SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission file number 0-10973
BELL SPORTS CORP. EMPLOYEES' RETIREMENT AND 401(k) PLAN
6350 San Ignacio Avenue
San Jose, CA 95119
------------------------------------
(Full title and address of the Plan)
BELL SPORTS CORP.
------------------------------------------------------------
(Name of Issuer of the Securities held pursuant to the Plan)
6350 San Ignacio Avenue
San Jose, CA 95119
-----------------------------------------------
(Address of Issuer's Principal Executive Office)
<PAGE>
Report of Independent Accountants
To the Participants and Administrator
of the Bell Sports Corp. Employees' Retirement and 401(k) Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Bell Sports Corp. Employees' Retirement and 401(k) Plan at December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. These supplemental
schedules and Fund Information are the responsibility of the Plan's management.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
May 25, 1999
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1998 AND 1997
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
INDEX
- --------------------------------------------------------------------------------
Page
Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits, with Fund Information 2-5
Statement of Changes in Net Assets Available for Benefits, with Fund
Information 6-9
Notes to Financial Statements 10-16
Supplemental Schedules:
Schedule I - Schedule of Assets Held for Investment Purposes 17-18
Schedule II - Schedule of Reportable Transactions 19-20
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
December 31, 1998
Fund Information
----------------
<TABLE>
<CAPTION>
Charter INVESCO
Guaranteed Total Fidelity Fidelity
Income Return Contrafund Magellan Lifetime20 Lifetime30 Lifetime40
Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund $2,608,019
CIGNA INVESCO Total Return Fund $695,941
CIGNA Fidelity Contrafund Fund $1,897,397
CIGNA Fidelity Magellan Fund $1,669,199
CIGNA Lifetime20 Fund $219,060
CIGNA Lifetime30 Fund $397,106
CIGNA Lifetime40 Fund $382,582
Cash equivalents 129
---------- -------- ---------- ---------- -------- -------- --------
Net assets available for benefits $2,608,148 $695,941 $1,897,397 $1,669,199 $219,060 $397,106 $382,582
========== ======== ========== ========== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1998
Fund Information
----------------
<TABLE>
<CAPTION>
American
Century -
Twentieth Vanguard
Century Growth &
Lifetime50 Lifetime60 Ultra Income
Fund Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund
CIGNA INVESCO Total Return Fund
CIGNA Fidelity Contrafund Fund
CIGNA Fidelity Magellan Fund
CIGNA Lifetime20 Fund
CIGNA Lifetime30 Fund
CIGNA Lifetime40 Fund
CIGNA Lifetime50 Fund $ 154,630
CIGNA Lifetime60 Fund $ 297,530
CIGNA American Century - Twentieth Century Ultra Fund $2,936,153
CIGNA Vanguard Growth & Income Fund $1,864,634
CIGNA Warburg Pincus Advisor International Equity Fund
Participant notes receivable
Cash equivalents
---------- ---------- ---------- ----------
Net assets available for benefits $ 154,630 $ 297,530 $2,936,153 $1,864,634
========== ========== ========== ==========
Warburg
Pincus
Advisor
International Participant
Equity Notes
Fund Receivable Total
-------- -------- -----------
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund $2,608,019
CIGNA INVESCO Total Return Fund 695,941
CIGNA Fidelity Contrafund Fund 1,897,397
CIGNA Fidelity Magellan Fund 1,669,199
CIGNA Lifetime20 Fund 219,060
CIGNA Lifetime30 Fund 397,106
CIGNA Lifetime40 Fund 382,582
CIGNA Lifetime50 Fund 154,630
CIGNA Lifetime60 Fund 297,530
CIGNA American Century - Twentieth Century Ultra Fund 2,936,153
CIGNA Vanguard Growth & Income Fund 1,864,634
CIGNA Warburg Pincus Advisor International Equity Fund $409,782 409,782
Participant notes receivable $273,576 273,576
Cash equivalents 129
-------- -------- -----------
Net assets available for benefits $409,782 $273,576 $13,805,738
======== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
December 31, 1997
Fund Information
----------------
<TABLE>
<CAPTION>
Charter INVESCO
Guaranteed Total Fidelity Fidelity
Income Return Contrafund Magellan
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund $1,955,754
CIGNA INVESCO Total Return Fund $ 553,892
CIGNA Fidelity Contrafund Fund $1,524,275
CIGNA Fidelity Magellan Fund $1,130,272
CIGNA Lifetime20 Fund
CIGNA Lifetime30 Fund
CIGNA Lifetime40 Fund
CIGNA Lifetime50 Fund
Cash equivalents 129
---------- ---------- ---------- ----------
Net assets available for benefits $1,955,883 $ 553,892 $1,524,275 $1,130,272
========== ========== ========== ==========
Lifetime20 Lifetime30 Lifetime40 Lifetime50
Fund Fund Fund Fund
---- ---- ---- ----
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund
CIGNA INVESCO Total Return Fund
CIGNA Fidelity Contrafund Fund
CIGNA Fidelity Magellan Fund
CIGNA Lifetime20 Fund $ 195,320
CIGNA Lifetime30 Fund $ 436,624
CIGNA Lifetime40 Fund $ 409,012
CIGNA Lifetime50 Fund $ 153,364
Cash equivalents
---------- ---------- ---------- ----------
Net assets available for benefits $ 195,320 $ 436,624 $ 409,012 $ 153,364
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
Fund Information
----------------
<TABLE>
<CAPTION>
American
Century -
Twentieth Vanguard
Century Growth &
Lifetime60 Ultra Income
Fund Fund Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund
CIGNA INVESCO Total Return Fund
CIGNA Fidelity Contrafund Fund
CIGNA Fidelity Magellan Fund
CIGNA Lifetime20 Fund
CIGNA Lifetime30 Fund
CIGNA Lifetime40 Fund
CIGNA Lifetime50 Fund
CIGNA Lifetime60 Fund $ 234,751
CIGNA American Century - Twentieth Century Ultra Fund $ 2,065,770
CIGNA Vanguard Growth & Income Portfolio $ 1,249,175
CIGNA Warburg Pincus Advisor International Equity Fund
Bell Sports Corp. Common Stock
Participant notes receivable
Cash equivalents
----------- ----------- -----------
Net assets available for benefits $ 234,751 $ 2,065,770 $ 1,249,175
=========== =========== ===========
Warburg
Pincus Bell
Advisor Sports
International Corp. Participant
Equity Common Notes
Fund Stock Receivable Total
----------- ----------- ----------- -----------
Assets
Investments, at fair value
CIGNA Charter Guaranteed Income Fund $ 1,955,754
CIGNA INVESCO Total Return Fund 553,892
CIGNA Fidelity Contrafund Fund 1,524,275
CIGNA Fidelity Magellan Fund 1,130,272
CIGNA Lifetime20 Fund 195,320
CIGNA Lifetime30 Fund 436,624
CIGNA Lifetime40 Fund 409,012
CIGNA Lifetime50 Fund 153,364
CIGNA Lifetime60 Fund 234,751
CIGNA American Century - Twentieth Century Ultra Fund 2,065,770
CIGNA Vanguard Growth & Income Portfolio 1,249,175
CIGNA Warburg Pincus Advisor International Equity Fund $ 409,213 409,213
Bell Sports Corp. Common Stock $ 466,527 466,527
Participant notes receivable $ 319,993 319,993
Cash equivalents 129
----------- ----------- ----------- -----------
Net assets available for benefits $ 409,213 $ 466,527 $ 319,993 $11,104,071
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
Year Ended December 31, 1998
Fund Information
----------------
<TABLE>
<CAPTION>
Charter
Charter Short-Term INVESCO
Guaranteed Fixed Total Fidelity
Income Income Return Contrafund
Fund Fund Fund Fund
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest $ 128,412
Net appreciation in fair value of
investments $ 1,551 $ 66,250 $ 476,152
----------- --------- --------- -----------
128,412 1,551 66,250 476,152
----------- --------- --------- -----------
Contributions
Employer 77,825 19,195 51,493
Employee 273,133 88,280 187,031
----------- --------- --------- -----------
350,958 107,475 238,524
----------- --------- --------- -----------
Total additions 479,370 1,551 173,725 714,676
Deductions from net assets attributed to:
Benefit payments 365,473 2,266 32,486 152,038
Transaction charge 2,844 199 426
----------- --------- --------- -----------
Total deductions 368,317 2,266 32,685 152,464
Change in forfeiture reserve, net 27,567 (856) (3,505)
----------- --------- --------- -----------
Net increase (decrease) prior to interfund
transfers 138,620 (715) 140,184 558,707
Interfund transfers, net 636,343 715 11,270 (177,284)
Transfer of assets due to sale of division (122,698) -- (9,405) (8,301)
----------- --------- --------- -----------
Net increase (decrease) 652,265 142,049 373,122
Net assets available for benefits at
beginning of year 1,955,883 -- 553,892 1,524,275
----------- --------- --------- -----------
Net assets available for benefits at
end of year $ 2,608,148 $ -- $ 695,941 $ 1,897,397
=========== ========= ========= ===========
Fidelity
Magellan Lifetime20 Lifetime30 Lifetime40
Fund Fund Fund Fund
----------- --------- --------- ---------
Additions to net assets attributed to:
Investment income
Interest
Net appreciation in fair value of
investments $ 385,598 $ 20,597 $ 49,471 $ 52,179
----------- --------- --------- ---------
385,598 20,597 49,471 52,179
----------- --------- --------- ---------
Contributions
Employer 60,794 23,665 28,350 16,971
Employee 264,816 72,332 80,202 52,868
----------- --------- --------- ---------
325,610 95,997 108,552 69,839
----------- --------- --------- ---------
Total additions 711,208 116,594 158,023 122,018
Deductions from net assets attributed to:
Benefit payments 216,523 63,174 81,470 115,063
Transaction charge 712 468 576 305
----------- --------- --------- ---------
Total deductions 217,235 63,642 82,046 115,368
Change in forfeiture reserve, net (7,423) (2,018) (278) (191)
----------- --------- --------- ---------
Net increase (decrease) prior to interfund
transfers 486,550 50,934 75,699 6,459
Interfund transfers, net 65,121 (23,604) (100,120) (25,006)
Transfer of assets due to sale of division (12,744) (3,590) (15,097) (7,883)
----------- --------- --------- ---------
Net increase (decrease) 538,927 23,740 (39,518) (26,430)
Net assets available for benefits at
beginning of year 1,130,272 195,320 436,624 409,012
----------- --------- --------- ---------
Net assets available for benefits at
end of year $ 1,669,199 $ 219,060 $ 397,106 $ 382,582
=========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
- --------------------------------------------------------------------------------
Year Ended December 31, 1998
Fund Information
----------------
<TABLE>
<CAPTION>
American
Century
-Twentieth Vanguard
Century Growth &
Lifetime50 Lifetime60 Ultra Income
Fund Fund Fund Fund
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest
Net appreciation in fair value of
investments $ 17,274 $ 31,644 $ 681,338 $ 360,301
--------- --------- ----------- -----------
17,274 31,644 681,338 360,301
--------- --------- ----------- -----------
Contributions
Employer 5,259 7,847 74,744 51,617
Employee 19,068 19,040 311,652 246,082
--------- --------- ----------- -----------
24,327 26,887 386,396
--------- --------- ----------- -----------
Total additions 41,601 58,531 1,067,734 658,000
Deductions from net assets attributed to:
Benefit payments 22,011 9,323 229,819 159,162
Transaction charge 165 70 803 73
Participant notes receivable terminated
due to withdrawal of participant
--------- --------- ----------- -----------
Total deductions 22,176 9,393 230,622 159,235
Change in forfeiture reserve, net (26) (384) (5,129) (1,724)
--------- --------- ----------- -----------
Net increase (decrease) prior to interfund
transfers 19,399 48,754 831,983 497,041
Interfund transfers, net (6,732) 15,332 66,866 151,747
Transfer of assets due to sale of division (11,401) (1,307) (28,466) (33,329)
--------- --------- ----------- -----------
Net increase (decrease) 1,266 62,779 870,383 615,459
Net assets available for benefits at
beginning of year 153,364 234,751 2,065,770 1,249,175
--------- --------- ----------- -----------
Net assets available for benefits at
end of year $ 154,630 $ 297,530 $ 2,936,153 $ 1,864,634
========= ========= =========== ===========
Warburg
Pincus
Advisor Bell Sports
International Corp. Participant
Equity Common Notes
Fund Stock Receivable Total
--------- ----------- ----------- -----------
Additions to net assets attributed to:
Investment income
Interest $ 25,563 $ 153,975
Net appreciation in fair value of
investments $ 13,288 $ 112,661 2,268,304
--------- ----------- ----------- -----------
13,288 112,661 25,563 2,422,279
--------- ----------- ----------- -----------
Contributions
Employer 11,072 10,177 439,009
Employee 43,786 34,070 1,692,360
--------- ----------- ----------- -----------
297,699 54,858 44,247 2,131,369
--------- ----------- ----------- -----------
Total additions 68,146 156,908 25,563 4,553,648
Deductions from net assets attributed to:
Benefit payments 40,721 22,985 1,512,514
Transaction charge 72 1,524 8,237
Participant notes receivable terminated
due to withdrawal of participant 79,712 79,712
--------- ----------- ----------- -----------
Total deductions 40,793 24,509 79,712 1,600,463
Change in forfeiture reserve, net (1,061) (2,052) 2,920
--------- ----------- ----------- -----------
Net increase (decrease) prior to interfund
transfers 26,292 130,347 (54,149) 2,956,105
Interfund transfers, net (25,506) (596,874) 7,732 --
Transfer of assets due to sale of division (217) (254,438)
--------- ----------- ----------- -----------
Net increase (decrease) 569 (466,527) (46,417) 2,701,667
Net assets available for benefits at
beginning of year 409,213 466,527 319,993 11,104,071
--------- ----------- ----------- -----------
Net assets available for benefits at
end of year $ 409,782 $ -- $ 273,576 $13,805,738
========= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
Year Ended December 31, 1997
Fund Information
----------------
<TABLE>
<CAPTION>
Charter INVESCO
Guaranteed Total Fidelity Fidelity
Income Return Contrafund Magellan
Fund Fund Fund Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest $ 110,988
Net appreciation in fair value of investments $ 103,561 $ 263,309 $ 231,781
----------- ----------- ----------- -----------
110,988 103,561 263,309 231,781
----------- ----------- ----------- -----------
Contributions
Employer 88,409 22,709 51,737 54,890
Employee 252,893 82,204 192,977 178,674
----------- ----------- ----------- -----------
341,302 104,913 244,714 233,564
----------- ----------- ----------- -----------
Total additions 452,290 208,474 508,023 465,345
Deductions from net assets attributed to:
Benefit payments 637,691 34,282 82,213 183,406
Transaction charge 1,845 267 299 404
----------- ----------- ----------- -----------
Total deductions 639,536 34,549 82,512 183,810
Change in forfeiture reserve, net 2,463 (155) (420) (24)
----------- ----------- ----------- -----------
Net (decrease) increase prior to interfund transfers (184,783) 173,770 425,091 281,511
Interfund transfers, net (52,783) 13,349 18,211 (51,404)
----------- ----------- ----------- -----------
Net (decrease) increase (237,566) 187,119 443,302 230,107
Net assets available for benefits at
beginning of year 2,193,449 366,773 1,080,973 900,165
----------- ----------- ----------- -----------
Net assets available for benefits at
end of year $ 1,955,883 $ 553,892 $ 1,524,275 $ 1,130,272
=========== =========== =========== ===========
Lifetime20 Lifetime30 Lifetime40 Lifetime50
Fund Fund Fund Fund
----------- ----------- ----------- -----------
Additions to net assets attributed to:
Investment income
Interest
Net appreciation in fair value of investments $ 25,944 $ 60,763 $ 52,959 $ 28,569
----------- ----------- ----------- -----------
25,944 60,763 52,959 28,569
----------- ----------- ----------- -----------
Contributions
Employer 22,832 24,703 18,667 6,839
Employee 71,172 79,928 66,523 25,321
----------- ----------- ----------- -----------
94,004 104,631 85,190 32,160
----------- ----------- ----------- -----------
Total additions 119,948 165,394 138,149 60,729
Deductions from net assets attributed to:
Benefit payments 45,959 70,027 35,040 111,548
Transaction charge 530 705 435
----------- ----------- ----------- -----------
Total deductions 46,489 70,732 35,475 111,548
Change in forfeiture reserve, net (24) (385)
----------- ----------- ----------- -----------
Net (decrease) increase prior to interfund transfers 73,435 94,277 102,674 (50,819)
Interfund transfers, net (29,241) (11,765) (10,146) (5,010)
----------- ----------- ----------- -----------
Net (decrease) increase 44,194 82,512 92,528 (55,829)
Net assets available for benefits at
beginning of year 151,126 354,112 316,484 209,193
----------- ----------- ----------- -----------
Net assets available for benefits at
end of year $ 195,320 $ 436,624 $ 409,012 $ 153,364
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
- --------------------------------------------------------------------------------
Year Ended December 31, 1997
Fund Information
----------------
<TABLE>
<CAPTION>
American
Century -
Twentieth Vanguard
Century Growth &
Lifetime60 Ultra Income
Fund Fund Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest
Net appreciation (depreciation) in fair
value of investments $ 27,380 $ 354,465 $ 268,432
----------- ----------- -----------
27,380 354,465 268,432
----------- ----------- -----------
Contributions
Employer 7,070 77,457 37,440
Employee 17,373 303,304 172,298
----------- ----------- -----------
24,443 380,761 209,738
----------- ----------- -----------
Total additions 51,823 735,226 478,170
Deductions from net assets attributed to:
Benefit payments 20,474 142,240 64,776
Transaction charge 140 662 120
Participant notes receivable terminated
due to withdrawal of participant
----------- ----------- -----------
Total deductions 20,614 142,902 64,896
Change in forfeiture reserve, net (107) (19) (130)
----------- ----------- -----------
Net increase (decrease) prior to interfund transfers 31,102 592,305 413,144
Interfund transfers, net 382 (4,883) 132,388
----------- ----------- -----------
Net increase 31,484 587,422 545,532
Net assets available for benefits at
beginning of year 203,267 1,478,348 703,643
----------- ----------- -----------
Net assets available for benefits at
end of year $ 234,751 $ 2,065,770 $ 1,249,175
=========== =========== ===========
Warburg
Pincus Bell
Advisor Sports
International Corp. Participant
Equity Common Notes
Fund Stock Receivable Total
----------- ----------- ----------- -----------
Additions to net assets attributed to:
Investment income
Interest $ 20,404 $ 131,392
Net appreciation (depreciation) in fair
value of investments $ (26,112) $ 142,708 1,533,759
----------- ----------- ----------- -----------
(26,112) 142,708 20,404 1,665,151
----------- ----------- ----------- -----------
Contributions
Employer 17,053 21,291 451,097
Employee 70,951 66,633 1,580,251
----------- ----------- ----------- -----------
88,004 87,924 2,031,348
----------- ----------- ----------- -----------
Total additions 61,892 230,632 20,404 3,696,499
Deductions from net assets attributed to:
Benefit payments 23,257 22,977 1,473,890
Transaction charge 18 2,709 8,134
Participant notes receivable terminated
due to withdrawal of participant 23,613 23,613
----------- ----------- ----------- -----------
Total deductions 23,275 25,686 23,613 1,505,637
Change in forfeiture reserve, net (2) (540) 657
----------- ----------- ----------- -----------
Net increase (decrease) prior to interfund transfers 38,615 204,406 (3,209) 2,191,519
Interfund transfers, net 4,441 (90,596) 87,057 --
----------- ----------- ----------- -----------
Net increase 43,056 113,810 83,848 2,191,519
Net assets available for benefits at
beginning of year 366,157 352,717 236,145 8,912,552
----------- ----------- ----------- -----------
Net assets available for benefits at
end of year $ 409,213 $ 466,527 $ 319,993 $11,104,071
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Description of Plan
The following description of the Bell Sports Corp. (the "Company")
Employees' Retirement and 401(k) Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan established effective January 1,
1991 and most recently amended August 4, 1998, retroactively effective
January 1, 1998. Employees become eligible to participate upon completing
500 hours of employment, as defined by the Plan agreement, within six
consecutive months of service and attaining the age of 21. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
Bell Sports Corp. was merged with HB Acquisition Corporation on August
17, 1998. There were no material effects of this merger on the Plan.
In connection with the sale of one division of Bell Sports Corp. to
Brunswick Corporation through an Asset Purchase Agreement dated April 1,
1997, any participant who becomes an employee of Brunswick Corporation
shall be fully vested in their Employer Matching Contribution Account and
Employer Discretionary Contribution Account effective April 28, 1997.
Contributions
Participants may contribute an amount equal to not less than 1 percent
nor more than 15 percent of their compensation for the contribution
period. The Company will make a matching contribution in an amount equal
to $.50 for each $1.00 contributed by an employee, up to a maximum of 5
percent of the participant's compensation. The Company may also make
discretionary nonelective contributions.
Participant Accounts
Each participant's account is credited with the participant's
contribution and allocation of the Company's contribution and Plan
earnings. Earnings are allocated by fund based on the ratio of a
participant's account invested in a particular fund to all participants'
investments in that fund. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's account.
10
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. The balance of vesting in the participants'
accounts is based on years of service. A participant becomes 20 percent
vested after one year of service, 40 percent vested after two years of
service, 60 percent vested after three years of service, 80 percent
vested after four years of service and 100 percent vested after five
years of service. However, if an active participant dies prior to
attaining the normal retirement age, the participant's account becomes
100 percent vested.
Investment Options
Upon enrollment in the Plan, a participant may currently direct
contributions among any of the following investment options:
* Charter Guaranteed Income Fund - Funds are invested in the CIGNA
Charter Guaranteed Income Fund, which provides a guaranteed rate
of return reset semiannually.
* INVESCO Total Return Fund - Funds are invested solely in units of
the CIGNA INVESCO Total Return Fund, which in turn invests solely
in shares of the INVESCO Total Return Fund.
* Fidelity Contrafund Fund - Funds are invested solely in units of
the CIGNA Fidelity Contrafund Fund, which in turn invests solely
in shares of the Fidelity Contrafund Fund.
* Fidelity Magellan Fund - Funds are invested solely in units of the
CIGNA Fidelity Magellan Fund, which in turn invests solely in
shares of the Fidelity Magellan Fund.
* Lifetime20 Fund - Funds are invested in five actively managed
separate accounts including the CIGNA Fidelity Advisor Growth
Opportunities Fund, CIGNA Warburg Pincus Advisor Emerging Growth
Fund, CIGNA Warburg Pincus Advisor International Equity Fund,
CIGNA Charter Actively Managed (Core) Fixed Income Fund, and the
CIGNA Charter High Yield Bond Fund.
* Lifetime30 Fund - Funds are invested in six actively managed
separate accounts including the CIGNA Fidelity Advisor Growth
Opportunities Fund, CIGNA Charter Growth & Income Fund, CIGNA
Warburg Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus
Advisor International Equity Fund, CIGNA Charter Actively Managed
(Core) Fixed Income Fund, and the CIGNA Charter High Yield Bond
Fund.
11
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
* Lifetime40 Fund - Funds are invested in seven actively managed
separate accounts including the CIGNA Fidelity Advisor Growth
Opportunities Fund, CIGNA Vanguard Growth & Income Fund, CIGNA
Charter Growth & Income Fund, CIGNA Warburg Pincus Advisor
Emerging Growth Fund, CIGNA Warburg Pincus Advisor International
Equity Fund, CIGNA Charter Actively Managed (Core) Fixed Income
Fund, and the CIGNA Charter High Yield Bond Fund.
* Lifetime50 Fund - Funds are invested in seven actively managed
separate accounts including the CIGNA Fidelity Advisor Growth
Opportunities Fund, CIGNA Charter Growth & Income Fund, CIGNA
Vanguard Growth & Income Fund, CIGNA Warburg Pincus Advisor
Emerging Growth Fund, CIGNA Warburg Pincus Advisor International
Equity Fund, CIGNA Charter Actively Managed (Core) Fixed Income
Fund, and the CIGNA Charter High Yield Bond Fund.
* Lifetime60 Fund - Funds are invested in five actively managed
separate accounts including the CIGNA Charter Growth & Income
Fund, CIGNA Vanguard Growth & Income Fund, CIGNA Warburg Pincus
Advisor International Equity Fund, CIGNA Charter Short-Term Fixed
Income Fund, and the CIGNA Charter Actively Managed (Core) Fixed
Income Fund.
* American Century - Twentieth Century Ultra Fund - Funds are
invested solely in units of the CIGNA American Century - Twentieth
Century Ultra Fund, which in turn invests solely in shares of the
American Century - Twentieth Century Ultra Fund.
* Vanguard Growth & Income Fund (formerly "Vanguard Growth & Income
Portfolio") - Funds are invested solely in units of the CIGNA
Vanguard Growth & Income Fund, which in turn invests solely in
shares of the Vanguard Growth & Income Fund.
* Warburg Pincus Advisor International Equity Fund - Funds are
invested solely in units of the CIGNA Warburg Pincus Advisor
International Equity Fund, which in turn invests solely in shares
of the Warburg Pincus Advisor International Equity Fund.
Participants may change their investment options at any time.
Payment of Benefits
On termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, installment
payments, or a distribution in the form of an annuity. Distributions are
subject to the applicable provisions of the Plan agreement.
12
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Participant Notes Receivable
Participants may borrow, at the discretion of the Plan's Loan Committee,
up to the lesser of $50,000 or 50 percent of the vested portion of their
account balance, with a minimum loan of $1,000, subject to certain
restrictions, in accordance with interest rates and collateral
requirements established by the Company.
Cash Equivalents
Contributions received prior to year end awaiting investment in the
appropriate investment option at December 31 are invested in the CIGNA
Charter Guaranteed Short-Term Account which is recorded at fair value,
and are included as cash equivalents within the fund in which units are
subsequently purchased.
2. Summary of Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting, and reflect management's estimates and assumptions, such as
those regarding fair value, that affect the recorded amounts. Significant
estimates used are discussed throughout the notes to financial
statements.
Investments
Investments in pooled separate accounts (CIGNA INVESCO Total Return Fund,
CIGNA Fidelity Contrafund Fund, CIGNA Fidelity Magellan Fund, CIGNA
Lifetime20 Fund, CIGNA Lifetime30 Fund, CIGNA Lifetime40 Fund, CIGNA
Lifetime50 Fund, CIGNA Lifetime60 Fund, CIGNA American Century -
Twentieth Century Ultra Fund, CIGNA Vanguard Growth & Income Fund and
CIGNA Warburg Pincus Advisor International Equity Fund) are recorded at
fair value, as determined by the unit value as reported by the
Connecticut General Life Insurance Company ("CG Life"). The investment in
the CIGNA Charter Guaranteed Income Fund is non-fully benefit responsive
and is recorded at fair value. Participant notes receivable are valued at
cost which approximates fair value. Effective August 17, 1998, the
Company stock was deleted as an investment option. Each participant's
company stock fund account was reinvested in the CIGNA Charter Short-Term
Fixed Income Fund at $10.25 per share of Company stock.
Contributions
Employee contributions are recorded in the period during which the
Company makes payroll deductions from the participants' earnings.
Matching Company contributions are recorded in the same period.
Discretionary nonelective contributions, if any, are recorded annually.
13
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Benefits
Benefit claims are recorded as expenses when they have been approved for
payment and paid by the Plan.
3. Deposit With Insurance Company
The Plan participates in a contract with CG Life via an investment in the
CIGNA Charter Guaranteed Income Fund. CG Life commingles the assets of
the CIGNA Charter Guaranteed Income Fund with other assets. For the
Plan's investment in the CIGNA Charter Guaranteed Income Fund the Plan is
credited with interest at the rate specified in the contract which ranged
from 5.90% to 5.80% and was 5.55% for the years ended December 31, 1998
and 1997, respectively, net of asset charges. CG Life prospectively
guaranteed the interest rates credited for the CIGNA Charter Guaranteed
Income Fund for six months. As discussed in Note 2, the CIGNA Charter
Guaranteed Income Fund is included in the financial statements at fair
value which, principally because of the periodic rate reset process,
approximates contract value.
4. Investments
Investments that represent 5 percent or more of the Plan's net assets are
separately identified below.
December 31,
1998 1997
---------- ----------
CIGNA Charter Guaranteed Income Fund $2,608,019 $1,955,754
interest rates, 5.80%; 5.55%
CIGNA INVESCO Total Return Fund 695,941 N/A
units, 18,086; N/A
CIGNA Fidelity Contrafund Fund 1,897,397 1,524,275
units, 24,109; 25,464
CIGNA Fidelity Magellan Fund 1,669,199 1,130,272
units, 9,999; 9,043
CIGNA American Century - Twentieth Century 2,936,153 2,065,770
Ultra Fund units, 55,991; 53,118
CIGNA Vanguard Growth & Income Fund 1,864,634 1,249,175
units, 42,737; 35,937
14
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. Participant Notes Receivable
Under the terms of the Plan, participants may borrow from their accounts
up to the lesser of $50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer to/from the investment fund
from/to the Participant Notes Receivable. A loan is secured by the
balance in the participant's account and bears interest at a rate
commensurate with market rates for similar loans, as defined (6.00% to
11.75% and 6.00% to 12.75% for the years ended December 31, 1998 and
1997, respectively).
6. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100 percent vested in their
accounts.
7. Income Taxes
The Internal Revenue Service has determined and informed the Company by a
letter dated September 13, 1994, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC"). The Plan has been amended since receiving the determination
letter. However, the Plan's administrator and tax counsel believe that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
8. Reconciliation of Plan Financial Statements to the Form 5500
Certain balances included on lines 31 and 32 of the Annual Return/Report
of Employee Benefit Plan (the "Form 5500") have been reclassified for
purposes of presentation in these financial statements to provide
additional disclosure.
15
<PAGE>
BELL SPORTS CORP.
EMPLOYEES' RETIREMENT AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. Forfeitures
The net change in forfeiture reserve represents the net change in the
available forfeiture reserve balance from the prior year plus the current
year forfeitures generated. Forfeitures result from nonvested benefit
payments remaining in the Plan for all terminated employees. Upon
reaching the break-in-service requirement, as defined in the Plan
agreement, forfeitures generated are added to the forfeiture reserve
balance. The forfeiture reserve of $56,687 and $13,464 at December 31,
1998 and 1997, respectively, is included in the CIGNA Charter Guaranteed
Income Fund and is available to offset contributions, which would be
otherwise payable by the Company, in accordance with the Plan agreement.
In 1998 and 1997 Company cash contributions were offset by $535 and $0,
respectively, from forfeited nonvested accounts.
10. Transfer To Affiliated Plan Due To Sale of Division
Effective October 19, 1998, certain employees and their participant
balances were transferred from the Plan to the Pactuco 401(k) Plan.
16
<PAGE>
BELL SPORTS CORP. SUPPLEMENTAL SCHEDULE
EMPLOYEES' RETIREMENT AND 401(k) PLAN SCHEDULE I
LINE 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c)
(b) Description of investment including
Identity of Issue, borrower, maturity date, rate of interest, (d) (e)
(a) lessor, or similar party collateral, par or maturity value Cost Current value
- --- ------------------------ --------------------------------- ---- -------------
<S> <C> <C> <C> <C>
Connecticut General Life CIGNA Charter Guaranteed
* Insurance Company Income Fund 5.80% $2,608,019 $2,608,019
Connecticut General Life CIGNA INVESCO Total Return Fund
* Insurance Company $38.48/unit 534,989 695,941
Connecticut General Life CIGNA Fidelity Contrafund Fund
* Insurance Company $78.70/unit 1,189,556 1,897,397
Connecticut General Life CIGNA Fidelity Magellan Fund
* Insurance Company $166.94/unit 1,068,252 1,669,199
Connecticut General Life CIGNA Lifetime20 Fund
* Insurance Company $18.69/unit 173,915 219,060
Connecticut General Life CIGNA Lifetime30 Fund
* Insurance Company $18.58/unit 309,201 397,106
Connecticut General Life CIGNA Lifetime40 Fund
* Insurance Company $18.01/unit 291,643 382,582
Connecticut General Life CIGNA Lifetime50 Fund
* Insurance Company $17.59/unit 117,499 154,630
Connecticut General Life CIGNA Lifetime60 Fund
* Insurance Company $16.08/unit 231,010 297,530
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
17
<PAGE>
BELL SPORTS CORP. SUPPLEMENTAL SCHEDULE
EMPLOYEES' RETIREMENT AND 401(k) PLAN SCHEDULE I
LINE 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c)
(b) Description of investment including
Identity of Issue, borrower, maturity date, rate of interest, (d) (e)
(a) lessor, or similar party collateral, par or maturity value Cost Current value
- --- ------------------------ --------------------------------- ---- -------------
<S> <C> <C> <C> <C>
Connecticut General Life CIGNA American Century -
* Insurance Company Twentieth Century Ultra Fund
$52.44/unit $1,906,493 $2,936,153
Connecticut General Life CIGNA Vanguard Growth &
* Insurance Company Income Fund $43.63/unit 1,270,720 1,864,634
Connecticut General Life CIGNA Warburg Pincus Advisor
* Insurance Company International Equity Fund
$22.91/unit 400,319 409,782
Connecticut General Life Cash equivalents (CIGNA Charter
* Insurance Company Guaranteed Short-Term Account) 129 129
* Participant Notes Receivable 6.00% - 11.75% 273,576 273,576
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
18
<PAGE>
BELL SPORTS CORP. SUPPLEMENTAL SCHEDULE
EMPLOYEES' RETIREMENT AND 401(k) PLAN SCHEDULE II
LINE 27D FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(h)
(b) (f) Current
Description of asset Expense value
(a) (include interest rate (c) (d) (e) incurred (g) of asset on (i)
Identity of party and maturity in case Purchase Selling Lease with Cost of transaction Net gain
involved of a loan) price price rental transaction asset date or (loss)
-------- ---------- ----- ----- ------ ----------- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut General Purchases into
Life Insurance CIGNA Charter
Company Guaranteed Income
Fund $1,416,650 N/A N/A N/A $1,416,650 $1,416,650 --
Connecticut General Sales from CIGNA
Life Insurance Charter Guaranteed
Company Income Fund N/A $895,716 N/A N/A 895,716 895,716 --
Connecticut General Purchases into
Life Insurance CIGNA Charter
Company Short-Term
Fixed Income Fund 695,449 N/A N/A N/A 695,449 695,449 --
Connecticut General Sales from CIGNA
Life Insurance Charter Short-Term
Company Fixed Income Fund N/A 697,000 N/A N/A 695,450 697,000 $1,550
Connecticut General Purchases into
Life Insurance CIGNA Fidelity
Company Contrafund Fund 400,513 N/A N/A N/A 400,513 400,513 --
Connecticut General Sales from CIGNA
Life Insurance Fidelity Contrafund
Company Fund N/A 503,543 N/A N/A 357,262 503,543 146,281
Connecticut General Purchases into
Life Insurance CIGNA Fidelity
Company Magellan Fund 443,681 N/A N/A N/A 443,681 443,681 --
Connecticut General Sales from CIGNA
Life Insurance Fidelity Magellan
Company Fund N/A 290,352 N/A N/A 219,399 290,352 70,953
Connecticut General Purchases into
Life Insurance CIGNA American
Company Century -Twentieth
Century Ultra Fund 813,010 N/A N/A N/A 813,010 813,010 --
Connecticut General Sales from CIGNA
Life Insurance American Century -
Company Twentieth Century
Ultra Fund N/A 623,965 N/A N/A 470,114 623,965 153,851
</TABLE>
19
<PAGE>
BELL SPORTS CORP. SUPPLEMENTAL SCHEDULE
EMPLOYEES' RETIREMENT AND 401(k) PLAN SCHEDULE II
LINE 27D FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(h)
(b) (f) Current
Description of asset Expense value
(a) (include interest rate (c) (d) (e) incurred (g) of asset on (i)
Identity of party and maturity in case Purchase Selling Lease with Cost of transaction Net gain
involved of a loan) price price rental transaction asset date or (loss)
-------- ---------- ----- ----- ------ ----------- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut General Purchases into
Life Insurance CIGNA Vanguard
Company Growth & Income Fund $738,681 N/A N/A N/A $738,681 $738,681 --
Connecticut General Sales from CIGNA
Life Insurance Vanguard Growth &
Company Income Fund N/A $335,414 N/A N/A 244,080 335,414 $91,334
Purchases into Bell
National Financial Sports Corp. Common
Services Corp. Stock 169,711 N/A N/A N/A 169,711 169,711 --
Sales from Bell
National Financial Sports Corp. Common
Services Corp. Stock N/A 748,899 N/A N/A 586,471 748,899 162,428
</TABLE>
20
<PAGE>
EXHIBITS
Exhibit Description
- ------- -----------
23.1 Consent of PricewaterhouseCoopers LLP
99.1 Bell Sports Corp. Employees' Retirement and 401(k) Plan Financial
Statements and Additional Information
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-94296) of Bell Sports Corp. of our report dated
May 25, 1999 relating to the financial statements of the Bell Sports Corp.
Employees' Retirement and 401(k) Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Hartford, Connecticut
June 25, 1999
BELL SPORTS CORP. EMPLOYEES' RETIREMENT AND 401(k) PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE 1......................................................................1
TITLE AND PURPOSE.....................................................1
ARTICLE 2......................................................................1
DEFINITIONS...........................................................1
ARTICLE 3......................................................................6
PARTICIPATION.........................................................6
Section 3.1. Eligibility for Participation...........................6
Section 3.2. Applications for Salary Reduction Contributions.........6
Section 3.3. Transfer to an Employer or Affiliate....................7
ARTICLE 4......................................................................7
EMPLOYER CONTRIBUTIONS................................................7
Section 4.1. Employer Discretionary Contributions....................7
Section 4.2. Salary Reduction Contributions..........................8
Section 4.3. Annual Limit on Salary Reduction Contributions..........9
Section 4.4. Employer Matching Contributions........................10
Section 4.5. Limitations on Contributions for Highly Compensated
Employees..............................................11
Section 4.6. Limitation on Employer Contributions...................16
ARTICLE 5.....................................................................18
ROLLOVER CONTRIBUTIONS AND DIRECT ROLLOVERS..........................18
Section 5.1. Rollover Contributions.................................18
Section 5.2. Direct Transfers from Other Plans......................19
Section 5.3. Special Accounting Rules for Rollover Contributions
and Direct Transfers...................................19
ARTICLE 6.....................................................................20
TRUST AND INVESTMENT FUNDS...........................................20
Section 6.1. Trust..................................................20
Section 6.2. Investment Funds.......................................20
ARTICLE 7.....................................................................21
PARTICIPANT ACCOUNTS.................................................21
Section 7.1. Participant Accounts...................................21
Section 7.2. Allocations of Contributions and Forfeitures Among
Participants' Accounts.................................22
Section 7.3. Limitations on Allocations.............................23
Section 7.4. Correction of Error....................................26
ARTICLE 8 ....................................................................27
INVESTMENT ELECTIONS AND VALUATION...................................27
Section 8.1. Investment of Contributions............................27
Section 8.2. Change of Investment Election..........................27
Section 8.3. Fiduciary Responsibilities for Directed Investments....28
-i-
<PAGE>
Section 8.4. Value of the Balance of Company Stock Account..........28
Section 8.5. Valuation of Funds.....................................29
Section 8.6. Account Statements.....................................30
ARTICLE 9.....................................................................30
VOTING AND OTHER SHAREHOLDER RIGHTS..................................30
Section 9.1. Shareholders Rights....................................30
Section 9.2. Company Stock..........................................30
ARTICLE 10....................................................................32
LOANS AND DISTRIBUTIONS..............................................32
Section 10.1. Loans to Participants.................................32
Section 10.2. Distribution Upon Termination of Employment...........35
Section 10.3. Time and Form of Distribution upon Termination of
Service...............................................37
Section 10.4. Investment of Distributee Accounts....................42
Section 10.5. Designation of Beneficiary............................42
Section 10.6. Distributions to Minor and Disabled Distributees......44
ARTICLE 11....................................................................44
SPECIAL PARTICIPATION AND DISTRIBUTION RULES.........................44
Section 11.1. Change of Employment Status and Transfers from
Affiliates............................................44
Section 11.2. Reemployment of an Eligible Employee Whose
Employment Terminated Prior to Becoming a
Participant...........................................45
Section 11.3. Reemployment of a Terminated Participant..............45
Section 11.4. Employment by Related Entities........................47
Section 11.5. Leased Employees......................................47
Section 11.6. Reemployment of Veterans..............................47
ARTICLE 12....................................................................49
ADMINISTRATION.......................................................49
Section 12.1. The Committee.........................................49
Section 12.2. Plan Administrator....................................52
Section 12.3. Claims Procedure......................................53
Section 12.4. Procedures for Domestic Relations Orders..............54
Section 12.5. Notices to Participants, etc..........................55
Section 12.6. Notices to Committee..................................56
Section 12.7. Records...............................................56
Section 12.8. Reports of Trustee and Accounting to Participants.....56
ARTICLE 13....................................................................56
PARTICIPATION BY OTHER EMPLOYERS.....................................56
Section 13.1. Adoption of Plan......................................56
Section 13.2. Withdrawal from Participation.........................57
Section 13.3. Company as Agent for Employers........................57
ARTICLE 14....................................................................58
CONTINUANCE BY A SUCCESSOR...........................................58
ARTICLE 15....................................................................59
-ii-
<PAGE>
MISCELLANEOUS........................................................59
Section 15.1. Expenses..............................................59
Section 15.2. Non-Assignability.....................................59
Section 15.3. Employment Non-Contractual............................61
Section 15.4. Limitation of Rights..................................61
Section 15.5. Merger or Consolidation with Another Plan.............61
Section 15.6. Applicable Law........................................62
Section 15.7. Severability..........................................62
Section 15.8. No Guarantee..........................................62
ARTICLE 16....................................................................62
TOP-HEAVY PLAN REQUIREMENTS..........................................62
Section 16.1. Top-Heavy Plan Determination..........................62
Section 16.2. Definitions and Special Rules.........................63
Section 16.3. Minimum Contribution for Top-Heavy Years..............64
Section 16.4. Top-Heavy Vesting Requirements........................64
Section 16.5. Special Rules for Applying Statutory Limitations
on Benefits...........................................65
ARTICLE 17....................................................................66
AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION............66
Section 17.1. Amendment.............................................66
Section 17.2. Establishment of Separate Plan........................66
Section 17.3. Full Vesting upon Termination of Participation or
Partial Termination of the Plan.......................67
Section 17.4. Distribution upon Termination of the Plan.............67
Section 17.5. Trust Fund to Be Applied Exclusively for
Participants and Their Beneficiaries..................68
APPENDIX A....................................................................70
-iii-
<PAGE>
ARTICLE 1
TITLE AND PURPOSE
The title of the Plan shall be the "Bell Sports Corp.
Employees' Retirement and 401(k) Plan." The Plan together with its related
trust, the Bell Sports Corp. Employees' Retirement and 401(k) Trust, is an
amendment and restatement of the Bell Sports, Inc. Employee's Retirement and
401(k) Plan and Trust and is a "profit sharing plan" within the meaning of U.S.
Treasury Department regulation section 1.401-1(a)(2)(ii). Unless otherwise
indicated, the provisions of this amendment and restatement are effective as of
January 1, 1998, provided, however, that Section 4.5(d) of the Plan, to the
extent such Section reflects modifications required by the Small Business Job
Protection Act of 1996, shall be effective January 1, 1997.
ARTICLE 2
DEFINITIONS
As used herein, the following words and phrases shall have the
following respective meanings when capitalized:
(1) Affiliate. (a) A corporation that is a member of the same
controlled group of corporations (within the meaning of section 414(b)
of the Code) as an Employer, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section
414(c) of the Code) with an Employer, (c) any organization (whether or
not incorporated) that is a member of an affiliated service group
(within the meaning of section 414(m) of the Code) that includes an
Employer, a corporation described in clause (a) of this subdivision or
a trade or business described in clause (b) of this subdivision, or (d)
any other entity that is required to be aggregated with an Employer
pursuant to Treasury regulations promulgated under section 414(o) of
the Code.
(2) Authorized Leave of Absence. Any period of absence
authorized by an Employer under its standard personnel practices
(including those required by the Family and Medical Leave Act of 1993),
provided that the Employee returns to the employ of the Employer at the
end of such period.
(3) Beneficiary. The person or persons entitled under Section
10.5 to receive benefits in the event of the death of a Participant.
<PAGE>
(4) Benefit Commencement Date. The first day on which an
amount becomes payable to a Participant or Beneficiary.
(5) Board of Directors. The board of directors of the Company.
(6) Break-in-Service Year. An Employee's initial
Break-in-Service Year shall be a 12-month period beginning the earlier
of his or her termination of employment and the first anniversary of
the first date the Employer is absent for any other reason. Each
12-month period thereafter in which an Employee shall not perform an
Hour of Employment shall be a Break-in-Service Year. For purposes of
determining whether an Employee has incurred a Break-in-Service Year,
the Employee shall be deemed to be employed by the Employer for any
period during which the Employee (a) is in Military Service, provided
that such Military Service does not extend beyond the date on which the
Employee could have been discharged (with or without application
therefor) and after discharge from such Military Service the Employee
returns to the employ of an Employer within the period prescribed by
laws relating to the employment rights of persons in Military Service,
(b) is on an Authorized Leave of Absence or (c) is absent from work for
any period not in excess of 24 months because of (i) the Employee's
pregnancy, (ii) the birth of the Employee's child, (iii) the placement
of a child with the Employee in connection with the Employee's adoption
of such child, (iv) the need to care for any such child for a period
beginning immediately following such birth or placement or (v) a
combination of such occurrences described in (i), (ii), (iii) and (iv).
The period during which such Employee shall be deemed to be employed
shall be determined under uniform rules adopted by the Committee in
accordance with regulations promulgated by the Department of Labor.
Notwithstanding the foregoing, clause (c) of this subdivision shall not
be applicable unless the Employee timely furnishes to the Committee
such information as it may reasonably require to establish to the
satisfaction of the Committee the reason for such absence and its
duration.
(7) Code. The Internal Revenue Code of 1986, as amended.
(8) Committee. The administrative committee appointed by the
Board of Directors or any successor appointed pursuant to Section 12.1
of the Plan.
(9) Company. Bell Sports Corp., a Delaware corporation, and
any successor to such corporation that adopts the Plan pursuant to
Article 14.
(10) Company Stock. Common stock of the Company.
<PAGE>
(11) Compensation. The compensation (including bonuses and
over-time pay) paid or deemed to be paid to an Employee by an Employer
which is currently includable in the Employee's gross income for income
tax withholding purposes, or which would be so includable but for the
Employee's election to have a portion of such wages contributed by his
or her Employer on a salary reduction basis under an arrangement
described under section 125 or 401(k) of the Code, except for those
items specifically excluded. Items specifically excluded are as
follows: prizes and awards, automobile allowances, cost-of-living
allowances, payments under the Employer's automobile policy, club dues,
tuition reimbursements, relocation payments, severance payments,
Employer contributions under this or any other retirement, deferred
compensation, life insurance, health or welfare program or plan
maintained by the Employer. In addition, compensation of an Employee
who is a highly compensated employee, as defined in section 414(q) of
the Code, shall not include any earnings resulting from (i) the
exercise of stock options, (ii) the sale of stock acquired by such
exercise, or (iii) amounts realized when restricted property becomes
taxable under section 83 of the Code. Notwithstanding the foregoing,
the compensation of any Employee for any Plan Year shall not exceed
$150,000 (or such other amount specified under section 401(a)(17) of
the Code, as adjusted from time to time for changes in the
cost-of-living).
(12) Distributee. An employee or former employee who is
entitled to a distribution under the Plan. In addition, the employee's
or former employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the
Code, are Distributees with regard to the interest of the spouse or
former spouse.
(13) Distributee Account. An account established for a
Participant following termination of employment pursuant to Sections
10.3 and 10.4.
(14) Effective Date. The effective date of this amendment and
restatement of the Plan shall be January 1, 1998 except as otherwise
provided in Article 1. In the case of any Affiliate that shall become
an Employer after January 1, 1996, the effective date shall be the date
designated by the Board of Directors.
(15) Eligible Employee. An Employee of an Employer, excluding
any Employee the terms of whose employment are subject to a collective
bargaining agreement which does not provide for the Employee's
eligibility to participate in the Plan.
(16) Employee. An individual whose relationship with an
Employer is, under common law, that of an employee. Notwithstanding the
foregoing, no individual who renders service for an Employer shall be
considered an Employee for purposes of the Plan if such Employee
renders such services pursuant to either (i) an agreement providing
that such services are to be rendered by the individual as an
independent contractor or (ii) an agreement with an entity, including a
leasing organization within the meaning of section 414(n)(2) of the
Code, that is not an Employer or an Affiliate.
(17) Employer. The Company, Bell Sports, Inc. or any other
Affiliate that, with the consent of the Company, elects to participate
in the Plan in the manner described in Article 13 and any successor
entity of an Employer that adopts the Plan pursuant to Article 14. If
the Company or any Affiliate withdraws from participation in the Plan
pursuant to Section 13.2, or terminates its participation in the Plan
pursuant to Section 17.4, such entity shall thereupon cease to be an
Employer.
(18) Employer Discretionary Contributions. Amounts which an
Employer contributes to the Plan pursuant to Section 4.1.
(19) Employer Discretionary Contribution Account. The account
established pursuant to Section 7.1 to which any Employer Discretionary
Contributions made on behalf of a Participant and earnings (and losses)
thereon are credited.
(20) Employer Matching Contributions. Amounts which an
Employer contributes to the Plan pursuant to Section 4.4.
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(21) Employer Matching Contribution Account. The account
established pursuant to Section 7.1 to which any Employer Matching
Contributions made on behalf of a Participant and earnings (and losses)
thereon are credited.
(22) Entry Dates. January 1, April 1, July 1 and October 1 of
each Plan Year.
(23) ERISA. The Employee Retirement Income Security Act of
1974, as amended.
(24) Hour of Employment. Each hour for which an Employee is
directly or indirectly compensated by, or entitled to receive
compensation from, an Employer, including hours for any period during
which the Employee receives compensation without rendering services
such as paid holidays, vacations, sick leave, disability leave, layoff,
jury duty, military duty or leave of absence, but not exceeding 501
hours for any one period of consecutive such days. For purposes of
determining the number of hours of employment to be credited to an
Employee, "compensation" shall include any back pay, irrespective of
mitigation of damages, either awarded to the Employee or agreed to by
an Employer. The computation of Hours of Employment and the periods to
which Hours of Employment are to be credited shall be determined under
uniform rules adopted by the Committee in accordance with U.S.
Department of Labor regulation section 2530.200b-2(b), (c) and (f).
(25) Funds. Funds established and maintained by the Committee
for the investment of Plan assets pursuant to Section 6.2.
(26) Military Service. Any service in the uniformed services
of the United States (as defined in 38 U.S.C. ss. 4303), by an
individual if such individual is entitled to reemployment rights under
USERRA with respect to such service.
(27) Participant. An Eligible Employee who has satisfied the
requirements set forth in Article 3. An individual shall cease to be a
Participant upon the complete distribution of his or her accounts under
the Plan.
(28) Permanent Disability. The total and permanent inability
of an Employee to perform the usual duties of his or her employment
with an Employer on account of a physical or mental illness or
condition, determined by a licensed physician approved by the
Committee.
(29) Plan. The plan herein set forth, and as from time to time
amended.
(30) Plan Administrator. The individual appointed by the
Committee to assist in plan administration pursuant to Section 12.2 of
the Plan.
(31) Plan Year. The twelve-month period beginning on January 1
of each year.
(32) Rollover Account. The account established pursuant to
Section 5.3 to which any rollover or direct transfer of an eligible
rollover distribution made on behalf of a Participant and earnings (and
losses) thereon are credited.
(33) Salary Reduction Contributions. Amounts which an Employer
contributes to the Plan on behalf of Participants pursuant to Section
4.2.
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(34) Salary Reduction Contribution Account. The account
established pursuant to Section 7.1 to which a Participant's Salary
Reduction Contributions, if any, and any earnings (and losses) thereon
are credited and any portion of a direct transfer or rollover
contribution of the Participant that is attributable to contributions
under a qualified cash or deferred arrangement, within the meaning of
section 401(k) of the Code.
(35) Trust. The Trust created by agreement between the Company
and the Trustee, as from time to time amended.
(36) Trust Fund. All money and property of every kind of the
Trust held by the Trustee pursuant to the terms of the agreement
governing the Trust.
(37) Trustee. The Trustee provided for in Section 6.1, or any
successor Trustee or, if there shall be more than one Trustee acting at
any time, all of such Trustees collectively.
(38) USERRA. The Uniformed Services Employment and
Reemployment Rights Act of 1994.
(39) Valuation Date. Each day that the New York Stock Exchange
is open, and any other day as the Committee may determine.
(40) Year of Service. A period beginning on the date an
Employee first performs an Hour of Employment for an Employer and
ending on the earlier of (i) the date the Employee terminates
employment and (ii) the first anniversary of the date the Employee is
absent from employment for any reason other than termination of
employment (e.g., disability, vacation, leave of absence, layoff,
etc.), except that Years of Service completed before five
Break-in-Service Years by an Employee with no vested account balance
before incurring the Break-in-Service Years shall be disregarded when
determining the vested portion of such Employee's account attributable
to Employer contributions (and any investment earning thereon) unless
the number of such Years of Service exceeds five. If an Employee who
terminates employment is rehired before the first anniversary of his
absence from employment, then the period of such absence is
disregarded. For purposes of this section, an Employee shall be deemed
to be employed by an Employer during any period of absence from such
employment during which the Employee is in Military Service, provided
that the Employee returns to the employ of the Employer within the
period prescribed by USERRA.
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ARTICLE 3
PARTICIPATION
Section 3.1. Eligibility for Participation. Each Eligible
Employee who immediately before the Effective Date was a Participant shall
continue to be a Participant. Each other Eligible Employee who on the Effective
Date has completed the eligibility service requirement set forth below and
attained age 21 shall become a Participant on the Effective Date. Each other
Eligible Employee shall become a Participant as of the first Entry Date
coinciding with or next following the date the Eligible Employee completes the
eligibility service requirement set forth below and attains age 21.
An Eligible Employee shall satisfy the eligibility service
requirement upon completion of 500 Hours of Employment during the
6-consecutive-month period beginning on the Employee's date of hire or during
the 6-consecutive month period beginning on the January 1 of any year subsequent
to the Employee's date of hire. For purposes of this paragraph, an Employee's
date of hire shall be the date on which the Employee first performs an Hour of
Employment, except that if the Employee's employment terminates and he or she is
rehired by an Employer after one Break-in-Service Year, the Employee's date of
hire shall be the date on which the Employee first performs an Hour of
Employment upon such rehire.
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Section 3.2. Applications for Salary Reduction Contributions.
At least 15 days prior to the January 1, April 1, July 1, or October 1 as of
which an Eligible Employee intends to commence Salary Reduction Contributions or
as of any other date specified by the Committee, an Eligible Employee shall
execute and deliver to his or her Employer an application on the form designated
by the Committee that specifies a rate of Salary Reduction Contribution. Such
application shall authorize the Eligible Employee's Employer to reduce his or
her Compensation by the amount of any such Salary Reduction Contributions and
shall be effective only with respect to Compensation not yet earned as of the
effective date of the election. The application shall also specify the Eligible
Employee's investment elections as described in Section 8.1, and shall evidence
the Eligible Employee's acceptance of and agreement to all provisions of the
Plan.
Section 3.3. Transfer to an Employer or Affiliate. If a
Participant is transferred from one Employer to another Employer or from an
Employer to an Affiliate, such transfer shall not terminate the Participant's
participation in the Plan, provided, however, that a Participant shall not be
entitled to make contributions to the Plan during any period of employment by
any Affiliate that is not an Employer. Periods of employment with an Affiliate,
whether before or after employment with an Employer, shall be taken into account
only to the extent set forth in Section 11.4. Payments received by a Participant
from an Affiliate that is not an Employer shall not be treated as Compensation
for any purposes under the Plan. If a Participant transfers from one Employer to
another Employer or to an Affiliate that is not an Employer, such Participant
shall continue to participate in the Plan until an event occurs that would have
terminated his or her participation in the Plan had the Employee continued in
the service of an Employer until the occurrence of such event.
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ARTICLE 4
EMPLOYER CONTRIBUTIONS
Section 4.1. Employer Discretionary Contributions. Subject to
the limitations set forth in Section 4.6, each Employer shall contribute for
each Plan Year such amount as the Employer may, in its sole discretion,
determine. An Employer Discretionary Contribution for any Plan Year may be made,
at the discretion of the Employer, in one or more installments at any time
during or after such Plan Year, except that all contributions by an Employer for
any Plan Year shall be delivered to the Trustee prior to the due date, including
extensions thereof, of the Employer's federal income tax return for the fiscal
year of the Employer that ends with or within such Plan Year.
Section 4.2. Salary Reduction Contributions. (a) Amount of
Contributions. Subject to the limitations set forth in Sections 4.3, 4.5 and
4.6, each Employer shall contribute as a Salary Reduction Contribution on behalf
of each Participant who is an Employee of such Employer an amount equal to a
percentage not less than 1% and not more than 15% of such Participant's
Compensation for each payroll period as designated by the Participant pursuant
to Section 3.2. The amount of the Participant's Compensation otherwise payable
for the period for which such Salary Reduction Contribution is made shall be
reduced by the amount of such contribution by means of a payroll reduction.
Salary Reduction Contributions shall be delivered to the Trustee as soon as
practicable after the end of the payroll period in which such contributions
would otherwise have been paid to the Participant as Compensation.
(b) Changes in Salary Reduction Contributions. The rate of a
Participant's Salary Reduction Contributions shall continue in effect at the
rate designated by a Participant pursuant to Section 4.2(a), notwithstanding any
changes in the Participant's Compensation, until the effective date of the
Participant's changes to such designation. A Participant may change such
designation as of the first payroll period beginning on or immediately after the
first day of any quarter in the Plan Year or as of any other date specified by
the Plan Administrator by giving written direction to the Plan Administrator in
the prescribed form at least 15 days (or such shorter period as may be
designated by the Plan Administrator) prior to the effective date of the change.
Any such change shall be limited to the contribution rates described in Section
4.2(a).
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(c) Suspension of Salary Reduction Contributions and
Resumption Thereof. A Participant may elect on a form designated by the
Committee to suspend future Salary Reduction Contributions by giving written
notice to the Plan Administrator at least 15 days (or such shorter period as may
be designated by the Plan Administrator) prior to the compensation payment date
on which the suspension shall take effect. A Participant who has ceased Salary
Reduction Contributions pursuant to this subsection may resume Salary Reduction
Contributions effective as of any January 1, April 1, July 1, or October 1 by
making a written election at the time specified in Section 3.2, provided that at
least 90 days have elapsed since the effective date of such Participant's
suspension of contributions.
Section 4.3. Annual Limit on Salary Reduction Contributions.
(a) General Rule. Notwithstanding the provisions of Section 4.2(a), a
Participant's Salary Reduction Contributions for any calendar year shall not
exceed the amount applicable under section 402(g) of the Code ($10,000 for the
1998 Plan Year; thereafter adjusted for changes in the cost of living in
accordance with section 402(g)(5) of the Code).
(b) Correction of Excess Salary Reduction Contributions. If
for any calendar year, the Plan Administrator determines that the aggregate of
the (i) Salary Reduction Contributions to the Plan and (ii) amounts contributed
under other qualified cash or deferred arrangements (described in section 401(k)
of the Code) which are maintained by an Employer or Affiliate will exceed the
limit imposed by Section 4.3(a) for the calendar year in which such
contributions were made ("Excess Salary Reduction Contributions"), the Plan
Administrator shall direct the Trustee to distribute an amount equal to such
Excess Salary Reduction Contributions (adjusted for gains and losses as
determined pursuant to applicable regulations) to such Participant no later than
the April 15 following such calendar year.
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(c) Correction of Other Excess Contributions. If for any
calendar year a Participant determines that the aggregate of the (i) Salary
Reduction Contributions to the Plan and (ii) amounts contributed under all other
plans or arrangements described in section 401(k), 408(k) or 403(b) of the Code,
including those maintained by other employers, will exceed the limit imposed by
Section 4.3(a) for the calendar year in which such contributions were made, such
Participant shall be permitted, pursuant to such rules and at such time prior to
the April 15 following such calendar year as determined by the Plan
Administrator, to submit a written request for the distribution of an amount
equal to or less than the amount of such excess contributions. The request
described in this Section 4.3(c) shall be made on a form designated by the
Committee and shall specify the amount of such excess contributions and the
amount to be distributed from the Plan. The request shall be accompanied by the
Participant's written statement that if such amount is not distributed, the
amounts contributed by the Participant under all plans and arrangements
described under sections 401(k), 408(k) and 403(b) of the Code will exceed the
limit for such Participant under section 402(g) of the Code. The Plan
Administrator shall direct the Trustee to distribute such amount no later than
such April 15.
Section 4.4. Employer Matching Contributions. (a) Guaranteed
Matching Contributions. Subject to the limitations set forth in Sections 4.5 and
4.6, each Employer shall contribute for each Plan Year on behalf of each
Participant an amount equal to 40% of the Salary Reduction Contributions which
are made through June 30, 1994 and 50% of the Salary Reduction Contributions
made thereafter on behalf of such Participant pursuant to Section 4.2(a) for
such Plan Year, but only to the extent that Salary Reduction Contributions made
on behalf of such Participant for any Plan Year do not exceed 5% of the
Participant's Compensation. Employer Matching Contributions shall be invested in
accordance with the Participant's investment election pursuant to Section 8.1.
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(b) Discretionary Matching Contributions. Subject to the
limitations set forth in Sections 4.5 and 4.6, an Employer, in its sole
discretion, may elect to make a discretionary Employer Matching Contribution for
such Plan Year on behalf of each Participant who had a Salary Reduction
Contribution election in effect on the day on which the board of directors of
the Employer decides to make a discretionary Employer Matching Contribution for
such year. The discretionary Employer Matching Contribution shall be an amount
equal to a percentage of the Salary Reduction Contributions made on behalf of
each such Participant during the Plan Year which shall be determined in the sole
discretion of such Employer.
(c) Delivery of Matching Contributions. Each Employer may
deliver Employer Matching Contributions (excluding discretionary Employer
Matching Contributions) to the Trustee at the same time Salary Reduction
Contributions are so delivered, but in all events shall deliver all Employer
Matching Contributions to the Trustee prior to the due date, including
extensions thereof, of the Employer's federal income tax return for the fiscal
year of the Employer that ends with or within such Plan Year.
Section 4.5. Limitations on Contributions for Highly
Compensated Employees. (a) Actual Deferral Percentage Test of Section 401(k)(3)
of the Code. Subject to the additional limit set forth in Section 4.5(c), the
Average Deferral Percentage (as defined in Section 4.5(f)) for the group
consisting of eligible Highly Compensated Employees (as defined in Section
4.5(f)) for each Plan Year shall not exceed the greater of:
(1) The Average Deferral Percentage for the group consisting
of all other Eligible Employees multiplied by 1.25, and
(2) the lesser of (i) the Average Deferral Percentage for the
group consisting of all other Eligible Employees PLUS two percentage
points, and (ii) 200% of the Average Deferral Percentage for such
group.
(b) Actual Contribution Percentage Test of Section 401(m) of
the Code. Subject to the additional limit set forth in Section 4.5(c), the
Average Contribution Percentage (as defined in Section 4.5(f)) for the group
consisting of eligible Highly Compensated Employees for each Plan Year shall not
exceed the greater of:
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(1) the Average Contribution Percentage for the group
consisting of all other Eligible Employees multiplied by 1.25, and
(2) the lesser of (i) the Average Contribution Percentage for
the group consisting of all other Eligible Employees plus two
percentage points, and (ii) 200% of the Average Contribution Percentage
for such group.
(c) Additional Limit. Notwithstanding anything herein to the
contrary, the sum of the Average Deferral Percentage and the Average
Contribution Percentage for the group consisting of eligible Highly Compensated
Employees shall not exceed the greater of:
(A) the SUM of:
(i) 1.25 TIMES the greater of the Average
Deferral Percentage and the Average Contribution
Percentage for the group consisting of all Eligible
Employees who are not Highly Compensated Employees;
PLUS
(ii) the lesser of (a) the SUM of two
percentage points plus the lesser of the Average
Deferral Percentage and the Average Contribution
Percentage for such group, and (b) 200% of the lesser
of the Average Deferral Percentage and the Average
Contribution Percentage for such group; and
(B) the SUM of:
(i) 1.25 TIMES the lesser of the Average
Deferral Percentage and the Average Contribution
Percentage for such group; PLUS
(ii) the lesser of (a) the SUM of two
percentage points PLUS the greater of the Average
Deferral Percentage and the Average Contribution
Percentage for such group, and (b) 200% of the
greater of the Average Deferral Percentage and the
Average Contribution Percentage for such group.
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(d) Adjustments to Comply with Limits. (1) Adjustments to
Comply with Section 401(k)(3) of the Code. (A) The Committee shall cause to be
made such periodic computations as it shall deem necessary or appropriate to
determine whether either of the tests set forth in Section 4.5(a) will be
satisfied for a Plan Year, and, if it appears to the Committee that neither of
such tests will be satisfied, the Committee shall direct the Plan Administrator
to take such steps as it deems necessary or appropriate to adjust the Salary
Reduction Contributions made pursuant to Section 4.2(a) for all or a portion of
such Plan Year on behalf of each Participant who is a Highly Compensated
Employee to the extent necessary in order for one of such tests to be satisfied.
If after the end of a Plan Year it is determined that regardless of any such
steps neither of the tests set forth in Section 4.5(a) shall be satisfied, the
Committee shall calculate the total amount by which the Salary Reduction
Contributions must be reduced in order to satisfy either such test, in the
manner prescribed by section 401(k)(8)(b) of the Code (the "excess contributions
amount"). The amount to be returned to each Participant who is a Highly
Compensated Employee shall be determined by first reducing the pre-tax
contributions of each Participant whose actual deferral percentage is the
highest at the time of the adjustment until such actual reduced dollar amount
equals the next highest actual dollar amount of Salary Reduction Contributions
made for such Plan Year on behalf of any Highly Compensated Employee or until
the total reduction equals the excess contributions amount. If further
reductions are necessary, then such contributions on behalf of each Participant
who is a Highly Compensated Employee and whose actual dollar amount of Salary
Reduction Contributions made for such Plan Year, after the reduction described
in the preceding sentence, is the highest shall be reduced in accordance with
the previous sentence. Such reductions shall continue to be made to the extent
necessary so that the total reduction equals the excess contributions amount.
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(B) The adjustment described in paragraph (1)(A) of this
Section 4.5(d) shall be made from time to time during the Plan Year with respect
to Salary Reduction Contributions made pursuant to Section 4.2(a) subsequent to
the time of each such adjustment as determined by the Committee. If within 2 1/2
months after the close of a Plan Year the Committee determines that
notwithstanding any adjustments made during such Plan Year neither of the tests
set forth in section 4.5(a) have been satisfied for such Plan Year, the
Committee shall within such 2 1/2 month period cause an additional adjustment to
be made so that one of such tests is satisfied, and shall cause a distribution
to such Participant of (i) the amount of such adjustment (and any gains or
losses allocable thereto) and (ii) any corresponding Employer Matching
Contributions related thereto (and any gains or losses allocable thereto) in
which such Participant is vested as of the end of the Plan Year for which such
contributions were made (or as of an earlier date if any such Participant
actually terminated service prior to the end of the Plan Year); any remaining
amount of such corresponding Employer Matching Contributions (and any gains or
losses allocable thereto) shall be forfeited. The adjustments for gains and
losses shall be determined pursuant to applicable regulations promulgated under
the Code. The Committee shall cause the amount determined under this
subparagraph (B) to be distributed no later than the last day of the Plan Year
in which the determination is made, but, if feasible, shall cause such amount to
be distributed within the 2 1/2 month period following the Plan Year for which
such contributions were made.
(2) Adjustments to Comply with Section 401(m) of the Code. (A)
The Committee shall cause to be made such periodic computations as it shall deem
necessary or appropriate to determine whether either of the tests set forth in
Section 4.5(b) is satisfied during a Plan Year, and if the Committee determines
that it is likely that neither of such tests will be satisfied, the Committee
shall take such steps as it deems necessary or appropriate to adjust the
Employer Matching Contributions made for such Plan Year on behalf of Highly
Compensated Employees to the extent necessary in order for one of such tests to
be satisfied. Such adjustment shall be effected in the same manner as the
adjustment described in paragraph (1)(A) of this Section 4.5(d).
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(B) The adjustment described in paragraph (2)(A) of this
Section 4.5(d) shall be made from time to time during the Plan Year with respect
to Employer Matching Contributions made pursuant to Section 4.4 as determined by
the Committee. If within 2 1/2 months after the close of a Plan Year the
Committee determines that notwithstanding any adjustments made during such Plan
Year neither of the tests set forth in Section 4.5(b) have been satisfied for
such Plan Year, the Committee shall within such 2 1/2 month period cause an
additional adjustment to be made pursuant to paragraph (2)(A) of this Section
4.5(d) so that one of such tests is satisfied, and shall cause a distribution to
such Participant of the portion of such Employer Matching Contribution reduction
(and any gains or losses allocable thereto) in which such Participant is vested
as of the end of the Plan Year for which contributions were made (or as of an
earlier date if any such Participant actually terminated service prior to the
end of the Plan Year), and any remaining portion of such Employer Matching
Contribution reduction (and any gains or losses allocable thereto) shall be
forfeited.
(3) Adjustments to Comply with the Additional Limit of Section
4.5(c). If, after making the adjustments described in paragraphs (1) and (2) of
this Section 4.5(d) for a Plan Year, the Committee determines that the
additional limit set forth in Section 4.5(c) for such Plan Year shall not be
satisfied, the Committee, within 2 1/2 months after the close of such Plan Year,
shall cause additional adjustments to be made to the Employer Matching
Contributions pursuant to Section 4.4 for such Plan Year on behalf of each
Participant who is a Highly Compensated Employee to the extent necessary in the
manner described in paragraph (2) of this Section 4.5(d). If necessary, the
Committee shall cause additional adjustments of the Salary Reduction
Contributions made pursuant to Section 4.2(a) for such Plan Year on behalf of
each Participant who is a Highly Compensated Employee in the manner described in
Paragraph (1) of this Section 4.5(d), as determined by the Committee.
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(e) Designation of Qualified Nonelective Contributions. For
each Plan Year, the Company may designate an amount of Employer Discretionary
Contributions made pursuant to Section 4.1 to be treated as "qualified
nonelective contributions" within the meaning of section 401(m)(4)(C) of the
Code for purposes of satisfying the actual deferral percentage limit of Section
4.5(a) or the actual contribution percentage limit of Section 4.5(b) or both.
Any such Employer Discretionary Contributions and earnings thereon shall be
accounted for separately by the Trustee and shall be distributable pursuant to
the provisions of the Plan concerning distributions of Employer Discretionary
Contributions, but no earlier than the Participant's separation from service or
death. Any other provision of the Plan to the contrary notwithstanding, a
Participant shall at all times be fully vested in his or her account balance
derived from qualified nonelective contributions.
(f) Definitions. For purposes of this Section 4.5 the
following definitions shall apply:
(1) The "Average Deferral Percentage" for a group of Eligible
Employees for a Plan Year shall be the average of the ratios,
calculated separately for each Eligible Employee in the group to the
nearest one-hundredth of one percent, of the Salary Reduction
Contributions made for the benefit of such Eligible Employee, as
adjusted pursuant to 4.5(d), PLUS any qualified nonelective
contributions designated by the Employer for this purpose pursuant to
Section 4.5(e) to the total compensation for such Plan Year paid to
such Eligible Employee.
(2) The "Average Contribution Percentage" for a group of
Eligible Employees for a Plan Year shall be the average of the ratios,
calculated separately for each Eligible Employee in the group to the
nearest one-hundredth of one percent, of the Employer Matching
Contributions for such year for the benefit of such Eligible Employee,
as adjusted pursuant to 4.5(d), PLUS any qualified nonelective
contributions designated by the Employer for this purpose pursuant to
Section 4.5(e) to such Eligible Employee's compensation for such Plan
Year.
(3) The term "Highly Compensated Employee" shall mean any
Employee described in section 414(q) of the Code.
(4) The term "compensation" shall have any of the meanings set
forth in section 414(s) of the Code or, any other meaning in accordance
with the Code for these purposes, all in the discretion of the Plan
Administrator.
(5) If the Plan and one or more other plans of an Employer to
which Salary Reduction Contributions or qualified nonelective
contributions (as such term is defined in section 401(m)(4)(C) of the
Code) are made are treated as one plan for purposes of section 410(b)
of the Code, such plans shall be treated as one plan for purposes of
this Section. If a Highly Compensated Employee participates in the Plan
and one or more other plans of an Employer to which any such
contributions are made, all such contributions shall be aggregated for
purposes of this Section.
(6) For Plan years beginning prior to January 1, 1997, if any
Participant is a 5% owner (under section 416(i)(1)(B)(i) of the Code)
or one of the ten most highly compensated Eligible Employees of the
Employers, the Salary Reduction Contributions and compensation of such
Participant shall include the Salary Reduction Contributions and
compensation of such Participant's family members (as defined in
section 414(q)(6)(B) of the Code), and such family members shall be
disregarded for all other purposes under this Section.
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Section 4.6. Limitation on Employer Contributions.
Notwithstanding anything in the Plan to the contrary, an Employer's
contributions for any Plan Year to the Plan and all other Plans qualified under
section 401(a) of the Code shall not exceed the maximum amount for which a
deduction is allowable to such Employer for federal income tax purposes for the
fiscal year of such Employer that ends with or within such Plan Year.
Any amount contributed by an Employer by reason of a good
faith mistake of fact, or the amount contributed by an Employer that exceeds the
maximum amount for which a deduction is allowable to such Employer for federal
income tax purposes by reason of a good faith mistake in determining the maximum
allowable deduction, shall upon the request of such Employer be returned by the
Trustee to the Employer. An Employer's request and the return of any such
contribution must be made within one year after the amount was mistakenly
contributed or after the deduction of such excess portion of such contribution
was disallowed, as the case may be. The amount to be returned to an Employer
pursuant to this paragraph shall be the excess of (i) the amount contributed
over (ii) the amount that would have been contributed had there not been a
mistake of fact or a mistake in determining the maximum allowable deduction.
Earnings attributable to the mistaken contribution shall not be returned to the
Employer, but losses attributable thereto shall reduce the amount to be so
returned. If the return to the Employer of the amount attributable to the
mistaken contribution would cause the balance of any Participant's account as of
the date such amount is to be returned (determined as if such date coincided
with the close of a Plan Year) to be reduced to less than what would have been
the balance of such account as of such date had the mistaken amount not been
contributed, the amount to be returned to the Employer shall be limited so as to
avoid such reduction.
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ARTICLE 5
ROLLOVER CONTRIBUTIONS AND DIRECT ROLLOVERS
Section 5.1. Rollover Contributions. (a) Requirements. If an
Eligible Employee receives, either before or after becoming an Employee, an
eligible rollover distribution (within the meaning of section 402(c)(4) of the
Code) from a qualified trust described in section 401(a) of the Code that is
exempt from tax under section 501(a) of the Code or from a qualified annuity
plan described in section 403(a) of the Code, then such Employee may contribute
to the Plan an amount that does not exceed the amount of such eligible rollover
distribution (including the proceeds from the sale of any property received as a
part of such eligible rollover distribution). If an Employee receives either
before or after becoming a Participant a distribution or distributions from an
individual retirement account or individual retirement annuity (within the
meaning of section 408 of the Code) and the amount received represents the
entire amount in such account or such annuity and no amount in such account or
such annuity is attributable to any source other than an eligible rollover
distribution (within the meaning of section 402(c)(4) of the Code) and any
earnings on such an eligible rollover distribution, then the Eligible Employee
may contribute to the Plan such distribution or distributions.
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(b) Delivery of Rollover Contributions to Plan Administrator.
Any rollover contribution made pursuant to Section 5.1(a) shall be delivered by
the Employee to the Plan Administrator on or before the date determined by the
Plan Administrator. Any such contribution must be accompanied by (i) a statement
of the Employee that to the best of his or her knowledge the amount so
transferred meets the conditions specified in paragraph (a) of this Section,
(ii) a copy of such documents as may have been received by the Employee advising
the Employee of the amount, character, and date of such distribution, and (iii)
if the Employee is not a Participant, an investment election under Section 8.1.
The Plan Administrator shall deliver such contribution to the Trustee on or
before the 60th day after the day on which the Employee received the
distribution or such other date as may be prescribed by law. Notwithstanding the
foregoing, the Plan Administrator shall not accept a rollover contribution if in
its judgment accepting such contribution would cause the Plan to violate any
provision of the Code or ERISA or regulations promulgated under either statute,
and the Plan Administrator shall not be required to accept such a contribution
to the extent it consists of property other than cash.
Section 5.2. Direct Transfers from Other Plans. Upon the
written request of an Eligible Employee, the Plan Administrator shall direct the
Trustee to accept an eligible rollover distribution, as defined in section
402(c)(4) of the Code, that is transferred directly from a trustee of a
qualified trust described in section 401(a) of the Code that is exempt from tax
under section 501(a) of the Code. Notwithstanding the foregoing, the Plan
Administrator shall not direct the Trustee to accept such a direct transfer if
in the Plan Administrator's judgment accepting such transfer would cause the
Plan to violate any provision of the Code or ERISA or regulations promulgated
under either statute, and the Trustee shall not be required to accept any
transfer to the extent it consists of property other than cash.
Section 5.3. Special Accounting Rules for Rollover
Contributions and Direct Transfers. If a rollover contribution or a direct
transfer is made by or on behalf of an Eligible Employee, the Plan Administrator
shall cause to be established and maintained for such Employee a Rollover
Account, to which shall be credited all rollover contributions and direct
transfers made for the benefit of the Employee, except that any portion of a
direct transfer or rollover contribution that is attributable to contributions
under a qualified cash or deferred arrangement, within the meaning of section
401(k) of the Code, shall be credited to the Employee's Salary Reduction
Contribution Account. Each rollover contribution and direct transfer shall be so
credited as of the date on which such contribution or transfer, as the case may
be, is delivered to the Trustee.
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If a rollover contribution or direct transfer is made by an
Eligible Employee prior to becoming a Participant, such Employee shall be deemed
to be a Participant for all purposes of the Plan, except for the purposes of
electing Salary Reduction Contributions, receiving allocations of Employer
Discretionary Contributions provided for in Section 7.2, and determining when
the Employee becomes a Participant pursuant to Article 3.
ARTICLE 6
TRUST AND INVESTMENT FUNDS
Section 6.1. Trust. The Trust holding the assets of the Plan
shall be governed by a trust agreement between the Company and the Trustee. All
contributions under the Plan shall be paid to the Trustee. The Trustee shall
hold all monies and other property received by it and invest and reinvest the
same, together with the income therefrom, on behalf of the Participants
collectively in accordance with the provisions of the Trust agreement. The
Trustee shall make distributions from the Trust Fund at such time or times to
such person or persons and in such amounts as the Plan Administrator directs in
accordance with the Plan.
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Section 6.2. Investment Funds. The Committee shall establish
and cause to be maintained three or more Investment Funds in which Plan assets
may be invested in accordance with the directions of Participants and
Beneficiaries. Until the "Effective Time" (as such term is defined in the
Agreement and Plan of Recapitalization and Merger dated as of February 17, 1998
between HB Acquisition Corporation and the Company), one of these Investment
Funds shall be the Company Stock Fund. The Company Stock Fund, including
earnings thereon, shall be solely invested in the Company Stock PROVIDED,
HOWEVER, that the Committee may make temporary investments in short-term
investment funds or cash and PROVIDED, FURTHER, that the Committee may at any
time cease to make further purchases of Company Stock until such time as the
Committee shall determine that the cessation of purchases of Company Stock is no
longer in the best interest of Participants or is no longer prohibited by law.
As of the "Effective Time" (as such term is defined in the Agreement and Plan of
Recapitalization and Merger dated as of February 17, 1998 between HB Acquisition
Corporation and the Company), the Company Stock contained in each Participant's
Company Stock Fund account shall be converted into a cash amount equal to the
product of $10.25 and the number of Company Shares held in such Participant's
Company Stock Fund account, and such cash amount shall be reinvested in the
CIGNA Charter Short-Term Fixed Income Fund as soon as practicable after such
Effective Time.
The Committee, in its sole discretion, may establish
additional Investment Funds for Participant-directed investments or may
eliminate or replace one or more of the Investment Funds. In addition, to the
extent directed by the Committee, one or more additional separate Investment
Funds shall be established, maintained and invested as directed by the
Committee.
All charges and expenses incurred in connection with the
purchase and sale of investments for an Investment Fund shall be charged to such
Investment Fund except to the extent such charges and expenses are paid by the
Employers, or by the Participants in accordance with a Participant-investment
procedure adopted by the Committee.
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ARTICLE 7
PARTICIPANT ACCOUNTS
Section 7.1. Participant Accounts. For each Participant the
Trustee shall establish and maintain, or shall cause to be established and
maintained, investment accounts herein for each Investment Fund available under
the Plan, including a Company Stock Account, to which amounts contributed under
the Plan shall be credited according to each Participant's investment elections
pursuant to Sections 8.1 and 8.2.
Each investment account shall, to the extent appropriate, be
composed of the following subaccounts: (I) a Salary Reduction Contribution
Account, to which shall be credited all Salary Reduction Contributions, (II) an
Employer Matching Contribution Account, to which shall be credited all Employer
Matching Contributions, (III) an Employer Discretionary Contribution Account, to
which shall be credited all Employer Discretionary Contributions, and (IV) a
Rollover Account established pursuant to Section 5.3, if applicable. Earnings
and losses on investment of funds in each account shall be credited or debited
to that account.
All such accounts and subaccounts shall be for accounting
purposes only, and there shall be no segregation of assets within the Investment
Funds among the separate subaccounts.
Section 7.2. Allocations of Contributions and Forfeitures
Among Participants' Accounts. (a) Allocation of Employer Discretionary
Contributions. Employer Discretionary Contributions shall be allocated and
credited to the Employer Discretionary Contribution Account of each Participant
who (1) completed 1,000 Hours of Employment during the Plan Year, and (2) was
employed by an Employer on the last day of the Plan Year. The amount so
allocated to the account of any such Participant shall be determined by
multiplying the total Employer Discretionary Contribution by such Participant's
Employer by a fraction, the numerator of which is the Participant's Compensation
for the Plan Year to which the Employer Discretionary Contribution relates and
the denominator of which is the aggregate of the Compensation of all
Participants employed by such Employer who are entitled to an allocation.
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(b) Allocation of Salary Reduction Contributions. Salary
Reduction Contributions shall be allocated and credited to the Salary Reduction
Contribution Account of each Participant for whom such contributions are made as
soon as practicable after such contributions are delivered to the Trustee.
(c) Allocation of Employer Matching Contributions. Employer
Matching Contributions shall be allocated and credited to the Employer Matching
Contribution Account of each Participant for whom such contributions are made as
soon as practicable after such contributions are delivered to the Trustee.
(d) Allocation of Rollover Contributions and Direct Transfers.
Each rollover contribution and direct transfer made pursuant to Article 5 shall
be credited to the Rollover Account of the Participant on whose behalf such
contribution or transfer is made in accordance with the provisions set forth in
Section 5.3.
(e) Allocation of Forfeitures. The total amount forfeited
during any portion of a Plan Year pursuant to Section 10.2 from the accounts of
Participants employed by an Employer, reduced by the amount of such forfeitures
credited to the accounts of former Participants who have been reemployed
pursuant to Section 11.3, shall be used to decrease contributions required by
the Employers for the Plan Year.
Section 7.3. Limitations on Allocations. Notwithstanding any
other provision of the Plan, the amount allocated to a Participant's accounts
under the Plan for each Plan Year shall be limited as follows:
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(1) the aggregate annual additions to such accounts and to the
Participant's accounts in all other defined contribution plans maintained by an
Employer shall not exceed the lesser of (A) the greater of $30,000 (as adjusted
for increases in the cost of living pursuant to section 415(d) of the Code) and
25% of the dollar limitation in effect under section 415(b)(1)(A) of the Code,
and (B) 25% of the Participant's compensation for such Plan Year, and
(2) for Plan Years commencing prior to January 1, 2000, the
SUM of (A) and (B) set forth below shall not exceed 1:
(A) The SUM of the separate amounts determined as follows for
each Plan Year during which the Participant shall have participated in
the Plan or in any other defined contribution plans maintained by an
Employer (computed as of the close of the Plan Year for which such
computations are made):
(I) the aggregate annual additions to the
Participant's accounts in all of such plans for each such Plan
Year, DIVIDED BY
(II) the lesser of (i) 125% of the maximum dollar
amount under section 415(c)(1)(A) of the Code, and (ii) 35% of
the Participant's compensation, for each such Plan Year,
respectively.
(B) The aggregate projected annual benefit of the Participant
under all defined benefit plans maintained by an Employer (determined
as of the close of the Plan Year for which such computations are made)
divided by the lesser of:
(I) 125% of the maximum dollar limitation contained
in section 415(b)(1)(A) of the Code as adjusted for changes in
the cost of living pursuant to section 415(d) of the Code, and
(II) 140% of the average of the Participant's
compensation for the three consecutive calendar years of his
or her participation in such defined benefit plans during
which his or her compensation was the highest.
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If the limitation described in clause (2) above shall be
exceeded for any Participant for any applicable Plan Year, the benefit that
would otherwise have been accrued for such Participant for such Plan Year under
one or more defined benefit plans maintained by an Employer shall be reduced
until such limitation is satisfied or until the benefits accrued under all such
plans have been reduced to zero, whichever occurs first. If after any such
reductions have been made, the amounts which would otherwise be allocated to the
Participant's accounts pursuant to Section 7.2 for a Plan Year remain limited by
this Section as a result of a reasonable error in estimating a Participant's
compensation, a reasonable error in determining the amount of Elective Deferrals
(within the meaning of section 402(g)(3) of the Code) that may be made with
respect to a Participant under the limits of section 415 of the Code, or under
other facts and circumstances as determined by the Commissioner of Internal
Revenue, and the excess contribution cannot be returned to the Employer, then
(i) the Salary Reduction Contributions (plus any income or gains and minus any
loss allocable to such Salary Reduction Contributions) shall be distributed to
the Participant to the extent necessary to comply with such limitations, and if
such limitations would still be exceeded after distributing the Salary Reduction
Contributions of a Participant, (ii) the amount of annual additions in excess of
such limitations (after making the distributions under (i)) shall be held in an
unallocated suspense account which shall be invested but shall not be credited
or debited with its own gains or losses and shall not share in gains or losses
of the Trust, and which shall be treated in the succeeding Plan Year as an
Employer Discretionary Contribution, thereby reducing amounts actually
contributed by the Employer for such Plan Year. Upon termination of the Plan,
any balance in such unallocated suspense account shall be returned to the
Employers as determined by the Company, but only if the allocation upon Plan
termination of such amount to Participants would cause all Participants to
receive annual additions in excess of the limitations of section 415 of the
Code.
For purposes of this Section 7.3, the "annual additions" for a
Plan Year to a Participant's accounts under the Plan and under all other defined
contribution plans maintained by an employer is the sum during such Plan Year
of:
(i) the allocations made to such Participant's accounts
pursuant to Section 7.2(a), (b), (c) and (e),
(ii) the amount of all other employer contributions (within
the meaning of section 415(c) of the Code) and forfeitures, if any,
allocated to such Participant's accounts under all other defined
contribution plans maintained by an employer,
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(iii) the amount of contributions by the Participant to any
such plan, excluding any transfers or contributions of eligible
rollover distributions defined in section 402(c)(4) of the Code,
(iv) the amount of such Participant's Excess Salary Reduction
Contributions (as defined in Section 4.3(b)), and
(v) contributions allocated on behalf of the Participant to
any individual medical benefit account maintained by an employer as
defined in section 415(l) of the Code.
For purposes of this Section 7.3, the terms "compensation", "defined
contribution plan," "projected annual benefit" and "defined benefit plan" shall
have the meanings set forth in section 415 of the Code, and the term "employer"
shall include all corporations and entities determined under sections 414(b),
(c) and (m) of the Code except that "more than 50%" shall be substituted for "at
least 80%" each place it appears in section 1563(a)(1) of the Code.
Section 7.4. Correction of Error. If it comes to the attention
of the Committee that an error has been made in any of the allocations
prescribed by this Article 7, appropriate adjustment shall be made to the
accounts of all Participants and designated Beneficiaries that are affected by
such error, except that no adjustment need be made with respect to any
Participant or Beneficiary whose account has been distributed in full prior to
the discovery of such error.
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ARTICLE 8
INVESTMENT ELECTIONS AND VALUATION
Section 8.1. Investment of Contributions. The investment of
the account balances of each Participant who immediately before the Effective
Date was a Participant shall be invested in the same manner as such Participant
elected immediately before the Effective Date. Each Participant, as part of his
or her application for participation prescribed by Section 3.2 (or in connection
with the delivery of a rollover contribution pursuant to Section 5.1 or a direct
transfer pursuant to Section 5.2), may make an investment election that shall
apply to the investment of contributions to be made on behalf of or by the
Participant pursuant to Article 4 or Article 5 and any earnings on such
contributions. Such elections, submitted in writing to the Plan Administrator,
shall specify that such contributions be invested either (i) wholly in one of
the Investment Funds established under Article 6 or (ii) divided among such
Investment Funds in multiples established by the Committee from time to time.
Separate investment elections with respect to Salary Reduction Contributions
made pursuant to Section 4.2 may be made. Each Employee for whom a Rollover
Account is established shall make such investment election as of the Valuation
Date coinciding with or next following the establishment of such account by
prior written notice filed with the Plan Administrator. In the absence of a
Participant's specific designation, all contributions made on behalf of such
Participant shall be invested in such manner as the Committee shall determine;
PROVIDED, HOWEVER, that if a Participant fails to make an election with respect
to such amounts invested on his behalf in the CIGNA Charter Short-Term Fixed
Income Fund in accordance with Section 6.2 by the date designated by the
Committee, such amounts shall be invested in the Guaranteed Income Fund.
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Section 8.2. Change of Investment Election. A Participant (or
a Beneficiary with an account balance under the Plan) may elect to change an
investment election as of any Valuation Date. Such change shall be limited to
the Investment Funds then maintained or selected by the Committee. A change in
an investment election made pursuant to this Section shall apply to
contributions (and earnings thereon) made on behalf of or by the Participant
prior to such change, or to future contributions (and earnings thereon) or both.
A Participant's change of investment election must be made through a telephone
transaction system in accordance with the written rules and conditions
established by the Committee. Any such change shall designate that the
contributions (and earnings thereon) shall be invested either (i) wholly in one
of the Investment Funds maintained or selected by the Committee pursuant to
Section 6.2, or (ii) divided among such Investment Funds in multiples
established by the Committee from time to time. A change of investment election
requiring a transfer to or from the Company Stock Fund shall not be effective
until two business days following the date on which such change of investment
election is received by the Committee, except that another time period may be
designated by the Committee. The Committee may determine at any time that
transfers to or from the Company Stock Fund shall not be permitted.
Section 8.3. Fiduciary Responsibilities for Directed
Investments. Each Participant (or Beneficiary with an account balance under the
Plan) shall have a reasonable opportunity to obtain written confirmation of his
or her investment instructions, in accordance with a procedure established by
the Committee and communicated to such Participants (and such Beneficiaries).
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Section 8.4. Value of the Balance of Company Stock Account. As
soon as practicable after the close of business on each Valuation Date, the
Trustee or its delegate shall determine the value of the Company Stock Fund as
of such Valuation Date and the value so determined shall be divided by the total
number of participating units allocated to such Fund in respect of Participants'
Company Stock Accounts. The resulting quotient shall be the value of a
participating unit in such fund as of such Valuation Date and shall constitute
the "price" of a participating unit as of such Valuation Date. Participating
units shall be credited, at the price so determined, to the Company Stock
Accounts of Participants with respect to amounts contributed or transferred to
such fund on their behalf on such Valuation Date. The value of all participating
units credited to Participants' Company Stock Accounts shall be redetermined in
the same manner as of each Valuation Date.
Section 8.5. Valuation of Funds. The value of each Investment
Fund shall be determined as of each Valuation Date. The value of each separate
Investment Fund as of any Valuation Date shall be the fair market value of the
aggregate assets of the Fund, determined by the Trustee or its delegate on the
basis of such evidence and information as the Trustee deems pertinent and
reliable, less the liabilities of the Fund other than liabilities to pay
benefits under the Plan and less an amount equal to the sum of the portions of
the Employer's contributions paid to the Trustee for the period since the last
preceding Valuation Date which are invested in the Fund. The Trustee's
determination of value shall be binding and conclusive.
As of each Valuation Date, each Participant's subaccount shall
for each Investment Fund be credited or charged, as the case may be, with that
percentage of any increase or decrease in the value of such Investment Fund
since the preceding Valuation Date which such Participant's "adjusted
subaccount," to the extent invested in such Fund, bears to the "adjusted
subaccounts" of all Participants to the extent invested in such Fund. A
Participant's "adjusted subaccount" is the amount credited to the Participant's
subaccount after all adjustments as of the preceding Valuation Date, reduced by
any withdrawals or distributions made since the last preceding Valuation Date
which have not been charged previously, and further reduced or increased in such
manner as the Committee determines in its discretion to be necessary to provide
an equitable allocation of any change in the value of any Investment Fund.
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Section 8.6. Account Statements. The Plan Administrator shall,
not less frequently than quarterly, furnish to each Participant a statement
setting forth the balances of such Participant's accounts under the Plan.
ARTICLE 9
VOTING AND OTHER SHAREHOLDER RIGHTS
Section 9.1. Shareholders Rights. (a) In General. Subject to
Section 9.2, the Trustee shall, at the direction of the Company, be entitled, in
person or by proxy, to vote, or to exercise any other rights with respect to,
any and all shares of corporate stock or mutual funds held by the Trustee in the
Trust.
Section 9.2. Company Stock. (a) In General. The following
provisions of 9.2 shall apply to Company Stock held in the Company Stock Fund
prior to the Effective Time under the Agreement and Plan of Recapitalization and
Merger dated as of February 17, 1998 between HB Acquisition Corporation and the
Company when all Company Stock held in the Company Stock Fund shall be converted
to cash as described in Section 6.2. With respect to any corporate matter that
involves the voting of shares of Company Stock with respect to the approval or
disapproval of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets of
a trade or business, or similar transaction prescribed in regulations
promulgated under either ERISA or the Code, each Participant (or Beneficiary
with a Company Stock Account balance under the Plan) shall be entitled to direct
the Trustee as to the exercise of any voting rights attributable to shares of
Company Stock then allocated to such Participant's (or Beneficiary's) Company
Stock Account and the Trustee shall vote such shares according to the voting
instructions of the Participant (or Beneficiary) that have been timely submitted
to the Trustee on forms designated by the Committee for such purpose. Except as
may be required by ERISA, the Trustee shall not vote the shares of Company Stock
credited to Company Stock Accounts with respect to which the Trustee does not
timely receive voting instructions as the Trustee. Written notice of any meeting
of shareholders of the Company and a request for voting instructions shall be
given by the Committee or the Trustee (or its delegate), at such time and in
such manner as the Committee shall determine, to each Participant (or
Beneficiary) entitled to give instructions for voting shares of Company Stock at
such meeting. The Company shall establish and pay for a means by which
Participants (and Beneficiaries) can expeditiously deliver such voting
instructions to the Trustee (or its delegate). All such instructions shall be
confidential and shall not be disclosed to any person, including the Employers.
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(b) Participant Direction of Company Stock Account.
Notwithstanding any other provision in this Section 9.2, each Participant (or a
Participant's Beneficiary) who directs the investment of a portion of his or her
Company Stock Account shall be entitled to exercise all rights with respect to
the Company Stock invested in such account in accordance with section 404(c) of
ERISA.
(c) Tender Offers. (i) Rights of Participants. In the event a
tender offer is made generally to the shareholders of the Company to transfer
all or a portion of the shares of Company Stock credited to their Company Stock
Accounts in return for valuable consideration, including but not limited to,
offers regulated by section 14(d) of the Securities Exchange Act of 1934, as
amended, the Trustee shall respond to such tender offer according to the written
instructions of the Participants (or Beneficiaries) that have been timely
submitted to the Trustee on forms provided by the Committee for such purpose.
Each Participant (or Beneficiary) who does not provide timely instructions to
the Trustee shall be presumed to have directed the Trustee not to tender the
Company Stock allocated to his or her Company Stock Account. A Participant (or
Beneficiary) shall not be limited in the number of instructions to tender or
withdraw from tender that he or she can give, but shall not have the right to
give instructions to tender or withdraw from tender after a reasonable time
established by the Committee as described in paragraph (iii) of this Section.
(ii) Duties of the Committee. Within a reasonable time after
the commencement of a tender offer, the Committee shall provide to each
Participant (or Beneficiary with a Company Stock Account balance):
(A) the offer to purchase as distributed by the offeror to the
shareholders of the Company,
(B) a statement of the shares of Company Stock allocated to
such Participant's (or Beneficiary's) Company Stock Account, and
(C) directions as to the means by which a Participant (or
Beneficiary) can give instructions with respect to the tender offer.
The Committee shall establish and pay for a means by which Participants (and
Beneficiaries) can expeditiously deliver instructions to the Trustee with
respect to a tender offer. All such instructions shall be confidential and shall
not be disclosed to any person, including the Employers. Confidentiality shall
be ensured in accordance with the procedures established by the Committee. The
Committee shall engage an independent fiduciary to receive instructions from
Participants (and Beneficiaries) and, in the case of such a fiduciary who is not
the Trustee, the independent fiduciary shall transmit such instructions to the
Trustee. The independent fiduciary shall transmit or cause to be transmitted to
the Trustee the aggregate numbers of shares of Company Stock to be tendered or
withheld from tender.
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ARTICLE 10
LOANS AND DISTRIBUTIONS
Section 10.1. Loans to Participants. (a) Making of Loans.
Subject to the restrictions set forth in this Section, the Committee shall
establish a loan program whereby any Participant who is determined by the Plan
Administrator to be creditworthy, may request, either by written application to
the Plan Administrator or through the telephone information system in accordance
with the written rules and conditions established by the Committee, to borrow
funds from the Plan. The principal balance of such loan shall be not less than
$1,000 and shall not exceed the lesser of:
(1) The greater of $10,000 or 50% of the aggregate of the
Participant's vested account balances as of the Valuation Date
coinciding with or immediately preceding the date on which the loan is
made, and
(2) $50,000, reduced by the excess, if any, of the highest
outstanding loan balance of the Participant under the Plan during the
period of time beginning one year and one day prior to the date such
loan is to be made and ending on the date such loan is to be made over
the outstanding balance of loans from the Plan on the date on which
such loan was made.
(b) Restrictions. No Participant may have more than one loan
outstanding at any time. Amounts equal to such loan shall be transferred from
the Participant's accounts (other than his or her Company Stock account) in the
same proportion as the value of each such account bears to the aggregate value
of all such accounts, unless the Participant designates in his or her written
loan application the portions of such loan to be debited to his or her Rollover
Account, Employer Discretionary Contribution Account, Salary Reduction
Contribution Account, and Employer Matching Account. Any loan approved by the
Plan Administrator pursuant to the preceding paragraph (a) shall be made only
upon the terms and conditions set forth below:
(1) The period for repayment of the loan shall be arrived at
by mutual agreement between the Plan Administrator and the Participant,
but such period shall not exceed five years from the date of the loan;
PROVIDED, HOWEVER, that if the purpose of the loan as determined by the
Plan Administrator is to acquire any dwelling unit that within a
reasonable time is to be used as the principal residence of the
Participant, then such period for repayment shall not exceed 15 years.
Such loan may be prepaid, without penalty, by delivery to the Plan
Administrator of cash in an amount equal to the entire unpaid balance
of such loan. Any loan is due in full upon termination of employment.
(2) No loan shall be made unless the Participant consents to
have such loan repaid in substantially equal installments deducted from
the regular payments of the Participant's compensation during the term
of the loan.
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(3) Each loan shall be evidenced by the Participant's
collateral promissory note for the amount of the loan, with interest,
payable to the order of the Trustee, and shall be secured by an
assignment of a portion of the Participant's vested interests in his or
her Rollover Account, Employer Discretionary Contribution Account,
Salary Reduction Contribution Account, and Employer Matching Account
equal to the initial principal amount of such loan, provided that such
portion so assigned shall not exceed 50% of such vested interests, and
such other collateral as required by the Committee.
(4) Each loan shall bear a fixed interest rate commensurate
with the interest rate then being charged by persons in the business of
lending money for loans made under similar circumstances.
(5) No distribution shall be made to any Participant who has
borrowed from the Trust to the extent such distribution would cause the
outstanding loan balance to exceed the limit in Section 10.1(a) with
respect to the Participant's account balance following such
distribution.
(6) Each Participant requesting a loan shall, as a condition
of receiving such loan, pay such reasonable loan processing fee as
shall be set from time to time by the Plan Administrator. At the
Participant's election, such fee may be paid from the loan proceeds.
(7) Failure to pay principal or interest when due shall result
in default; PROVIDED, HOWEVER, that where such failure occurs as a
result of a Participant's termination of employment with his or her
Employer and repayment of such Participant's loan may no longer be
deducted from such Participant's payment of compensation, a default
shall not occur unless and until such Participant fails to repay the
entire unpaid balance of such loan, or restructure repayment thereof
upon terms arrived at by mutual agreement between the Plan
Administrator and such Participant, within 60 days of the Valuation
Date following such termination of employment; and FURTHER PROVIDED
that in the case of a failure to pay principal or interest due to
insufficient compensation a default shall not occur unless and until
that number of consecutive installments, as determined by the Plan
Administrator (but not in excess of six), are not paid when due under
the terms of such note. Notwithstanding the foregoing, a Participant,
who files for, or against whom is filed, a petition for relief under
the Title 11 of the United States Code shall be deemed to be in default
upon the occurrence of such filing.
If any loan or portion of a loan made to a Participant under
the Plan, together with the accrued interest thereon, is in default, the
Committee shall take appropriate steps to collect on the note and foreclose on
the security. If on a Participant's settlement date, any loan or portion of a
loan made to such Participant under the Plan, together with the accrued interest
thereon, remains unpaid, an amount equal to such loan or any part thereof,
together with the accrued interest thereof, shall be charged to the
Participant's accounts after all other adjustments required under the Plan, but
before any distribution pursuant to Section 10.2.
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(c) Loan Fund Account. A Loan Fund Account shall be
established, operated and maintained for each Participant who shall receive a
loan under the Plan and such account shall be credited with the amounts
transferred from the Participant's other accounts pursuant to paragraph (b).
Interest and principal payments received by the Trustee in respect of the amount
of the Participant's loan shall be credited to the Loan Fund Account as received
by the Trustee. Interest and principal so credited shall be allocated among the
Participant's other accounts in accordance with the Participant's investment
elections in effect at the time such interest payments are received.
(d) Applicability. The provisions of this Section 10.1 shall
apply to each former Participant and Beneficiary with an account balance under
the Plan if such former Participant or Beneficiary is a "party in interest" as
defined in section 3(14) of ERISA. Each reference in this Section 10.1 to
"Participant" shall include such former Participants and Beneficiaries with
account balances under the Plan, except that the requirements of Section
10.1(b)(2) shall be met with respect to each such former Employee and
Beneficiary if the Participant or Beneficiary consents to have such loan repaid
in substantially equal installments as determined by the Plan Administrator, but
not less frequently than quarter-annually.
Section 10.2. Distribution Upon Termination of Employment. (a)
Termination of Employment under Circumstances Entitling Participant to Full
Distribution of Account Balance. Except as provided in paragraph (c) of this
Section 10.2, a Participant or the Participant's Beneficiary, as the case may
be, shall be entitled to receive his or her entire account balance as of the
Valuation Date coinciding with the date on which the Participant's termination
of employment occurs, if such termination occurs under any of the following
circumstances:
(1) after the date the Participant attains age 65,
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(2) on account of the Participant's death,
(3) on account of the Participant's Permanent Disability, or
(4) after the Participant has at least five Years of Service.
(b) Termination of Service under Circumstances Resulting in
Partial Forfeiture of the Participant's Account Balance. If a Participant's
employment terminates under circumstances other than those set forth in
paragraph (a), the Participant shall be entitled to receive (i) the balances of
his or her Salary Reduction Contribution Account and Rollover Account
(determined as of the Valuation Date coinciding with or immediately following
the date on which such termination of employment occurs), and (ii) that
percentage of such Participant's Employer Discretionary Contribution Account and
Employer Matching Contribution Account (determined as of the Valuation Date
coinciding with or immediately following the date on which his or her
termination of employment occurs). Such percentage shall be determined by
reference to the number of the Participant's Years of Service at the date of the
Participant's termination of employment in accordance with the table described
below.
Years of Service Percentage
---------------- ----------
Less than 1 0%
At least 1 but less than 2 20%
At least 2 but less than 3 40%
At least 3 but less than 4 60%
At least 4 but less than 5 80%
5 or more 100%
The difference between the balance of the Participant's Employer Discretionary
Contribution Account and Employer Matching Contribution Account and the amount
distributable with respect to such account pursuant to this paragraph shall be
charged to such account and forfeited. Such forfeiture shall occur as of the
first Valuation Date following the Participant's termination of employment. Such
forfeited amounts shall be used to reduce future contributions to the Plan by
the Employer of such Participant.
(c) Distributions Upon Termination of Employment to
Participants of the American Recreation Group Savings and Investment Plan. Upon
termination of employment with the Employers, any Participant who was a
participant in the American Recreation Group Savings and Investment Plan on
February 15, 1995, or such Participant's beneficiary as the case may be, may
elect, by submitting a written request to the Plan Administrator at least 30
days in advance (or such other period as the Committee may from time to time
prescribe), to receive his or her entire account balance as of January 1, 1996
which is attributable to such Participant's accrued benefit under the American
Recreation Group Savings and Investment Plan.
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Section 10.3. Time and Form of Distribution upon Termination
of Service. (a) Form of Distribution. (i) Except as provided in paragraphs (ii),
(ii) and (iv) of this Section 10.3(a), any distribution to which a Participant
(or a Participant's Beneficiary) becomes entitled upon termination of employment
shall be distributed by the Trustee at the direction of the Plan Administrator
by whichever of the following methods the Participant elects, which election may
be changed at any time prior to the date distribution commences by advance
written notice to the Plan Administrator:
(A) by payment in a lump sum;
(B) by payment in a series of approximately equal, monthly
installments, over a period not longer than the joint life expectancy
of the Participant and the Participant's Beneficiary or, in the case of
a Distributee other than the Participant, the life expectancy of the
Distributee, and further provided that payment to such Distributee
commence not later than one year after the date of the Participant's
death; or
(C) by payment in the form of an annuity over a period certain
not to exceed the shorter of (A) ten years, or (B) except in the case
of the Participant's death, the life expectancy of the Participant.
Prior to the date determined by the Committee in connection
with the Agreement and Plan of Recapitalization and Merger dated as of February
17, 1998 between HB Acquisition Corporation and the Company, a Participant at
the time of distribution may elect to receive the value of his Company Stock
account in the form of Company Stock or cash, PROVIDED, HOWEVER, if the amount
of the Participant's account balance to be distributed does not exceed $5,000
(or such other amount prescribed by section 411(a)(11) of the Code), the
distribution of the Company Stock account shall be in cash. After the date
determined by the Committee in connection with the Agreement and Plan of
Recapitalization and Merger dated as of February 17, 1998 between HB Acquisition
Corporation and the Company, a Participant may receive the value of his Company
Stock account only in the form of cash.
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(ii) The automatic form of distribution for a Participant who
is married and who was a Participant in the Jim Blackburn Design, Inc. Profit
Sharing Plan on December 31, 1992 with an account balance on such date of at
least $5,000 (or such other amount prescribed by section 411(a)(11) of the Code)
is a joint and 50% survivor annuity. Such a Participant may also elect a joint
and 100% survivor annuity. If such a Participant does not elect one of the
survivor annuity forms of distribution and designate his or her spouse as
beneficiary, the Participant's election is not effective unless the
Participant's spouse consents in writing to the Participant's election (or
change of election) and such consent acknowledges the effect of the election and
is witnessed by either a Plan representative or a notary public or it is
established to the satisfaction of a Plan representative that such consent
cannot be obtained because the Participant's spouse cannot be located or such
other circumstance as may be prescribed in regulations.
If the Participant elects payment in a series of installments,
and if the Participant's Beneficiary is an individual other than the
Participant's spouse, the present value (as determined by the Plan
Administrator) of the installments expected to be paid to the Participant shall
not be less than 50% of the balance of his or her Distributee Account at the
time distributions hereunder shall commence. The life expectancy of the
Participant or the Participant's spouse may, at the election of such Participant
or spouse, be redetermined as of April 1 of each calendar year after payments
under paragraph (ii) above have commenced. If a balance remains in a
Participant's Distributee Account at the expiration of the period of time over
which installments are to be paid, the remaining balance shall be paid to the
Distributee in a lump sum. If the balance in a Distributee Account is
insufficient to complete the number of installments initially contemplated,
payment of installments shall terminate upon exhaustion of the Distributee
Account.
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(iii) A Participant who was a participant in the American
Recreation Group Savings and Investment Plan on February 15, 1995 and who
attains the age 59 1/2 may elect, upon written request to the Plan Administrator
at least 30 days in advance (or such other period as the Committee may from time
to time prescribe), to withdraw any dollar amount to a maximum of 100% of the
aggregate vested value as of January 1, 1996 of his or her Salary Reduction
Contribution Account, Employer Matching Contribution Account and Employer
Discretionary Contribution Account as of the Valuation Date coinciding with the
withdrawal election.
(iv) A Participant who was a participant in the American
Recreation Group Savings and Investment Plan on February 15, 1995, upon written
request to the Plan Administrator at least 30 days in advance (or such other
period as the Committee may from time to time prescribe), may elect to withdraw
all or a portion of the balance as of January 1, 1996 in his or her Rollover
Account as of the Valuation Date coinciding with the withdrawal request.
(b) Small Benefits Payable in Lump Sum. Notwithstanding any
provision of the Plan to the contrary, if the amount of the Participant's
account balance to be distributed does not exceed $5,000 (or such other amount
prescribed by section 411(a)(11) of the Code), such amount shall be distributed
as soon as practicable after the Valuation Date coinciding with or next
following the Participant's termination of employment.
(c) Time of Distribution. Upon a Participant's termination of
employment or death, distribution shall commence as soon as administratively
feasible on or after the Valuation Date on which such termination of employment
or death occurs or at such later time as the Participant or the Participant's
Beneficiary, as the case may be, elects, which election may be changed by
advance written notice to the Plan Administrator; PROVIDED, HOWEVER, that:
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(1) Subject to Section 10.3(b), the Participant's account
balance shall not be distributed prior to the Participant's 65th
birthday unless the Participant has consented in writing to such
distribution;
(2) Distributions paid or commencing during the Participant's
lifetime shall commence not later than April 1 of the calendar year
following the calendar year in which the Participant attains age 70
1/2;
(3) Distributions commencing after the Participant's death
shall be completed within five years after the death of the
Participant, except that (i) if the Participant's Beneficiary is the
Participant's spouse, distribution may be deferred until the date on
which the Participant would have attained age 70 1/2 had the
Participant survived, and (ii) if the Participant's Beneficiary is a
natural person other than the Participant's spouse and distributions
commence not later than one year after the Participant's death, such
distributions may be made over a period not longer than the life
expectancy of such Beneficiary. If at the time of the Participant's
death, distribution of the Participant's benefit has commenced, the
remaining portion of the Participant's benefit shall be paid in the
manner elected by the Participant's Beneficiary, but at least as
rapidly as was the method of distribution being used prior to the
Participant's death;
(4) If upon the Participant's death, whether before or after
distribution has been made, any amount is distributable to an entity
other than a natural person, such distribution shall be made within
five years after the Participant's death; and
(5) Notwithstanding any other provision herein, all
distributions shall be made in accordance with both the minimum
distribution requirements and the minimum distribution incidental
benefit requirements of proposed Treasury Regulations under section
401(a)(9) of the Code.
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(d) Notwithstanding any provision of the Plan to the contrary,
a Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have the entire amount of an Eligible Rollover Distribution
(as defined in subsection (e)) that is $200 or greater paid directly to an
Eligible Retirement Plan (as defined in subsection (e)) specified by the
Distributee in a Direct Rollover (as defined in subsection (e)). If the amount
of the Eligible Rollover Distribution is greater than $500, the Distributee may
elect to have a portion of such total amount paid directly to an Eligible
Retirement Plan with the balance paid to the Distributee, provided that the
portion transferred to the Eligible Retirement Plan is an amount not less than
$500. No earlier than 90 days before an Eligible Rollover Distribution is to
commence, the Plan Administrator shall provide the Distributee with a written
explanation of the Distributee's right to elect a Direct Rollover of the
distribution, the tax withholding consequences of the Distributee's distribution
options, the tax consequences of a rollover to an Eligible Retirement Plan, and
the Distributee's right to consider his or her distribution options for a period
of at least 30 days after receiving the notice. If the Distributee, after
receiving such notice, affirmatively elects a distribution option, then the
distribution to such Distributee or the Direct Rollover on such distributee's
behalf may be made as soon as practicable following such election. If, however,
the Distributee fails to make such an affirmative election, the distribution may
not commence until 30 days after the notice was provided to such Distributee,
subject to the consent requirement in paragraph (1) of Section 10.3(c).
(e) For purposes of subsection (d) of this Section, the
following definitions shall apply:
(i) An "Eligible Rollover Distribution" is any
distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include 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; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion
of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) An "Eligible Retirement Plan" is an individual
retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of
the Code, an annuity plan described in section 403(a) of the
Code, an annuity plan described in section 403(a) of the Code,
or a qualified trust described in section 401(a) of the Code,
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to
the Participant's surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual
retirement annuity.
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(iii) A "Direct Rollover" is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
Section 10.4. Investment of Distributee Accounts. If
distribution of the amount to which a Distributee becomes entitled is made later
than 60 days following the Valuation Date as of which the adjusted balances of
the Participant's accounts are determined pursuant to Section 10.2, the
undistributed balance of such amount shall be credited, as of such Valuation
Date, to a Distributee Account established and maintained in the name of the
Distributee entitled to receive the same. The balance so credited to such
account shall be invested in the Trust Fund, in accordance with the investment
elections of the Participant in respect of whom such distribution is made that
were on file with the Plan Administrator as of the date that such Participant
terminated service with the Employers. For purposes of the account adjustments
prescribed in Section 8.5, but not for the purpose of the allocation of
contributions under Section 7.2, a Distributee for whom a Distributee Account is
established shall be deemed to be a Participant and such account shall be deemed
to be a Participant's account. For purposes of Section 8.5 the balance of such
account shall be deemed to be the balance of such account immediately prior to
the date of the adjustment pursuant to Section 8.5.
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Section 10.5. Designation of Beneficiary. Each Participant
shall have the right to designate a Beneficiary or Beneficiaries (who may be
designated contingently or successively and that may be an entity other than a
natural person) to receive any distribution upon the death of such Participant
or, in the case of a Participant who dies subsequent to the termination of his
or her employment but prior to the distribution of the entire amount to which
the Participant is entitled under the Plan, any undistributed balance of the
Participant's accounts, provided, however, that no such designation (or change
thereof) shall be effective if the Participant was married on the date of the
Participant's death unless such designation (or change thereof) was consented to
at the time of such designation (or change thereof) by the person who was the
Participant's spouse during such period, in writing, acknowledging the effect of
such consent and witnessed by a notary public or a Plan representative, or it is
established to the satisfaction of the Plan Administrator that such consent
could not be obtained because the Participant's spouse cannot be located or such
other circumstances as may be prescribed in regulations promulgated by the
Treasury Department. Subject to the preceding sentence, a Participant may from
time to time, without the consent of any Beneficiary, change or cancel any such
designation. Such designation and each change therein shall be made in the form
prescribed by the Plan Administrator and shall be filed with the Plan
Administrator. If (i) no Beneficiary has been effectively named or (ii) the
designated Beneficiary has predeceased the Participant, any undistributed
balance of the deceased Participant shall be distributed by the Trustee at the
direction of the Plan Administrator (a) to the surviving spouse of such deceased
Participant, if any, or (b) if there is no surviving spouse, to the surviving
children of such deceased Participant, if any, in equal shares, or (c) if there
is no surviving spouse or surviving children, to the surviving parents of such
deceased Participant, if any, in equal shares, or (d) if there is no surviving
spouse, surviving children or surviving parents, to the executor or
administrator of the estate of such deceased Participant, or (e) if no executor
or administrator has been appointed for the estate of such deceased Participant
within six months following the date of the Participant's death, in equal shares
to the person or persons who would be entitled under the intestate succession
laws of the state of the Participant's domicile to receive the Participant's
personal estate. The marriage of a Participant shall be deemed to revoke any
prior designation of a Beneficiary made by such Participant and a divorce shall
be deemed to revoke any prior designation of the Participant's divorced spouse
if written evidence of such marriage or divorce has been made in accordance with
such designation. If within a period of three years following the death or other
termination of employment of any Participant the Plan Administrator in the
exercise of reasonable diligence has been unable to locate the person or persons
entitled to benefits under this Article 10, the rights of such person or persons
shall be forfeited, PROVIDED, HOWEVER, that the Plan shall reinstate and pay to
such person or persons the amount of the benefits so forfeited upon a claim for
such benefits made by such person or persons. The amount to be so reinstated
shall be obtained from the total amount that shall have been forfeited pursuant
to Section 10.2 during the Plan Year that the claim for such forfeited benefit
is made. If the amount to be reinstated exceeds the amount of such forfeitures,
the Employer in respect of whose Employee the claim for forfeited benefit is
made shall make a contribution in an amount equal to the remainder of such
excess. Any such contribution shall be made without regard to whether or not the
limitations set forth in Section 4.6 will be exceeded by such contribution.
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Section 10.6. Distributions to Minor and Disabled
Distributees. Any distribution under this Article that is payable to a
Distributee who is a minor or to a Distributee who, in the opinion of the
Committee, is unable to manage his or her affairs by reason of illness or mental
incompetency may be made to or for the benefit of any such Distributee at such
time consistent with the provisions of Section 10.3 and in such of the following
ways as the legal representative of such Distributee shall direct: (a) directly
to any such minor Distributee if, in the opinion of such legal representative,
the Distributee is able to manage his or her affairs, (b) to such legal
representative, (c) to a custodian under a Uniform Gifts to Minors Act for any
such minor Distributee, or (d) to some near relative of any such Distributee to
be used for the latter's benefit. Neither the Committee nor the Trustee shall be
required to see to the application by any third party other than the legal
representative of a Distributee of any distribution made to or for the benefit
of such Distributee pursuant to this Section.
ARTICLE 11
SPECIAL PARTICIPATION AND DISTRIBUTION RULES
Section 11.1. Change of Employment Status and Transfers from
Affiliates. If an individual who is not a Participant becomes eligible to
participate because of a change in his or her employment status or a transfer
from the employ of an Affiliate which is not an Employer, such individual shall
become a Participant as of the date of such change if the individual has
satisfied the age and eligibility service requirements set forth in Section 3.1;
otherwise the individual shall become a Participant in accordance with Section
3.1 following satisfaction of the age and service requirements.
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Section 11.2. Reemployment of an Eligible Employee Whose
Employment Terminated Prior to Becoming a Participant. (a) If an Eligible
Employee whose employment terminated before the Employee had satisfied the age
and eligibility service requirements set forth in Section 3.1 is reemployed by
an Employer, such Employee shall be eligible to become a Participant in
accordance with Section 3.1.
(b) If an Eligible Employee whose employment terminated after
he or she had satisfied the age and eligibility service requirements set forth
in Section 3.1 but prior to becoming a Participant is reemployed by an Employer,
the Eligible Employee shall not be required to satisfy again such requirements
and shall be eligible to become a Participant upon the first Entry Date
coinciding with or next following the date of reemployment.
Section 11.3. Reemployment of a Terminated Participant. (a) If
a Participant (or former Participant) whose employment with an Employer was
terminated is reemployed by an Employer, the Participant (or former Participant)
shall not be required to satisfy again the age and eligibility service
requirements set forth in Section 3.1 and shall be eligible to receive
allocations of Employer Discretionary Contributions pursuant to Section 4.1,
elect Salary Reduction Contributions pursuant to Section 4.2, and receive
Employer Matching Contributions pursuant to Section 4.4 upon the first Entry
Date coinciding with or next following the date of reemployment, except that if
the Participant's employment was terminated by reason of a layoff with recall
rights under his or her Employer's policies and procedures, then such
Participant shall be eligible to make such elections and receive such
allocations upon the date of his or her reemployment.
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(b) If a terminated Participant is reemployed prior to
incurring five consecutive Break-in-Service Years, thereafter completes a Year
of Service before incurring five consecutive Break-in-Service Years, and at or
after termination of employment a portion or all of such Participant's Employer
Discretionary Contribution Account and Employer Matching Contribution Account
was forfeited, but such Participant did not receive or commence to receive a
distribution pursuant to Section 10.2, then an amount equal to the portion of
such accounts that was forfeited shall be credited to such Participant's
accounts as of the close of the Plan Year in which the Participant completes
such Year of Service, but after making the allocations required by Section 7.2
for such Plan Year. If upon termination of employment any such Participant
received a lump-sum distribution, then the Participant shall have the right to
pay an amount equal to such distribution to the Trustee. If the Participant
makes such a payment, then an amount equal to the portion of any Employer
Discretionary Contribution Account and Employer Matching Contribution Account
that was forfeited shall be credited, along with such payment, to the
Participant's Employer Discretionary Contribution Account and Employer Matching
Contribution Account as of the close of the Plan Year in which such payment is
made, but after making the allocations required by Section 8.5 for such Plan
Year. Any such payment must be made by the fifth anniversary of the
Participant's date of reemployment. If pursuant to this paragraph the forfeited
portions of a Participant's Employer Discretionary Contribution Account and
Employer Matching Contribution Account are to be restored, the amount restored
shall be obtained from the total amount that has been forfeited pursuant to
Section 10.2 during the Plan Year in which such Participant is reemployed or the
Plan Year in which such Participant makes the payment set forth above, as the
case may be, from the accounts of Participants employed by the same Employer as
the reemployed Participant. If the aggregate amount to be so restored to the
accounts of Participants who are employees of a particular Employer exceeds the
amount of such forfeitures, such Employer shall make a contribution in an amount
equal to such excess.
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Section 11.4. Employment by Related Entities. If an individual
is employed by an Affiliate, then the individual's employment with the Affiliate
shall be taken into account under the Plan solely for the purposes of
determining whether and when such individual is eligible to participate in the
Plan under Article 3, measuring such individual's Years of Service and when such
individual has retired or otherwise terminated employment for purposes of
Article 10 to the same extent it would have been had such period of employment
been as an Employee of his or her Employer. Notwithstanding the previous
sentence, if a Participant is transferred to an Affiliate which is not an
Employer, the Participant shall continue to be a Participant for all purposes
under the Plan, except for Articles 4, 5 and 8 and Section 7.2.
Section 11.5. Leased Employees. If an individual who performed
services as a leased employee (within the meaning of section 414(n)(2) of the
Code) of an Employer or an Affiliate becomes an Employee, or if an Employee
becomes such a leased employee, then any period during which the individual
performed services as a leased employee shall be taken into account solely for
the purposes of determining whether and when such individual is eligible to
participate in the Plan under Article 3, measuring such individual's Years of
Service and determining when such individual has retired or otherwise terminated
his or her employment for purposes of Article 10 to the same extent it would
have been had such service been as an Employee. Notwithstanding the previous
sentence, this Section shall not apply to any period of service during which
such a leased employee was covered by a plan described in section 414(n)(5) of
the Code.
Section 11.6. Reemployment of Veterans. The provisions of this
Section shall apply in the case of the reemployment by an Employer of an
Eligible Employee, within the period prescribed by USERRA, after the Eligible
Employee's completion of a period of Military Service. The provisions of this
Section are intended to provide such Employees with the rights required by
USERRA and section 414(u) of the Code and shall be interpreted in accordance
with such intent.
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(a) Make Up of Salary Reduction Contributions. Such Employee
shall be entitled to make contributions under the Plan in addition to
any Salary Reduction Contributions which the Employee elects to have
made under the Plan pursuant to Section 4.2 (such contributions
referred to herein as "Make Up Deferrals"). From time to time while
employed by an Employer, such Employee may elect to make such Make Up
Deferrals during the period beginning on the date of such Employee's
reemployment and ending on the earlier of:
(i) the end of the period equal to the product of
three and such Employee's period of qualified military
service, and
(ii) the 5th anniversary of the date of such
reemployment.
Such Employee shall not be permitted to contribute Make Up Deferrals to
the Plan in excess of the amount which the Employee could have elected
to have made under the Plan in the form of voluntary savings
contributions or deferred compensation contributions, as the case may
be, if the Employee had continued in employment with his Employer
during such period of Military Service. Such Employee shall be deemed
to have earned "Compensation" from his Employer during such period of
Military Service for this purpose in the amount prescribed by sections
414(u)(2)(B) and 414(u)(7) of the Code. The manner in which an Employee
may elect to make Make Up Deferrals pursuant to this subsection (a)
shall be prescribed by the Committee.
(b) Make Up of Matching Contributions. An Employee who makes
Make Up Deferrals as described in subsection (a) shall be entitled to
an allocation of Employer Matching Contributions ("Make Up Matching
Contributions") in an amount equal to the amount of Employer Matching
Contributions which would have been allocated to the Employer Matching
Contributions Account of such Employee under the Plan if such Make Up
Deferrals had been made in the form of deferred compensation
contributions during the period of such Employee's Military Service.
The Employee's Employer shall make a special contribution to the Plan
which shall be utilized solely for purposes of such allocation.
Any contributions made by an Employee or an Employer pursuant to this Section on
account of a period of Military Service in a prior Plan Year shall not be
subject to the limitations prescribed by Sections 4.3, 4.6 and 7.3 of the Plan
(relating to sections 402(g), 404 and 415 of the Code, respectively) for the
Plan Year in which such contributions are made. The Plan shall not be treated as
failing to satisfy the nondiscrimination rules of Section 4.5 of the Plan
(relating to sections 401(k)(3) and 401(m) of the Code) for any Plan Year solely
on account of any Make Up Deferrals or Make Up Matching Contributions made on
behalf of an Employee pursuant to this Section.
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ARTICLE 12
ADMINISTRATION
Section 12.1. The Committee. (a) The Company shall be a "named
fiduciary" within the meaning of such term as used in ERISA. The Board of
Directors shall appoint a Committee consisting of three or more members, which
shall be responsible (except for duties specifically vested in the Trustee or
delegated by the Committee to any investment manager for the Trust) for the
operation and administration of the Plan.
(b) The Board of Directors shall have the right at any time,
with or without cause, to remove any member of the Committee. A member of the
Committee may resign and his or her resignation shall be effective upon delivery
of his or her written resignation to the Committee and to the Company. Upon the
resignation, removal or failure or inability for any reason of any member of the
Committee to act hereunder, the Board of Directors shall appoint a successor
member or members. All successor members of the Committee shall have all the
rights, privileges and duties of their predecessors.
(c) Any member of the Committee may, but need not, be an
employee or a director, officer or shareholder of any of the Employers, and such
status shall not disqualify him or her from taking action hereunder or render
him or her accountable for any distribution or other material advantage received
by him or her under the Plan, provided that no member of the Committee who is a
Participant shall take part in any action of the Committee or any matter
involving solely his or her rights under the Plan.
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(d) Promptly after the appointment of the original members of
the Committee and from time to time thereafter, and promptly after the
appointment of any successor member of the Committee, the Trustee shall be
notified as to the names of the persons appointed as members or successor
members of the Committee by delivery to the Trustee of a certified copy of the
resolution of the board of directors of the Company making such appointment.
(e) The Committee shall have the duty and authority to
interpret and construe the terms of the Plan, including, but not limited to, all
questions of eligibility, the status and rights of Participants, Beneficiaries,
Distributees, and other persons under the Plan, and the manner, time, and amount
of payment of any distributions under the Plan. Any interpretation or
construction of the Plan by the Committee pursuant to this Section shall be
final and binding on Participants, Beneficiaries and all other concerned
parties. Each Employer shall, from time to time, upon request of the Committee,
furnish to the Committee such data and information as the Committee shall
require in the performance of its duties.
(f) The Committee shall direct the Trustee to make payments of
amounts to be distributed from the Trust under Article 10.
(g) The Committee shall supervise the collection of
Participants' contributions and the delivery of such amounts to the Trustee.
(h) The members of the Committee may allocate their
responsibilities among themselves and may designate any person, partnership or
corporation to carry out any of their responsibilities. Any such allocation or
designation shall be reduced to writing and such writing shall be kept with the
records of the meetings of the Committee.
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(i) The Committee may act at a meeting, or by writing without
a meeting, by the vote or written assent of a majority of its members. The
Committee shall elect from its members a chairman and a secretary and keep the
Trustee advised of the identity of the members holding those offices. The
secretary shall keep records of all meetings of the Committee, and forward all
necessary communications to the Trustee. The Committee may adopt such rules and
procedures as it deems desirable for the conduct of its affairs and the
administration of the Plan, provided that any such rules and procedures shall be
consistent with the provisions of the Plan and ERISA. The Company shall be the
Plan's agent for service of legal process.
(j) The members of the Committee, and each of them, shall
discharge their duties with respect to the Plan (i) solely in the interest of
the Participants and Beneficiaries, (ii) for the exclusive purpose of providing
benefits to Participants and their Beneficiaries and of defraying reasonable
expenses of administering the Plan and (iii) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The Employers hereby
indemnify the members of the Committee, and each of them, from the effects and
consequences of their acts, omissions and conduct in their official capacity,
except to the extent that such effects and consequences shall result from their
own willful misconduct. The portion of the cost of any indemnity to be borne by
an Employer shall be determined by the Company in its sole discretion.
(k) No member of the Committee shall receive any compensation
or fee for his or her services, unless otherwise agreed between such member of
the Committee and the Company, but the Company shall reimburse the Committee
members for any necessary expenditures incurred in the discharge of their duties
as Committee members.
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(l) The Committee may employ such counsel (who may be counsel
for any Employer) and agents and may arrange for such clerical and other
services as it may require in carrying out the provisions of the Plan. The
Committee shall have the sole authority to appoint, remove, and determine the
duties vested in any investment manager for the Trust.
Section 12.2. Plan Administrator. (a) The Committee shall
appoint a Plan Administrator who may but need not be a Participant, or a
director, officer, employee or shareholder of any of the Employers, and such
status shall not disqualify him or her from taking any action hereunder or
render such person accountable for any distribution or other material advantage
received by him or her under the Plan, provided that he or she shall not take
any part in any action or matter involving solely his or her rights under the
Plan.
(b) The Plan Administrator shall be responsible for the daily
operation of the Plan within the policies, interpretations and rules made by the
Committee. The Plan Administrator shall also perform such ministerial functions
with respect to the Plan as the Committee shall from time to time designate.
(c) The Employers hereby indemnify the Plan Administrator from
the effects and consequences of his or her acts, omissions and conduct in his or
her official capacity, except to the extent such effects and consequences shall
result from his or her willful misconduct. The portion of the cost of any
indemnity to be borne by an Employer shall be determined by the Company in its
sole discretion.
(d) The Plan Administrator shall not receive any compensation
or fee for his or her services unless otherwise agreed between the Plan
Administrator and the Company, but the Company shall reimburse the Plan
Administrator for any necessary expenditures incurred in the discharge of his or
her duties.
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(e) Promptly after the appointment of the Plan Administrator
and from time to time thereafter, and promptly after the appointment of any
successor Plan Administrator, the Trustee shall be notified as to the name or
names of the persons appointed as Plan Administrator by delivery to the Trustee
of a written notice from the Committee making such appointment.
Section 12.3. Claims Procedure. If any Participant or
Distributee believes he or she is entitled to benefits in an amount greater than
those which he or she is receiving or has received, the Participant or
Distributee may file a claim with the Plan Administrator. Such a claim shall be
in writing and state the nature of the claim the facts supporting the claim, the
amount claimed, and the address of the claimant. The Plan Administrator shall
review the claim and, unless special circumstances require an extension of time,
within 90 days after receipt of the claim, give written notice by registered or
certified mail to the claimant of its decision with respect to the claim. If
special circumstances require an extension of time, the claimant shall be so
advised in writing within the initial 90-day period and in no event shall such
an extension exceed 90 days. The notice of the decision of the Plan
Administrator with respect to the claim shall be written in a manner calculated
to be understood by the claimant and, if the claim is wholly or partially
denied, set forth the specific reasons for the denial, specific references to
the pertinent Plan provisions on which the denial is based, a description of any
additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is necessary, and
an explanation of the claim review procedure under the Plan. The Plan
Administrator shall also advise the claimant that the claimant or the claimant's
duly authorized representative may request a review by the Committee of the
denial by filing with the Committee a written request for a review within 60
days after notice of the denial has been received by the claimant. The claimant
shall be informed that he or she may have reasonable access to pertinent
documents and submit comments in writing to the Committee within the same 60-day
period. If a request is so filed, the Committee shall review the denial within
60 days after receipt of such request unless special circumstances require an
extension of time, and the claimant shall be given written notice of the
Committee's final decision. If special circumstances require an extension of
time, the claimant shall be so advised in writing within the initial 60-day
period and in no event shall such an extension exceed 60 days. The notice of the
Committee's final decision shall include specific reasons for the decision and
specific references to the pertinent Plan provisions on which the decision is
based and shall be written in a manner calculated to be understood by the
claimant.
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Section 12.4. Procedures for Domestic Relations Orders. If the
Plan Administrator or Committee receives any written judgment, decree or order
(including approval of a property settlement agreement) pursuant to domestic
relations or community property laws of any state relating to the provision of
child support, alimony or marital property rights of a spouse, former spouse,
child or other dependent of a Participant and purporting to provide for the
payment of all or a portion of the Participant's benefit under the Plan to or on
behalf of one or more of such persons (such judgment, decree or order being
hereinafter called a "domestic relations order"), the Plan Administrator shall
promptly notify the Participant and each other payee specified in such domestic
relations order of its receipt and of the following procedures. After receipt of
a domestic relations order, the Plan Administrator shall determine whether such
order constitutes a "qualified domestic relations order" and shall notify the
Participant and each payee named in such order in writing of its determination.
The notice shall be written in a manner calculated to be understood by the
parties and, if the Plan Administrator determines the domestic relations order
is not a qualified domestic relations order, the notice shall set forth specific
reasons for the Plan Administrator's determination, and shall contain an
explanation of the review procedure under the Plan. The Plan Administrator shall
also advise each party that the party or the party's duly authorized
representative may request a review of the Plan Administrator's determination by
filing a written request for such review. The Plan Administrator shall give each
party affected by such a request notice of the request. Each party also shall be
informed that he or she (i) may have reasonable access to pertinent documents
and (ii) submit comments in writing to the Committee in connection with such
request for review. Each party shall be given written notice of the Committee's
final determination, which notice shall be written in a manner calculated to be
understood by the parties and shall include specific reasons for such final
determination. Any amounts subject to a domestic relations order which would be
payable to the alternate payee prior to a determination that such order is a
qualified domestic relations order shall be separately accounted for and not
distributed prior to such determination. If within 18 months after receipt of
written evidence of such order by the Plan Administrator it is determined that
such domestic order constitutes a qualified domestic relations order, the
amounts so separately accounted for (plus any interest thereon) shall be paid to
the alternate payee. If within such 18-month period it is determined that such
order does not constitute a qualified domestic relations order, the amounts so
separately accounted for (plus any interest thereon) shall be paid to such other
persons, if any, entitled to such amounts at such time. Unless otherwise
required by law, the Committee shall establish the time periods in which the
Plan Administrator's determination regarding the status of a qualified domestic
relations order, a request for review thereof and the resulting review thereof
shall be made, provided that the total of such time periods shall not be longer
than 18 months from the date written evidence of a domestic relations order is
received by the Plan Administrator. The duties of the Plan Administrator under
this Section may be delegated by the Plan Administrator to one or more persons
other than the Plan Administrator.
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Section 12.5. Notices to Participants, etc. All notices,
reports and statements given, made, delivered or transmitted to a Participant or
distributee or any other person entitled to or claiming benefits under the Plan
shall be deemed to have been duly given, made or transmitted when mailed by
first class mail with postage prepaid and addressed to the Participant or
distributee or such other person at the address last appearing on the records of
the Committee. A Participant or distributee or other person may record any
change of address from time to time by written notice filed with the Committee.
Section 12.6. Notices to Committee. Written directions,
notices and other communications to the Committee from a Participant or
distributee or any other person entitled to or claiming benefits under the Plan
shall be deemed to have been duly given, made or transmitted either when
delivered to such location as shall be specified upon the forms prescribed by
the Committee for the giving of such directions, notices and other
communications or when mailed by first class mail with postage prepaid and
addressed to the addressee at the address specified upon such forms.
Section 12.7. Records. The Committee shall keep a record of
all of its proceedings and shall keep or cause to be kept all books of account,
records and other data as may be necessary or advisable in its judgment for the
administration of the Plan.
Section 12.8. Reports of Trustee and Accounting to
Participants. The Plan Administrator shall keep on file, in such form as it
shall deem convenient and proper, all reports concerning the Trust Fund received
by it from the Trustee or its delegate, and the Plan Administrator shall, as
soon as possible after the close of each Plan Year, advise each Participant and
Beneficiary of the balance credited to any account for his or her benefit as of
the close of such Plan Year pursuant to Section 8.6 hereof.
ARTICLE 13
PARTICIPATION BY OTHER EMPLOYERS
Section 13.1. Adoption of Plan. Any Affiliate may elect, with
the consent of the Board of Directors, to become an Employer under the Plan and
Trust by adopting the Plan for the benefit of the Employer's Eligible Employees,
effective as of the date specified in such adoption, and
(a) by filing with the Company a certified copy of a
resolution of the Employer's board of directors to that effect, and
such other instruments as the Company may require; and
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(b) by the Company's filing with the Trustee a copy of such
resolution, together with a certified copy of resolutions of the Board
of Directors approving such adoption.
The adoption resolution shall become, as to such adopting Affiliate, a part of
the Plan as then amended or thereafter amended and the related Trust. It shall
not be necessary for the adopting Affiliate to sign or execute the original or
then amended Plan and Trust documents. The effective date of the Plan for any
such adopting Affiliate shall be that stated in the resolution of adoption, and
from and after such effective date, such adopting Affiliate shall assume all the
rights, obligations, and liabilities of an Employer hereunder and under the
Trust agreement. The administrative powers and control of the Company, as
provided in the Plan and the Trust agreement, including the sole right to
amendment, and of appointment and removal of Committee members, the Trustee, and
their successors, shall not be diminished by reason of the participation of any
such adopting Affiliate in the Plan and Trust.
Section 13.2. Withdrawal from Participation. Any Employer may
withdraw from participation in the Plan at any time by filing with the Committee
a duly certified copy of a resolution of the Employer's board of directors to
that effect and giving notice thereof to the Board of Directors, the Committee,
the other Employers and the Trustee at least 90 days prior to the effective date
of withdrawal, provided the Board of Directors consents to such withdrawal.
Section 13.3. Company as Agent for Employers. Each Affiliate
that becomes a participating Employer pursuant to Section 13.1 or Article 14
shall be deemed to have appointed the Company its agent to exercise on its
behalf all of the powers and authorities hereby conferred upon the Company by
the terms of the Plan, including, but not by way of limitation, the power to
amend and terminate the Plan. The authority of the Company to act as such agent
shall continue unless and until the portion of the Trust Fund held for the
benefit of Employees of the particular Employer and their Beneficiaries is set
aside in a separate Trust Fund as provided in Section 17.2.
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ARTICLE 14
CONTINUANCE BY A SUCCESSOR
In the event that an Employer is reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that another entity succeeds
to all or substantially all of the Employer's business, such successor entity
may be substituted for the Employer under the Plan and be substituted for the
Employer as a party to the Trust agreement by adopting the Plan and becoming a
party to the Trust agreement; PROVIDED, HOWEVER, that any entity that becomes a
successor entity to the Company in connection with the Agreement and Plan of
Recapitalization and Merger dated as of February 17, 1998 between HB Acquisition
Corporation and the Company shall be deemed to have elected to become a
participating Employer under the Plan and Trust effective as of the date such
entity becomes a successor entity to the Company. Contributions by the Employer
shall be automatically suspended from the effective date of any such
reorganization until the date upon which the substitution of such successor
entity for the Employer under the Plan becomes effective. If, within 90 days
following the effective date of any such reorganization, any successor entity
shall not have become a party to the Plan, or if the Employer adopts a plan of
complete liquidation other than in connection with a reorganization, the Plan
shall be automatically terminated with respect to employees of such Employer as
of the close of business on the 90th day following the effective date of such
reorganization or as of the close of business on the date of adoption of such
plan of complete liquidation, as the case may be, and the Committee shall direct
the Trustee to distribute the portion of the Trust Fund applicable to such
Employer in the manner provided in Article 17.
If such successor entity is substituted for an Employer as
described above, then, for all purposes of the Plan, employment of an Employee
with such Employer, including service with and compensation paid by such
Employer, shall be considered to be employment with such Employer.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Expenses. All costs and expenses incurred in
administering the Plan and the Trust, including the expenses of the Plan
Administrator or Committee, the fees of counsel and any agents for the Plan
Administrator or Committee, the fees and expenses of the Trustee and the fees of
counsel for the Trustee and other administrative expenses, shall be paid by the
Trustee from the Trust Fund to the extent such expenses are not paid by the
Employers, PROVIDED, HOWEVER, that the Committee may determine that the accounts
of Participants who choose not to take a distribution upon termination of
employment may be charged for any and all costs and expenses to maintain their
accounts and Participants who request a loan pursuant to Section 10.1 may be
charged a reasonable loan processing fee pursuant to Section 10.1(b)(6). The
Company, in its sole discretion, shall determine the portion of costs and
expenses that are to be borne by each Employer.
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Section 15.2. Non-Assignability. (a) In General. It is a
condition of the Plan, and all rights of each Participant and Beneficiary shall
be subject thereto, that no right or interest of any Participant or Beneficiary
shall be assignable or transferable in whole or in part, either directly or by
operation of law or otherwise, including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge or bankruptcy, but excluding
devolution by death or mental incompetency, and no right or interest of any
Participant or Beneficiary shall be liable for, or subject to, any obligation or
liability of such Participant or Beneficiary, including claims for alimony or
the support of any spouse, except as provided in Section 15.2(b).
(b) Exception for Qualified Domestic Relations Orders.
Notwithstanding any provision of the Plan to the contrary, if a Participant's
account balances under the Plan, or any portion thereof, are the subject of one
or more qualified domestic relations orders, such account balances or portion
thereof shall be paid to the person and at the time and in the manner specified
in any such order. A "qualified domestic relations order" shall mean any
"domestic relations order" as defined in Section 12.4 that creates (or
recognizes the existence of) or assigns to a person other than the Participant
(an "alternate payee") rights to all or a portion of the Participant's account
balance under the Plan, and:
(A) clearly specifies the following:
(i) the name and last known mailing address (if any) of the
Participant and each alternate payee covered by such order,
(ii) the amount or percentage of the Participant's benefits to
be paid by the Plan to each such alternate payee, or the manner in
which such amount or percentage is to be determined,
(iii) the number of payments to, or period of time for which,
such order applies, and
(iv) each plan to which such order applies; but
(B) does not require any of the following:
(i) the Plan to provide any type or form of benefit or any
option not otherwise provided under the Plan at the time such order is
issued,
(ii) the Plan to provide increased benefits (determined on the
basis of actuarial equivalence),
(iii) the payment of benefits to an alternate payee that at
the time such order is issued already are required to be paid to a
different alternate payee under a prior qualified domestic relations
order; or
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(iv) the commencement of payments to any alternate payee
before the earlier of (I) the earliest date as of which the Participant
is entitled to a distribution under the Plan and (II) the first day of
the month coincident with or next following the Participant's 50th
birthday;
all as determined by the Plan Administrator pursuant to the procedures contained
in Section 12.4. Any amounts subject to a domestic relations order prior to
determination of its status as a qualified domestic relations order that but for
such order would be paid to the Participant shall be segregated in a separate
account or an escrow account pending such determination. If within the 18-month
period beginning with the date on which the first payment would be required to
be made under a domestic relations order the Plan Administrator or Committee
determines that the domestic relations order constitutes a qualified domestic
relations order, the amount so segregated (plus any interest thereon) shall be
paid to the alternate payee. If such determination is not made within such
18-month period, then the amount so segregated (plus any interest thereon),
shall, as soon as practicable after the end of such 18-month period, be paid to
the Participant. Any determination regarding the status of such order after such
18-month period shall be applied only to payments on or after the date of such
determination.
Section 15.3. Employment Non-Contractual. The Plan confers no
right upon an Employee to continue in employment with an Employer.
Section 15.4. Limitation of Rights. A Participant or
Distributee shall have no right, title or claim in or to any specific asset of
the Trust Fund, but shall have the right only to distributions from the Trust
Fund on the terms and conditions herein provided.
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Section 15.5. Merger or Consolidation with Another Plan. A
merger or consolidation with, or transfer of assets or liabilities to, any other
plan shall not be effected unless the terms of such merger, consolidation or
transfer are such that each Participant, distributee, Beneficiary or other
person entitled to receive benefits from the Plan would, if the Plan were to
terminate immediately after the merger, consolidation or transfer, receive a
benefit equal to or greater than the benefit such person would be entitled to
receive if the Plan were to terminate immediately before the merger,
consolidation, or transfer.
Section 15.6. Applicable Law. The Plan and all rights
hereunder shall be governed by and construed in accordance with the laws of the
State of Illinois to the extent such laws are preempted by federal law.
Section 15.7. Severability. If a provision of the Plan shall
be held illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included in the Plan.
Section 15.8. No Guarantee. None of the Committee, the Plan
Administrator, the Trustee nor any of the Employers in any way guarantees the
Trust from loss or depreciation nor the payment of any money that may be or
become due to any person from the Trust Fund. Nothing herein contained shall be
deemed to give any Participant, Distributee, or Beneficiary an interest in any
specific part of the Trust Fund or any other interest except the right to
receive benefits out of the Trust Fund in accordance with the provisions of the
Plan and the Trust.
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ARTICLE 16
TOP-HEAVY PLAN REQUIREMENTS
Section 16.1. Top-Heavy Plan Determination. If as of the
determination date (as hereinafter defined) for any Plan Year (a) the sum of the
account balances under the Plan and all other defined contribution plans in the
aggregation group (as defined below) and (b) the present value of accrued
benefits under all defined benefit plans in such aggregation group of all
Participants in such plans who are key employees (as defined in section 416(i)
of the Code) for such Plan Year exceeds 60% of the aggregate of the account
balances and present value of accrued benefits of all Participants in such plans
as of the determination date (as hereinafter defined), then the Plan shall be a
top-heavy plan for such Plan Year, and the requirements of Sections 16.3 and
16.4 shall be applicable for such Plan Year as of the first day thereof. If the
Plan is a top-heavy plan for any Plan Year and is not a top-heavy plan for any
subsequent Plan Year, the requirements of this Article 16 shall not be
applicable for such subsequent Plan Year except to the extent provided in
Section 16.4.
Section 16.2. Definitions and Special Rules. (a) Definitions.
For purposes of this Article 16, the following definitions set forth below shall
apply.
(1) Determination Date. The determination date for
all plans in the aggregation group shall be the last day of
the preceding Plan Year, and the valuation date applicable to
a determination date shall be (i) in the case of a defined
contribution plan, the date as of which account balances are
determined that is coinciding with or immediately precedes the
determination date, and (ii) in the case of a defined benefit
plan, the date as of which the most recent actuarial valuation
for the Plan Year that includes the determination date is
prepared, except that if any such plan specifies a different
determination or valuation date, such different date shall be
used with respect to such plan.
(2) Aggregation Group. The aggregation group shall
consist of (a) each plan of an Employer in which a key
Employee is a Participant, (b) each other plan that enables
such a plan to be qualified under section 401(a) of the Code,
and (c) any other plans of an Employer that the Company
designates as part of the aggregation group.
(3) Key Employee. Key Employee shall have the meaning
set forth in section 416(i) of the Code.
(4) Compensation. Compensation shall have the meaning
set forth in U.S. Treasury Department regulation section
1.415-2(d).
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(b) Special Rules. For the purpose of determining the accrued
benefit or account balances of a Participant, any person who received a
distribution from a plan (including a plan that has terminated) in the
aggregation group during the five-year period ending on the last day of the
preceding Plan Year shall be treated as a Participant in such plan, and any such
distribution shall be included in such Participant's account balance or accrued
benefit, as the case may be.
Section 16.3. Minimum Contribution for Top-Heavy Years.
Notwithstanding any provision of the Plan to the contrary, the sum of the
contributions under Article 4 allocated during any Plan Year to the accounts of
each Participant (other than a key employee as defined in section 416(i) of the
Code) and the forfeitures allocated to such Participant pursuant to Section 7.2
during any Plan Year for which the Plan is a top-heavy plan shall in no event be
less than the lesser of (i) three percent of such Participant's compensation (as
defined under section 415 of the Code) during such Plan Year and (ii) the
highest percentage at which contributions are made on behalf of any key employee
(as defined in section 416(i) of the Code) for such Plan Year. Such minimum
contribution shall be made even if, under other provisions of the Plan, the
Participant would not otherwise be entitled to receive an allocation or would
receive a lesser allocation for the year because of (i) the Participant's
failure to complete 1,000 hours of service, or (ii) compensation of less than a
stated amount. The percentage referred to in clause (ii) of the first sentence
of this Section shall be obtained by dividing the aggregate of contributions
made pursuant to Article 4 and pursuant to any other defined contribution plan
that is required to be included in the aggregation group (other than a defined
contribution plan that enables a defined benefit plan that is required to be
included in such group to be qualified under section 401(a) of the Code) during
the Plan Year on behalf of such key employee by such key employee's compensation
for the Plan Year.
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Section 16.4. Top-Heavy Vesting Requirements. Notwithstanding
any provision of the Plan to the contrary, if a Participant's termination of
employment occurs during a Plan Year for which a plan is a top-heavy plan, the
Participant shall be entitled to receive, if more beneficial than otherwise
provided under the Plan, an amount determined by multiplying such Participant's
account balance determined under Section 10.2 by the percentage set forth in the
table below opposite the number of the Participant's Years of Service.
Years of Service Percentage Vested
---------------- -----------------
at least 2 but less than 3 20%
at least 3 but less than 4 40%
at least 4 but less than 5 60%
at least 5 but less than 6 80%
6 or more 100%
If a Participant's termination of employment occurs during a Plan Year for which
the Plan is not a top-heavy plan but after the Plan has been a top-heavy plan
for any Plan Year, such Participant shall be entitled to not less than the
balance of his or her account determined under Section 10.2 multiplied by the
percentage set forth above opposite the number of the Participant's Years of
Service as of the end of the last Plan Year for which the Plan was a top-heavy
plan, and, if at such time such Participant had completed at least five Years of
Service, the Participant shall be entitled to elect to have the portion of his
or her account determined under this Section 16.4 without regard to whether the
Plan again becomes a top-heavy plan.
Section 16.5. Special Rules for Applying Statutory Limitations
on Benefits. (a) In any Plan Year for which the Plan is a top-heavy plan,
paragraph (2)(A)(II) of Section 7.3 shall be applied by substituting "100%" for
"125%" appearing therein, unless, for such Plan Year, the percentage of account
balances of Participants who are key employees determined under Section 16.1
does not exceed 90%.
(b) In any Plan Year for which the Plan is a top-heavy plan,
paragraph (2)(B)(I) of Section 7.3 shall be applied by substituting "100%" for
"125%" appearing therein unless for any such Plan Year the percentage of accrued
benefits of Participants who are key employees does not exceed 90%.
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ARTICLE 17
AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION
Section 17.1. Amendment. The Company may at any time and from
time to time amend or modify the Plan by resolution of the Board of Directors or
any duly authorized committee of the Board, or any written instrument duly
adopted by the Committee to the extent the ability to amend or modify the Plan
has been delegated by the Board (or committee thereof) to the Committee. Any
such amendment or modification shall become effective on such date as the Board
of Directors (or duly authorized committee of the Board) shall determine and may
apply to Participants in the Plan at the time thereof as well as to future
Participants.
Section 17.2. Establishment of Separate Plan. If an Employer
withdraws from the Plan under Section 13.2, the Committee shall determine the
portion of the Trust Fund held by the Trustee that is attributable to the
Participants and former Participants of such Employer and direct the Trustee to
segregate such portion in a separate Trust Fund. Such separate Trust Fund shall
thereafter be held and administered as a part of the separate plan of such
Employer.
The portion of the Trust Fund attributable to the Participants
and former Participants of a particular Employer shall be equal to an amount
which bears the same ratio to the total value of the Trust Fund as the total
amount credited to the accounts that are allocated to the Participants and
former Participants of such Employer bears to the total amount credited to such
accounts of all Participants and former Participants.
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Section 17.3. Full Vesting upon Termination of Participation
or Partial Termination of the Plan. In the event that any Employer terminates
its participation in the Plan, or in the event of the partial termination of the
Plan, the accounts of all Participants of such Employer, or accounts of those
Participants who are affected by the partial termination of the Plan, as the
case may be, shall become fully vested and shall not thereafter be subject to
forfeiture.
Section 17.4. Distribution upon Termination of the Plan. Any
Employer may at any time terminate its participation in the Plan by written
instrument executed on behalf of the Employer by resolution of its board of
directors to that effect. In the event of any such termination, the Committee
shall determine the portion of the Trust Fund held by the Trustee that is
attributable to the Participants and former Participants of such Employer and
direct the Trustee to distribute such portion to Participants ratably in
proportion to the balances of their respective accounts. A complete
discontinuance of contributions by an Employer shall be deemed a termination of
such Employer's participation in the Plan for purposes of this Section.
If the Internal Revenue Service refuses to issue an initial,
favorable determination letter to the effect that the Plan and Trust Fund as
adopted by an Employer meets the requirements of section 401(a) of the Code and
that the Trust is exempt from tax under section 501(a) of the Code, the Employer
may terminate its participation in the Plan and the Committee shall direct the
Trustee to pay and deliver the portion of the Trust Fund attributable to the
Participants and former Participants of such Employer, determined pursuant to
Section 17.2, to such Employer and such Employer shall pay to Participants or
their Beneficiaries the part of such Employer's portion of the Trust Fund as is
attributable to contributions made by Participants.
Section 17.5. Trust Fund to Be Applied Exclusively for
Participants and Their Beneficiaries. Subject only to the provisions of Sections
4.6, 7.3 and 17.4, and any other provision of the Plan to the contrary
notwithstanding, it shall be impossible for any part of the Trust Fund to be
used for, or diverted to, any purpose that is not for the exclusive benefit of
Participants and Beneficiaries.
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IN WITNESS WHEREOF, the undersigned officers of the Company
pursuant to the authorization and direction of the Board of Directors have
executed this amendment and restatement of the Plan on this _____ day of
__________, 1998.
BELL SPORTS CORP.
By
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Title
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ATTEST:
- -----------------------------------
Title
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APPENDIX A
SPECIAL PROVISIONS FOR CERTAIN PARTICIPANTS
Notwithstanding anything in the Plan to the contrary, the provisions of
this Appendix shall apply to the Participants described below:
1. Any Participant who becomes an employee of Brunswick Corporation on
April 28, 1997 in connection with the sale of certain assets to
Brunswick Corporation pursuant to the Asset Purchase Agreement dated
April 1, 1997 among Brunswick Corporation, American Recreation Company,
Inc. and the Company shall be fully vested in his Employer Matching
Contribution Account and his Employer Discretionary Contribution
Account as of April 28, 1997.
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