Directors, or its
designee, the Administrative Committee may direct the Trustee to hold the
Members' Plan Benefit in the Trust Fund until such Members or their
Beneficiaries become eligible to receive benefit payments under the terms and
provisions of this Plan.
Restrictions on Liquidation of Trust Upon Termination. In no event,
-----------------------------------------------------
however, will a Member's Nonelective Account and Pre-Tax Account be distributed
before the first to occur of the following events:
-----
The Member's retirement;
The Member's death;
The Member's disability (as determined by the Administrative
Committee);
The Member's termination of employment;
The Member's attainment of age 59-1/2;
The termination of the Plan, provided that neither the Company
nor an Affiliated Company maintains a successor plan;
The disposition, to a corporation that is not an Affiliated
Company, of substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Company in the trade or business in which the
Member is employed, provided that the Member continues employment with the
transferee corporation and the Company continues to maintain the Plan; or
The disposition, to a corporation that is not an Affiliated
Company, of the Company's interest in a subsidiary in which the Member is
employed, provided that the Member continues employment with the subsidiary and
the Company continues to maintain the Plan.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
A distribution may be made under (f), (g), or (h) above only if it
constitutes a total distribution of the entire balance of the Member's Accounts.
EMPLOYEE INVESTMENT PLAN
71
<PAGE>
INALIENABILITY OF BENEFITS.
--------------------------
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 at any time under the Plan and the
Trust Agreement 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, Beneficiary or Alternate Payee. Any attempt to so alienate or
subject any such amount will be void. If any Member, Beneficiary or Alternate
Payee attempts to, or alienates, sells, transfers, assigns, pledges, attaches or
otherwise encumbers any amount payable under the Plan and Trust Agreement, or
any portion 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:
Arrangements for the withholding of tax from benefit
distributions;
Arrangements for the recovery of benefit overpayments; or
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 19.2 and the
creation, assignment or recognition of a right to all or a portion of a Member's
Plan Benefit under a Qualified Domestic Relations Order under Section 19.3 will
not violate this Section 19.1.
Return of Contributions. All Pre-Tax Contributions, Nonelective
-----------------------
Contributions, Matching Contributions and Profit Sharing Contributions are
expressly conditioned upon the deductibility of such contributions under section
404 of the Code. If the deduction of any Pre-Tax Contributions, Nonelective
Contribution, Matching Contribution or Profit Sharing 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 Pre-Tax Contributions, Nonelective
Contribution, Matching Contribution or
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Profit Sharing 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 Pre-Tax Contributions, Nonelective Contribution,
Matching Contribution or Profit Sharing Contribution so returned will be reduced
to reflect losses but will not be increased to reflect gains or income. Any Pre-
Tax Contributions so returned will be paid to the Member from whom it was
withheld.
Qualified Domestic Relations Orders. The Administrative Committee
-----------------------------------
will honor the terms of a Qualified Domestic Relations Order that satisfies the
following requirements.
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:
---
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 Plan 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.
The Domestic Relations Order specifically indicates that it
applies to this Plan.
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.
The Domestic Relations Order does not require the payment of
all or a portion of a Member's Plan 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.
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 Plan Benefit. If the order requires payments to begin after a
Member's Earliest Retirement Age before the Member's actual retirement, the
amount of the payments must be determined as if the Member had begun receiving
benefit payments on the
EMPLOYEE INVESTMENT PLAN
73
<PAGE>
date on which the payments are to begin under the order, but taking into account
only the value of the Member's Accounts at that time. The Plan Benefit payable
to an Alternate Payee will not be recalculated upon the Member's actual
retirement.
Alternate Payment Forms. The Domestic Relations Order may call
-----------------------
for the payment of the Member's Plan 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, as defined in section 417(b) of
the Code, with respect to the Alternate Payee and his or her subsequent spouse.
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 Plan 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 Domestic Relations
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
EMPLOYEE INVESTMENT PLAN
74
<PAGE>
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 16.
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.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
TOP-HEAVY PROVISIONS.
--------------------
Determination of Top-Heavy Status. If the Plan becomes "Top Heavy,"
---------------------------------
the provisions of this Section 20 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"), the cumulative balances credited to the Accounts of all
Members who are "Key Employees" under the Plan exceed 60% of the cumulative
balances credited to the Accounts of all Members under the Plan. The Plan will
be "Super Top Heavy" if, on the Determination Date, the cumulative balances
credited to the Accounts of all Members who are "Key Employees" under the Plan
exceed 90% of the cumulative balances credited to the Accounts of all Members.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee, in its sole and absolute discretion, but
under the provisions of section 416 of the Code, determines 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:
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;
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
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 aggregate of the amounts credited to the
accounts of Key Employees under all "defined contribution plans" (as defined in
section 414(i) of the Code) included in such group plus the present value of the
cumulative accrued benefits for Key Employees under all "defined benefit plans"
(as defined in section 414(j) 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
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Employees exceeds 90% of the sum so determined for all employees and
beneficiaries. Such determination will be made by the Administrative Committee
in accordance with section 416 of the Code.
Minimum Allocations. For any Plan Year during which the Plan is a
-------------------
Top-Heavy Plan, the Matching Contributions, Nonelective Contributions, Profit
Sharing Contributions (other than the portion of the Profit Sharing
Contributions and Forfeitures which could have been received in cash in
accordance with Section 6.2) and Forfeitures allocated under this Plan and
employer contributions and forfeitures allocated under any other defined
contribution plan of the Aggregation Group, on behalf of any Member who is (a)
employed on the last regularly scheduled working day of the Plan Year, and (b)
who is not a Key Employee will not be less than a percentage of the Member's
Total Compensation, equal to the lesser of:
------
3%; or
The percentage equal to the largest percentage that any Key
Employee for that Plan Year receives of Pre-Tax Contributions, Matching
Contributions, Nonelective Contributions, Profit Sharing Contributions and
Forfeitures allocated on behalf of that Key Employee's Total Compensation for
that Plan Year, as limited by Section 20.5 below.
The minimum allocation will be determined without regard to any
contributions made or benefits available under the federal Social Security Act.
Minimum Vesting. If a Member (other than a Member who did not
---------------
complete any Period of Service after the Plan became a Top-Heavy Plan) ceases to
be an Employee while the Plan is a Top-Heavy Plan and after such Member has
completed 3 or more Years of Service, such Member's Vested Interest in his or
her Matching Account and Profit Sharing Regular Account will be 100% and will no
longer be subject to forfeiture for an act of Misconduct under 11.1. If a
Member ceases to be an Employee while the Plan is a Top-Heavy Plan and before
the Member has completed 3 Years of Service, the Member's Vested Interest in his
or her Matching Account and Profit Sharing Regular Account will be determined in
accordance with Section 11.1.
Effect of Change in Top-Heavy Status on Vesting. If the Plan at any
-----------------------------------------------
time is a Top-Heavy Plan and later ceases to be a Top-Heavy Plan, each Member
who is credited with 3 or more Years of Service as of the last day of the last
Plan Year in which the Plan is a Top-Heavy Plan will continue to have a 100%
Vested Interest in his or her Matching Account and Profit Sharing Regular
Account. Each Member who is credited with fewer than 3 Years of Service as of
the last day of the last Plan Year in which the Plan is a Top-Heavy Plan will
have
EMPLOYEE INVESTMENT PLAN
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<PAGE>
his or her Vested Interest in his or her Matching Account and Profit Sharing
Regular Account determined under Section 11.1 (unless and until the Plan again
becomes a Top-Heavy Plan).
Impact on Maximum Benefits. For any Plan Year in which the Plan is a
--------------------------
Top-Heavy Plan, the number "1.00" will be substituted for the number "1.25"
wherever it appears in section 415(e)(2) and section 415(e)(3) of the Code.
Such substitution will not have the effect of reducing any benefit accrued under
a defined benefit plan maintained by a Participating Company before the first
day of the Plan Year in which this provision becomes applicable.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
GENERAL LIMITATIONS AND PROVISIONS.
----------------------------------
No Employment Rights. Nothing in the Plan will be deemed to give any
--------------------
employee the right to be retained in the employment of the Company or an
Affiliated Company or affect the right of the Company or an Affiliated Company
to terminate a person's employment with or without cause.
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,
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 for such amount 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 of the Company.
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 therefore 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.
Lost Members or Other Persons. If the Administrative Committee is
-----------------------------
unable to locate a Member, Beneficiary or other person who is entitled to
receive a benefit under the Plan, the Administrative Committee may (but need
not) direct that such benefit be applied to reduce the Company Matching
Contribution and/or Profit Sharing Contribution to the Plan. If the person
later makes a claim for his or her benefit before the date final distributions
are made from the Trust Fund following the termination of the Plan, the Company
that employed the Member with respect to whom the benefit is payable, will
reinstate such benefit (without income, gains or other adjustment) by making a
special contribution to the Plan as soon as reasonably practicable after such
claim is made. However, if the benefit would have been lost by reason of
escheat under applicable state law, then the benefit 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 has expired, the
Administrative Committee may transfer the affected person's benefits to an
individual retirement account established for such person.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Personal Data to the Administrative Committee. Each Member must file
---------------------------------------------
with the Administrative Committee such pertinent information concerning himself
or herself, his or her Beneficiary or any other person as the Administrative
Committee may specify, and no member, 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.
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.
Notice to the Administrative Committee. All elections, designations,
--------------------------------------
requests, notices, instructions and other communications from a Participating
Company, a Member, Beneficiary, or other person to the Administrative Committee,
required or permitted under the Plan, will be:
In such form as is prescribed from time to time by the
Administrative Committee;
Mailed by first-class mail or delivered to such location as will
be specified by the Administrative Committee, or provide by electronic means,
including telephone, as permitted by the Administrative Committee; and
Deemed to have been given and delivered only upon actual receipt
by the Administrative Committee or its designee at the location.
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, the employee, Member, Beneficiary or other person at his or her address last
appearing on the records of the Administrative Committee.
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
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Sections contained in the Plan and not to another instrument, document or
publication unless specifically stated otherwise.
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.
Governing Law. The Plan and all rights under the Plan will be
-------------
interpreted and construed in accordance with California law except to the extent
such law is preempted by the Act and the Code.
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.
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 __________________, 1995.
LEVI STRAUSS ASSOCIATES INC.
By: _______________________________________
Its: _________________________________
EMPLOYEE INVESTMENT PLAN
81
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(As Amended and Restated Effective November 27, 1989)
APPENDIX A
----------
PRIOR PLAN PROVISIONS
---------------------
This Appendix A states the provisions of the Plan in effect on or after the
Effective Date (November 27, 1989) which were amended before September 1, 1994.
The provisions of the Plan in effect as of September 1, 1994 are presented in
the main text of this amended and restated Plan.
Effective before November 21, 1990, Section 2.1 of the Plan, then designated as
Section 18.1, read as follows:
18.1 "Accounts" means, to the extent applicable to a Member, one
--------
or more of the following accounts: Matching Account, Post-Tax
Account, Pre-Tax Account, Profit Sharing Account and Rollover Account.
Effective before November 21, 1990, Section 2.6 of the Plan, then designated as
Section 15.4, read as follows:
15.4 Annual Additions. For purposes of this Section 15, a
----------------
Member's "Annual Additions" for a Plan Year will equal the sum of the
following:
(a) The amount of employer contributions and forfeitures
allocated to the Member as of any date within such Plan Year under any
qualified defined contribution plan maintained by the Affiliated
Group, including Profit Sharing Contributions, Matching Contributions
and Forfeitures under this Plan;
(b) The aggregate employee contributions which the Member
contributes during such Plan Year to all qualified retirement plans
maintained by the Affiliated Group, including Post-Tax Contributions
to this Plan; and
EMPLOYEE INVESTMENT PLAN
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<PAGE>
(c) The amount of contributions made on behalf of the Member
for such Plan Year to any qualified defined contribution plan
maintained by the Affiliated Group under a salary deferral election by
the Member under a qualified cash or deferred arrangement, including
Pre-Tax Contributions to this Plan.
Effective August 13, 1990, the following clause was added to the end of the
fourth sentence of Section 2.8 of the Plan, then designated as Section
10.9:
"or the Administrative Committee is satisfied the spouse cannot be
located."
Before November 26, 1990, an account executive's Compensation under Section 2.14
of the Plan could not exceed the maximum for the Home Office Salary Grade 6
salary range in effect at the end of such a Plan Year.
Effective before August 13, 1990, the last paragraph of 2.17 of the Plan, then
designated as Section 18.46, read as follows:
18.46 "Temporary Employee" means a person who:
-------------------
(a) Is hired to fill, for a period not to exceed six
calendar months, a position which arises from either an emergency
situation or from the temporary absence of an Eligible Employee;
(b) Is subject, as a condition of such employment, to
termination without prior notice at any time; and
(c) Does not complete a 365-day Period of Service.
Effective before November 21, 1990, Section 2.17 of the Plan, then designated as
Section 18.10, read as follows:
18.10 "Eligible Employee" means an Employee of a Participating
-----------------
Company who is paid from the home office of the Company. The Board of
Directors, in designating a Participating Company, may specify that
only certain named Employees or only certain classifications of
Employees of such Participating Company will be "Eligible Employees,"
in which
EMPLOYEE INVESTMENT PLAN
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<PAGE>
event all other Employees of such Participating Company will
not be "Eligible Employees." In addition, the term "Eligible
Employee" will not include an Employee who is:
(a) Included in a unit of employees covered by a collective-
bargaining agreement that does not provide that such Employee will be
eligible to participate in the Plan;
(b) A stocktaker, service representative, retiree
coordinator or Temporary Employee;
(c) A nonresident alien who receives no remuneration from a
Participating Company that constitutes income from sources within the
United States (within the meaning of section 861(a)(3) of the code);
(d) Any alien who (i) receives remuneration from the Company
which 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 in respect of which
the alien is benefiting (by reason of accruing a benefit or making or
having contributions made on such alien's behalf) under (A) a
retirement plan established or maintained outside of the United States
by a foreign subsidiary (including a domestic subsidiary operating
abroad) or 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 any member
of the Affiliated Group;
(e) A United States citizen locally hired by a foreign
subsidiary (including a domestic subsidiary operating broad) or
foreign division of a Participating Company;
(f) Not paid on a salary or commission basis;
(g) Covered by an individual employment contract that
expressly provides that he or she will not be eligible for membership
in the Plan; or
EMPLOYEE INVESTMENT PLAN
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<PAGE>
(h) A "leased employee" (as defined in section 414(n) of the
Code) who is providing services to a member of the Affiliated Group.
The Board of Directors on a nondiscriminatory basis may designate as
an Eligible Employee any person described in (c), (d), (e) or (f)
above. Such designation must be made in writing after receiving the
advice of counsel.
A person's status as an Eligible Employee will be determined by
the Administrative Committee and such determination will be conclusive
and binding on all persons.
Effective on and after November 26, 1990, Section 2.17 of the Plan, then
designated as Section 18.10, was amended to exclude Highly Compensated
Employees as Eligible Employees for purposes of making Member Contributions
and for receiving an allocation of Matching Contributions, Nonelective
Contributions, Profit Sharing Contributions and Forfeitures under the Plan.
Effective before November 21, 1990, Section 2.34 of the Plan, then designated as
Section 18.23, read as follows:
18.23 "Matching Contributions" means the contribution made by
----------------------
the Participating Companies under Section 4.
Effective before November 26, 1990, Section 2.35 of the Plan, then designated as
Section 18.24, read as follows:
18.24 "Member" means a person who participates in the Plan under
------
Section 2.
Effective before July 1, 1991, Section 2.37 of the Plan, then designated as
Section 18.12, read as follows:
18.12 "Entry Date" means December 1 and June 1 of each Plan
----------
Year.
Section 2.40 and Section 2.41 of the Plan, then designated as Section 18.28 and
Section 18.29, were added to the Plan, effective on and after November 21,
1990.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Section 3.5 of the Plan, then designated as Section 2.5, was added to the Plan
effective on and after November 26, 1990.
Effective before November 21, 1990, Section 5 of the Plan, then designated as
Section 4, read as follows:
SECTION 4. MATCHING CONTRIBUTIONS.
--------- ----------------------
4.1 Amount and Form. The Participating Companies will make a
---------------
Matching Contribution to the Plan for each Plan Year in an amount
equal to 50% of each Member's Member Contributions for such Plan Year
which are transferred to Fund C under Section 6.2. The Board of
Directors may determine that no Matching Contribution will be made for
a particular Plan Year or portion of a Plan Year, or may determine
that a lesser Matching Contribution will be made, in view of Company
performance and economic and financial conditions prevailing and
anticipated at the time. The Board of Directors also may determine in
its sole discretion that a greater Matching Contribution will be made
for a particular Plan Year or portion of a Plan Year. No Matching
Contribution will be made for a Member unless he or she (a) is an
Employee on the date as of which a Matching Contribution is allocated
or (b) ceased to be an Employee during the Plan Year after attaining
age 55 and completing 15 years of Service, after attaining age 65 or
by reason of death and his or her Account has not been distributed
under Section 10. Matching Contributions may be made in the form of
cash or in the form of shares of Stock, or a combination of both.
4.2 Deposit With Trustee; Crediting Accounts. Matching
----------------------------------------
Contributions for any Plan Year will be paid to the Trustee at the
time when Member Contributions are transferred to Fund C under Section
6.2 and will be allocated among Members in proportion to their Member
Contributions which are transferred to Fund C. A Member's share of
the Matching Contributions will be allocated and credited to the
Member's Matching Account as of the earlier of the date the Matching
Contributions are made to the Plan or the end of the Plan Year during
which the Member made the Member Contributions with respect to which
such Matching Contributions are made. Forfeitures arising under
Section 10.4 with respect to any Member's Matching Account during a
Plan Year will
EMPLOYEE INVESTMENT PLAN
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<PAGE>
be allocated among other Members as additional Matching Contributions
for such Plan Year and credited to such Members' Matching Accounts.
4.3 Curtailment or Distribution of Excess Aggregate
-----------------------------------------------
Contributions. If any Matching Contributions otherwise allocable to a
-------------
Member would constitute "excess aggregate contributions" (as defined
in section 401(m)(6)(B) of the Code) with respect to a Plan Year, then
such matching contributions will be treated in accordance with
paragraph (a) or (b):
(a) Such Matching Contributions will not be made to the
Plan, if the Matching Contributions have not been made to the
Plan as of the date on which such Matching Contributions are
determined to constitute excess aggregate contributions, or
(b) Such Matching Contributions (and any earnings on such
Matching Contributions) will be distributed to the Member no
later than 2-1/2 months after the end of the Plan Year, if such
Matching Contributions have been made to the Plan before the date
as of which the Matching Contributions are determined to
constitute excess aggregate contributions.
Effective before January 1, 1993, Section 4.7 of the Plan read as follows:
4.7 Rollover Contributions. An Employee may make a Rollover
----------------------
Contribution to the Plan in an amount equal to all or part of a
previous distribution from a plan that, at the time of the
distribution, met the requirements of section 401(a) of the Code. The
Rollover Contribution must be made in cash within 60 days after its
receipt by the Employee either from the qualified plan or an
individual retirement account which meets the requirements of section
408 of the Code. A Rollover Contribution shall be permitted only if
the Employee establishes that:
(a) The Rollover Contribution includes no assets other than
those attributable to employer contributions, earnings on
employer contributions and earnings on employee contributions
under plans qualified under section 401(a) of the Code;
EMPLOYEE INVESTMENT PLAN
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<PAGE>
(b) Such Contribution includes no assets other than those
attributable to a qualified total distribution, as defined in
section 402(a)(S)(E)(i) of the Code; and
(c) If the amount was received by the Employee from an
individual retirement account, the distribution from such account
represented a total distribution thereof.
The Rollover Contribution shall be paid to the Trustee as soon as
practicable, credited to the Employee's Rollover Account and invested
as described in Section 7. If it is determined that a Member's
Rollover Contribution mistakenly failed to qualify under the Code as a
tax-free rollover, then the balance in the Member's Rollover Account
attributable to the mistaken contribution immediately shall be
segregated from all other Plan assets, treated as a nonqualified trust
established by and for the benefit of the Member, and distributed to
the Member. Such a mistaken contribution shall be deemed never to
have been a part of the Plan.
Effective before November 26, 1990, the following sentence appeared at the end
of Section 6.2 of the Plan, then designated as Section 5.2:
Forfeitures arising under Section 10.5 with respect to any Member's
Profit Sharing Account during a Plan Year will be allocated among
other Members who are Employees on the last working day of such Plan
Year as additional Profit Sharing Contributions for such Plan Year
and, subject to Section 5.2, will be credited to such Members' Profit
Sharing Accounts.
Fund E was added to the Plan, as an investment option under Section 7.1,
effective March 1, 1991.
Effective before November 21, 1990, Section 7.2 of the Plan, then designated as
Section 6.2, read as follows:
6.2 Investment of Contributions. A Member's share of any Profit
---------------------------
Sharing Contribution and Forfeitures attributable to Profit Sharing
Accounts will be deposited in Fund A, Fund B, Fund D and/or Fund H in
25% increments of such Contribution and Forfeitures as directed by the
Member in accordance with procedures established by the Administrative
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Committee. A Member's investment directions for Profit Sharing
Contributions and Forfeitures will remain in effect until changed by
the Member. If the Member fails to file any investment directions,
his or her share of any Profit Sharing Contribution and Forfeitures
attributable to Profit Sharing Accounts will be deposited in Fund D.
All Matching Contributions will be deposited in Fund C. All Member
Contributions initially will be deposited in the Segregated Account.
Twice each Plan Year, the Investment Committee will obtain an
independent appraisal of the Fair Market Value of Stock. The
Investment Committee will notify the Trustee of such Fair Market Value
promptly after completion of the appraisal. If the Trustee determines
that the Fair Market Value exceeds adequate consideration for Stock
within the meaning of section 3(18) of ERISA, all Member Contributions
that are invested in the Segregated Account and any earnings on such
contributions will be transferred from the Segregated Account to
Fund D, and no Matching Contribution will be made with respect to such
Member Contributions. If the Trustee determines that the Fair Market
Value does not exceed adequate consideration for stock, the
Administrative Committee will notify Members of such Fair Market Value
and the Company's stockholders of the Trustee's intention to purchase
Stock. Each Member who has Member Contributions invested in the
Segregated Account will have the opportunity to elect to have such
Member Contributions and any earnings on such contributions
transferred from the Segregated Account to Fund A, Fund B, Fund C,
Fund D and/or Fund H in 25% increments of such Member Contributions
and earnings. If a Member files such an election on the prescribed
form by the date determined by the Administrative Committee, the
Member's Member Contributions that are invested in the Segregated
Account and any earnings on such contributions will be transferred to
the Fund(s) elected by the Member. If a Member fails to file such an
election on the prescribed form by the date determined by the
Administrative Committee, the Member's Member Contributions that are
invested in the Segregated Account and any earnings on such
contributions automatically will be transferred to Fund C. At the
time when Member Contributions and earnings are transferred to Fund C,
the Participating Companies will make a Matching Contribution under
Section 4.1 unless the Board of Directors determines that no Matching
contribution will be made. The Trustee will seek to acquire Stock for
Fund C at a price no greater than Fair Market Value to the extent any
cash Matching Contributions deposited in Fund C and Member
Contributions transferred
EMPLOYEE INVESTMENT PLAN
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<PAGE>
to Fund C exceed the cash requirements of Fund C as determined by the
Administrative Committee. The Trustee may acquire Stock from a party-
in-interest or a disqualified person for no more than adequate
consideration (as defined in section 3(18) of ERISA) in accordance
with the requirements of section 408(e) of ERISA.
If any Member's Member Contributions in excess of the cash
requirements of Fund C have not been invested in Stock when the Fair
Market Value of Stock is next determined because insufficient Stock
was available to the Trustee, the Member may elect to have such Member
Contributions and any earnings on such contributions transferred to
Fund A, Fund B, Fund D and/or Fund H in 25% increments in accordance
with procedures established by the Administrative Committee. In the
absence of such an election, the Member Contributions and earnings
will remain in Fund C for investment in Stock at the new Fair Market
Value to the extent Stock is available. Any Matching Contributions
and earnings on such contributions that have not been invested in
Stock will remain in Fund C, whether or not the Member elects to
transfer the excess Member Contributions to another Fund.
Any Member who requests a distribution of his or her Plan Benefit
under Section 10 before a date on which Matching Contributions are
made to the Plan will be deemed to have elected not to invest in Fund
C such Member's Member Contributions and earnings on such
contributions which were held in the Segregated Account immediately
before such request.
Before May 31, 1991, Member investment directions had to be in increments of 25%
of the Member's Accounts.
Effective on and after October 29, 1990, Section 7.2 of the Plan, then
designated as Section 6.2, was amended to give the Investment Committee the
discretion to effect a "Suspension."
Before July 1, 1991, the phrase "as of the last day of each quarter during a
Plan Year" in Section 7.3 of the Plan, then designated as Section 6.2, was
replaced by the phrase "as of the last day of each Quarter."
Section 7.4 of the Plan, then designated as Section 6.4, was added to the Plan
effective on and after January 1, 1991.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Effective before February 28, 1991 clause (i) of Section 7.7 of the Plan, then
designated as section 17.5, read as follows:
(i) any offer to purchase stock by the Company if it is for
purposes of making cash distributions under the Plan.
Section 7.7(c) of the Plan, then designated as Section 17.5(b), was added to the
Plan, effective on and after February 28, 1991.
Effective with respect to Hardship Withdrawals made before August 13, 1990, the
final paragraph of Section 9.3 of the Plan, then designated as Section 8.3,
was not applicable.
The last clause of Section 9.3(a)(vii) became effective for hardship withdrawals
made after May 3, 1993.
Effective before the issuance of final regulations under section 401(k) of the
Code, the Plan provided for hardship withdrawals from Members' Nonelective
Accounts.
Effective with respect to withdrawals made before November 21, 1990, Section 9.4
of the Plan, then designated as Section 8.4, read as follows:
8.4 Withdrawals From Fund C. The portion of a Member's Accounts
-----------------------
invested in Fund C may be withdrawn under Section 8.1 or 8.3 at the
time when Member Contributions and Matching Contributions are invested
in Fund C, but only to the extent the Administrative Committee
determines that there is sufficient cash available in Fund C to permit
the withdrawal.
Effective with respect to withdrawals made before November 21, 1990, Section 9.5
of the Plan, then designated as Section 8.5, read as follows:
8.5 Payment of Withdrawals. A Member may request a withdrawal
----------------------
by filing the prescribed form with the Administrative Committee. A
withdrawal will be paid in cash soon as reasonably practicable after
the Administrative Committee receives the prescribed form and
determines that the withdrawal request meets the requirements of
Section 8.1, 8.2 or 8.3, as applicable.
EMPLOYEE INVESTMENT PLAN
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<PAGE>
Effective with respect to withdrawals made before June 25, 1990, Section 9.7 of
the Plan, then designated as Section 8.7, read as follows:
A Member's Accounts will be liquidated to the extent necessary to
fund a withdrawal under Section 8.3 in the following order of
priority: Post-Tax Account, Rollover Account, Pre-Tax Account, Profit
Sharing Account and Matching Account. Within a Member's Profit
Sharing Account, the portion attributable to amounts which the Member
could have elected to receive in cash under Section 5.2 will be
liquidated only after the balance of the Member's Vested Interest in
his or her Profit Sharing Account has been liquidated. Within any
Account, amounts invested in each Fund will be liquidated in the
following order of priority: Fund D, Fund B, Fund H and Fund A. If
the Investment Committee determines that it is not feasible for the
Trustee to prudently liquidate the necessary amount invested in any
Fund in accordance with Members' withdrawal requests, the Investment
Committee will so advise the Administrative Committee which will
direct that such steps be taken as it considers necessary or desirable
for the protection of Members' Accounts, including the reordering of
liquidation priorities or a pro rata reduction in the amount of each
Member's withdrawal.
Effective with respect to withdrawals made after June 25, 1990, but before
November 21, 1990, Section 9.7 of the Plan, then designated as Section 8.7,
read as follows:
8.7 Source of Withdrawals. A Member's Accounts will be
---------------------
liquidated to the extent necessary to fund a withdrawal under Section
8.3 in the following order of priority: Post Tax-Account (excluding
any portion of such Account held in Fund C or the Segregated Account
within Fund D), Rollover Account, Pre-Tax Account (excluding any
portion of such Account held in Fund C or the Segregated Account
within Fund D), the portion of the Member's Profit Sharing Account
attributable to amounts which the Member could have elected to receive
in cash under Section 5.2, the portion of the Member's Post-Tax
Account held in the Segregated Account within Fund D, the portion of
the Member's Pre-Tax Account held in the Segregated Account within
Fund D, the portion of the Member's Post-Tax Account held in Fund C,
the portion of the Member's Pre-Tax Account held in Fund C, the
balance of the Member's Profit Sharing Account, the Matching Account
and the Nonelective Account. Except as provided above, within any
Account, amounts invested
EMPLOYEE INVESTMENT PLAN
A-11
<PAGE>
in each Fund will be liquidated in the following order of priority;
Fund D, Fund B, Fund H and Fund A.
Effective before April 1, 1990, Section 10.1(a) of the Plan, then designated as
Section 9.1(a), read as follows:
(a) Profit Sharing Account. A Member may borrow an amount from
----------------------
his or her Profit Sharing Account not exceeding 100% of the Member's
Vested Interest in such Account. Such a loan will be permitted only
if the Administrative Committee determines that (i) the proceeds of
the loan will be used to acquire, construct or rehabilitate the
Member's primary residence, or to refinance any loan or loans
previously made to the Member by a third party for any of the
foregoing purposes; or (ii) such loan is required by the Member for
reasons set forth in Section 8.3(g).
Effective before March 1, 1991, Section 10.1(b) of the Plan, then designated as
Section 9.1(b), read as follows:
(b) After-Tax, Pre-Tax, Matching and Rollover Accounts.
--------------------------------------------------
Effective on and after a date determined by the Administrative
Committee and announced to Members, a Member may borrow an amount from
his or her Post-Tax Account, Rollover Account, Matching Account and/or
Pre-Tax Account not exceeding 100% of the balance credited to such
Accounts. A loan from the Member's Pre-Tax Account will be permitted
only if the Administrative Committee determines that the Member is
Totally and Permanently Disabled or that the proceeds will be used for
a purpose described in Section 8.3(a) through (f).
Effective before April 1, 1990 Section 10.1(d) of the Plan, then designated as
Section 9.1(c), read as follows:
(c) Additional Limitations. No loan will be permitted from the
----------------------
portion of any Account invested in Fund C. No loan will be granted to
the extent it would cause the aggregate balance of all loans a Member
has outstanding under the Plan to exceed the least of (i) $50,000,
less the amount by which such aggregate balance has been reduced by
repayments of principal during the one-year period ending on the day
before the new loan is made; (ii) 50% of the Member's Vested Interest
in all of the Member's Accounts; or (iii) the amount that can be
repaid with level
EMPLOYEE INVESTMENT PLAN
A-12
<PAGE>
monthly payments, including interest, equal to 15% of the Member's
monthly base Compensation. The amount of any loan will be a multiple
of $100 and will not be less than $1,000. In addition, only 2 loans to
a Member may be outstanding at any time, and a Member may apply for a
loan no more than twice in any Plan Year.
Effective before April 1, 1990 Section 10.2 of the Plan, then designated as
Section 9.2, read as follows:
9.2 Terms of Loans. All loans will be on such terms and
--------------
conditions as the Administrative Committee may determine, provided
that all loans will:
(a) Be made under a promissory note secured by (i) the
residence that the Member acquires, in the case of a loan from the
Member's Profit Sharing Account, and (ii) the Account(s) that funded
the loan;
(b) Be subject to a substantially level payment schedule, as
determined by the Administrative Committee, with payments to be made
at least quarterly and whenever possible to be made through semi-
monthly payroll deductions;
(c) Bear interest at a fixed rate determined by the
Administrative Committee based upon the prime interest rate in effect
at a commercial bank as of the first day of December, March, June or
September immediately preceding the date on which the loan is
approved, plus 1%; and
(d) Provide for repayment in full, whether from the Member's
Accounts or otherwise, on or before the earlier of (i) 5 years after
the date the loan is made (15 years after the date the loan is made if
the loan is used to acquire the Member's principal residence) or (ii)
the date the Member's Plan Benefit is distributed under Section 10.
Effective for the Period beginning April 1, 1990, and ending November 20, 1990,
Section 10.2 of the Plan, then designated as Section 9.2, read as follows:
EMPLOYEE INVESTMENT PLAN
A-13
<PAGE>
9.2 Terms of Loans. All loans will be on such terms and
--------------
conditions as the Administrative Committee may determine, provided
that all loans will:
(a) Be made under a promissory note secured by
(i) the residence of the Member, in the case of a loan
under Section 9.1(a)(i) or, to the extent agreed upon by the Member
and the Administrative Committee, in the case of the loan under
9.1(a)(ii) for reasons set forth in 8.1(b); and
(ii) the Account(s) that funded the loan to the extent
that such Account(s) funds the loan; provided, however that:
(A) in the case of a loan made on or after April
1, 1990, under 9.1(a)(i), or a loan made under 9.1(a)(ii) and
secured by the Member's residence, the Plan's security interest
in the Member's Profit Sharing Account will not extend to the
portion of such Account attributable to amounts which the Member
could have elected to receive in cash under Section 5.2
("Elective Profit Sharing Contributions"); and
(B) in the case of any other loan made under
Section 9.1(a)(ii), the promissory note with respect to such loan
will be secured by portions of the Account other than Elective
Profit Sharing Contributions only to the extent that the amount
of such loan exceeds the amount of Elective Profit Sharing
Contributions available to secure such promissory note;
(b) Be subject to a substantially level payment schedule, as
determined by the Administrative Committee, with payments to be made
at least quarterly and whenever possible to be made through semi-
monthly payroll deductions; provided, however, that in the event that
payments are not made for a period of up to 90 days due to the
Member's temporary absence from active work, such payments may be made
(i) in a single sum after the Member returns to active work, (ii)
ratably over the remaining period of the loan, (iii) in a single sum
together with the final payment provided for under the note, or (iv)
in another manner mutually agreed upon by the Member and the
Administrative Committee;
EMPLOYEE INVESTMENT PLAN
A-14
<PAGE>
(c) Bear interest at a fixed rate determined by the
Administrative Committee based upon the prime interest rate in effect
at a commercial bank as of the first day of December, March, June or
September immediately preceding the date on which the loan is
approved, plus 1%; and
(d) Provide for repayment in full, whether from the Member's
Accounts or otherwise, on or before the earlier of (i) 5 years after
the date the loan is made (15 years after the date the loan is made if
the loan is used to acquire the Member's principal residence) or (ii)
the date the Member's Plan Benefit is distributed under Section 10.
Effective November 21, 1990, Section 10.2 of the Plan, then designated as
Section 9.2, was amended to read as set forth in this amended and restated
Plan.
Effective with respect to loans made before March 1, 1991, Section 10.3 of the
Plan, then designated as Section 9.3, read as follows:
9.3 Source of Loans; Application of Loan Payments. As of the
---------------------------------------------
first day of the month following the date the Administrative Committee
approves a loan, the amount of the loan will be paid to the Member
from the vested portion of the Member's Accounts that are being used
to fund the loan, in the following order of priority: Post-Tax
Account, Rollover Account, Pre-Tax Account, Profit Sharing Account,
and the portion attributable to amounts which the Member could have
elected to receive in cash under Section 5.2 will be used to fund a
loan only after the balance of the Member's Vested Interest in his or
her Profit Sharing Account has been so used. Amounts invested in
Fund A, Fund B and Fund H will be liquidated and transferred to
Fund D for disbursement from Fund D. If less than the entire amount
of any Account is required to fund the loan, amounts invested in the
Funds will be liquidated to fund the loan in the following order of
priority: Fund D, Fund B, Fund H and Fund A. If the Investment
Committee determines that it is not feasible for the Trustee to
prudently liquidate the necessary amount invested in any Fund in
accordance with Members' loan requests, the Investment Committee will
so advise the Administrative Committee which will direct that such
steps be taken as it considers necessary or desirable for the
protection of Members' Accounts, including the reordering of
liquidation priorities or a
EMPLOYEE INVESTMENT PLAN
A-15
<PAGE>
pro rata reduction in the amount of each Member's loan. The promissory
note executed by the Member will be deposited in the Member's
Account(s) that funded the loan. Principal and interest payments will
be credited to the Member's Account(s) that funded the loan and
invested in Fund D.
Effective with respect to loans made before November 26, 1990, the second to
last sentence of Section 10.4 of the Plan, then designated as Section 9.4,
read as follows:
If an involuntary withdrawal from the Member's Profit Sharing Account
is declared, the Member's Vested Interest in such Account will be
determined as provided in Section 12.2.
Effective before November 26, 1990, Section 11.1(a) of the Plan, then designated
as Section 10.1(a), read as follows:
(a) A Member's Vested Interest in his or her Pre-Tax
Account, Post-Tax Account and Rollover Account (if any) will be 100%
at all times. Except as provided in Section 10.1(c), a Member's
Vested Interest in his or her Matching Account will be 100% at all
times.
Effective before November 26, 1990, Section 11.1(b) and (c) of the Plan, then
designated as Section 10.1(b) and (c), read as follows:
(b) A Member's Vested Interest in the portion of his or her
Profit Sharing Account attributable to amounts which the Member could
have elected to receive in cash under Section 5.2 will be 100% at all
times. The Member's Vested Interest in the remainder of his or her
Profit Sharing Account will be 100% if the Member attains age 65 as an
Employee, dies while an Employee or becomes Totally and Permanently
Disabled while an Employee. Until a Member's Vested Interest in the
remainder of such Account becomes 100% under the preceding sentence,
the Member's Vested Interest in the remainder of such Account will be
determined according to the following schedule based on the Member's
completed Years of Service:
EMPLOYEE INVESTMENT PLAN
A-16
<PAGE>
<TABLE>
<CAPTION>
Completed
Years of Service Vested Interest
---------------- ---------------
<S> <C>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
</TABLE>
(c) If the Administrative Committee determines that any
Member who has not reached age 65 and who has completed less than 5
Years of Service engaged in any act of misconduct while an Employee,
the Member will have no Vested Interest in his or her Matching Account
and the Member's Vested Interest in his or her Profit Sharing Account
will consist solely of the amounts described in the first sentence of
Section 10.1(b). The balance of such Accounts will be forfeited under
Section 10.5.
Effective before November 26, 1990, Section 10.2 of the Plan read as follows:
10.2 Vesting After Prior Withdrawals or Distributions. Section
------------------------------------------------
10.1(b) will be applied as set forth in the following sentence in the
case of any Member who received one or more prior withdrawals or
distributions from his or her Profit Sharing Account under Section 8,
9.4 or this Section 10, who subsequently remained an Employee or was
rehired as an Employee and whose Vested Interest in the entire Profit
Sharing Account is not yet 100%. The Member's Vested Interest in such
Account will be determined by first applying the appropriate
percentage under the schedule in Section 10.1(b) to the sum of the
value of such Account plus the aggregate value of the Member's prior
withdrawals or distributions from such Account, and then subtracting
the aggregate value of such prior withdrawals or distributions.
Effective before November 26, 1990, Section 10.5 of the Plan read as follows:
10.5 Forfeitures. If a Member ceases to be an Employee during a
-----------
Plan Year and is not rehired as an Employee on or before the date the
EMPLOYEE INVESTMENT PLAN
A-17
<PAGE>
Member incurs a 1-year Service Break, then the portion of the Member's
Profit Sharing Account in excess of the Member's Vested Interest will
become a Forfeiture as of such date.
Effective before August 6, 1990, Section 11.5(a) of the Plan, then designated as
Section 10.7(a), read as follows:
(a) Monthly installments over a period not exceeding the
reasonable life expectancy of the Member (or Beneficiary), as
determined under the mortality table specified in Appendix B to the
Revised Home Office Pension Plan of Levi Strauss & Co. The amount of
each installment will be determined by dividing the value of the
portion of the Plan Benefit remaining in the Trust Fund by the number
of installments elected less the number of installments already paid.
Effective before August 1, 1989, Section 12.2 of the Plan, then designated as
Section 15.2, read as follows:
15.2 Combined Limitation on Benefits and Contributions. Except
-------------------------------------------------
as otherwise permitted under ERISA, the Tax Equity an Fiscal
Responsibility Act of 1982 and the Tax Reform Act of 1986, the sum of
a Member's defined benefit plan fraction and his or her defined
contribution plan fraction will not exceed 1.0 with respect to any
Plan Year. For purposes of this Section 15.2, the terms "defined
benefit plan fraction" and "defined contribution plan fraction" will
have the meaning given to such terms by section 415(e) of the Code and
the regulations thereunder. If a Member would exceed the above
limitation, then such Member's benefits under any qualified defined
benefit plan(s) that may be maintained by the Affiliated Group will be
reduced as necessary to allow his or her Annual Additions to equal the
maximum permitted by law and the Plan.
Effective before November 21, 1990, Section 12.3 of the Plan, then designated as
Section 15.3, read as follows:
15.3 Disposition of Excess Annual Additions. Any Annual
--------------------------------------
Additions under this Plan that cannot be allocated to a Member because
of the limitation described in Section 15.1 will be processed as
follows:
EMPLOYEE INVESTMENT PLAN
A-18
<PAGE>
(a) Profit Sharing Contributions and Forfeitures
attributable to Profit Sharing Accounts that cannot be allocated to
the Member will be deducted from the amount of Profit Sharing
Contributions which otherwise would be made under Section 5, but such
reduction will not affect the amounts allocable under Section 5.3 to
Members whose Profit Sharing Contribution component of Annual
Additions is not reduced.
(b) Matching Contributions and Forfeitures attributable to
Matching Accounts that cannot be allocated to the Member will be
deducted from the amount of Matching Contributions which otherwise
would be made under Section 4, but such reduction will not affect the
amounts allocable under Section 4.2 to Members whose Matching
Contribution component of Annual Additions is not reduced.
(c) Post-Tax Contributions made by the Member (increased by
any income or reduced by any losses allocable to such Contributions)
will be returned to the Member in cash.
(d) Pre-Tax Contributions made by the Member will be reduced
under Section 3.4. Any Pre-Tax Contributions that cannot be handled
in accordance with Section 3.4 will be credited to a suspense account
on behalf of the Member. All amounts credited to such account will be
treated as Pre-Tax Contributions for successive Plan Years and will be
allocated annually to the Member under Section 3 (to the extent such
allocation is not prohibited by Section 15.1) until exhausted. No
gains or losses will be credited to such account and no additional
Pre-Tax Contributions, Matching Contributions or Profit Sharing
Contributions will be made by or on behalf of the Member so long as
any amount remains in such account.
Effective before November 21, 1990, Section 13.1 of the Plan, then designated as
11.1, read as follows:
11.1 Contributions. The Administrative Committee will make
-------------
arrangements for the collection of Member Contributions as provided in
Section 3. The Company will cause the Participating Companies to make
Matching Contributions and Profit Sharing Contributions to the Plan as
provided in Sections 4 and 5.
EMPLOYEE INVESTMENT PLAN
A-19
<PAGE>
Effective before November 21, 1990, Section 18.3 of the Plan, then designated as
Section 14.3, read as follows:
14.3 Effect of Termination. Upon termination of the Plan, no
---------------------
assets of the Plan will revert to any Participating Company or be used
for, or diverted to, purposes other than the exclusive purpose of
providing benefits to Members and Beneficiaries and of defraying the
reasonable expenses of termination. Upon termination of the Plan or
upon complete discontinuance of contributions, the Vested Interest of
each Member in his or her Matching Account and entire Profit Sharing
Account will be 100%. (Each Member's Vested Interest in his or her
Pre-Tax Account, Post-Tax Account and Rollover Account is 100% at all
times.)
Effective before November 21, 1990, Section 20.2 of the Plan, then designated as
paragraph (b) in Appendix A, read as follows:
(b) Minimum Allocations. For any Plan Year during which the Plan
-------------------
is a Top-Heavy Plan, the Pre-Tax Contributions, Matching
Contributions, Profit Sharing Contributions and Forfeitures allocated
under this Plan and employer contributions and forfeitures allocated
under any other defined contribution plan of the Aggregation Group on
behalf of any Member who is employed on the last regularly scheduled
working day of the Plan Year and who is not a Key Employee will not be
less than a percentage of the Member's Total Compensation equal to the
lesser of (i) 3%; or (ii) the percentage equal to the largest
percentage that any Key Employee for that Plan Year receives of Pre-
Tax Contributions, Matching Contributions, Profit Sharing
Contributions and Forfeitures allocated on behalf of that Key
Employee's Total Compensation for that Plan Year as limited by (e)
below. The minimum allocation will be determined without regard to
any contributions made or benefits available under the Federal Social
Security Act.
Effective before November 21, 1990, Section 20.2 of the Plan, then designated as
Section 17.7, read as follows:
17.7 Return of Contributions. All Pre-Tax Contributions,
-----------------------
Matching Contributions and Profit Sharing Contributions are expressly
conditioned upon the deductibility of such Contributions under section
404
EMPLOYEE INVESTMENT PLAN
A-20
<PAGE>
of the Code. If the deduction of any such 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 Member Contribution,
Matching Contribution or Profit Sharing 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 such Contribution returned under this Section 17.7 will be reduced
to reflect losses but will not be increased to reflect gains or
income. Any Member Contribution returned under this Section 17.7 will
be paid to the Member from whom it was withheld.
Effective for the period beginning January 1, 1990 and ending July 16, 1990,
Appendix C to the Plan, read as follows:
As of January 1, 1990, Members will not make Member Contributions
as Pre-Tax Contributions.
Effective on and after July 17, 1990, Appendix C to the Plan read as follows:
As of January 1, 1990, Members will not make Member Contributions
as Pre-Tax Contributions; provided, however, that after July 16, 1990,
such provision will not apply to any Member who is not a "Highly
Compensated Employee," within the meaning of section 414(q) of the
Code.
EMPLOYEE INVESTMENT PLAN
A-21
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX B
----------
BLACKOUT PROVISIONS
-------------------
1. In General. Any person or entity authorized to amend the Plan, or any
----------
person or entity designated in writing by such person or entity (the "Blackout
Coordinator"), may establish a Blackout Period, as defined below, in the event
that the Blackout Coordinator determines that such a Blackout Period is
necessary or appropriate in the administration of the Plan.
2. Definitions.
-----------
(a) A Blackout Period is a period of time during which Affected
Requests shall not be processed or effected.
(b) An Affected Request is any of the following requests by a Member
(or Beneficiary) for an action or an event under the Plan, or any of the
following Plan functions or events:
(i) Reinvestment of Accounts pursuant to Section 7 of the
Plan;
(ii) Valuation of Accounts and distribution of statements
pursuant to Section 8 of the Plan;
(iii) Withdrawals pursuant to Section 9 of the Plan;
(iv) Loans pursuant to Section 10 of the Plan; and
(v) Distribution of Plan Benefits pursuant to Section 11 of
the Plan.
In addition, the Blackout Coordinator, in its declaration of the Blackout
Period or in any supplementary action regarding the Blackout Period, may
designate as Affected Requests any other requests by a Member (or Beneficiary)
or other Plan functions or events which are otherwise allowed or provided for
under the Plan, or may declare that specified requests or Plan
EMPLOYEE INVESTMENT PLAN
B-1
<PAGE>
functions or events encompassed by (b)(i)-(v) above shall not constitute
Affected Requests, for all or a designated portion of the Blackout Period.
3. Duration. The duration of the Blackout Period shall be determined by
--------
the Blackout Coordinator, in its sole discretion.
4. Effect of Blackout Period. Affected Requests will be held by the
-------------------------
Administrative Committee until the end of the Blackout Period. At the end of
the Blackout Period, the Administrative Committee shall reconfirm the Member's
(or Beneficiary's) eligibility for or desire with respect to any Affected
Request which had been submitted by such Member (or Beneficiary), but which had
not been processed as a result of the Blackout Period. Other Plan functions or
events which would have occurred if not for the Blackout Period, will be
processed automatically after the expiration of the Blackout Period.
EMPLOYEE INVESTMENT PLAN
B-2
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX C
----------
FUNDS
-----
- - Fidelity Money Market Trust: Retirement Money Market Portfolio
- - Fidelity Investment Grade Bond Fund
- - Fidelity Asset Manager: Income
- - Fidelity Asset Manager
- - Fidelity Asset Manager: Growth
- - Fidelity Magellan Fund
- - Fidelity Contrafund
- - Fidelity Overseas Fund
- - Sponsor Stock Fund
The Fund designated as the Holding Account referenced in Section 7.1 shall
be the Fidelity Retirement Government Money Market Portfolio.
The Fund designated as the Fund to receive contributions for which no
proper Member investment direction has been received shall be the Fidelity
Retirement Government Money Market Portfolio.
EMPLOYEE INVESTMENT PLAN
C-1
<PAGE>
EMPLOYEE INVESTMENT PLAN OF
---------------------------
LEVI STRAUSS ASSOCIATES INC.
----------------------------
APPENDIX D
----------
ADDITIONAL ELIGIBLE WITHDRAWALS AND LOANS
-----------------------------------------
In accordance with Sections 9.3(a)(viii), 9.3(b)(ii)(B) and 10.1(a)(iii),
losses relating to natural disasters described herein may form a basis for
withdrawals or loans.
(a) Description of Natural Disaster.
-------------------------------
Limitations.
-----------
EMPLOYEE INVESTMENT PLAN
D-1
<PAGE>
Exhibit 10qq
EMPLOYEE INVESTMENT PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
-----------------
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Investment Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 18.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company and certain of its major stockholders are
considering a transaction intended to ensure the long-term private, family
ownership of the Company (the "Transaction") and which would involve the
elimination of Company stock as an investment under the Plan;
WHEREAS, by resolutions duly adopted on November 30, 1995, the Board
of Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt amendments to the Plan in order to accommodate
and reflect the possibility of the Transaction and any related transactions; and
WHEREAS, effective as of December 7, 1995 the Company adopted a new
Appendix F to the Plan to accommodate and reflect the possibility of the
Transaction and any related transactions;
WHEREAS, the Company wants to amend Appendix F to delay the
application of certain provisions of Appendix F;
WHEREAS, the amendments herein are within the scope of such delegated
authority of Robert D. Haas;
NOW, THEREFORE, effective as of the date hereof, Appendix F of the
Plan is hereby amended and restated in its entirety to read as set forth on the
attached exhibit.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, on
December 7, 1995.
/s/ Robert D. Haas
__________________________
Robert D. Haas
<PAGE>
Chairman of the Board and Chief Executive
Officer
<PAGE>
EXHIBIT
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
APPENDIX F
--------------------
Suspension of Stock Fund Investments
and Related Provisions
--------------------
1. Introduction.
------------
Effective as of December 7, 1995, the provisions of this Appendix F to the
Plan are applicable with respect to the transactions and events specified
below, instead of the provisions of the main text of, or other appendices
to, the Plan which would otherwise govern such transactions and events.
2. Special Provisions.
------------------
(a) Stock Fund Transactions.
-----------------------
(i) All reinvestment of Accounts under Section 7.3, withdrawals under
Section 9, loans under Section 10 and distributions of Plan
Benefits under Section 11 shall be suspended effective for
requests received on or after the Suspension Date (as such term
is defined in Section F.2(c) below), to the extent that such
transactions would have resulted in the distribution or transfer
of funds from the Stock Fund.
(ii) (A) Except as provided in (B) below, any duty,
responsibility or function assigned to the Investment
Committee with respect to matters relating to the Stock Fund
after the Effective Date, including but not limited to
obtaining an appraisal of the Fair Market Value of LSAI
Stock, is hereby assigned to the Chief Executive Officer of
the Company (the "CEO"), or to any person or entity
designated in writing by the CEO. The CEO, or the individual
or entity designated by the CEO, if any, shall be referred
to as the "Coordinator."
(B) The assignment provided in (A) above does not apply to
any responsibility of the Investment Committee in
discharging its duties under the Plan in connection with a
transaction or event which may
-1-
<PAGE>
result in the sale, conversion or other disposition of the
LSAI Stock held by the Plan, including but not limited to
acting on behalf of the Plan with respect to the exercise of
stockholders' rights associated with mergers (for example,
dissenter's rights under relevant state law) and responses
to purchase offers as described in Section 7.7(c).
(iii) Nothing herein is intended to require the Coordinator to obtain
a Fair Market Value of LSAI Stock during the suspension of
Stock Fund transactions provided in Section F.2(a)(i) above.
(iv) The responsibilities of the Investment Committee under the Plan
which are not described in the assignment provided in Section
F.2(a)(ii)(A) above shall remain in full force and effect.
(b) Investments and Investment Directions.
-------------------------------------
(i) No additional investment of Member Contributions or Company
Contributions shall be made to the Stock Fund.
(ii) Effective for pay periods beginning December 25, 1995, all
Member Contributions held in the Retirement Government Money
Market Fund pending potential investment in the Stock Fund
shall be transferred to the Retirement Money Market Fund, all
current Member Contributions shall be deposited in the fund
designated by the Member for the investment of such Member
Contributions, and the Retirement Money Market Fund shall be
the Fund to receive contributions for which no proper
investment direction has been received.
(iii) With respect to any Matching Contribution which is made with
respect to Member Contributions made on or after May 29, 1995:
(A) A transfer of Member Contributions to the Stock Fund is
not required in order for the Company to make a Matching
Contribution.
(B) The first Matching Contribution made after the date of
this Appendix shall be made with respect to Member
Contributions made on or before December 24, 1995 on
behalf of a Member who was an Employee on November 22,
1995, or ceased to be an Employee between May 29, 1995 and
November 22, 1995 by reason of an event described in
Section 5.1(b)(i)-(iv). Any subsequent Matching
Contributions, and the time for making any
-2-
<PAGE>
such Matching Contribution, shall be determined by the
Company, in its sole discretion.
(C) Matching Contributions shall be made in cash and deposited
in the Fund designated by the Member as of the date of
deposit for investment of his or her Member contributions
or, if no such designation is in effect, in the Retirement
Money Market Fund.
(c) Suspension Date. For purposes of this Appendix F, the term
---------------
"Suspension Date" shall mean the date on which the Company commences
distribution (including but not limited to distribution by electronic
mail) of a summary of the terms of this Appendix F.
-3-
<PAGE>
Exhibit 10qq
EMPLOYEE INVESTMENT PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
-----------------
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Investment Plan of Levi Strauss Associates Inc. (the "Plan");
WHEREAS, pursuant to Section 18.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan in order to readmit a
limited number of Highly Compensated Employees to active participation under
certain circumstances;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 June 1, 1993, 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 such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective November 27, 1995, the Plan is hereby
amended as set forth below:
1. The current text of Section 3.5 is redesignated as Section 3.5(a).
2. Current Sections 3.5(a) through (d) are redesignated as Sections
3.5(a)(i) through (iv).
1
<PAGE>
3. The first sentence of current Section 3.5 is amended to read as set
forth below:
Any Highly Compensated Employee will only be eligible for membership
in the Plan as an Inactive Member or as set forth in Section 3.5(b),
and in either case only if he or she satisfies the eligibility
requirements of Section 3.1.
4. Section 3.5 is amended by a new Section 3.5(b), to read as set forth
below:
(b) (i) Eligible Highly Compensated Employees. Section
-------------------------------------
3.5(a) notwithstanding, a Highly Compensated Employee who satisfies
the eligibility requirements of Section 3.1 may participate in the
Plan for all or a portion of a Plan Year as a Member provided that
he or she is included in an eligible category of Highly Compensated
Employees described in Appendix E to the Plan.
(ii) Establishment of Appendix E. Appendix E may be
---------------------------
established, amended or revoked from time to time by any individual
or entity empowered to amend the Plan. It is intended that
Appendix E designate an eligible category of Highly Compensated
Employees who can participate in the Plan without resulting in the
Plan failing to comply with the nondiscriminatory coverage rules of
Code section 410(b) or any successor provision. However, the
existence of this provision does not require the Company to
designate any Highly Compensated Employees, or the maximum
permissible Highly Compensated Employees, to participate in the Plan
as Members for any Plan Year.
5. The Plan is amended by a new Appendix E, to read as set forth on the
attached exhibit hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
December 21, 1995.
________________________________
Donna J. Goya
Senior Vice President
2
<PAGE>
EXHIBIT TO EMPLOYEE INVESTMENT PLAN AMENDMENT
EMPLOYEE INVESTMENT PLAN OF
LEVI STRAUSS ASSOCIATES INC.
APPENDIX E
--------------------
Pursuant to Section 3.5(b) of the Plan, the Highly Compensated
Employees described below are eligible to participate in this Plan as Members:
6. For the Plan Year ending in 1996, Highly Compensated Employees whose
compensation (as determined pursuant to Section 2.23) for the Plan
Year ending in 1995 did not exceed $95,000.
3
<PAGE>
Exhibit 10rr
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EMPLOYEE LONG-TERM INVESTMENT
-----------------------------
AND SAVINGS PLAN
----------------
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of April 1, 1995)
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of April 1, 1995)
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................................................ 2
2.1 "Accounts"................................................. 2
2.2 "Act"...................................................... 2
2.3 "Administrative Committee"................................. 2
2.4 "Affiliated Company"....................................... 2
2.5 "Alternate Payee".......................................... 2
2.6 "Annual Additions"......................................... 2
2.7 "Annuity Starting Date".................................... 3
2.8 "Beneficiary".............................................. 3
2.9 "Board of Directors"....................................... 3
2.10 "Code"..................................................... 4
2.11 "Committee"................................................ 4
2.12 "Company".................................................. 4
2.13 "Compensation"............................................. 4
2.14 "Domestic Relations Order"................................. 4
2.15 "Effective Date"........................................... 4
2.16 "Employee"................................................. 4
2.17 "Fair Market Value"........................................ 6
2.18 "Forfeiture"............................................... 6
2.19 "Fund"..................................................... 6
2.20 "Highly Compensated Employee".............................. 6
2.21 "Highly Compensated Former Employee"....................... 8
2.22 "Hour of Service".......................................... 8
2.23 "Inactive Member".......................................... 8
2.24 "Investment Committee"..................................... 8
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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Page
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2.25 "Investment Manager"....................................... 8
2.26 "IRS"...................................................... 8
2.27 "Labor Department"......................................... 8
2.28 "LS&CO."................................................... 8
2.29 "LSAI Stock"............................................... 8
2.30 "Matching Account"......................................... 9
2.31 "Matching Contribution".................................... 9
2.32 "Member"................................................... 9
2.33 "Member Contributions"..................................... 9
2.34 "Membership Date".......................................... 9
2.35 "Mutual Fund".............................................. 9
2.36 "Normal Retirement Age".................................... 9
2.37 "Participating Company".................................... 9
2.38 "Plan"..................................................... 9
2.39 "Plan Benefit"............................................. 9
2.40 "Plan Year"................................................ 9
2.41 "Post-Tax Account"......................................... 9
2.42 "Post-Tax Contributions"................................... 9
2.43 "Pre-Tax Account".......................................... 10
2.44 "Pre-Tax Contributions".................................... 10
2.45 "Qualified Domestic Relations Order"....................... 10
2.46 "Qualified Member"......................................... 10
2.47 "Registration Rights Agreement"............................ 10
2.48 "Regulations".............................................. 10
2.49 "Required Beginning Date".................................. 10
2.50 "Retiree Coordinator"...................................... 10
2.51 "Rollover Account"......................................... 10
2.52 "Rollover Contributions"................................... 10
2.53 "Service".................................................. 11
2.54 "Special Company Account".................................. 12
2.55 "Special Company Contribution"............................. 12
2.56 "Surviving Spouse"......................................... 12
2.57 "Total Compensation"....................................... 12
2.58 "Totally and Permanently Disabled"......................... 14
2.59 "Trust Agreement".......................................... 14
2.60 "Trust Fund"............................................... 14
2.61 "Trustee".................................................. 14
2.62 "Valuation Date"........................................... 14
2.63 "Vested Interest".......................................... 14
2.64 "Year of Service".......................................... 14
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
Page
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SECTION 3 MEMBERSHIP AND TRANSFER.................................... 15
3.1 Commencement of Membership................................. 15
3.2 Rehired and Transferred Employees.......................... 15
3.3 Suspension of Membership................................... 15
3.4 Termination of Membership.................................. 16
3.5 Highly Compensated Employees............................... 16
SECTION 4 MEMBER CONTRIBUTIONS....................................... 17
4.1 Election to Make Contributions............................. 17
4.2 Maximum Pre-Tax Contributions.............................. 17
4.3 Change or Suspension of Contributions...................... 17
4.4 Resumption of Contributions................................ 17
4.5 Withholding and Deposit With Trustee; Crediting Accounts... 17
4.6 Distribution of Excess Contributions and Deferrals......... 18
4.7 Rollover Contributions..................................... 18
SECTION 5 MATCHING AND SPECIAL COMPANY CONTRIBUTIONS................. 20
5.1 Matching Contribution...................................... 20
5.2 Special Company Contribution............................... 20
5.3 Deposit with Trustee; Crediting Accounts................... 21
5.4 Curtailment or Distribution from Plan of Excess Aggregate
Contributions.............................................. 21
SECTION 6 TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS.......... 23
6.1 Trust Fund................................................. 23
6.2 Investment of Contributions................................ 23
6.3 Reinvestment of Contributions.............................. 24
6.4 Investment by Alternate Payees............................. 25
6.5 Allocation of Voting Rights................................ 25
6.6 Exercise of Voting Rights.................................. 26
6.7 Other Instructions by Members.............................. 26
6.8 Participant Directed Accounts.............................. 27
SECTION 7 VALUATIONS AND STATEMENTS.................................. 29
7.1 Valuation of Accounts...................................... 29
7.2 Statements................................................. 29
SECTION 8 WITHDRAWALS................................................ 30
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<PAGE>
Page
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8.1 Withdrawals from Post-Tax Accounts......................... 30
8.2 Withdrawals from Rollover Accounts......................... 30
8.3 Requirements for Hardship and Disability Withdrawals....... 30
8.4 Payment of Withdrawals..................................... 32
8.5 Valuation Date............................................. 32
8.6 Withdrawals by Alternate Payees............................ 32
SECTION 9 PLAN BENEFITS.............................................. 33
9.1 Vesting in Accounts........................................ 33
9.2 Amount of Plan Benefit..................................... 33
9.3 Valuation of Plan Benefit.................................. 33
9.4 Form of Payment............................................ 33
9.5 Time of Payment............................................ 35
9.6 Death Benefit.............................................. 36
9.7 Limitation on Time of Payment.............................. 36
9.8 Undeliverable Checks....................................... 37
SECTION 10 ALLOCATION LIMITATIONS..................................... 38
10.1 Limitation on Annual Additions............................. 38
10.2 Combined Limitation on Benefits and Contributions.......... 38
10.3 Reduction of Excess Annual Additions....................... 38
10.4 Disposition of Excess Annual Additions..................... 38
SECTION 11 FUNDING POLICY AND METHOD.................................. 40
11.1 Contributions.............................................. 40
11.2 Trust Fund................................................. 40
11.3 Expenses of the Plan....................................... 40
11.4 Cash Requirements.......................................... 40
11.5 Independent Accountant..................................... 40
11.6 Loans from Parties-In-Interest............................. 41
SECTION 12 BENEFICIARIES.............................................. 42
SECTION 13 ADMINISTRATION AND OPERATION OF THE PLAN................... 43
13.1 Plan Administrator......................................... 43
13.2 Control and Management of Plan Assets...................... 43
13.3 Trustees and Investment Managers........................... 43
13.4 Committee Membership....................................... 44
13.5 Reports to Board of Directors.............................. 44
13.6 Employment of Advisers..................................... 44
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
Page
----
13.7 Limitations on Committee Actions........................... 44
13.8 Committee Meetings......................................... 45
SECTION 14 CLAIMS AND REVIEW PROCEDURES............................... 46
14.1 Applications for Benefits.................................. 46
14.2 Denial of Applications..................................... 46
14.3 Requests for Review........................................ 46
14.4 Decisions on Review........................................ 47
14.5 Exhaustion of Administrative Remedies...................... 47
SECTION 15 TERMINATION OF EMPLOYER PARTICIPATION...................... 48
15.1 Termination by Participating Company....................... 48
15.2 Effect of Termination...................................... 48
15.3 IRS Termination Procedure.................................. 48
15.4 Termination of the Plan.................................... 48
SECTION 16 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST..... 49
16.1 Right to Amend............................................. 49
16.2 Plan Merger or Consolidation............................... 49
16.3 Termination of the Plan.................................... 49
16.4 Partial Termination of the Plan............................ 49
16.5 Manner of Distribution..................................... 50
16.6 Restrictions on Liquidation of Trust Fund Upon Termination. 50
SECTION 17 INALIENABILITY OF BENEFITS................................. 51
17.1 No Assignment Permitted.................................... 51
17.2 Return of Contributions.................................... 51
17.3 Qualified Domestic Relations Orders........................ 52
SECTION 18 TOP-HEAVY PROVISIONS....................................... 54
18.1 Determination of Top-Heavy Status.......................... 54
18.2 Minimum Allocations........................................ 54
18.3 Minimum Vesting............................................ 55
18.4 Impact on Maximum Benefits................................. 55
SECTION 19 GENERAL LIMITATIONS AND PROVISIONS......................... 56
19.1 No Employment Rights....................................... 56
19.2 Payments from the Trust.................................... 56
19.3 Payments to Minors or Incompetents......................... 56
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
Page
----
19.4 Lost Members or Other Persons.............................. 56
19.5 Personal Data to the Administrative Committee.............. 56
19.6 Insurance Contracts........................................ 57
19.7 Notice to the Administrative Committee..................... 57
19.8 Notices to Members and Beneficiaries....................... 57
19.9 Word Usage................................................. 57
19.10 Headings................................................... 57
19.11 Governing Law.............................................. 57
19.12 Heirs and Successors....................................... 57
19.13 Withholding................................................ 58
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
vi
<PAGE>
Page
----
APPENDIX A PRIOR PLAN PROVISIONS...................................... A-1
APPENDIX B BLACKOUT PROVISIONS........................................ B-1
APPENDIX C FUNDS...................................................... C-1
APPENDIX D ADDITIONAL ELIGIBLE WITHDRAWALS............................ D-1
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
vii
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
(As Amended and Restated Effective November 27, 1989,
with main text reflecting certain changes as of April 1, 1995)
1 INTRODUCTION AND PERSONS TO WHOM PLAN APPLIES.
- - ---------------------------------------------
1.1 Introduction. Effective August 1, 1989, the Levi Strauss
------------
Associates Inc. Employee Long-Term Investment and Savings Plan ("ELTIS") was
established to provide eligible employees ("Employees") with a program of
regular savings supplemented by Matching Contributions. ELTIS was amended from
time to time after August 1, 1989, to comply with certain provisions of relevant
law or effect other changes desired by Levi Strauss Associates Inc.
By this amendment and restatement (the "Plan"), Levi Strauss Associates Inc.
intends to amend ELTIS (1) effective November 27, 1989 to comply with the Tax
Reform Act of 1986 and other applicable legislation and (2) effective April 1,
1995, to effect certain plan design changes, including changes relating to a
change in recordkeeper. Levi Strauss Associates Inc. intends that the Plan
continue to qualify as a profit sharing plan under section 401(a) and related
sections of the Code and as a cash or deferred arrangement under section 401(k)
of the Code and that the trust established under the Plan continue to qualify
as a tax-exempt trust under section 501(a) of the Code.
This amended and restated Plan is generally effective November 27, 1989.
Certain provisions of the Plan which were in effect on or after November 27,
1989, but which were amended before April 1, 1995 are included in Appendix A.
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 claiming benefits
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 Levi Strauss Associates Inc. or an Affiliated Company, 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, or unless the Member again becomes an Employee on or after the
Effective Date. This amended and restated Plan will not reduce any Member's Plan
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
1
<PAGE>
Benefit under the Plan, as determined on the date immediately preceding the
Effective Date, and this Plan will be construed accordingly.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
2
<PAGE>
2 DEFINITIONS.
- - -----------
When used in this Plan document the following terms will have the
following meanings:
2.1 "Accounts" means to the extent applicable to a Member one or more
--------
of the following Accounts:
(a) Pre-Tax Account;
(b) Matching Account;
(c) Special Company Account; and
(d) Post-Tax Account.
2.2 "Act" means the Employee Retirement Income Security Act of 1974,
---
as amended, and any Regulations or rulings issued under the Act.
2.3 "Administrative Committee" means the committee appointed to
------------------------
administer the Plan as described in Section 13.4.
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; or
(e) Any other entity designated as an Affiliated Company by the
Board of Directors.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
3
<PAGE>
2.5 "Alternate Payee" means the spouse, former spouse, child or other
---------------
dependent of a Member who is recognized under a Domestic Relations Order as
having a right to receive all, or a portion, of a Member's Plan Benefit.
2.6 "Annual Additions" means the sum of the following additions to the
----------------
Member's Accounts for the Plan Year:
(a) The aggregate employee contributions which the Member
contributes to all qualified retirement plans maintained by the Company and all
Affiliated Companies, including Post-Tax Contributions to this Plan;
(b) The amount of contributions made on behalf of the Member to
any qualified defined contribution plan maintained by the Company and all
Affiliated Companies under an election by the Member under a qualified cash or
deferred arrangement, including Pre-Tax Contributions to this Plan;
(c) The amount of employer contributions and forfeitures
allocated to the Member under any qualified defined contribution plan maintained
by the Company and any Affiliated Company, including Matching Contributions and
Special Company Contributions to this Plan; and
(d) Contributions allocated to any individual medical benefit
account (within the meanings of sections 415(l) and 419A(d)(2) of the Code) that
is established for the Member.
Employee contributions will be determined without regard to any rollover
contributions (as defined in sections 402(a)(5), 403(a)(4), 403(b)(8) and
403(d)(3) of the Code) and without regard to any employee contributions to a
simplified employee pension plan which are excludable from income under section
408(k)(6) of the Code. In addition, the 25% of compensation limitation
described in section 415(c)(1)(B) of the Code will not apply to any
contribution for medical benefits (within the meaning of section 419A(f)(2) of
the Code) after the Member's separation from Service which is treated as an
Annual Addition.
2.7 "Annuity Starting Date" means the first day of the first month for
---------------------
which an amount is payable 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 Plan Benefit in a form other than an annuity in
accordance with Section 9.4 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 under Section 9.1 and Section 12 (or any other person or persons
designated as such under
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
4
<PAGE>
applicable law) to receive the amount, if any, payable under the Plan upon the
death of the Member.
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 "Code" means the Internal Revenue Code of 1986, as amended, and
----
any Regulations or rulings issued under the Code.
2.11 "Committee" means the Administrative Committee or Investment
---------
Committee, as applicable.
2.12 "Company" means Levi Strauss Associates Inc., LS&CO. and each
-------
other Participating Company or any of them.
2.13 "Compensation" means a Member's compensation for a Plan Year paid
------------
by the Company for services while an Employee and a Member during that Plan
Year, as reported on IRS Form W-2, including the Member's Pre-Tax Contributions
to the Plan for such Plan Year. The term "Compensation" does not include any
bonuses (except for cash profit sharing payments), relocation expenses, gifts on
account of retirement, severance payments, pay in lieu of notice and noncash
compensation such as prizes and awards. A Member's Compensation will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
For Plan Years beginning on and after the November 27, 1989,
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. In
determining the Compensation of a Member, the family aggregation rules under
section 414(q) of the Code will apply, except that in applying these rules, the
term "family" will only include the spouse of the Member and any lineal
descendants of the Member who have not reached age 19 before the close of the
Plan Year.
2.14 "Domestic Relations Order" means any judgement, decree or order
------------------------
(including approval of a property settlement agreement) that:
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
5
<PAGE>
(a) Relates to the provision of child support, alimony payments
or marital property rights to a spouse, former 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.
2.15 "Effective Date" means November 27, 1989, except as expressly
--------------
stated otherwise in this document or as required by the Tax Reform Act of 1986,
as amended, and other applicable legislation.
2.16 "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) An alien who:
(i) Receives remuneration from the Company which
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 of the United States by a foreign subsidiary (including a
domestic subsidiary operating abroad) or 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 any Affiliated Company;
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
(e) A United States citizen locally hired by a foreign
subsidiary (including a domestic subsidiary operating abroad) or foreign
division of the Company;
(f) 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;
(g) 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;
(h) An employee who is included in a group or classification of
employees on the payroll of a company designated by the Board of Directors as
not being eligible to participate in the Plan; or
(i) A Highly Compensated Employee, with respect to the
eligibility to make Member Contributions or receive an allocation of Matching
Contributions only.
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 any person described in (c), (d) or (e) above. Such designation must
be made in writing after receiving the advice of counsel.
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; or
(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.
2.17 "Fair Market Value" means the value of a share of LSAI Stock,
-----------------
determined by the latest independent appraisal of the value of LSAI Stock
obtained by the Investment Committee. If LSAI Stock is offered to the public
under the Registration Rights Agreement, "Fair Market Value" will mean the net
proceeds realized by the Trustee in selling shares of LSAI Stock under such
offering until LSAI Stock is reappraised or until a public market for LSAI Stock
arises.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
2.18 "Forfeiture" means the portion of a Member's Matching Account and
----------
Special Company Contribution Account which is forfeited under Section 9.1.
2.19 "Fund" means any of the investment funds described in Section 6.1.
----
2.20 "Highly Compensated Employee" means an Employee 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 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 for a Plan Year, the following employees, as described in section
414(q)(8) and section 414(q)(11) of the Code, will be excluded:
(i) Those who have not completed 6 months of service;
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
(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 section 414(q)(8) and section 414(q)(11)
of the Code) will be treated as officers. Further, if no officer receives the
level of "compensation" described in Section 2.20(a)(iv), the highest paid
officer of the Company and all Affiliated Companies will be treated as a Highly
Compensated Employee described in Section 2.20(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 the person and any Company
or Employee contributions made on behalf of the 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.
"Compensation" means Total Compensation as defined in Section 2.57 of
the Plan 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) (regarding annuity contracts).
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
9
<PAGE>
2.21 "Highly Compensated Former Employee" means a former employee who
----------------------------------
separates from Service 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.
2.22 "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.
2.23 "Inactive Member" means an individual participating in the Plan
---------------
under Section 3.3 and 3.5.
2.24 "Investment Committee" means the committee appointed to manage and
--------------------
control the Plan's assets as described in Section 13.4.
2.25 "Investment Manager" means a person who is appointed to direct the
------------------
investment of all or any part of the Trust Fund under Section 13.2 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.
2.26 "IRS" means the United States Internal Revenue Service.
---
2.27 "Labor Department" means the United States Department of Labor.
----------------
2.28 "LS&CO." means Levi Strauss & Co., a Delaware corporation.
------
2.29 "LSAI Stock" means shares of common or preferred stock of Levi
----------
Strauss Associates Inc. that have been authorized for issuance to or ownership
by the Trustee.
2.30 "Matching Account" means the account maintained for a Member to
----------------
hold the Member's Matching Contributions.
2.31 "Matching Contribution" means the contribution made by the Company
---------------------
under Section 5.1.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
10
<PAGE>
2.32 "Member" means a person who is either an "Active Member" who
------
participates in all features of the Plan or an "Inactive Member" who only
participates in certain features of the Plan under Section 3.3 or Section 3.5.
2.33 "Member Contributions" means Post-Tax Contributions and/or Pre-Tax
--------------------
Contributions.
2.34 "Membership Date" means the first day of each payroll period.
---------------
2.35 "Mutual Fund" means a regulated investment company, as defined in
-----------
Section 851 of the Code.
2.36 "Normal Retirement Age" means age 65.
---------------------
2.37 "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 as its exclusive agents to exercise on its
behalf all of the power and authority conferred under this Plan, 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 15.2.
2.38 "Plan" means this Levi Strauss Associates Inc. Employee Long-Term
----
Investment and Savings Plan, as amended from time to time.
2.39 "Plan Benefit" means the benefit distributable to a Member or
------------
Beneficiary under Section 9.
2.40 "Plan Year" means the annual period corresponding to LS&CO.'s
---------
fiscal year for federal income tax purposes.
2.41 "Post-Tax Account" means the account maintained for a Member to
----------------
hold the Member's Post-Tax Contributions.
2.42 "Post-Tax Contributions" means post-tax contributions made by a
----------------------
Member under Section 4.1.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
11
<PAGE>
2.43 "Pre-Tax Account" means the account maintained by a Member to hold
---------------
the Member's Pre-Tax Contributions.
2.44 "Pre-Tax Contributions" means the contributions made to the Plan
---------------------
on behalf of a Member under Section 4.1.
2.45 "Qualified Domestic Relations Order" means a Domestic Relations
----------------------------------
Order that satisfies the requirements described in Section 17.3.
2.46 "Qualified Member" means a Member who has reached age 63, or who
----------------
has reached age 53 and completed at least 13 Years of Service.
2.47 "Registration Rights Agreement" means the registration rights
-----------------------------
agreement entered into by Levi Strauss Associates Inc. and the Trustee, as
amended from time to time, under which the Trustee may require Levi Strauss
Associates Inc. under certain circumstances to register Stock under the
Securities Act of 1933.
2.48 "Regulations" means the applicable regulations issued under the
-----------
Code or the Act by the IRS or the Labor Department or any other governmental
authority and any temporary rules promulgated by such authorities pending the
issuance of such regulations.
2.49 "Required Beginning Date" generally means April 1 of the calendar
-----------------------
year following the calendar 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.
2.50 "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.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
12
<PAGE>
2.51 "Rollover Account" means the account maintained for a Member to
----------------
hold the Member's Rollover Contributions.
2.52 "Rollover Contributions" means the rollover contributions made by
----------------------
a Member under Section 4.7.
2.53 "Service" means employment (whether or not as an Employee) with
-------
the Company or an Affiliated Company. Service will begin on the date an Employee
first performs 1 Hour of Service for the Company or an 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) The first anniversary of the date the Employee is absent
from Service for any other reason (e.g. an authorized leave of absence as
described in paragraphs (i) and (ii), etc. below).
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 Services
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 a 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.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
13
<PAGE>
If an Employee is on a leave of absence for more than 12 months, the
Employee will be deemed to have quit and terminated Service as of the end of
such 12 month period if the Employee fails to abide by the terms and conditions
of such leave (which may include a requirement of reemployment), as established
from time to time by the Administrative Committee. If an Employee retires,
dies or terminates employment while on leave of absence, vacation, holiday or
jury duty or while disabled or sick, his or her Service will terminate on the
earlier of:
- -------
(i) The date of such retirement, death or termination; or
(ii) 12 months after the start of a leave, vacation or
holiday or onset of disability or sickness.
All Service will be aggregated, whether or not such Service is performed
consecutively, and every partial month will be deemed to be one full month of
Service.
An Employee's Period of Service will be determined by the Administrative
Committee and such determination will be conclusive and binding on all persons.
2.54 "Special Company Account" means the account maintained for a
-----------------------
Member to hold the Member's Special Company Contributions.
2.55 "Special Company Contribution" means the contribution made by a
----------------------------
Company under Section 5.2.
2.56 "Surviving Spouse" means, with respect to any deceased Member, the
----------------
individual (if any) who is considered to be the spouse of such Member under
local law at the time of such Member's death.
2.57 "Total Compensation" means all wages, salaries, and fees for
------------------
professional services and other amounts received during the Plan Year for
personal services actually rendered in the course of employment with an
Affiliated Company (including, but not limited to, commissions paid sales
representatives, account executives and account managers compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, reimbursements, and other expenses
under a nonaccountable plan (as described in section 1.62 of the Code)
determined without regard to any exclusions from income under section 931 and
section 933 of the Code. "Total 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
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
14
<PAGE>
Code), determined without regard to any exclusions from gross income similar to
those under section 931 and section 933 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 Member 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 Member;
(d) Amounts paid or reimbursed by the Company or an Affiliated
Company for moving expenses incurred by the Member, but only to the extent that
such amounts are not deductible by the Member under section 217 of the Code;
(e) The value of a nonqualified stock option granted to the
Member 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 Member for the
taxable year when granted; and
(f) The amount includable in the gross income of the Member upon
making an election described in section 83(b) of the Code.
"Total Compensation" will not include:
-----------
(a) Company contributions to a plan of deferred compensation, to
the extent that before the application of the limitations under section 415 of
the Code to that plan, the contributions are not includable in the Member's
gross income for federal income tax purposes in the taxable year of the Member
in which the contributions are made;
(b) Company contributions under 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 plan of deferred compensation
regardless of whether such amounts are includable in gross income of the Member
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) held by
the Member either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
15
<PAGE>
(f) Amounts realized from the sale, exchange or other
distribution of stock acquired under an incentive stock option; and
(g) Other amounts that receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the premiums
are not includable in the gross income of the Member) or contributions made by
an employer (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 excluded from the gross income of the Member.
For Plan Years beginning on and after the Effective Date, Total
Compensation 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. In determining the Total
Compensation of a Member, the family aggregation rules under section 414(q) of
the Code will apply, except that in applying those rules the term "family" will
only include the spouse of the Member and any lineal descendants of the Member
who have not reached age 19 before the close of the Plan Year.
2.58 "Totally and Permanently Disabled" 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.
2.59 "Trust Agreement" means the trust agreement or agreements between
---------------
Levi Strauss Associates Inc. and a Trustee under which the assets of the Plan
are managed.
2.60 "Trust Fund" means the trust fund or funds consisting of the
----------
assets of the Plan and maintained by the Trustee under the Plan and the Trust
Agreement.
2.61 "Trustee" means the trustee or trustees of the Trust Fund.
-------
2.62 "Valuation Date" means any business day.
--------------
2.63 "Vested Interest" means the nonforfeitable interest of a Member in
---------------
a particular Account, determined in accordance with Section 9.1.
2.64 "Year of Service" means a 12 month period of Service in which the
---------------
Member has Service under Section 2.53. A Member's Years of Service will be
determined by the Administrative Committee and such determination will be
conclusive and binding on all persons.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
16
<PAGE>
3 MEMBERSHIP AND TRANSFER.
- - -----------------------
3.1 Commencement of Membership. Each Employee who was a Member in the
--------------------------
Plan on the Effective Date, will continue to be a Member. Each Employee who was
not a Member in the Plan on the Effective Date, will become a Member in the Plan
under paragraphs (a), (b) and (c) below.
(a) Pre-Tax Contributions and Matching Contributions.
------------------------------------------------
Membership in the Plan is voluntary for the Pre-Tax Contributions provided for
in Section 4.1 and the Matching Contributions provided for in Section 5.1. An
Employee may become a Member in the Plan with respect to Pre-Tax Contributions
and Matching Contributions on the first day of the first pay period coinciding
with or next following the day on which he or she completes a Year of Service,
by filing the prescribed form with the Administrative Committee in advance.
(b) Special Company Contributions. Membership for Special
-----------------------------
Company Contributions provided for in Section 5.2 is automatic. An Employee who
is hired on or before November 30 of the prior Plan Year, and who maintains an
employment relationship with the Company or an Affiliated Company from such date
until the last day of such Plan Year, will become a Member in the Plan for any
Special Company Contribution as of the last day of such Plan Year.
(c) Post-Tax Contributions. Effective as of the first day of
----------------------
the first pay period ending after June 1, 1995, an Employee may become a Member
with respect to Post-Tax Contributions on the first day of the first pay period
coinciding with or next following the day on which he or she completes a Year of
Service, by filing the prescribed form with the Administrative Committee in
advance.
Upon becoming a Member, an Employee will designate a Beneficiary under
Section 2.8 and Section 12.
3.2 Rehired and Transferred Employees. A former Employee who is
---------------------------------
rehired, will be eligible to begin or resume membership in the Plan on the first
day of the first pay period coinciding with or next following the date he or she
returns to the status of an Employee and has completed a Year of Service.
Similarly, an employee of the Company or an Affiliated Company who becomes an
Employee after the Membership Date following his or her completion of a Year of
Service, will be eligible to begin or resume membership in the Plan on the first
day of the first pay period coinciding with or next following the date he or she
attains or returns to the status of an Employee.
3.3 Suspension of Membership. A Member's membership in the Plan will
------------------------
be suspended for any period during which the Member is an employee of the
Company or an
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
17
<PAGE>
Affiliated Company but not an Employee. A Member whose membership is suspended
may not make Member Contributions or receive an allocation of Matching
Contributions and Special Company Contributions with respect to the period of
suspension, but the Member's Accounts will continue to share in the income,
gains, losses and expenses of the Trust Fund.
3.4 Termination of Membership. A Member's membership in the Plan will
-------------------------
end when his or her Plan Benefit has been distributed or on the date of his or
her death, whichever occurs first.
3.5 Highly Compensated Employees. Any Employee who is a Highly
----------------------------
Compensated Employee will only be eligible for membership in the Plan as an
Inactive Member, provided that he or she otherwise satisfies the eligibility
requirements of Section 9.1. An Inactive Member will not be eligible to make
Member Contributions under Section 4 of the Plan or to receive any allocation of
Matching Contributions under Section 5 of the Plan. An Inactive Member will,
however, be eligible to:
(a) Direct the investment of his or her Accounts under Section
6; and
(b) Make withdrawals from his or her Accounts under Section 8.
An Inactive Member will continue to be subject to the remaining
provisions of the Plan. The Administrative Committee will periodically determine
whether Members in the Plan are Highly Compensated Employees and any such
Member's status will change from an Active Member to an Inactive Member as soon
as practicable after the Administration Committee makes such determination.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
18
<PAGE>
4 MEMBER CONTRIBUTIONS.
- - --------------------
4.1 Election to Make Contributions. A Member whose membership is not
------------------------------
suspended under Section 3.3 or Section 3.5 may elect to make Pre-Tax
Contributions or, effective as of the first day of the first pay period after
June 1, 1995, Pre-Tax Contributions, Post-Tax Contributions, or any combination
of Pre-Tax Contributions or Post-Tax Contributions to the Plan at the rates
specified in paragraph (a) and (b) below:
(a) Up to 10% of his or her Compensation, in 1% increments; or
(b) From $5 to $25, in $5 increments.
A Member's election to make Pre-Tax Contributions will constitute an
election (for federal tax purposes and, wherever permitted, for state and local
tax purposes) to have his or her taxable Compensation reduced by the amount of
all Pre-Tax Contributions.
4.2 Maximum Pre-Tax Contributions. A Member's Pre-Tax Contributions
-----------------------------
to the Plan for any calendar year will not exceed $7,000 (as adjusted under
section 402(g)(5) of the Code for cost of living increases). Effective as of the
first day of the first pay period after June 1, 1995, if any Member's Pre-Tax
Contributions are affected by this limitation, the Member will continue to make
such contributions as Post-Tax Contributions to the Plan unless the Member
elects to suspend such Contributions as provided in Section 4.3.
4.3 Change or Suspension of Contributions. A Member, at any time, may
-------------------------------------
change the rate of his or her Member Contributions within the percentage and
dollar limitations described in Section 4.1 by filing the prescribed form with
the Administrative Committee or by utilizing such other notification procedure
as is prescribed by the Administrative Committee. A Member may suspend all
Member Contributions by filing the prescribed form with the Administrative
Committee or by utilizing such other notification procedure as is prescribed by
the Administrative Committee. Such changes in rate of contributions or
suspension will be effective as soon as reasonably practicable after the date
the form is filed with or notice is received by the Administrative Committee.
4.4 Resumption of Contributions. A Member who has suspended all
---------------------------
Member Contributions under Section 4.3 may resume Member Contributions to the
Plan at any time by filing the prescribed advance notice with the Administrative
Committee. The resumption in contributions shall be effective as soon as
reasonably practicable after the applicable notice is received by the
Administrative Committee.
4.5 Withholding and Deposit With Trustee; Crediting Accounts. All
--------------------------------------------------------
Member Contributions to the Plan will be withheld through payroll deductions
from the Member's
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
19
<PAGE>
Compensation and will be paid to the Trustee as soon as reasonably practicable
following the end of the pay period in which they are withheld. A Member's Pre-
Tax Contributions will be credited to his or her Pre-Tax Account, and the
Member's Post-Tax Contributions shall be credited to his or her Post-Tax
Account.
4.6 Distribution of Excess Contributions and Deferrals.
--------------------------------------------------
(a) Excess Contributions. If a Member who is a Highly
--------------------
Compensated Employee makes Pre-Tax Contributions which constitute "Excess
Contributions" (as defined in section 401(k)(8)(B) of the Code and the
Regulations issued under such Code section which are expressly incorporated by
this reference) with respect to a Plan Year, such Excess Contributions (and the
earnings on such contributions) will be distributed to the Member after the end
of such Plan Year. Such distribution will be made as soon as administratively
practicable, but in no event later than the end of the next Plan Year. Pre-Tax
Contributions and any earnings on such contributions directed by the Highly
Compensated Employees having the highest rate of Pre-Tax Contributions (as a
percentage of Compensation) will be refunded first under the provisions of the
applicable Regulations. Any refund of Pre-Tax Contributions and earnings will be
limited to the amount that, in the judgment of the Administrative Committee,
will result in the Plan satisfying the requirements of section 401(k)(3)(A) of
the Code.
(b) Excess Deferrals. If a Member makes Pre-Tax Contributions
----------------
which constitute "Excess Deferrals" (as defined in section 402(g)(2)(A) of the
Code and the Regulations issued under such Code section which are expressly
incorporated by this reference) to one or more plans, with respect to a calendar
year, the Member may allocate the Excess Deferrals among the plans to which such
deferrals were made and notify the Administrative Committee in writing by
March 1 of the next calendar year of the Excess Deferrals allocated to the Plan.
Upon the Administrative Committee's receipt of such notice, the amount of the
Excess Deferrals designated by the Member (and any earnings on such amount) will
be distributed to the Member by April 15 of such year.
4.7 Rollover Contributions. An Employee may make a Rollover
----------------------
Contribution to the Plan in an amount equal to all or part of a previous
distribution from a plan that, at the time of the distribution, met the
requirements of section 401(a) of the Code. The Rollover Contribution must be
made in cash within 60 days after its receipt by the Employee either from the
qualified plan or from an individual retirement account which meets the
requirements of section 408 of the Code and has only been used to hold qualified
plan distributions. A Rollover Contribution will be permitted only if the
Employee establishes that:
(a) The Rollover Contribution includes no assets other than
those attributable to employer contributions, earnings on employer contributions
and earnings on employee contributions under plans qualified under section
401(a) of the Code; and
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
20
<PAGE>
(b) If the amount was received by the Employee from a qualified
plan, the Rollover Contribution qualifies as an "eligible rollover distribution"
under section 402(c)(4) of the Code; or
(c) If the amount was received by the Employee from an
individual retirement account, which contains funds described in Section 4.7(a)
only, the distribution from such account represented a total distribution of
such account.
The Rollover Contribution will be paid to the Trustee as soon as practicable,
credited to the Employee's Rollover Account and invested as described in Section
6. If it is determined that a Member's Rollover Contribution mistakenly failed
to qualify under the Code as a tax-free rollover, then the balance in the
Member's Rollover Account attributable to the mistaken contribution immediately
will be segregated from all other Plan assets, treated as a nonqualified trust
established by and for the benefit of the Member, and distributed to the Member.
Such a mistaken contribution will be deemed never to have been a part of the
Plan.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
21
<PAGE>
5 MATCHING AND SPECIAL COMPANY CONTRIBUTIONS.
- - ------------------------------------------
5.1 Matching Contribution. Except as provided below, for each period
---------------------
(an "Accumulation Period") during a Plan Year with respect to which a transfer
of Member Contributions to the Stock Fund is permitted in accordance with
Section 6.2(b), the Company will make a Matching Contribution to the Plan in an
amount equal to 50% of each Member's Member Contributions for the Accumulation
Period. The Matching Contribution will be reduced by any amount which cannot be
allocated to the Member because of the contribution limitation described in
Section 10.1. The Board of Directors may determine in its sole discretion that:
(a) No Matching Contribution will be made for a particular Plan
Year or portion of a Plan Year;
(b) A lesser Matching Contribution will be made, in view of
Company performance, and economic and financial conditions prevailing and
anticipated at the time; or
(c) A greater Matching Contribution will be made for a
particular Plan Year or portion of a Plan Year.
No Matching Contribution will be made for a Member unless he or she:
(a) Is an Employee on the last day of the final preceding
payroll period with respect to which a Member may make a Member Contribution
which would be matched by a portion of such Matching Contribution; or
(b) Ceased to be an Employee during the Plan Year:
(i) After attaining age 55 and completing 15 years of
Service;
(ii) After attaining Normal Retirement Age;
(iii) By reason of death; or
(iv) By reason of Total and Permanent Disability,
and his or her Accounts have not been distributed under Section 9.
The Matching Contribution may be made in the form of cash or in the form
of shares of LSAI Stock, or a combination of both.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
22
<PAGE>
5.2 Special Company Contribution. The Company may make a Special
----------------------------
Company Contribution, from Company profits, to the Plan for each Plan Year in
such amount as may be determined by the Board of Directors. Any Special Company
Contribution may be made in the form of cash or in shares of LSAI Stock, or a
combination of both.
5.3 Deposit with Trustee; Crediting Accounts. Any Matching
----------------------------------------
Contribution for any Accumulation Period will be paid to the Trustee at the time
when Member Contributions designated for Investment in the Stock Fund may be
transferred to the Stock Fund under Section 6.2 and will be allocated among
Members in proportion to their Member Contributions during the Accumulation
Period to any Fund. A Member's share of the Matching Contribution will be
allocated and credited to the Member's Matching Account as of the earlier of:
-------
(a) The date the Matching Contribution is made to the Plan; or
(b) The end of the Plan Year during which the Member made the
Member Contributions with respect to which such Matching Contribution is made.
Forfeitures arising under Section 9.1 with respect to any Member's Matching
Account during a Plan Year will be allocated among other Members as an
additional Matching Contribution for such Plan Year and credited to such
Members' Matching Accounts.
Any Special Company Contribution will be paid to the Trustee on or
before the due date (including extensions) for filing the Company's consolidated
federal income tax return for the Plan Year. Any Special Company Contribution
for a Plan Year will be allocated among Members who are Employees on the last
working day of such Plan Year either:
------
(i) In proportion to each Member's Compensation for such
Plan Year including, in the case of a Member who was a Member for only
part of the Plan Year, amounts that would have been Compensation if the
Member had been a Member for the full Plan Year; or
(ii) In an equal amount for each Member, as determined by
the Board of Directors in their sole discretion. Such allocation will be
reduced on a pro rata basis for a Member who transfers from a job paid
from the field payroll of the Company to a job paid from the home office
payroll of the Company, or vise versa, based on the number of months the
Member was employed in the job paid from the field payroll.
A Member's share of any Special Company Contribution will be credited to
the Member's Special Company Account. Forfeitures arising under Section 9.1
with respect to any Member's Special Company Account during a Plan Year will be
allocated among other Members
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
23
<PAGE>
as an additional Special Company Contribution for such Plan Year and credited to
such Members' Special Company Accounts.
5.4 Curtailment or Distribution from Plan of Excess Aggregate
---------------------------------------------------------
Contributions. If any Matching Contribution otherwise allocable to a Member who
- -------------
is a Highly Compensated Employee would constitute an "Excess Aggregate
Contribution" (as defined in section 401(m)(6)(B) of the Code and the
Regulations issued under such Code section which are expressly incorporated by
this reference) with respect to the Plan Year, then:
(a) The Matching Contribution will not be made to the Plan, if
the Matching Contribution has not been made to the Plan as of the date on which
the Matching Contribution is determined to constitute an Excess Aggregate
Contribution; or
(b) The Matching Contribution (and any earnings on such Matching
Contribution) will be distributed to each affected Member after the end of such
Plan Year, if the Matching Contribution has been made to the Plan before the
date on which the Matching Contribution is determined to constitute an Excess
Aggregate Contribution.
The Matching Contribution made on behalf of Highly Compensated Employees
having the highest rate of Matching Contribution will be reduced and/or
distributed first, under the terms of the applicable Regulations. Any
reduction and/or distribution of the Matching Contribution made will be limited
to the amount which, in the judgment of the Administrative Committee, is
expected to meet the requirements of Section 401(m) of the Code.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
24
<PAGE>
6 TRUST FUND, INVESTMENTS AND INVESTMENT DIRECTIONS.
- - -------------------------------------------------
6.1 Trust Fund.
----------
(a) In General. All contributions to the Plan will be held by
----------
the Trustee for investment and reinvestment as part of the Trust Fund under the
Trust Agreement. The Trust Fund will consist of the Funds designated on Appendix
C to the Plan. One of such Funds will be designated as the Fund which will hold
Member Contributions designated for potential investment in the Stock Fund (the
"Holding Account").
(b) Stock Fund. One of the Funds available for investment of
----------
the Trust Funds will be the Stock Fund. The Stock Fund will be invested and
reinvested in LSAI Stock to the extent LSAI Stock is available for purchase by
the Trustee in accordance with Section 6.2, and in cash or interest-bearing
short-term debt obligations of any kind (i) pending investment in LSAI Stock, or
(ii) to the extent required to pay expenses of the Plan or meet anticipated cash
distributions to Members and Beneficiaries, as determined and directed by the
Administrative Committee. The Stock Fund will consist of all Stock Fund
investments held by the Trustee and all cash held by the Trustee which is
derived from dividends, interest or other income from Stock Fund investments,
contributions to be invested in the Stock Fund and proceeds from the sale or
redemption of Stock Fund investments.
6.2 Investment of Contributions. All Matching Contributions and
---------------------------
Special Company Contributions will be deposited in the Stock Fund. All Member
Contributions will be deposited in the Fund designated by the Member for such
investment in 1% increments of such contribution as directed by the Member in
accordance with procedures established by the Administrative Committee. A
Member's investment directions will remain in effect until changed by the
Member. If the Member fails to file any investment directions, his or her Pre-
Tax Contributions will be deposited in the Fund designated in Appendix C for
investment of contributions for which no investment direction has been received.
Generally, twice each Plan Year, the Investment Committee will obtain an
independent appraisal of the Fair Market Value of LSAI Stock. The Investment
Committee will notify the Trustee of such Fair Market Value promptly after
completion of the appraisal.
(a) If Fair Market Value of LSAI Stock Exceeds Adequate
---------------------------------------------------
Consideration. If the Trustee determines that the Fair Market Value of LSAI
- -------------
Stock exceeds "Adequate Consideration" for LSAI Stock within the meaning of
section 3(18) of the Act, all Member Contributions that are held in the Holding
Account and any earnings on such contributions will be transferred to an
alternative Fund as designated by the Member, and no Matching
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
Contribution will be made with respect to such Member Contributions unless the
Investment Committee effects a "Suspension" as described below.
The Investment Committee will effect a Suspension, in its sole
discretion, by determining that the Member Contributions held in the Holding
Account and earnings on such contributions will remain in the Holding Account
rather than be transferred to another Fund. If the Investment Committee effects
a Suspension, the Administrative Committee, in such manner and under such
procedures as it deems appropriate, will promptly provide Members whose Member
Contributions and earnings are subject to the Suspension the opportunity to
elect whether such amounts will remain held in the Holding Account. If the
Member fails to file an election on the prescribed form by the date determined
by the Administrative Committee, such amounts will remain in the Holding Account
subject to the remaining provisions of the Plan. If a Member elects to have such
amounts transferred to another Fund, such amounts will be transferred to such
other Fund.
(b) If Fair Market Value of LSAI Stock Does Not Exceed Adequate
-----------------------------------------------------------
Consideration. Conversely, if the Trustee determines that the Fair Market Value
- -------------
of LSAI Stock does not exceed Adequate Consideration for LSAI Stock, the
Administrative Committee will notify Members of such Fair Market Value. Each
Member who has Member Contributions held in the Holding Account will have the
opportunity to elect to have such Member Contributions and any earnings on such
contributions transferred from the Holding Account to any Fund in 1% increments
of such Member Contributions and earnings. If a Member files such an election in
the prescribed manner by the date determined by the Administrative Committee,
the Member's Member Contributions that are held in the Holding Account and any
earnings on such contributions will be transferred to the Fund or Funds elected
by the Member. If a Member fails to file such an election by the date determined
by the Administrative Committee, the Member's Member Contributions that are held
in the Holding Account and any earnings on such contributions automatically will
be transferred to the Stock Fund. At the time when Member Contributions and
earnings are transferred to the Stock Fund, the Company will make a Matching
Contribution under Section 5.1 unless the Board of Directors determines that no
Matching Contribution will be made.
To the extent that any cash Matching Contributions and cash Special
Company Contributions deposited in the Stock Fund and any Member Contributions
transferred to the Stock Fund exceed the cash requirements of the Stock Fund, as
determined by the Administrative Committee, the Trustee will seek to acquire
LSAI Stock for the Stock Fund at a price no greater than Fair Market Value. The
Trustee may acquire LSAI Stock from a "Party-in-Interest" (as defined in section
3(14) of the Act) or a "Disqualified Person" (as defined in section 4975(e)(2)
of the Code) for no more than Adequate Consideration in accordance with the
requirements of section 408(e) of the Act.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
6.3 Reinvestment of Contributions. A Member may elect to change the
-----------------------------
investment of his or her Accounts under the applicable paragraph (a) or (b),
subject to the limitations of paragraph (c).
(a) General Rules Regarding Investment of Accounts. On any
----------------------------------------------
business day, a Member may elect to transfer amounts invested in any Fund other
than the Stock Fund among such Funds in 1% increments of the balance credited to
the Member's Accounts invested in such Funds as of such day. A Member's election
must be made in a manner prescribed by the Administrative Committee.
(b) Rules Regarding Investment of Accounts by Qualified Members.
-----------------------------------------------------------
As of any business day, a Qualified Member (i.e., any Member who has reached age
----
63, or reached age 53 and completed at least 13 Years of Service) may elect to
have amounts credited to his or her Accounts invested in the Stock Fund
transferred to any other Fund in 1% increments by filing the notice prescribed
by the Administrative Committee. A Qualified Member may make only 1 such
election in any Plan Year.
(c) Certain Limitations on Investment Due to Liquidity of the
---------------------------------------------------------
Trust Fund. The Investment Committee may determine that it is not feasible for
- ----------
the Trustee to prudently liquidate and transfer the necessary amount from one
Fund to another in accordance with Qualified Members' reinvestment elections. If
the Investment Committee so determines, it will advise the Administrative
Committee which will direct that such steps be taken as it considers necessary
or desirable for the protection of Qualified Members' Accounts, including a pro
rata reduction in the amount transferred with respect to each Member, or the
scheduling of transfers over a period consistent with prudent liquidation.
6.4 Investment by Alternate Payees. The Administrative Committee will
------------------------------
determine, in its sole and absolute discretion, if an Alternate Payee is
entitled to a portion of a Member's Accounts under the terms of a Qualified
Domestic Relations Order. If the Administrative Committee so determines, it
will segregate the Alternate Payee's portion of the Member's Accounts into
separate Matching Contribution, Pre-Tax Contribution, Post-Tax Contribution and
Special Company Contribution Accounts, as appropriate. The Alternate Payee
will only be entitled to direct the investment of his or her Accounts under the
provisions of this Section 6 in the same manner, at the same times, and subject
to the same conditions as Members in the Plan.
6.5 Allocation of Voting Rights. Except as specifically authorized in
---------------------------
this Section 6.5, the Trustee will vote all shares of LSAI Stock held in the
Trust Fund at the direction of the Investment Committee.
If the stockholders of Levi Strauss Associates Inc. are entitled to vote
with respect to any of the following matters, then only in connection with such
matters, the Trustee will vote the
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
shares of LSAI Stock held in the Trust Fund in accordance with the Members'
directions to the Trustee as provided in Section 6.6:
(a) Any merger or consolidation of Levi Strauss Associates Inc.
with any other corporation, unless the stockholders of Levi Strauss Associates
Inc. immediately before the merger or consolidation would own (immediately after
the merger or consolidation) equity securities of the surviving corporation or
acquiring corporation or a parent entity possessing more than 5/6 of the voting
power of the surviving corporation or acquiring corporation or parent entity;
(b) Any plan of complete liquidation of Levi Strauss Associates
Inc.;
(c) Any dissolution of Levi Strauss Associates Inc.; or
(d) Any plan or agreement for the sale or disposition by Levi
Strauss Associates Inc. of all or substantially all of its assets, unless the
stockholders of Levi Strauss Associates Inc. immediately before the sale or
disposition would own (immediately after the sale or disposition) equity
securities of the acquiring entity or a parent entity possessing more than 5/6
of the voting power of the acquiring entity or parent entity.
6.6 Exercise of Voting Rights. When Members are entitled to direct
-------------------------
the voting of LSAI Stock under Section 6.5, each Member will be entitled to
direct the Trustee with respect to the voting of all whole and fractional shares
of LSAI Stock which are allocated to his or her Accounts (or represented by
units allocated to such Accounts) as of the last Valuation Date coinciding with
or preceding the applicable record date. The Administrative Committee will
conclusively determine the number of the shares of LSAI Stock that are subject
to each Member's voting instructions and will advise the Trustee accordingly.
Before any annual or special meeting at which LSAI Stock will be voted
on the matters described in Section 6.5, the Board of Directors will cause to be
delivered to each Member the proxy statement and any related materials prepared
for holders of LSAI Stock, a request for written voting instructions, and the
voting instructions form prescribed by the Board of Directors for this purpose.
Each Member who wishes to exercise his or her voting rights must complete and
return such form to the Trustee before the date prescribed by the Board of
Directors. Once received by the Trustee, a Member's voting instructions may be
revoked, subject to such conditions as the Trustee may impose.
Any shares of LSAI Stock with respect to which the Trustee receives
timely, written voting instructions from Members will be voted by the Trustee in
accordance with such instructions on the matters described in Section 6.5. The
Trustee also will determine the ratio of affirmative votes, negative votes and
abstentions with respect to each matter described in Section
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
6.5 for which it has received timely voting instructions from Members. The
Trustee will then vote on such matters all shares of LSAI Stock allocated to
Members' Accounts with respect to which it has not received timely voting
instructions, in accordance with the ratios so determined. If the Trustee
determines that voting the shares in accordance with such ratios would violate
its fiduciary responsibilities under the Act, it will vote such shares of stock
in accordance with such fiduciary requirements. The Trustee will aggregate any
fractional shares and, after rounding down to the next lower integer if the
total is not a whole number, will vote an equivalent number of whole shares of
LSAI Stock.
For purposes of this Section 6.6, each Member will be a "Named
Fiduciary" as defined under section 402(a) of the Act with respect to the shares
of LSAI Stock allocated to his or her Accounts.
6.7 Other Instructions by Members.
-----------------------------
(a) Sale to Levi Strauss Associates Inc. of LSAI Stock. Except
--------------------------------------------------
as provided in this Section 6.7 and in the Registration Rights Agreement, the
Trustee may sell LSAI Stock held in the Trust Fund only to Levi Strauss
Associates Inc.
(b) Acquisition Offers. If any person or group makes an offer
------------------
to acquire all or part of the outstanding LSAI Stock (an "Acquisition Offer"),
the Trustee will tender the LSAI Stock held in the Trust Fund to such person or
group only to the extent that it has been directed to do so by Members.
"Acquisition Offers" will not include:
-----------
(i) Any offer to purchase LSAI Stock by Levi Strauss
Associates Inc.;
(ii) Any offer to purchase less than 5% of all of the
outstanding shares of common stock of Levi Strauss Associates Inc.,
including LSAI Stock held in the Trust Fund; or
(iii) Any public offering of LSAI Stock under the
Registration Rights Agreement.
In the event of an Acquisition Offer, each Member will be entitled to
instruct the Trustee confidentially (on a form to be prescribed by the
Administrative Committee) with respect to the disposition of those shares of
LSAI Stock which then would be subject to the Member's voting instructions
under Section 6.6. If the Trustee receives such an instruction by a date
determined by the Trustee and communicated to Members, the Trustee will tender
such LSAI Stock in accordance with such instruction. Any LSAI Stock as to
which the Trustee does not receive instructions within such period will not be
tendered by the Trustee.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
The Trustee will obtain and distribute to each Member all appropriate
materials pertaining to the Acquisition Offer, including any statement of the
position of Levi Strauss Associates Inc. with respect to such offer issued
under Regulation 14e-2 promulgated under the Securities Exchange Act of 1934,
as soon as practicable after such materials are issued. If Levi Strauss
Associates Inc. is not required to or fails to issue such statement within 5
business days after the commencement of such offer, the Trustee will distribute
such materials to each Member without such statement by Levi Strauss Associates
Inc. and will separately distribute such statement, if any, as soon as
practicable after it is issued. Levi Strauss Associates Inc. may require
verification of the Trustee's compliance with the Members' confidential voting
instructions by an independent auditor selected by Levi Strauss Associates Inc.
For purposes of this Section b, each Member will be a "Named
Fiduciary" as defined under section 402(a) of the Act with respect to the
shares of LSAI Stock allocated to his or her Accounts.
(c) Acquisitions by Levi Strauss Associates Inc. If Levi
-------------------------------------------
Strauss Associates Inc. makes an offer to purchase LSAI Stock, the Investment
Committee will determine whether, and to what extent, the Plan will sell LSAI
Stock to Levi Strauss Associates Inc. in connection with such offer.
6.8 Participant Directed Accounts. It is intended that transactions
-----------------------------
by Members pursuant to this Section 6 satisfy the conditions set forth in
Department of Labor Regulation Section 2550.404c-1, except to the extent that
such transactions are not covered by such regulation.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
7 VALUATIONS AND STATEMENTS.
- - -------------------------
7.1 Valuation of Accounts. As of each Valuation Date, the
---------------------
Administrative Committee will value each Member's Accounts at fair market value
and will adjust such Accounts to reflect the Member's share of any realized or
unrealized investment income, gains, losses and expenses of the Fund or Funds in
which the Accounts were invested which have accrued since the preceding
Valuation Date. For this and all other purposes under the Plan, LSAI Stock will
be taken into account at its Fair Market Value.
7.2 Statements. The Administrative Committee will prepare and
----------
distribute a statement to each Member at least annually. Such statement will
reflect the status of the Member's Accounts (including the fair market value
thereof) and will contain such other information as the Administrative Committee
may prescribe.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
8 WITHDRAWALS.
- - -----------
8.1 Withdrawals from Post-Tax Accounts. A Member may withdraw all or
----------------------------------
part of the balance credited to his or her Post-Tax Account invested in any Fund
(although the timing of a withdrawal from the Stock Fund is subject to the
availability of cash) or combination of such Funds.
8.2 Withdrawals from Rollover Accounts. A Member may withdraw all or
----------------------------------
part of the balance credited to his or her Rollover Account invested in any Fund
or combination of such Funds.
8.3 Requirements for Hardship and Disability Withdrawals. A Member
----------------------------------------------------
who incurs a hardship or who becomes Totally and Permanently Disabled may make
withdrawals from the Member's Pre-Tax Account, Matching Account and Special
Company Account as specified in paragraphs (a), (b), (c) and (d) below.
(a) Limits on Hardship Withdrawals. A Member's hardship
------------------------------
withdrawals from his or her Account under this Section 8.3 will not exceed the
lesser of:
- ---------
(i) The Member's aggregate Pre-Tax Contributions, reduced
by the sum of all Pre-Tax Contributions previously withdrawn by or
distributed to the Member; or
(ii) The balance credited to his or her Pre-Tax Account,
Matching Account and Special Company Account.
The minimum amount that may be withdrawn will be $1,000. A Member may
not withdraw earnings credited to his or her Pre-Tax Account after November 27,
1988.
(b) Hardship Requirements. Subject to the limits specified in
---------------------
paragraph (a), a hardship withdrawal will be permitted only if the entire amount
requested is not reasonably available from other resources of the Member and is
required to meet an "Immediate and Heavy Financial Need" of the Member arising
solely from one or more of the following:
-----------
(i) Expenses for extraordinary and unreimbursed medical
or hospital expenses incurred by the Member, the Member's spouse, any
dependent of the Member, or a nondependent parent or child of the
Member;
(ii) Amounts necessary for the Member, the Member's
spouse, any dependent of the Member, or a nondependent parent or child
of the Member to obtain medical or hospital care;
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
(iii) The payment of tuition and related educational
expenses (including room and board) for the next 12 months of post-
secondary education for the Member, the Member's spouse or child, or any
dependent of the Member;
(iv) The payment of expenses incurred by the Member in
purchasing his or her primary residence;
(v) The need to prevent the eviction of the Member from
his or her primary residence or foreclosure on the mortgage of the
Member's primary residence;
(vi) The payment of funeral expenses for a family member
or relative of the Member;
(vii) The loss of income resulting from an abbreviated work
schedule required by the Member's health, the loss of employment by the
Member's working spouse or garnishment of the Member's wages;
(viii) The loss of income, real property or personal
property as a result of any natural disaster as specified in Appendix D
to the Plan by any individual or entity empowered to amend the Plan; or
(ix) Effective July 1, 1995, the need to pay attorney's
fees, fines, penalties, judgements, assessments or other costs related
to legal proceedings on behalf of the Member or the Member's spouse or
dependents.
(c) Immediate and Heavy Financial Need. An amount will be
----------------------------------
considered necessary to satisfy the Member's Immediate and Heavy Financial Need
only if the Administrative Committee determines that the need cannot be relieved
by any of the following:
---
(i) Reimbursement or compensation by insurance or
otherwise;
(ii) Reasonable liquidation of the Member's assets,
including assets of the Member's spouse and minor children that are
reasonably available to the Member, to the extent such liquidation would
not itself cause an immediate and heavy financial need;
(iii) Cessation of Pre-Tax Contributions; or
(iv) A loan from a commercial source on reasonable
commercial terms.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
Unless the Member requests otherwise, the amount of the Member's
hardship withdrawal will include the amount of any federal, state or local taxes
or any penalties reasonably anticipated to result from the withdrawal. Such sums
will be withheld at the time such hardship withdrawal is distributed to the
Member.
(d) Disability Withdrawals. A Member who is Totally and
----------------------
Permanently Disabled may withdraw all or any part of his or her Accounts under
the Plan.
8.4 Payment of Withdrawals. A Member may request a withdrawal by
----------------------
filing the prescribed form with the Administrative Committee. A withdrawal will
be paid to the Member in cash as soon as reasonably practicable after the
Administrative Committee receives the prescribed form and determines that the
withdrawal request meets the requirements of Section 8.1, 8.2 or 8.3, as
applicable. The Administrative Committee may delay payment of a withdrawal from
the Stock Fund until sufficient cash is available in the Stock Fund to permit
the withdrawal to be paid.
8.5 Valuation Date. The value of a Member's Accounts will be
--------------
determined as of the Valuation Date immediately preceding the date the
withdrawal is processed.
8.6 Withdrawals by Alternate Payees. An Alternate Payee who is
-------------------------------
entitled to a portion of a Member's Accounts under the terms of a Qualified
Domestic Relations Order may withdraw amounts from his or her Accounts under
this Section 8 in the same manner, at the same times and subject to the same
conditions as Members in the Plan.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
34
<PAGE>
9 PLAN BENEFITS.
- - -------------
9.1 Vesting in Accounts.
-------------------
(a) General Rule. A Member's Vested Interest in his or her
------------
Account shall be 100% at all times.
9.2 Amount of Plan Benefit. If a Member ceases to be an Employee for
----------------------
any reason or becomes Totally and Permanently Disabled while an Employee, the
Member (or, in the event of a Member's death, the Member's Beneficiary) will be
entitled to receive a Plan Benefit equal to the Member's Vested Interest in his
or her Accounts.
9.3 Valuation of Plan Benefit. The value of the Vested Interest in a
-------------------------
Member's Accounts to be distributed as a Plan Benefit will be determined as of
the Valuation Date which occurs on or most recently prior to the later of the
date of the termination of the Member's employment or the date on which the
distribution is requested.
9.4 Form of Payment. Unless a Member (or Beneficiary) elects
---------------
otherwise, the Member's Plan Benefit will be paid in the form of a lump sum in
cash. If the value of the Member's Plan Benefit exceeds $3,500, the Member (or
Beneficiary) may elect to have all or a portion of such Plan Benefit paid in one
of the following forms by filing the prescribed form with the Administrative
Committee:
(a) Installments. The Member (or Beneficiary) may elect to have
------------
the Member's Plan Benefit paid in the form of monthly installments over a period
not exceeding the reasonable life expectancy of the Member (or Beneficiary), as
determined under the mortality table specified in Section 25 of the Levi Strauss
Associates Inc. Revised Employee Retirement Plan. The amount of each installment
will be determined by dividing the value of the portion of the Member's Plan
Benefit remaining in the Trust Fund by the number of installments elected, less
the number of installments already paid.
(b) Annuity Contract. The Member (or Beneficiary) may elect to
----------------
have the Member's Plan Benefit paid in the form of a single premium annuity
contract purchased from an insurer. The normal form of annuity contract for a
single Member will be a life annuity contract which will provide the Member with
a monthly income for his or her life. The normal form of annuity contract for a
married Member will be a joint and survivor annuity contract which will provide
the Member with a monthly income for his or her life, and upon his or her death,
monthly income to his or her spouse, in an amount not less than 50% nor more
than 100% of the amount payable to the Member. If the Member dies before the
Annuity Starting Date, his or her spouse will be entitled to a survivor's
annuity which will provide the spouse with a monthly
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
35
<PAGE>
income for his or her life equal to 50% of the amount that would have been paid
to the Member if his or her annuity payments had begun on the date of the
Member's death.
If the Member elects that only a portion of his Plan Benefit be paid in
the form of installments or an annuity, then the remainder of such benefit will
be paid in a lump sum.
A married Member may elect another form of annuity or may designate
another joint annuitant with his or her spouse's consent. The spouse's consent
must:
(i) Be in writing;
(ii) Acknowledge the effect of the alternate form of
annuity or specifically identify the alternate joint annuitant;
(iii) Be witnessed by a notary public; and
(iv) Be given within 90 days before the Annuity Starting
Date.
The spouse's consent to receive an alternate form of annuity or to the
designation of a Beneficiary will not be binding on a subsequent spouse if the
Member remarries. The Member may revoke such an election at any time before
the Annuity Starting Date, in which case the Member's benefit will be paid in
the form of a joint and survivor annuity to the Member and his or her spouse,
unless the Member elects an alternate form of benefit or Beneficiary
designation with his or her spouse's consent. If benefits are payable to a
joint annuitant other than the Member's spouse, the present value of the
benefits payable to the joint annuitant will not exceed 50% of the present
value of the benefits payable to the Member (determined as of the Annuity
Starting Date).
The Administrative Committee will provide to each Member who elects to
receive an annuity a written explanation in nontechnical language containing
the following information:
(i) A description of the terms and conditions of the
joint and survivor annuity and the single life annuity;
(ii) A statement that the Member may elect during the
"Election Period" described below to waive the joint and survivor
annuity or life annuity by electing any optional form of benefit
provided under the Plan;
(iii) A statement that the Member may revoke the waiver of
the joint and survivor annuity or life annuity during the election
period and the effect of such revocation;
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
(iv) Notice of the requirement that the Member's spouse
must consent to the waiver of the joint and survivor annuity and
election of any optional form of benefit;
(v) A general explanation of the financial effect of
election of each of the optional forms of benefit provided under the
Plan; and
(vi) A statement that the Member may request an
explanation of the specific financial effect, in terms of monthly
payments, on the Member's Plan Benefit of making an election.
The Election Period will begin 90 days before the Annuity Starting Date
and end on the Annuity Starting Date, unless the Member requests additional
information from the Administrative Committee, in which case it will end no
later than 90 days after the Member receives such additional information. During
the Election Period any election not to take the joint and survivor annuity or
life annuity will be revocable. Upon the expiration of the Election Period, any
election made will be irrevocable and the Member will not be required nor
eligible to make an election if no election had been made.
(c) Direct Transfer. A Member (or eligible Beneficiary) may
---------------
elect to have the Member's Plan Benefit paid by a direct transfer 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. The Member (or Beneficiary) may elect to have his or her
Plan Benefit paid in the form of a direct transfer at any time after the
Administrative Committee provides the Member with notice of the direct transfer
option as required by section 402(f) of the Code (the "Section 402(f) Notice").
9.5 Time of Payment. A Member's Plan Benefit will be paid in full or
---------------
will begin to be paid on the Member's Required Beginning Date. However, subject
to the rules stated in paragraphs (a), (b) and (c) below, a Member may elect to
receive his or her Plan Benefit earlier, on or as soon as reasonably practicable
after the last day of any month after the Member ceases to be an Employee.
The following rules will govern benefit payments from the Plan.
(a) Mandatory Cashout of Benefits Less Than $3,500. Except as
----------------------------------------------
provided in Section b, a Member's Plan Benefit will be paid in a lump sum cash
payment as soon as reasonably practicable after the Member ceases to be an
Employee if the value of his or her Plan
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
37
<PAGE>
Benefit does not exceed $3,500. Alternatively, effective January 1, 1993, a
Member may elect to have his or her Plan Benefit paid by a direct transfer 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. The Member may elect to have his or her Plan Benefit paid in
the form of a direct transfer at any time after the Administrative Committee
provides the Member with notice of the direct transfer option as required by
section 402(f) of the Code (the "Section 402(f) Notice").
(b) Insufficient Cash in the Stock Fund. If the Administrative
-----------------------------------
Committee determines that the cash available in the Stock Fund is insufficient
for the payment of a Member's Plan Benefit, the payment will be delayed until
the Administrative Committee determines that sufficient cash is available.
Except as provided in Section c (regarding Code section 401(a)(9) compliance)
and in Section 9.7 (regarding limitations on time of payment), no payment
delayed under the Plan will be made later than:
-----
(i) 1 year after the last day of the Plan Year in which
the Member ceases to be an Employee by reason of reaching Normal
Retirement Age, Total and Permanent Disability or death;
(ii) 5 years after the last day of the Plan Year in which
the Member ceases to be an Employee for any other reason; or
(iii) The Member's Required Beginning Date.
If a payment with respect to an Account invested in the Stock Fund has
been delayed to the Member's Required Beginning Date and the Administrative
Committee determines that the cash in the Stock Fund is insufficient to make
such payment, LSAI Stock will be paid to the Member or Beneficiary unless the
Company redeems sufficient shares of LSAI Stock at Fair Market Value to make
such payment in cash.
(c) 401(a)(9) Compliance. All benefit payments under the Plan
--------------------
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 paid to the Member each calendar year, beginning with
the calendar year in which the Member's Required Beginning Date occurs, in order
to assure that certain minimum amounts be paid to the Member and that only
"incidental" benefits be provided to Member's Beneficiaries. Furthermore, any
payment option required by section 401(a)(9) of the Code will override and
supersede any inconsistent payment provision provided for in the Plan.
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
9.6 Death Benefit. If a Member dies before payment of his or her Plan
-------------
Benefit has begun, then the Member's Beneficiary will be entitled to receive the
Member's Plan Benefit as soon as reasonably practicable after the Beneficiary
files a claim with the Administrative Committee on the prescribed form. If the
Beneficiary fails to file the prescribed claim form, the Member's Plan Benefit
will be paid to the Beneficiary in full no later than 5 years after the Member's
death. If the Member dies after installment payments have begun under Section
a, the remainder of the Member's Plan Benefit will be paid to the Member's
Beneficiary in a single lump sum as soon as reasonably practicable after the
Member's death.
9.7 Limitation on Time of Payment. Unless a Member elects otherwise,
-----------------------------
payment of his or her Plan Benefit will occur or commence not later than 60 days
after the latest of the following:
------
(a) The last day of the Plan Year in which the Member reaches
Normal Retirement Age;
(b) The last day of the Plan Year in which the Member ceases to
be an Employee;
(c) The earliest date on which the Administrative Committee can
reasonably ascertain the amount of the Member's Plan Benefit; or
(d) The earliest date on which the Administrative Committee can
reasonably locate the Member (or his or her Beneficiary).
In no event, however, will the payment of a Member's Plan Benefit begin
later than the Member's Required Beginning Date.
9.8 Undeliverable Checks. In the event that a Benefit cannot be
--------------------
delivered, the Account of the Member (or Beneficiary, as applicable) shall be
recredited with the amount of the Benefit which cannot be delivered, but such
Account shall be allocated to the money market fund referenced in Appendix C, or
in such fund referenced in Appendix C as the Administrative Committee, in its
sole discretion determines is most similar to a money market fund with respect
to its risk characteristics.
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
10 ALLOCATION LIMITATIONS.
- -- ----------------------
10.1 Limitation on Annual Additions. The Annual Additions allocated to
------------------------------
a Member for any Plan Year will not exceed the lesser of the following:
------
(a) $30,000 (or, if greater, 1/4 of the dollar limitation for
defined benefit plans in effect under section 415(b)(1)(A) of the Code) as
adjusted to take into account changes in the cost of living; or
(b) 25% of the Member's Total Compensation for such Plan Year.
If a Member's Annual Additions would exceed the above limitation, then
such Annual Additions will be reduced by reducing the components of such
additions, as necessary, in the order in which they are listed in Section 2.6.
The Plan Year will be the "limitation year" (as defined under section
415 of the Code) unless the Board of Directors designates another 12 consecutive
month period as the limitation year under a written resolution adopted by the
Board of Directors.
10.2 Combined Limitation on Benefits and Contributions. If a Member
-------------------------------------------------
also participates in one or more qualified defined benefit plans (as defined in
section 414(j) of the Code) maintained by the Company or any Affiliated Company,
the Member's benefits under any of the qualified defined benefit plans will be
reduced to the extent necessary to ensure that the sum of the "Defined Benefit
Fraction" (as defined in section 415(e)(2) of the Code) for the Plan Year plus
the "Defined Contribution Fraction" (as defined in section 415(e)(3) of the
Code) for the Plan Year does not exceed 1.0.
10.3 Reduction of Excess Annual Additions. Any Pre-Tax Contributions
------------------------------------
will be credited to a suspense account on behalf of the Member. All amounts
credited to such suspense account will be treated as Pre-Tax Contributions for
successive Plan Years and will be allocated annually to the Member under Section
4 (to the extent such allocation is not prohibited by Section 10.1) until
exhausted. No gains or losses will be credited to such suspense account and no
additional Pre-Tax Contributions, Matching Contributions and Special Company
Contributions will be made by or on behalf of the Member so long as any amount
remains in such suspense account. Any amounts that cannot be allocated to the
Member as a Matching Contribution and/or Special Company Contribution will be
deducted from the amount of the Matching Contribution and/or Special Company
Contribution that otherwise would be made as described in Sections 5.1 and 5.2,
but such reduction will not affect the amounts allocable under Sections 5.1 and
5.2 to Members whose Matching Contribution and/or Special Company Contribution
component of Annual Additions is not reduced.
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
10.4 Disposition of Excess Annual Additions. If the Company elects to
--------------------------------------
make a Special Company Contribution for the Plan Year under Section 5.3 of the
Plan and allocates such contribution to each Member's Account based on the
Committee's best estimate of the Member's Compensation for the Plan Year and it
is subsequently determined that such Compensation estimate was incorrect and
that the allocation of the Special Company Contribution to the Member's Account
would violate the limitations contained in Section 10.1 of the Plan, then that
portion of the Special Company Contribution that exceeds the Section 10.1
limitations (the "Excess Contribution") will not be deemed an Annual Addition
for the Plan Year. The Administrative Committee may, in its sole and absolute
discretion, treat such Excess Contribution in any of the following ways:
(a) Allocate and reallocate the Excess Contribution to other
Members in the Plan to the extent that such allocation or reallocation does not
cause the limitations in Section 10.1 to be exceeded with respect to each Member
for the Plan Year. If the allocation or reallocation would cause the limitations
in Section 10.1 to be exceeded with respect to each Member, then the Excess
Contribution must be held unallocated in a suspense account to be allocated or
reallocated to Members in subsequent Plan Years.
(b) Use the Excess Contribution to reduce the Matching
Contribution and/or Special Company Contribution to the Member for the next Plan
Year (and succeeding Plan Years, as necessary) if the Member is still
participating in the Plan at the end of such Plan Year (or Plan Years). If the
Member is not participating in the Plan at the end of the Plan Year, then the
Excess Contribution must be held unallocated in a suspense account for such Plan
Year and allocated and reallocated in the next Plan Year (and succeeding Plan
Years, as necessary) to all of the remaining Members in the Plan in accordance
with the rules stated in Section a. In addition, the Excess Contribution
must be used to reduce the Matching Contribution and Special Company
Contribution, if any, to the Plan for the next Plan Year (and succeeding Plan
Years, as necessary) for all of the remaining Members in the Plan.
(c) Hold the Excess Contribution in a suspense account for the
Plan Year and allocate and reallocate such contribution in the next Plan Year to
all Members in the Plan in accordance with Section a. The Excess
Contribution must be used to reduce the Matching Contribution and Special
Company Contribution, if any, for the next Plan Year (and succeeding Plan Years,
as necessary) for all Members in the Plan.
(d) Refund any Pre-Tax Contributions made by the Member to the
Plan for the Plan Year to the extent necessary to eliminate the Excess
Contribution. However, any such refund may not be made if it will result in
prohibited discrimination in favor of Highly Compensated Employees. If such
prohibited discrimination will result from the refund of Pre-Tax Contributions,
the Excess Contribution must be treated in accordance with Sections 10.4(a),
(b), or (c).
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<PAGE>
11 FUNDING POLICY AND METHOD.
- -- -------------------------
11.1 Contributions. The Administrative Committee will make arrangements
-------------
for the collection of Pre-Tax Contributions as provided in Section 4. The
Company will make Matching Contributions and Special Company Contributions to
the Plan as provided in Section 5.
11.2 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.
11.3 Expenses of the Plan. The expenses of administering the Plan will
--------------------
include but not be limited to:
(a) The fees and expenses of any employee and of the Trustee for
the performance of their duties under the Trust Agreement;
(b) 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 for the Plan); and
(c) 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).
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. An election by the
Participating Companies to pay all or a part of the above expenses directly will
not bind such 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.
11.4 Cash Requirements. From time to time the Administrative Committee
-----------------
will estimate the Plan Benefits, withdrawals and administrative expenses to be
paid out of the Trust Fund during the period for which the estimate is made and
will also estimate the contributions to be made to the Plan during that period.
The Administrative Committee will inform the Trustee and each Investment Manager
of the estimated cash needs of, and contributions to, the Plan
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
during the periods for which the estimates are made. The estimates will be made
on an annual, quarterly, monthly or other basis, as the Administrative Committee
may determine.
11.5 Independent Accountant. The Administrative Committee will engage
----------------------
an independent qualified public accountant to conduct such examinations and to
express such opinions as may be required by section 103(a)(3) of the Act. The
Administrative Committee may remove and discharge the person so engaged, in
which event it will engage a successor independent qualified public accountant
to perform such examinations and to express such opinions.
11.6 Loans from Parties-In-Interest. The Investment Committee, in its
------------------------------
sole discretion, may borrow money or receive credit from a party-in-interest
(within the meaning of Section 3(14) of ERISA), providing such loan or extension
of credit satisfies the applicable conditions of Department of Labor Prohibited
Transactions Class Exemption No. 80-26, or such successor exemption which may
from time to time be applicable, and otherwise satisfies the prohibited
transactions provisions of ERISA and the Code. The proceeds of such a loan shall
be allocated to such investment fund or funds as the Investment Committee deems
appropriate. In connection with such a loan or extension of credit, the
Investment Committee or its designee may execute such promissory notes or loan
or other documents as it deems appropriate.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
12 BENEFICIARIES.
- -- -------------
If no Beneficiary designation is in effect under Section 2.8 at the time
of a Member's death, or if no designated Beneficiary survives the Member, the
payment of the Member's Plan 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
living children;
(c) If the Member has no living children, then to his or her
living parents;
(d) If the Member has no living parents, then to his or her living
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 Member's Plan Benefit, if
any. If the Administrative Committee is in doubt as to the right of any person
to receive such benefit, the Administrative Committee may direct the Trustee to
retain such benefit, without liability for any interest, until the rights to
such benefit are determined, or, alternatively, may direct the Trustee to pay
such benefit into any court of appropriate jurisdiction and such payment will
be a complete discharge of the liability of the Plan and the Trust Fund.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
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<PAGE>
13 ADMINISTRATION AND OPERATION OF THE PLAN.
- -- ----------------------------------------
13.1 Plan Administrator. The Administrative Committee is the "Plan
------------------
Administrator" of the Plan (as such term is defined in the Act) and the "Named
Fiduciary" as defined in section 402(a) of the Act with respect to the operation
and administration of 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 under
the objective criteria described in the Plan. The Administrative Committee's
rules, interpretations, computations 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 described in section 404(a)(1) of the Act.
13.2 Control and Management of Plan Assets. The Investment Committee
-------------------------------------
is the "Named Fiduciary" as defined in section 402(a) 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) Direct the investment of any Plan assets not assigned to an
Investment Manager or to the Trustee; and
(d) Perform such other functions as are specifically assigned to
the Investment Committee under the Plan.
13.3 Trustees and Investment Managers. Each trustee appointed under
--------------------------------
Section 13.2 will have the exclusive authority and discretion to manage and
control the Plan assets held in trust by it, except to the extent that:
(a) The Investment Committee directs how those assets will be
invested;
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
(b) The Investment Committee allocates the authority to manage
those assets to one or more Investment Managers; or
(c) The Plan prescribes how those assets will be invested.
Each Investment Manager appointed under Section 13.2 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 Plan 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.
13.4 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.
13.5 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, concerning the
matters for which it is responsible under the Plan.
13.6 Employment of Advisers. The Administrative Committee and the
----------------------
Investment Committee may make use of employees of the Company or outside agents
as they 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,
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
fairness opinions provided by investment bankers and written opinions or advice
by actuaries or accountants engaged by the Administrative Committee. Either
Committee may delegate to any such agent or to any subcommittee or member of the
Committee 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.
13.7 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
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 an
administrator) with respect to the Plan.
13.8 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, telegraph or telephone
of their right to vote on the proposal and of the outcome of the vote. "Mail"
will include any written or electronic interoffice communication.
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<PAGE>
14 CLAIMS AND REVIEW PROCEDURES.
- -- ----------------------------
14.1 Applications for Benefits. Any application for a Plan Benefit must
-------------------------
be submitted to the Administrative Committee at the Company's principal office.
Such application must be in writing on the prescribed form and must be signed by
the applicant.
14.2 Denial of Applications. In the event that any application for
----------------------
a Plan 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 given to the applicant before the end of the initial 90-day
period. The notice will indicate the special circumstances requiring an
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 14.3) upon the expiration of such period.
14.3 Requests for Review. Any person whose application for a Plan
-------------------
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. 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
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<PAGE>
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.
14.4 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 the 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 benefits
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
Plan Benefit, such benefit will be paid to the applicant.
14.5 Exhaustion of Administrative Remedies. No legal or equitable
-------------------------------------
action for a Plan Benefit will be brought unless and until the claimant has:
(a) Submitted a written application for a Plan Benefit in
accordance with Section 14.1;
(b) Been notified that the application is denied;
(c) Filed a written request for a review of the application in
accordance with Section 14.3; and
(d) Been notified in writing that the Administrative Committee
has affirmed the denial of the application;
A Member 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 14.2 and Section 14.4.
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<PAGE>
15 TERMINATION OF EMPLOYER PARTICIPATION.
- -- -------------------------------------
15.1 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 such 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, 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 and other appropriate governmental authorities under
Sections 15.3 and 16.3 of the Plan.
15.2 Effect of Termination. Upon termination of the Plan as to any
---------------------
Participating Company, the interest in the Accounts of any Members who were or
are currently employed by such Participating Company will continue to be 100%
vested and nonforfeitable and no amount will subsequently be payable under the
Plan to or with respect to such Members except as provided in this Section 15.
Subject to any conditions which the IRS or any other governmental authority may
impose, the Administrative Committee will direct the Trustee to segregate that
portion of the Trust Fund attributable to the Members' Accounts of that
Participating Company. To the maximum extent permitted by the Code and the Act,
any rights of Members or former Members of that Participating Company and their
Beneficiaries and other eligible survivors will be unaffected by a termination
of the Plan as to such Participating Company.
15.3 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 affect 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.
15.4 Termination of the Plan. If the Plan is terminated with respect to
-----------------------
all Participating Companies, the provisions of this Section 15 will be applied
to each of the Participating
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
Companies individually or collectively as determined by the Administrative
Committee in its sole and absolute discretion.
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<PAGE>
16 AMENDMENT, MERGER OR TERMINATION OF THE PLAN AND TRUST.
- -- ------------------------------------------------------
16.1 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 Member's Plan 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.
16.2 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 such 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).
16.3 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 terminate the Plan or to
completely discontinue contributions under the Plan. As required by law, before
the termination or discontinuance of contributions, the Board of Directors, or
its designee, will notify the Administrative Committee, the Trustee, or any
other fiduciary of its intent to terminate the Plan or to discontinue
contributions under the Plan. Upon such termination or discontinuance of
contributions, the interest of each Member in his or her Accounts will continue
to be 100% vested and nonforfeitable.
16.4 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" under section 411(d)(3) of the Code, the
interest of each Member in his or her Accounts will continue to be 100% vested
and nonforfeitable. If a Partial Termination occurs, the Accounts of the Members
affected by the Partial Termination will be segregated by the Trustee and used
to pay benefits under the Plan to such Members in accordance with Section 16.5
as though the Plan had been completely terminated. Alternatively, the
Administrative
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Committee may postpone benefit payments to those Members until their subsequent
termination of Service with the Company in accordance with other provisions of
the Plan.
16.5 Manner of Distribution. Upon termination of the Plan, 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 benefit
payments to Members in accordance with the modes of payment provided for in
Section 9.4. Alternatively, with the consent of the Board of Directors, or its
designee, the Administrative Committee may direct the Trustee to hold the
Members' Plan Benefit in the Trust Fund until such Members or their
Beneficiaries become eligible to receive benefit payments under the terms and
provisions of this Plan.
16.6 Restrictions on Liquidation of Trust Fund Upon Termination. In no
----------------------------------------------------------
event, however, will a Member's Pre-Tax Account be distributed before the first
-----
to occur of the following events:
(a) The Member's retirement;
(b) The Member's death;
(c) The Member's disability (as determined by the Administrative
Committee);
(d) The Member's termination of employment;
(e) The Member's attainment of age 59-1/2;
(f) The termination of the Plan, provided that neither the
Company nor an Affiliated Company maintains a successor plan;
(g) The disposition, to a corporation that is not an Affiliated
Company, of substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Company in the trade or business in which the
Member is employed, provided that the Member continues employment with the
transferee corporation and the Company continues to maintain the Plan; or
(h) The disposition, to a corporation that is not an Affiliated
Company, of the Company's interest in a subsidiary in which the Member is
employed, provided that the Member continues employment with the subsidiary and
the Company continues to maintain the Plan.
A distribution may be made under (f), (g), or (h) above only if it
constitutes a total distribution of the entire balance of the Member's Accounts.
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<PAGE>
17 INALIENABILITY OF BENEFITS.
- -- --------------------------
17.1 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 at any time under the Plan
and Trust Agreement will be subject 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,
Beneficiary or Alternate Payee. Any attempt to so alienate or subject any such
amount will be void. If any Member, Beneficiary or Alternate Payee attempts to,
or alienates, sells, transfers, assigns, pledges, attaches or otherwise
encumbers any amount payable under the Plan and Trust Agreement, or any portion
of such amount, or if by reason of his or her bankruptcy or 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; or
(c) 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 17.2 and
the creation, assignment or recognition of a right to all or a portion of a
Member's Plan Benefit under a Qualified Domestic Relations Order under Section
17.3 will not violate this Section 17.1.
17.2 Return of Contributions. All Pre-Tax Contributions, Post-Tax
-----------------------
Contributions, Matching Contributions and Special Company Contributions are
expressly conditioned upon the deductibility of such contributions under
section 404 of the Code. If the deduction of any Pre-Tax Contribution,
Post-Tax Contribution, Matching Contribution or Special 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 Pre-Tax Contribution, Post-Tax
Contribution, Matching Contribution or Special 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
Pre-Tax
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Contribution, Post-Tax Contribution, Matching Contribution or Special Company
Contribution so returned will be reduced to reflect losses but will not be
increased to reflect gains or income. Any Pre-Tax Contribution or Post-Tax
Contribution so returned will be paid to the Member from whom it was withheld.
17.3 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 Plan 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.
(iv) The Domestic Relations Order does not require the
payment of all or a portion of a Member's Plan 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 Plan Benefit. If the order requires payments to begin after a
Member's Earliest Retirement Age but before the Member's actual retirement, the
amount of the payments must be determined as if the Member had begun receiving
benefit payments on the date on which the payments are to begin under the order,
but taking into account only the value of the Member's Accounts at that time.
The Plan Benefit payable to an Alternate Payee will not be recalculated upon the
Member's actual retirement.
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<PAGE>
(c) Alternate Payment Forms. The Domestic Relations Order may
-----------------------
call for the payment of the Member's Plan 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, as defined in section 417(b)
of the Code, with respect to the Alternate Payee and his or her subsequent
spouse.
(d) 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 Plan 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 Domestic Relations
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
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<PAGE>
Order will be binding and conclusive on all interested parties, present and
future, subject to the claims review provisions of Section 14.
(e) 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.
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
18 TOP-HEAVY PROVISIONS.
- -- --------------------
18.1 Determination of Top-Heavy Status. If the Plan becomes "Top
---------------------------------
Heavy," the provisions of this Section 18 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"), the cumulative balances credited to the Accounts of all
Members who are "Key Employees" under the Plan exceed 60% of the cumulative
balances credited to the Accounts of all Members under the Plan. The Plan will
be "Super Top Heavy" if, on the Determination Date, the cumulative balances
credited to the Accounts of all Members who are "Key Employees" under the Plan
exceed 90% of the cumulative balances credited to the Accounts of all Members.
A "Key Employee" means a key employee as defined in section 416 of the
Code.
If the Administrative Committee, in its sole and absolute discretion,
but under the provisions of section 416 of the Code, determines 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 aggregate of the amounts credited to the
accounts of Key Employees under all "defined contribution plans" (as defined in
section 414(i) of the Code) included in such group plus the present value of the
cumulative accrued benefits for Key Employees under all "defined benefit plans"
(as defined in section 414(j) 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
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<PAGE>
determination will be made by the Administrative Committee in accordance with
section 416 of the Code.
18.2 Minimum Allocations. For any Plan Year during which the Plan is a
-------------------
Top-Heavy Plan, the Matching Contributions and Special Company Contributions
allocated under this Plan and employer contributions and forfeitures allocated
under any other defined contribution plan of the Aggregation Group on behalf of
any Member who is (a) employed on the last regularly scheduled working day of
the Plan Year, and (b) who is not a Key Employee will not be less than a
percentage of the Member's Total Compensation, equal to the lesser of:
------
(a) 3%; or
(b) The percentage equal to the largest percentage that any Key
Employee for that Plan Year receives of Pre-Tax Contributions, Matching
Contributions and Special Company Contributions allocated on behalf of that Key
Employee's Total Compensation for that Plan Year, as limited by Section 18.4
below.
The minimum allocation will be determined without regard to any
contributions made or benefits available under the federal Social Security Act.
18.3 Minimum Vesting. If a Member (other than a Member who did not
---------------
complete any Period of Service after the Plan became a Top-Heavy Plan) ceases to
be an Employee while the Plan is a Top-Heavy Plan and after such Member has
completed 3 or more Years of Service, such Member's Vested Interest in his or
her Matching Account and Special Company Account will be 100% and will no longer
be subject to forfeiture for an act of Misconduct under Section 9.1. If a Member
ceases to be an Employee while the Plan is a Top-Heavy Plan and before the
Member has completed 3 Years of Service, the Members Vested Interest in his or
her Matching Account and Special Company Contribution Account will be determined
in accordance with Section 9.1.
18.4 Impact on Maximum Benefits. For any Plan Year in which the Plan is
--------------------------
a Top-Heavy Plan, the number "1.00" will be substituted for the number "1.25"
wherever it appears in section 415(e)(2) and section 415(e)(3) of the Code. Such
substitution will not have the effect of reducing any benefit accrued under a
defined benefit plan maintained by a Participating Company before the first day
of the Plan Year in which this provision becomes applicable.
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<PAGE>
19 GENERAL LIMITATIONS AND PROVISIONS.
- -- ----------------------------------
19.1 No Employment Rights. Nothing in the Plan will give any employee
--------------------
the right to be retained in the employment of the Company or an Affiliated
Company or affect the right of the Company or an Affiliated Company to terminate
a person's employment with or without cause.
19.2 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,
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 for such amount 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 of the Company.
19.3 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 therefore 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.
19.4 Lost Members or Other Persons. If the Administrative Committee is
-----------------------------
unable to locate a Member, Beneficiary or other person who is entitled to
receive a benefit under the Plan, the Administrative Committee may (but need
not) direct that such benefit be applied to reduce the Company's Matching
Contribution and/or any Special Company Contribution to the Plan. If the person
later makes a claim for his or her benefit before the date final distributions
are made from the Trust Fund following the termination of the Plan, the Company
that employed the Member with respect to whom the benefit is payable, will
reinstate such benefit (without income, gains or other adjustment) by making a
special contribution to the Plan as soon as reasonably practicable after such
claim is made. However, if the benefit would have been lost by reason of escheat
under applicable state law, then the benefit 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 has expired, the
Administrative Committee may transfer the affected person's benefit to an
individual retirement account established for such person.
EMPLOYEE LONG-TERM INVESTMENT
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19.5 Personal Data to the Administrative Committee. Each Member must
---------------------------------------------
file with the Administrative Committee such pertinent information concerning
himself or herself, his or her Beneficiary or any other person as the
Administrative Committee may specify, and no member, 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.
19.6 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.
19.7 Notice to the Administrative Committee. All elections,
--------------------------------------
designations, requests, notices, instructions and other communications from a
Participating Company, a Member, Beneficiary, 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, or provided by electronic
means, including telephone, as permitted by the Administrative Committee; and
(c) Deemed to have been given and delivered only upon actual
receipt by the Administrative Committee or its designee at the location.
19.8 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, the employee, Member, Beneficiary or other person at his or her address last
appearing on the records of the Administrative Committee.
19.9 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.
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<PAGE>
19.10 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.
19.11 Governing Law. The Plan and all rights under the Plan will be
-------------
interpreted and construed in accordance with California law except to the extent
such law is preempted by the Act and Code.
19.12 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.
19.13 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 _______________, 1995.
LEVI STRAUSS ASSOCIATES INC.
By: ____________________________________
Its: _____________________________
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EMPLOYEE LONG-TERM INVESTMENT
-----------------------------
AND SAVINGS PLAN
----------------
APPENDIX A
----------
PRIOR PLAN PROVISIONS
---------------------
This Appendix A states the provisions of the Plan in effect on or after
the Effective Date (November 27, 1989) which were amended before April 1, 1995.
The provisions of the Plan in effect as of April 1, 1995 are presented in the
main text of this amended and restated Plan.
20 Effective before November 21, 1990, Section 2.1 of the Plan, then
designated as Section 16.1, read as follows:
16.1 "Account" means the Account maintained for a Member
-------
to which are credited the Member's Pre-Tax Contributions and
Company Contributions.
21 Effective before November 21, 1990, Section 2.6 of the Plan, then
designated as Section 13.4, read as follows:
13.4 Annual Additions. For purposes of this Section 13,
----------------
a Member's "Annual Additions" for a Plan Year will be equal to the sum
of the following:
(a) The aggregate employee contributions which the
Member contributes during such Plan Year to all qualified
retirement plans maintained by the Affiliated Group;
(b) The amount of contributions made on behalf of
the Member for such Plan Year to any qualified defined
contribution plan maintained by the Affiliated Group under an
election by the Member under a qualified cash or deferred
arrangement, including Pre-Tax Contributions to this Plan; and
(c) The amount of employer contributions and
forfeitures allocated to the Member as of any date within such
Plan Year
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
under any qualified defined contribution plan maintained by the
Affiliated Group, including Company Contributions to this Plan.
22 Effective August 13, 1990, the following clause was added to the end of
the first sentence in Section 2.8 of the Plan, then designated as
Section 8.6:
"or the Administrative Committee is satisfied that the spouse
cannot be located."
23 Effective before January 1, 1992, Section 2.16 of the Plan, then
designated as Section 16.11, read as follows:
16.11 "Eligible Employee" means an Employee who is on the
-----------------
payroll of a Participating Company other than an Employee who is
paid from the home office of the Company. The Board of Directors,
in designating a Participating Company, may specify that only
certain named Employees or only certain classifications of
Employees on the payroll of such Participating Company will not be
"Eligible Employees." In addition, the term "Eligible Employee"
will not include an Employee who is:
(A) Included in a unit of employees covered by a
collective-bargaining agreement which does not provide that such
Employee will be eligible to participate in the Plan;
(B) A stocktaker or Temporary Employee;
(C) A nonresident alien who receives no remuneration
from a Participating Company that constitutes income from sources
within the United States (within the meaning of section 861(a)(3)
of the Code);
(D) An alien who receives no remuneration from a
Participating Company that constitutes income from sources within
the United States (within the meaning of section 861(a)(3) of the
Code), if the alien has been transferred by a Participating
Company from a job outside the United Sates to a job within the
United States and the duration of such transfer is expected to be
less than 24 months;
(E) A United States citizen locally hired by a
foreign subsidiary (including a domestic subsidiary operating
abroad) or foreign division of a Participating Company; or
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<PAGE>
(F) A "leased employee" (as defined in section 414(n)
of the Code) who is providing services to a member of the
Affiliated Group.
The Board of Directors on a nondiscriminatory basis may designate
as an Eligible Employee any person described in (c), (d) or (e)
above. Such designation must be made in writing after receiving
the advice of counsel.
A person's status as an Eligible Employee will be determined
by the Administrative Committee and such determination will be
conclusive and binding on all persons.
24 Section 2.19 and Section 2.20 of the Plan, then designated as Section
16.18, were added to the Plan, effective November 21, 1990.
25 Effective before January 1, 1992, Section 2.30 of the Plan, then
designated as Section 16.22, read as follows:
16.22 "Member" means a person who participates in the Plan
------
under Section 2.
26 Section 2.46, then designated as Section 16.28, was added to the Plan
effective November 21, 1990.
27 Effective before November 21, 1990, Section 3.1 of the Plan, then
designated as Section 2.1, read as follows:
2.1 Commencement of Membership. Membership in the Plan is
--------------------------
voluntary. By filing the prescribed form with the Administrative
Committee in advance, an Eligible Employee may commence
participation in the Plan on the first day of the first pay period
of any month coinciding with or next following any Entry Date
after he or she completes a 365-day Period of Service. Upon
becoming a Member, the Eligible Employee will designate a
Beneficiary under Section 8.6.
28 Effective for the period beginning November 21, 1990, and ending May 28,
1991, Section 3.1 of the Plan, then designated as Section 2.1, read as
follows:
2.1 Commencement of Membership. With respect to Pre-Tax
--------------------------
Contributions provided for in Section 2.1 and Matching
Contributions
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
provided for in Section 3.1, membership in the Plan is voluntary.
By filing the prescribed form with the Administrative Committee in
advance, an Eligible Employee may commence participation in the
Plan with respect to such provisions on the first day of the first
pay period of any month coinciding with or next following any
Entry Date after he or she completes a 365-day Period of Service.
With respect to Special Company Contributions provided for in
Section 3.2, an Eligible Employee who is (a) employed by the
Company or a Participating Company on or before May 31 of a Plan
Year and (b) employed by the Company or a Participating Company on
the last day of such Plan Year, will be eligible to participate in
the Plan with respect to such contributions for such Plan Year.
Upon becoming a Member, the Eligible Employee will designate a
Beneficiary under Section 8.6.
29 Effective for the period beginning May 29, 1991, and ending November 23,
1991, Section 3.1 of the Plan, then designated as Section 2.1, read as
follows:
2.1 Commencement of Membership. Membership in the Plan
--------------------------
is voluntary for Pre-Tax Contributions provided for in Section 2.1
and the Matching Contribution provided for in Section 3.1. By
filing the prescribed form with the Administrative Committee in
advance, an Eligible Employee may commence participation in the
Plan on the first day of the first pay period of any month
coinciding with or next following any Entry Date after he or she
completes a 365-day Period of Service.
Membership for the Special Company Contribution provided
under Section 3.2 is automatic and an Eligible Employee will
commence participation in the Plan for such contribution on the
first day coinciding with or next following any Entry Date after
he or she completes a 365-day Period of Service.
Upon becoming a Member, an Eligible Employee will designate
a Beneficiary under Section 8.6.
30 The existing Section 3.1 of the Plan was added to the Plan, effective
for the Plan Year ending November 24, 1991.
31 The existing Section 3.5 of the Plan was added to the Plan, effective
January 1, 1992.
EMPLOYEE LONG-TERM INVESTMENT
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<PAGE>
32 Effective before November 21, 1990, Section 5 of the Plan, then
designated as Section 4, read as follows:
4.1 Amount and Form. The Participating Companies will make
---------------
a Company Contribution to the Plan for each Plan Year in an amount
equal to 50% of each Member's Pre-Tax Contributions for such Plan
Year which are transferred to Fund Y pursuant to Section 5.2,
reduced by any amount which cannot be allocated to the Member
because of the contribution limitation described in Section 13.1.
The Board of Directors may determine that no Company Contribution
will be made for a particular Plan Year or portion of a Plan Year,
or may determine that a lesser Company Contribution will be made,
in view of Company performance and economic and financial
conditions prevailing and anticipated at the time. The Board of
Directors also may determine in its sole discretion that a greater
Company Contribution will be made for a particular Plan Year or
portion of a Plan Year. No Company Contribution will be made for a
Member unless he or she (a) is an Employee on the date as of which
a Company Contribution is allocated or (b) ceased to be an
Employee during the Plan Year after attaining age 55 and
completing 15 years of Service, after attaining age 65 or by
reason of death and his or her Account has not been distributed
under Section 8. Company Contributions may be made in the form of
cash or in the form of shares of LSAI Stock, or a combination of
both.
4.2 Deposit With Trustee; Crediting Accounts. Company
----------------------------------------
Contributions for any Plan Year will be paid to the Trustee at the
time when Pre-Tax Contributions are transferred to Fund Y under
Section 5.2 and will be allocated among Members in proportion to
their Pre-Tax Contributions which are transferred to Fund Y. A
Member's share of the Company Contributions will be allocated and
credited to the Member's Account as of the earlier of the date the
Company Contributions are made to the Plan or the end of the Plan
Year during which the Member made the Pre-Tax Contributions with
respect to which such Company Contributions are made.
4.3 Curtailment or Distribution of Excess Aggregate
-----------------------------------------------
Contributions. If any Company Contributions otherwise allocable to
-------------
a Member would constitute "excess aggregate contributions" (as
defined in section 401(m)(6)(B) of the Code) with respect to a
Plan Year, (a) such Company Contributions will not be made to the
Plan, if such Company
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-5
<PAGE>
Contributions have not been made to the Plan as of the date on
which such Company Contributions are determined to constitute
excess aggregate contributions, or (b) such Company Contributions
(and any income allocable to such Company Contributions) will be
distributed to the Member no later than 2-1/2 months after the end
of such Plan Year, if such Company Contributions have been made to
the Plan prior to the date on which such Company Contributions are
determined to constitute excess aggregate contributions.
33 Effective before the Plan Year ending November 24, 1991, paragraph 2 of
Section 5.3 of the Plan, then designated as Section 4.3, read as
follows:
The Special Company Contribution will be paid to the Trustee
on or before the due date (including extensions) for filing the
Company's consolidated federal income tax return for the Plan
Year. The Special Company Contribution for a Plan Year will be
allocated among Members who are Employees on the last working day
of such Plan Year either (a) in proportion to each Member's
Compensation for such Plan Year including, in the case of a Member
who was a Member for only part of the Plan Year, amounts that
would have been Compensation if the Member had been a Member for
the full Plan Year or (b) in an equal amount for each Member, as
determined by the Board of Directors in their sole discretion. A
Member's share of the Special Company Contribution will be
credited to the Member's Special Company Account.
34 Effective before November 21, 1990, Section 6.2 of the Plan, then
designated as Section 5.2, read as follows:
5.2 Investment of Contributions. All Company Contributions
---------------------------
will be deposited in Fund Y. All Pre-Tax Contributions initially
will be deposited in the Segregated Account. Twice each Plan Year,
the Investment Committee will obtain an independent appraisal of
the Fair Market Value of LSAI Stock. The Investment Committee will
notify the Trustee of such Fair Market Value promptly after
completion of the appraisal. If the Trustee determines that the
Fair Market Value exceeds adequate consideration for LSAI Stock
within the meaning of section 3(18) of ERISA, all Pre-Tax
Contributions that are invested in the Segregated Account and any
earnings on such contributions will be transferred to Fund Z, and
no Company Contribution will be made with respect to such Pre-Tax
Contributions. If the Trustee determines that the Fair Market
Value does not exceed adequate consideration for LSAI Stock, the
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-6
<PAGE>
Administrative Committee will notify Members of such Fair Market
Value and the Company's stockholders of the Trustee's intention to
purchase LSAI Stock. Each Member who has Pre-Tax Contributions
invested in the Segregated Account will have the opportunity to
elect to have such Pre-Tax Contributions and any earnings on such
contributions transferred from the Segregated Account to Fund Z
and/or Fund Y in 25% increments of such Pre-Tax Contributions and
earnings. If a Member files such an election on the prescribed
form by the date determined by the Administrative Committee, the
Member's Pre-Tax Contributions that are invested in the Segregated
Account and any earnings on such contributions will be transferred
to the Fund elected by the Member. If a Member fails to file such
an election on the prescribed form by the date determined by the
Administrative Committee, the Member's Pre-Tax Contributions that
are invested in the Segregated Account and any earnings on such
contributions automatically will be transferred to Fund Y. At the
time when Pre-Tax Contributions and earnings are transferred to
Fund Y, the Participating Companies will make a Company
Contribution under Section 4.1 unless the Board of Directors
determines that no Company Contribution will be made. The Trustee
will seek to acquire LSAI Stock for Fund Y at a price no greater
than Fair Market Value to the extent any cash Company
Contributions deposited in Fund Y and Pre-Tax Contributions
transferred to Fund Y exceed the cash requirements of Fund Y as
determined by the Administrative Committee. The Trustee may
acquire LSAI Stock from a party in interest or a disqualified
person for no more than adequate consideration (as defined in
section 3(18) of ERISA) in accordance with the requirements of
section 408(e) of ERISA.
If any Member's Pre-Tax Contributions in excess of the cash
requirements of Fund Y have not been invested in LSAI Stock when
the Fair Market Value of LSAI Stock is next determined because
insufficient LSAI Stock was available to the Trustee, the Member
may elect to have such Pre-Tax Contributions and any earnings on
such contributions transferred to Fund Z in accordance with
procedures established by the Administrative Committee. In the
absence of such an election, the Pre-Tax Contributions and
earnings will remain in Fund Y for investment in LSAI Stock at the
new Fair Market Value to the extent LSAI Stock is available. Any
Company Contributions and earnings on such contributions that have
not been invested in LSAI Stock will remain in Fund Y, whether or
not the Member elects to transfer the excess Pre-Tax Contributions
to Fund Z.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-7
<PAGE>
Any Member who requests a distribution of his or her Plan
Benefit under Section 8 prior to a date on which Company
Contributions are made to the Plan will be deemed to have elected
not to invest in Fund Y the Member's Pre-Tax Contributions and
earnings on such contributions which were held in the Segregated
Account immediately prior to such request.
35 Section 6.2 of the Plan, then designated as Section 5.2, was amended to
give the Investment Committee the authority to effect a Suspension,
effective October 29, 1990.
36 Section 6.4 of the Plan, then designated as Section 5.4, was added to
the Plan, effective January 1, 1991.
37 Effective before February 28, 1991, Section 6.7(b)(i) of the Plan, then
designated as Section 15.5(i), read as follows:
(i) Any offer to purchase LSAI Stock by the
Company for purposes of making cash distributions from the
Plan.
38 Section 6.7(c) of the Plan, then designated as Section 15.5(b), was
added to the Plan, effective February 28, 1991.
39 Effective before November 21, 1990, the first and second paragraphs of
Section 8.1 of the Plan, then designated as Section 7.1, read as
follows:
7.1 Requirements for Withdrawals. A Member who incurs a
----------------------------
hardship or who becomes Totally and Permanently Disabled may
withdraw from the Member's Account an amount not exceeding the
lesser of (1) the Member's aggregate Pre-Tax Contributions,
reduced by the sum of all Pre-Tax Contributions previously
withdrawn by or distributed to the Member, or (2) the balance
credited to his or her Account. The minimum amount that may be
withdrawn will be $1,000. A Member may not make more than 2
hardship withdrawals in any Plan Year. A hardship withdrawal will
be permitted only if the entire amount requested is not reasonably
available from other resources of the Member and is required to
meet immediate and heavy financial needs of the Member arising
solely from 1 or more of the following:
(a) The payment of extraordinary and unreimbursed
medical or hospital expenses incurred by the Member, the Member's
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-8
<PAGE>
spouse, any dependent of the Member, or a nondependent parent or
child of the Member;
(b) The payment of tuition expenses for the next
quarter or semester of post-secondary education for the Member,
the Member's spouse or child, or any dependent of the Member;
(c) The payment of expenses incurred by a Member in
purchasing his or her primary residence;
(d) The need to prevent the eviction of the Member
from his or her primary residence or foreclosure on the mortgage
of the Member's primary residence;
(e) The payment of funeral expenses for a family
member or relative of the Member; or
(f) The loss of income resulting from an
abbreviated work schedule required by the Member's health, the
loss of employment by the Member's working spouse or garnishment
of the Member's wages.
An amount will be considered necessary to satisfy the
Member's immediate and heavy financial need only if the
Administrative Committee determines that the need cannot be
relieved by any of the following:
(i) Reimbursement or compensation by
insurance or otherwise;
(ii) Reasonable liquidation of the Member's
assets, including assets of the Member's spouse and minor
children that are reasonably available to the Member, to the
extent such liquidation would not itself cause an immediate
and heavy financial need;
(iii) Cessation of Pre-Tax Contributions; or
(iv) A loan from a commercial source on
reasonable commercial terms.
40 The final paragraph of Section 8.1 of the Plan, then designated as
Section 7.1, was added to the Plan, effective August 13, 1990.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-9
<PAGE>
41 Effective before November 21, 1990, Section 9.1 of the Plan, then
designated as Section 8.1, read as follows:
8.1 Vesting in Accounts. A Member's interest in his or
-------------------
her Account will be 100 percent vested and nonforfeitable at all
times.
42 Effective before November 21, 1990, Section 10.4 of the Plan, then
designated as Section 13.3, read as follows:
13.3 Disposition of Excess Annual Additions. Any Pre-Tax
--------------------------------------
Contributions that cannot be credited to a Member because of the
limitation described in Section 13.1 will be reduced under Section
3.5. Any Pre-Tax Contributions that cannot be handled in
accordance with the preceding sentence will be credited to a
suspense account on behalf of the Member. All amounts credited to
such account will be treated as Pre-Tax Contributions for
successive Plan Years and will be allocated annually to the Member
under Section 3 (to the extent such allocation is not prohibited
by Section 13.1) until exhausted. No gains or losses will be
credited to such account and no additional Pre-Tax Contributions
or Company Contributions will be made by or on behalf of the
Member so long as any amount remains in such account. Any amounts
that cannot be allocated to the Member as Company Contributions
will be deducted from the amount of Company Contributions that
otherwise would be made as described in Section 4.1, but such
reduction will not affect the amounts allocable under Section 4.1
to Members whose Company Contribution component of Annual
Additions is not reduced.
43 Effective November 27, 1989, Section 10.4 of the Plan, then designated
as Section 13.4, was added to the Plan.
44 Effective before November 21, 1990, Section 11.1 of the Plan, then
designated as Section 9.1, read as follows:
9.1 Contributions. The Administrative Committee will make
-------------
arrangements for the collection of Pre-Tax Contributions as
provided in Section 3. The Company will cause the Participating
Companies to make Company Contributions to the Plan as provided in
Section 4.
45 Effective before November 21, 1990, Section 18.2 of the Plan, then
designated as Appendix A, paragraph (b), read as follows:
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-10
<PAGE>
(b) Minimum Allocations. For any Plan Year during
-------------------
which the Plan is a Top-Heavy Plan, the Pre-Tax Contributions and
Company Contributions allocated under this Plan and employer
contributions and forfeitures allocated under any other defined
contribution plan of the Aggregation Group on behalf of any Member
who is employed on the last regularly scheduled working day of the
Plan Year and who is not a Key Employee will not be less than a
percentage of the Member's Total Compensation equal to the lesser
of (i) 3% or (ii) the percentage equal to the largest percentage
that any Key Employee for that Plan Year receives of Pre-Tax
Contributions and Company Contributions allocated on behalf of
that Key Employee's Total Compensation for that Plan Year. The
minimum allocation will be determined without regard to any
contributions made or benefits available under the Federal Social
Security Act.
46 Effective before November 21, 1990, the Plan contained a Section 16.9
which read as follows:
16.9 "Company Contribution" means the contribution made by
--------------------
the Participating Companies under Section 4.1.
47 Effective before November 21, 1990, Section 19.2 of the Plan, then
designated as Section 15.7, read as follows:
15.7 Return of Contributions. Pre-Tax Contributions
-----------------------
and Company Contributions are expressly conditioned upon the
initial determination by the Secretary of the Treasury or his
delegate that the Plan meets the requirements of section 401(a) of
the Code and upon the deductibility of such Contributions under
section 404 of the Code. If such initial determination is not
favorable, then all Pre-Tax Contributions and Company
Contributions will be returned to the Participating Companies
within 12 months after the date of the initial determination. If
the deduction of any Pre-Tax Contribution or 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
Pre-Tax Contribution or 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 Pre-Tax Contribution or Company Contribution returned
under this Section 15.7 will be reduced to reflect
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-11
<PAGE>
losses but will not be increased to reflect gains or income. Any
Pre-Tax Contribution returned under this Section 15.7 will be paid
to the Member from whom it was withheld.
48 Effective with respect to the Plan Year ending in 1989, Appendix B of
the Plan read as follows:
If Matching Contributions are made with respect to Pre-Tax
Contributions made during the Plan Year ended in 1989, such Matching
Contributions will be made with respect to such Pre-Tax Contributions
made by a Member who was employed by the Company on the last day of such
Plan Year but received a distribution of his or her Plan Benefit under
Section 8 before the date on which such Matching Contributions are made
to the Plan, without regard to whether such Pre-Tax Contributions are
transferred to Fund Y (the "Special Carryover Match").
The Special Carryover Match will be allocated to such Member's
account as of the last day of the Plan Year ended in 1989, and will
become distributable under Section 8 of the Plan.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
A-12
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EMPLOYEE LONG-TERM INVESTMENT
-----------------------------
AND SAVINGS PLAN
----------------
APPENDIX B
----------
BLACKOUT PROVISIONS
-------------------
1. In General. The Administrative Committee or its designee (either
----------
referred to herein as the "Blackout Coordinator") may establish a Blackout
Period, as defined below, in the event that the Blackout Coordinator determines
that such a Blackout Period is necessary or appropriate in the administration
of the Plan.
2. Definitions.
-----------
(a) A Blackout Period is a period of time during which Affected
Requests shall not be processed or effected.
(b) An Affected Request is any of the following requests by a
Member (or Beneficiary) for an action or an event under the Plan, or any of the
following Plan functions or events:
(i) Reinvestment of Accounts pursuant to Section 6 of
the Plan;
(ii) Valuation of Accounts and distribution of statements
pursuant to Section 7 of the Plan;
(iii) Withdrawals pursuant to Section 8 of the Plan; and
(iv) Distribution of Plan Benefits pursuant to Section 9
of the Plan.
In addition, the Blackout Coordinator, in its declaration of the Blackout
Period or in any supplementary action regarding the Blackout Period, may
designate as Affected Requests any other requests by a Member (or Beneficiary)
or other Plan functions or events which are otherwise allowed or provided for
under the Plan, or may declare that specified requests or Plan functions or
events encompassed by (b)(i)-(iv) above shall not constitute Affected Requests,
for all or a designated portion of the Blackout Period.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
B-1
<PAGE>
3. Duration. The duration of the Blackout Period shall be determined
--------
by the Blackout Coordinator, in its sole discretion.
4. Effect of Blackout Period. Affected Requests will be held by the
-------------------------
Administrative Committee until the end of the Blackout Period. At the end of the
Blackout Period, the Administrative Committee shall reconfirm the Member's (or
Beneficiary's) eligibility for or desire with respect to any Affected Request
which had been submitted by such Member (or Beneficiary), but which had not been
processed as a result of the Blackout Period. Other Plan functions or events
which would have occurred if not for the Blackout Period, will be processed
automatically after the expiration of the Blackout Period.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
B-2
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EMPLOYEE LONG-TERM INVESTMENT
-----------------------------
AND SAVINGS PLAN
----------------
APPENDIX C
----------
FUNDS
-----
- - Fidelity Money Market Trust: Retirement Money Market Portfolio
- - Fidelity Asset Manager
- - Fidelity Magellan Fund
- - Sponsor Stock Fund
The Fund designated as the Holding Account referenced in Section 7.1
shall be the Fidelity Retirement Government Money Market Portfolio.
The Fund designated as the Fund to receive contributions for which no
proper Member investment direction has been received shall be the Fidelity
Retirement Government Money Market Portfolio.
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
C-1
<PAGE>
LEVI STRAUSS ASSOCIATES INC.
----------------------------
EMPLOYEE LONG-TERM INVESTMENT
-----------------------------
AND SAVINGS PLAN
----------------
APPENDIX D
----------
ADDITIONAL ELIGIBLE WITHDRAWALS
-------------------------------
In accordance with Section 8.3(b)(viii), losses relating to natural
disasters described herein may form a basis for withdrawals.
(a) (a) Description of Natural Disaster.
-------------------------------
(I) Limitations.
-----------
EMPLOYEE LONG-TERM INVESTMENT
AND SAVINGS PLAN
D-1
<PAGE>
Exhibit 10ss
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT AND SAVINGS PLAN
-----------------
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Levi Strauss Associates Inc. Employee Long-Term Investment and Savings Plan (the
"Plan");
WHEREAS, pursuant to Section 16.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company and certain of its major stockholders are
considering a transaction intended to ensure the long-term private, family
ownership of the Company (the "Transaction") and which would involve the
elimination of Company stock as an investment under the Plan;
WHEREAS, by resolutions duly adopted on November 30, 1995, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt amendments to the Plan in order to accommodate
and reflect the possibility of the Transaction and any related transactions; and
WHEREAS, effective as of December 7, 1995 the Company adopted a new
Appendix E to the Plan to accommodate and reflect the possibility of the
Transaction and any related transactions;
WHEREAS, the Company wants to amend Appendix E to delay the application
of certain provisions of Appendix E;
WHEREAS, the amendments herein are within the scope of such delegated
authority of Robert D. Haas;
NOW, THEREFORE, effective as of the date hereof, Appendix E of the Plan
is hereby amended and restated in its entirety to read as set forth on the
attached exhibit.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, on
December 7, 1995.
/s/ Robert D. Haas
______________________________
Robert D. Haas
<PAGE>
Chairman of the Board and Chief Executive
Officer
<PAGE>
EXHIBIT
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT AND SAVINGS PLAN
APPENDIX E
--------------------
Suspension of Stock Fund Investments
and Related Provisions
--------------------
1. Introduction.
------------
Effective as of December 7, 1995, the provisions of this Appendix E to the
Plan are applicable with respect to the transactions and events specified
below, instead of the provisions of the main text of, or other appendices
to, the Plan which would otherwise govern such transactions and events.
2. Special Provisions.
------------------
(a) Stock Fund Transactions.
-----------------------
(i) All reinvestment of Accounts under Section 6.3, withdrawals
under Section 8 and distributions of Plan Benefits under
Section 9 shall be suspended effective for requests received on
or after the Suspension Date (as such term is defined in
Section E.2(c) below), to the extent that such transactions
would have resulted in the distribution or transfer of funds
from the Stock Fund.
(ii) (A) Except as provided in (B) below, any duty,
responsibility or function assigned to the Investment
Committee with respect to matters relating to the Stock
Fund after the Effective Date, including but not limited
to obtaining an appraisal of the Fair Market Value of LSAI
Stock, is hereby assigned to the Chief Executive Officer
of the Company (the "CEO"), or to any person or entity
designated in writing by the CEO. The CEO, or the
individual or entity designated by the CEO, if any, shall
be referred to as the "Coordinator."
(A) The assignment provided in (A) above does not apply to any
responsibility of the Investment Committee in discharging
its duties under the Plan in connection with a transaction
or event which may
-1-
<PAGE>
result in the sale, conversion or other disposition of
the LSAI Stock held by the Plan, including but not limited
to acting on behalf of the Plan with respect to the
exercise of stockholders' rights associated with mergers
(for example, dissenter's rights under relevant state law)
and responses to purchase offers as described in
Section 6.7(c).
(iii) Nothing herein is intended to require the Coordinator to
obtain a Fair Market Value of LSAI Stock during the suspension
of Stock Fund transactions provided in Section E.2(a)(i)
above.
(iv) The responsibilities of the Investment Committee under the
Plan which are not described in the assignment provided in
Section E.2(a)(ii)(A) above shall remain in full force and
effect.
(b) Investments and Investment Directions.
-------------------------------------
(i) No additional investment of Member Contributions or Company
Contributions shall be made to the Stock Fund.
(ii) Effective for pay periods beginning December 25, 1995, all
Member Contributions held in the Retirement Government Money
Market Fund pending potential investment in the Stock Fund
shall be transferred to the Retirement Money Market Fund, all
current Member Contributions shall be deposited in the fund
designated by the Member for the investment of such Member
Contributions, and the Retirement Money Market Fund shall be
the Fund to receive contributions for which no proper
investment direction has been received.
(iii) With respect to any Matching Contribution which is made with
respect to Member Contributions made on or after May 29, 1995:
(A) A transfer of Member Contributions to the Stock Fund is
not required in order for the Company to make a Matching
Contribution.
(B) The first Matching Contribution made after the date of
this Appendix shall be made with respect to Member
Contributions made on or before December 24, 1995 on
behalf of a Member who was an Employee on November 22,
1995, or ceased to be an Employee between May 29, 1995
and November 22, 1995 by reason of an event described in
Section 5.1(b)(i)-(iv). Any subsequent Matching
Contributions, and the time for making any
-2-
<PAGE>
such Matching Contribution, shall be determined by the
Company, in its sole discretion.
(C) Matching Contributions shall be made in cash and deposited
in the Fund designated by the Member as of the date of
deposit for investment of his or her Member contributions
or, if no such designation is in effect, in the Retirement
Money Market Fund.
(c) Suspension Date. For purposes of this Appendix E, the term
---------------
"Suspension Date" shall mean the date on which the Company commences
distribution (including but not limited to distribution by electronic
mail) of a summary of the terms of this Appendix E.
-3-
<PAGE>
Exhibit 10ss
LEVI STRAUSS ASSOCIATES INC.
EMPLOYEE LONG-TERM INVESTMENT AND SAVINGS PLAN
-----------------
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Levi Strauss Associates Inc. Employee Long-Term Investment and Savings Plan (the
"Plan");
WHEREAS, pursuant to Section 16.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan in order to readmit a
limited number of Highly Compensated Employees to active participation under
certain circumstances;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 June 1, 1993, 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 such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, effective November 27, 1995, the Plan is hereby amended
as set forth below:
1. The current text of Section 3.5 is revised in its entirety to
read as set forth below:
3.5 Highly Compensated Employees.
----------------------------
(a) Any Highly Compensated Employee will only be eligible
for membership in the Plan as an Inactive Member or as set forth in
Section 3.5(b) and, in either case, only if he or she otherwise
satisfies the eligibility requirements of Section 3.1. An Inactive
Member will not be
1
<PAGE>
eligible to make Member Contributions under Section 4 of the Plan
or receive any allocation of Matching Contributions under
Section 5 of the Plan. An Inactive Member will, however, be
eligible to:
(i) Make Rollover Contributions to the Plan under
Section 4.7;
(ii) Direct the investment of his or her Accounts under
Section 6; and
(iii) Make withdrawals from his or her Accounts under
Section 8.
An Inactive Member will continue to be subject to the
remaining provisions of the Plan. The Administrative Committee will
periodically determine whether Members in the Plan are Highly
Compensated Employees and any such Member's status will change from
an Active Member to an Inactive Member as soon as practicable after
the Administration Committee makes such determination.
(b) (i) Eligible Highly Compensated Employees.
-------------------------------------
Section 3.5(a) notwithstanding, a Highly Compensated Employee who
satisfies the eligibility requirements of Section 3.1 may
participate in the Plan for all or a portion of a Plan Year as a
Member provided that he or she is included in an eligible category
of Highly Compensated Employees described in Appendix F to the Plan.
(ii) Establishment of Appendix F. Appendix F may be
---------------------------
established, amended or revoked from time to time by any individual
or entity empowered to amend the Plan. It is intended that
Appendix F designate an eligible category of Highly Compensated
Employees who can participate in the Plan without resulting in the
Plan failing to comply with the nondiscriminatory coverage rules of
Code section 410(b) or any successor provision. However, the
existence of this provision does not require the Company to
designate any Highly Compensated Employees, or the maximum
permissible Highly Compensated Employees, to participate in the Plan
as Members for any Plan Year.
2. The Plan is amended by a new Appendix F, to read as set forth on the
attached exhibit hereto.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on
December 21, 1995.
2
<PAGE>
________________________________
Donna J. Goya
Senior Vice President
3
<PAGE>
EXHIBIT TO
EMPLOYEE LONG-TERM INVESTMENT AND SAVINGS PLAN AMENDMENT
EMPLOYEE LONG-TERM INVESTMENT AND SAVINGS PLAN OF
LEVI STRAUSS ASSOCIATES INC.
APPENDIX F
--------------------
Pursuant to Section 3.5(b) of the Plan, the Highly Compensated
Employees described below are eligible to participate in this Plan as Members:
3. For the Plan Year ending in 1996, Highly Compensated Employees
whose compensation (as determined pursuant to Section 2.20) for the
Plan Year ending in 1995 did not exceed $95,000.
4
<PAGE>
Exhibit 10tt
LEVI STRAUSS ASSOCIATES INC.
RETIREMENT PLAN FOR OVER-THE-ROAD
TRUCK DRIVERS AND DISPATCHERS
--------------------
AMENDMENT
The Levi Strauss Associates Inc. Retirement Plan for Over-the-Road Truck
Drivers and Dispatchers is hereby amended as set forth below:
Effective as of the first day of the Plan Year beginning in 1993,
Section 11 is amended by the addition of a new Section 11.7, to read as set
forth below:
11.7 Direct Rollovers. A distributee may elect at the time and in
----------------
the manner prescribed by the Administrative Committee to have any portion
of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. The
terms used in this paragraph are defined as follows:
(a) Eligible rollover distribution. Any distribution of all
or any portion of the balance to the credit of the distributee, except
that it does not include:
(i) Any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more.
(ii) Any distribution to the extent it is required under
section 401(a)(9) of the Code.
(iii) The portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
(b) Eligible retirement plan.
1
<PAGE>
(i) An individual retirement account described in
section 408(a) of the Code.
(ii) An individual retirement annuity described in
section 408(b) of the Code.
(iii) An annuity plan described in section 403(a) of the
Code.
(iv) A qualified trust described in section 401(a) of
the Code that accepts the distributee's eligible rollover
distribution.
(v) However, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
(c) Distributee. A Member or former Member, his or her
surviving spouse, or his or her spouse or former spouse who is the
alternate payee under a Qualified Domestic Relations Order.
(d) Direct rollover. A payment by the Plan to the eligible
retirement plan specified by the distributee.
To facilitate installment payments under Section 11.7, the
Administrative Committee, in its sole discretion, may segregate all or any
part of the Participant's Benefit in a separate account.
Dated: November ____, 1995.
/s/ Donna J. Goya
__________________________________
Donna J. Goya
Senior Vice President
2
<PAGE>
Exhibit 10uu
REVISED HOME OFFICE PENSION PLAN
OF LEVI STRAUSS ASSOCIATES INC.
--------------------
AMENDMENT
The Revised Home Office Pension Plan of Levi Strauss Associates Inc. is
hereby amended as set forth below:
1. Effective November 28, 1994, Section 5 is amended by a new
Section 5.5, to read as set forth below:
5.5 Certain Benefits Protected. With respect to any Member whose
--------------------------
current accrued benefit under the Plan as of November 28, 1994 is based
on compensation for Plan Years beginning before such Plan Year that
exceeded $150,000, the Member's accrued benefit, unless otherwise
provided in the Plan, will be the greater of the accrued benefit
determined for the Member under (a) or (b) below:
(a) The Member's accrued benefit determined with respect to
the benefit formula applicable for the Plan Year beginning as of
November 28, 1994, as applied to the Member's total years of Benefit
Service taken into account under the Plan for purposes of benefit
accruals, or
(b) The sum of:
(i) The Member's accrued benefit as of the last day of
the last Plan Year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the Code, and
(ii) The Member's accrued benefit determined under the
benefit formula applicable for the Plan Year beginning as of
November 28, 1994, as applied to the Member's Benefit Service
for Plan Years beginning after 1993.
1
<PAGE>
2. Effective as of the first day of the Plan Year beginning in 1993,
Section 11 is amended by the addition of a new Section 11.7, to read as set
forth below:
11.7 Direct Rollovers. A distributee may elect at the time and in
----------------
the manner prescribed by the Administrative Committee to have any portion
of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. The
terms used in this paragraph are defined as follows:
(a) Eligible rollover distribution. Any distribution of all
or any portion of the balance to the credit of the distributee, except
that it does not include:
(i) Any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more.
(ii) Any distribution to the extent it is required
under section 401(a)(9) of the Code.
(iii) The portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
(b) Eligible retirement plan.
(i) An individual retirement account described in
section 408(a) of the Code.
(ii) An individual retirement annuity described in
section 408(b) of the Code.
(iii) An annuity plan described in section 403(a) of the
Code.
(iv) A qualified trust described in section 401(a) of
the Code that accepts the distributee's eligible rollover
distribution.
(v) However, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
2
<PAGE>
(c) Distributee. A Member or former Member, his or her
surviving spouse, or his or her spouse or former spouse who is the
alternate payee under a Qualified Domestic Relations Order.
(d) Direct rollover. A payment by the Plan to the eligible
retirement plan specified by the distributee.
To facilitate installment payments under Section 11.7, the
Administrative Committee, in its sole discretion, may segregate all or any
part of the Participant's Benefit in a separate account.
Dated: November ____, 1995.
/s/ Donna J. Goya
_________________________________
Donna J. Goya
Senior Vice President
3
<PAGE>
Exhibit 10vv
LEVI STRAUSS ASSOCIATES INC.
REVISED EMPLOYEE RETIREMENT PLAN
----------------
AMENDMENT
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Levi Strauss Associates Inc. Revised Employee Retirement Plan (the "Plan");
WHEREAS, pursuant to Section 21.1 of the Plan, the Board of Directors
of the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company desires to amend the Plan to provide an early
retirement program;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 June 1, 1993, 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 such limits to the delegated
authority of Donna J. Goya;
NOW, THEREFORE, the Plan is amended by the addition of an Appendix C,
to read as set forth on the attached exhibit.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto on
January 10, 1995.
/s/ Donna J. Goya
___________________________
Donna J. Goya
<PAGE>
Senior Vice President
<PAGE>
Exhibit 10vv
LEVI STRAUSS ASSOCIATES INC.
REVISED EMPLOYEE RETIREMENT PLAN
--------------------
AMENDMENT
The Levi Strauss Associates Inc. Revised Employee Retirement Plan is hereby
amended as set forth below:
Effective for the Plan Year beginning in 1993, Section 12 is amended by the
addition of a new Section 12.6, to read as set forth below:
12.6 Direct Rollovers. A distributee may elect at the time and in the
----------------
manner prescribed by the Administrative Committee to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. The terms used in this
paragraph are defined as follows:
(a) Eligible rollover distribution. Any distribution of all or
any portion of the balance to the credit of the distributee, except
that it does not include:
(i) Any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more.
(ii) Any distribution to the extent it is required under
section 401(a)(9) of the Code.
(iii) The portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
(b) Eligible retirement plan.
1
<PAGE>
(i) An individual retirement account described in section
408(a) of the Code.
(ii) An individual retirement annuity described in section
408(b) of the Code.
(iii) An annuity plan described in section 403(a) of the
Code.
(iv) A qualified trust described in section 401(a) of the
Code that accepts the distributee's eligible rollover
distribution.
(v) However, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
(c) Distributee. A Member or former Member, his or her surviving
spouse, or his or her spouse or former spouse who is the alternate
payee under a Qualified Domestic Relations Order.
(d) Direct rollover. A payment by the Plan to the eligible
retirement plan specified by the distributee.
To facilitate installment payments under Section 12.6, the
Administrative Committee, in its sole discretion, may segregate all or any
part of the Participant's Benefit in a separate account.
Dated: November 22, 1995.
/s/ Donna J. Goya
___________________________
Donna J. Goya
Senior Vice President
2
<PAGE>
Exhibit 10ww
EMPLOYEE STOCK PURCHASE AND STOCK AWARD PLAN
OF
LEVI STRAUSS ASSOCIATES INC.
-----------------
AMENDMENTS
WHEREAS, LEVI STRAUSS ASSOCIATES INC. (the "Company") has adopted the
Employee Stock Purchase and Stock Award Plan of Levi Strauss Associates Inc.
(the "Plan");
WHEREAS, pursuant to Section 10.1 of the Plan, the Board of Directors of
the Company is authorized to amend the Plan at any time and for any reason;
WHEREAS, the Company and certain of its major stockholders are
considering a transaction intended to ensure the long-term private, family
ownership of the Company (the "Transaction") and which would involve the
elimination of Company stock as an investment under the Plan;
WHEREAS, by resolutions duly adopted on November 30, 1995, the Board of
Directors of the Company authorized Robert D. Haas, Chairman of the Board and
Chief Executive Officer, to adopt amendments to the Plan in order to accommodate
and reflect the possibility of the Transaction and any related transactions; and
WHEREAS, effective as of December 7, 1995 the Company adopted a new
Appendix A to the Plan to accommodate and reflect the possibility of the
Transaction and any related transactions;
WHEREAS, the Company wants to amend Appendix A to delay the application
of certain provisions of Appendix A;
WHEREAS, the amendments herein are within the scope of such delegated
authority of Robert D. Haas;
NOW, THEREFORE, effective as of the date hereof, Appendix A of the Plan
is hereby amended and restated in its entirety to read as set forth on the
attached exhibit.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, on
December 7, 1995.
/s/ Robert D. Haas
_________________________________________
Robert D. Haas
Chairman of the Board and Chief Executive
Officer
<PAGE>
EXHIBIT
EMPLOYEE STOCK PURCHASE AND
STOCK AWARD PLAN
APPENDIX A
--------------------
1. Introduction.
------------
Effective as of the Suspension Date (as such term is defined below), the
provisions of this Appendix A to the Plan are applicable with respect to
the transactions and events specified below, instead of the provisions of
the main text of the Plan which would otherwise govern such transactions
and events. For purposes of this Appendix A, the term "Suspension Date"
shall mean the date on which the Company commences distribution (including
but not limited to distribution by electronic mail) of a summary of the
terms of this Appendix A.
2. Closing of Participation.
------------------------
On and after December 25, 1995, no Eligible Employee who was not a
Participant in the Plan on the date before the Suspension Date may become a
Participant in the Plan.
3. Termination of Purchases and Awards.
-----------------------------------
On and after the Suspension Date, there will be no purchases or awards of
Class E Stock under Articles IV and V of the Plan, respectively. At a time
after the Suspension Date determined by the Administrator (as defined in
the rules prescribed by the Committee), the Administrator shall terminate
all contributions to the Plan and distribute to each Participant the value
of his or her Account under the Plan.
4. Suspension of Stock Transactions.
--------------------------------
Hardship Sales under Section 7.1, Demand Sales under Section 7.2 and sales
subsequent to Termination of Employment under Section 7.4 (except for sales
required by the Company pursuant to Section 7.4) shall be suspended,
effective for any request for such a transaction received by the Committee
on or after the Suspension Date. The suspension of such transactions shall
remain in effect until terminated by the Chief Executive Officer of the
Company. All requests for transactions under Sections 7.1, 7.2 and 7.4
which are received before the Suspension Date shall be processed as if the
Suspension Date is a Purchase Date and at the Fair Market Value in effect
as of the most recent preceding Purchase Date.
<PAGE>
Exhibit 10xx
LEVI STRAUSS ASSOCIATES INC.
EXCESS BENEFIT RESTORATION PLAN
----------------
LEVI STRAUSS ASSOCIATES INC.
SUPPLEMENTAL BENEFIT RESTORATION PLAN
----------------
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established the
Levi Strauss Associates Inc. Excess Benefit Restoration Plan and the Levi
Strauss Associates Inc. Supplemental Benefit Restoration Plan (individually, the
"Excess BRP" and the "Supplemental BRP," respectively, collectively, the
"BRPs");
WHEREAS, the Company desires to amend the BRPs to provide for an orderly
and systematic division of interests under the BRPs pursuant to an appropriate
domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends the
BRPs as set forth below:
1. The Excess BRP is amended by the addition of a new Section 10 to
read as set forth below:
Section 10
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this Plan notwithstanding, an
Eligible Employee's benefit under the Plan shall be payable to
any "alternate payee," as such person is defined in section
414(p)(8) of
1
<PAGE>
the Code, as provided in a domestic relations order with
respect to the Plan which would constitute a qualified
domestic relations order within the meaning of section
414(p)(1)(A) of the Code if the Plan were subject to section
414(p) of the Code. Determinations under this Section 10,
including but not limited to determination of whether an order
would constitute a qualified domestic relations order, shall
be made by the Committee, or its designee, in its sole
discretion. The rights of any alternate payee hereunder are
subject to the provisions of the Plan as administered with
respect to alternate payees, and the Committee may require an
alternate payee to acknowledge that his or her rights are
subject to such provisions.
2. The Supplemental BRP is amended by the addition of a new Section X
to read as set forth below:
Section X
Alienation in Response to Qualified Domestic Relations Order
------------------------------------------------------------
Any other provision of this Plan notwithstanding, an
Eligible Employee's benefit under the Plan shall be payable to
any "alternate payee," as such person is defined in section
414(p)(8) of the Code, as provided in a domestic relations
order with respect to the Plan which would constitute a
qualified domestic relations order within the meaning of
section 414(p)(1)(A) of the Code if the Plan were subject to
section 414(p) of the Code. Determinations under this
Section 10, including but not limited to determination of
whether an order would constitute a qualified domestic
relations order, shall be made by the Committee, or its
designee, in its sole discretion. The rights of any alternate
payee hereunder are subject to the provisions of the Plan as
administered with respect to alternate payees, and the
Committee may require an alternate payee to acknowledge that
his or her rights are subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
________________________ ___________________________________________
Date Donna J. Goya
2
<PAGE>
Exhibit 10yy
LEVI STRAUSS ASSOCIATES INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
----------------
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established
the Levi Strauss Associates Inc. Deferred Compensation Plan for Executives (the
"DCPE");
WHEREAS, the Company desires to amend the DCPE to provide for an
orderly and systematic division of interests under the DCPE pursuant to an
appropriate domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends
section (a) of Article 11 of the DCPE to read as set forth below:
1. The first sentence shall be amended by the addition of the following
at the end thereof:
or in the final paragraph of this Section 11(a) with respect to
domestic relations orders.
2. The following new paragraph shall be added after the existing
paragraph:
Any other provision of this Plan notwithstanding, an
Eligible Employee's Deferred Compensation under the Plan
shall be payable to any "alternate payee," as such person
is defined in section 414(p)(8) of the Code, as provided
in any domestic
1
<PAGE>
relations order with respect to the Plan which would
constitute a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code if the Plan
were subject to section 414(p) of the Code. Determinations
under this section (a), including but not limited to
determination of whether an order would constitute a
qualified domestic relations order, shall be made by the
Administrator, or its designee, in its sole discretion.
The rights of any alternate payee hereunder are subject to
the provisions of the Plan as administered with respect to
alternate payees, and the Administrator may require an
alternate payee to acknowledge that his or her rights are
subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
_________________________ _______________________________________________
Date Donna J. Goya
2
<PAGE>
Exhibit 10zz
LEVI STRAUSS ASSOCIATES INC.
LONG-TERM PERFORMANCE PLAN
________________
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established
the Levi Strauss Associates Inc. Long-Term Performance Plan (the "LTPP");
WHEREAS, the Company desires to amend the LTPP to provide for an
orderly and systematic division of interests under the LTPP pursuant to an
appropriate domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends
Section 4.8 of the LTPP by the addition of the following new paragraph after the
existing paragraph:
The foregoing provisions notwithstanding, any Right or
entitlement to payment with respect to any Right under the Plan may be
transferred to any "alternate payee," as such person is defined in
section 414(p)(8) of the Code, as provided in any domestic relations
order with respect to the Plan which would constitute a qualified
domestic relations order within the meaning of section 414(p)(1)(A) of
the Code if the Plan were subject to section 414(p) of the Code.
Determinations under this paragraph, including but not limited to
determination of whether an order would constitute a qualified
domestic relations order, shall be made by the Committee in its sole
discretion. The rights of any alternate payee hereunder are subject
to the provisions of the Plan as administered with respect to
alternate payees, and the
1
<PAGE>
Committee may require an alternate payee to acknowledge that his or
her rights are subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
_____________________ _________________________________________
Date Donna J. Goya
2
<PAGE>
Exhibit 10aaa
LEVI STRAUSS ASSOCIATES INC.
1992 EXECUTIVE STOCK APPRECIATION RIGHTS PLAN
________________
AMENDMENTS
WHEREAS, Levi Strauss Associates Inc. (the "Company") has established
the Levi Strauss Associates Inc. 1992 Executive Stock Appreciation Rights Plan
(the "SAR Plan");
WHEREAS, the Company desires to amend the SAR Plan to provide for an
orderly and systematic division of interests under the SAR Plan pursuant to an
appropriate domestic relations order;
WHEREAS, by resolutions duly adopted on June 18, 1992, 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 employee benefit
plans of the Company and to delegate to any other officer of the Company the
authority to adopt certain amendments to such plans (the "Delegation"); and
WHEREAS, on June 1, 1993, pursuant to the Delegation, Robert D. Haas
delegated to Donna J. Goya, Senior Vice President, the authority to amend the
employee benefit plans of the Company subject to specified limits, and such
delegation has not been amended, rescinded or superseded as of the date hereof;
NOW, THEREFORE, effective as of the date hereof, the Company amends
Section 7 of the SAR Plan in its entirety to read as set forth below:
No Rights or other rights granted under or provided by this Plan
are assignable or otherwise transferable by holders or Employees,
except by will, by the laws of descent and distribution, or as
provided in the following paragraph.
The foregoing provisions notwithstanding, any Right or other
right under the Plan may be transferred to any "alternate payee," as
such person is defined in section 414(p)(8) of the Code, as provided
in any domestic relations order with respect to the Plan which would
constitute a qualified domestic relations order within the meaning of
section 414(p)(1)(A) of the Code if the Plan were subject to section
414(p) of the Code. Determinations under this paragraph, including
but not limited to determination of whether an order would constitute
a qualified domestic relations order, shall be
1
<PAGE>
made by the Committee in its sole discretion. The rights of any
alternate payee hereunder are subject to the provisions of the Plan as
administered with respect to alternate payees, and the Committee may
require an alternate payee to acknowledge that his or her rights are
subject to such provisions.
IN WITNESS WHEREOF, the undersigned has set her hand hereunto as of the
date set forth below.
_____________________ _________________________________________
Date Donna J. Goya
2
<PAGE>
Exhibit 21
SUBSIDIARIES
As of November 26, 1995
<TABLE>
<CAPTION>
State or Country
Name of Incorporation
- ---- ----------------
<S> <C>
Levi Strauss Associates Inc. Delaware
Brittania Sportswear Ltd. California
Brittsport Limited Hong Kong
Levi Strauss & Co. Delaware
Battery Street Enterprises, Inc. Delaware
LS Reconveyance Corporation California
Custom Clothing Technology Corp. Massachusetts
Jeans Tech, Inc*. Ohio
Levi Strauss (Budapest) Jeanswear Co. Ltd. (joint venture) Hungary
Levi Strauss Employee Purchase Plan, Inc. Arkansas
Levi Strauss Eximco (Asia) Pte. Ltd. Singapore
Levi Strauss Eximco Chile Limitada Chile
Levi Strauss Eximco Columbia Columbia
Levi Strauss Eximco Limited Hongkong
Levi Strauss Eximco Europe Belgium
Levi Strauss Eximco (Hellas) E.P.E. Greece
Levi Strauss Export Sales Corp. California
Levi Strauss Foreign Sales Corporation Barbados
Levi Strauss (Geneva) S.A. Switzerland
Levi Strauss (Budapest) Jeanswear Co. Ltd. Hungary
Levi Strauss Japan K.K. Japan
Levi's Only Stores, Inc. Delaware
LDJV, Inc. Delaware
Majestic Insurance International Ltd. Bermuda
Miratrix, S.A. Costa Rica
NF Industries, Inc. Nevada
Vogue Insurance International Ltd. Bermuda
Wharf Clothiers, Inc. California
</TABLE>
<PAGE>
SUBSIDIARIES
As of November 26, 1995
<TABLE>
<CAPTION>
State or Country
Name of Incorporation
- ---- ----------------
<S> <C>
Levi Strauss Associates Inc.
Levi Strauss & Co.
Levi Strauss International California
Creative Apparel Enterprises, S.A. Belgium
Levi Strauss Advisory Services B.V. i.o. The Netherlands
Levi Strauss Argentina S.A. Argentina
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 Far East Pte. Ltd. Singapore
Levi Strauss France, S.A. France
Levi Strauss Germany GmbH Germany
Levi Strauss (Hungary) Ltd. Hungary
Levi Strauss Indonesia Indonesia
Levi Strauss International Finance Company., N.V. Netherlands Antilles
Levi Strauss Istanbul Konfeksiyon Sanayi ve Ticaret A.S. Turkey
Levi Strauss Italia Srl Italy
Eximco Italia Levi Strauss 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. Bna. Malaysia
</TABLE>
-2-
<PAGE>
SUBSIDIARIES
As of November 26, 1995
<TABLE>
<CAPTION>
State or Country
Name of Incorporation
- ---- ----------------
<S> <C>
Levi Strauss Associates Inc.
Levi Strauss & Co.
Levi Strauss International
Levi Strauss Eximco Mauritius Limited Mauritius
Levi Strauss (India) Private Limited India
Levi Strauss de Mexico, S.A. de C.V. Mexico
Levi Strauss Nederland B. V. Netherlands
Dockers Europe B.V. The Netherlands
Dockers Austria GmbH Austria
Dockers Denmark ApS Denmark
Dockers Germany Vertriebs GmbH Germany
Dockers Hispania Spain
Dockers Italia S.R.L. Italy
Dockers France S.A.R.L. France
Dockers Nederland B.V. The Netherlands
Dockers Norway AS Norway
Dockers Spain Spain
Dockers Sweden AB Sweden
Dockers U.K. Limited United Kingdom
First American Casual Clothing Co. AB Sweden
Levi Strauss Hellas, S.A. Greece
Levi Strauss Poland Z.o.o. (=Ltd.) Poland
Levi Strauss Prague Czech Republic
Levi Strauss South Africa (Proprietary) Limited South Africa
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 Pension Trustee Ltd. United Kingdom
Levi Strauss del Peru S.A. Peru
Levi Strauss (Philippines) Inc. Philippines
Levi Strauss (Philippines) Inc. II Philippines
</TABLE>
-3-
<PAGE>
SUBSIDIARIES
As of November 26, 1995
<TABLE>
<CAPTION>
State or Country
Name of Incorporation
- ---- ----------------
<S> <C>
Levi Strauss Associates Inc.
Levi Strauss & Co.
Levi Strauss International
Levi Strauss (Russia) Ltd. Russia
Levi Strauss South Africa (Pty.) Ltd. South Africa
Levi Strauss (Suisse) S.A. Switzerland
Levi Strauss Trading Limited Liability Company Hungary
Levi Strauss (U.K.) Ltd. United Kingdom
Farvista Limited United Kingdom
Levi Strauss de Venezuela, C.A. * Venezuela
Retail Index Limited United Kingdom
Saddleman South America, Inc. Delaware
Soumen Levi Strauss OY Finland
</TABLE>
* In process of liquidation.
All subsidiaries of the Company are 100% owned (except as noted) and are
included in the consolidated financial statements. Indirect subsidiaries are
noted by indentation.
-4-
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To 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 LLP
San Francisco, California,
February 21, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF LEVI STRAUSS ASSOCIATES INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-26-1995
<PERIOD-START> NOV-28-1994
<PERIOD-END> NOV-26-1995
<CASH> 1,088,032
<SECURITIES> 0
<RECEIVABLES> 1,004,788
<ALLOWANCES> 34,939
<INVENTORY> 879,083
<CURRENT-ASSETS> 3,071,172
<PP&E> 1,431,792
<DEPRECIATION> 525,037
<TOTAL-ASSETS> 4,709,157
<CURRENT-LIABILITIES> 1,397,536
<BONDS> 16,366
<COMMON> 194,146
246,609
0
<OTHER-SE> 1,921,147
<TOTAL-LIABILITY-AND-EQUITY> 4,709,157
<SALES> 6,707,631
<TOTAL-REVENUES> 6,707,631
<CGS> 3,930,132
<TOTAL-COSTS> 3,930,132
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,659
<INCOME-PRETAX> 1,034,837
<INCOME-TAX> 300,101
<INCOME-CONTINUING> 734,736
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 734,736
<EPS-PRIMARY> 13.94
<EPS-DILUTED> 0
</TABLE>
