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Exhibit 10.d
FINGERHUT CORPORATION
PROFIT SHARING AND 401(K) SAVINGS PLAN
Table of Contents
Page
ARTICLE 1. DESCRIPTION AND PURPOSE 1
1.2. Plan Description. 1
1.1. Plan Name. 1
1.3. Plan Background. 1
1.4. Plan Purposes. 2
ARTICLE 2. ELIGIBILITY 3
2.1. Eligibility Requirements. 3
2.2. Transfer Among Participating Employers. 3
2.3. Multiple Employment. 3
2.4. Reentry. 4
2.5. Condition of Participation. 4
2.6. Termination of Participation. 4
ARTICLE 3. CONTRIBUTIONS 5
3.1. Pre-Tax Contributions. 5
3.2. Matching Contributions. 6
3.3. Voluntary Contributions. 7
3.4. Profit Sharing Contributions. 7
3.5. Rollovers and Transfers. 8
3.6. Corrective Contributions. 9
ARTICLE 4. ACCOUNTS AND VALUATION 10
4.1. Establishment of Accounts. 10
4.2. Valuation and Account Adjustment. 10
4.3. Allocations Do Not Create Rights. 11
ARTICLE 5. PARTICIPANT INVESTMENT DIRECTION 12
5.1. Establishment of Investment Funds. 12
5.2. Contribution Investment Directions. 12
5.3. Transfer Among Investment Funds. 13
5.4. Investment of Matching Account in Fingerhut Stock. 13
5.5. Investment Direction Responsibility Resides With
Participants. 13
5.6. Beneficiaries and Alternate Payees. 14
ARTICLE 6. WITHDRAWALS DURING EMPLOYMENT AND LOANS 15
6.1. Hardship Withdrawals. 15
6.2. Withdrawals After Attaining Age 59-1/2. 16
6.3. Other Withdrawals from Voluntary Account, Rollover
Account and Profit Sharing Account. 16
6.4. Rules for Withdrawals. 18
6.5. No Plan Loans. 18
ARTICLE 7. VESTING AND FORFEITURES 19
7.1. Vesting. 19
7.2. Forfeiture Upon Distribution. 19
7.3. Other Forfeitures. 20
7.4. Reallocation of Forfeitures. 20
ARTICLE 8. DISTRIBUTIONS AFTER TERMINATION 22
8.1. Time and Form of Distribution. 22
8.2. Beneficiary Designation. 25
8.3. Assignment, Alienation of Benefits. 26
8.4. Payment in Event of Incapacity. 26
8.5. Payment Satisfies Claims. 27
8.6. Disposition if Distributee Cannot be Located. 27
8.7. Direct Rollovers and Transfers. 27
ARTICLE 9. CONTRIBUTION LIMITATIONS 28
9.1. Pre-Tax Contribution Dollar Limitation. 28
9.2. Actual Deferral Percentage Limitations. 28
9.3. Actual Contribution Percentage Limitations. 31
9.4. Multiple Use Limitation. 33
9.5. Earnings on Excess Contributions. 35
9.6. Aggregate Defined Contribution Limitations. 35
9.7. Aggregate Defined Contribution/Defined Benefit
Limitations. 37
9.8. Administrator's Discretion. 38
ARTICLE 10. SERVICE RULES 39
10.1. Computation Period. 39
10.2. Eligibility Service. 39
10.3. Vesting Service. 39
10.4. Hour of Service. 39
10.5. One-Year Break in Service. 42
10.6. Loss of Service. 43
10.7. Pre-Acquisition Service. 43
10.8. Transition from Elapsed Time. 44
ARTICLE 11. ADOPTION, AMENDMENT AND TERMINATION 45
11.1. Adoption by Affiliated Organizations. 45
11.2. Authority to Amend and Procedure. 45
11.3. Authority to Terminate and Procedure. 46
11.4. Vesting Upon Termination, Partial Termination or
Discontinuance of Contributions. 46
11.5. Distribution Following Termination, Partial Termination
or Discontinuance of Contributions. 46
ARTICLE 12. DEFINITIONS, CONSTRUCTION AND INTERPRETATIONS 47
12.1. Account. 47
12.2. Active Participant. 47
12.3. Administrator. 47
12.4. Affiliated Organization. 47
12.5. Board. 47
12.6. Beneficiary. 48
12.7. Code. 48
12.8. Company. 48
12.9. Disabled. 48
12.10. Effective Date. 48
12.11. Eligible Earnings. 48
12.12. Employee. 49
12.13. Fingerhut Stock. 49
12.14. Fund. 49
12.15. Governing Law. 49
12.16. Headings. 49
12.17. Highly Compensated Employee. 49
12.18. Matching Account. 50
12.19. Matching Contributions. 50
12.20. Normal Retirement Date. 51
12.21. Number and Gender. 51
12.22. Participant. 51
12.23. Participating Employer. 51
12.24. Plan. 51
12.25. Plan Rule. 51
12.26. Plan Year. 51
12.27. Pre-Tax Contribution Account. 51
12.28. Pre-Tax Contributions. 51
12.29. Profit Sharing Account. 51
12.30. Profit Sharing Contributions. 51
12.31. Qualified Employee. 52
12.32. Rollover Account. 52
12.33. Section 415 Wages. 52
12.34. Spousal Consent. 53
12.35. Termination of Employment. 53
12.36. Testing Wages. 54
12.37. Treasury Regulations. 54
12.38. Trust. 54
12.39. Trustee. 54
12.40. Voluntary Contributions. 55
12.41. Voluntary Account. 55
ARTICLE 13. ADMINISTRATION OF PLAN 56
13.1. Administrator, Named Fiduciary. 56
13.2. Compensation and Expenses. 56
13.3. Plan Rules. 56
13.4. Administrator's Discretion. 56
13.5. Indemnification. 57
13.6. Benefit Claim Procedure. 57
13.7. Correction of Errors. 58
ARTICLE 14. MISCELLANEOUS 59
14.1. Merger, Consolidation, Transfer of Assets. 59
14.2. Limited Reversion of Fund. 59
14.3. Top-Heavy Provisions. 60
14.4. No Employment Rights Created. 64
14.5. Special Provisions. 64
14.6. USERRA. 64
FINGERHUT CORPORATION
PROFIT SHARING AND 401(K) SAVINGS PLAN
ARTICLE
1.
DESCRIPTION AND PURPOSE
1.1. Plan Name.
The name of the Plan is the "Fingerhut Corporation Profit Sharing
and 401(k) Savings Plan."
1.2. Plan Description.
The Plan is a profit sharing plan providing for Pre-Tax
Contributions pursuant to a qualified cash or deferred
arrangement, with Matching Contributions and discretionary Profit
Sharing Contributions by Participating Employers. The Plan is
intended to qualify under Code section 401(a) and to satisfy the
requirements of Code sections 401(k) and 401(m). Notwithstanding
the designation of the Plan as a profit sharing plan, a
Participating Employer may make contributions to the Plan even
though it has no current or accumulated earnings and profits.
1.3. Plan Background.
(A) The Plan was originally established, effective January 15,
1960, by Wiman Manufacturing Co. and, effective as of March 28,
1969, sponsorship of the Plan was assumed by the Company.
Effective July 3, 1976, the Plan was amended and restated to
comply with the requirements of the Employee Retirement Income
Security Act of 1974.
(B) For purposes of incorporating Plan amendments adopted after
1976, to conform the Plan document with the requirements of the
Tax Equity and Fiscal Responsibility Act of 1982, the Deficit
Reduction Act of 1984 and the Retirement Equity Act of 1984 and
to make certain other administrative changes to the Plan, the
Plan was amended and restated to read as set forth in the 1985
Revision.
(C) In order to conform with the requirements of the Tax Reform
Act of 1986, the Technical and Miscellaneous Revenue Act of 1988
and rulings and regulations issued subsequent to the adoption of
the 1985 Revision of the Plan and to incorporate into a single
Plan document amendments to the 1985 Revision of the Plan, the
Plan was amended and restated to read as set forth in the 1989
Revision.
(D) Effective generally as of July 1, 1997, the Plan was amended
and restated to add a qualified cash or deferred arrangement
under Code section 401(k), to change the name of the Plan to the
"Fingerhut Corporation Profit Sharing and 401(k) Savings Plan,"
to add a Matching Contribution in the form of Fingerhut Stock, to
eliminate Voluntary Contributions, to comply with changes in
applicable law, to make certain other miscellaneous changes and
to incorporate into a single Plan document amendments to the 1989
Revision of the Plan.
1.4. Plan Purposes.
The purposes of the Plan are to promote effort and cooperation on
the part of Active Participants; to provide a measure of economic
security to Active Participants by accumulating contributions for
distribution upon retirement, as a supplement to other resources
then available; and to permit Active Participants to share in the
profits and growth of their Participating Employer.
ARTICLE
2.
ELIGIBILITY
2.1. Eligibility Requirements.
(A) Each Employee who was eligible to participate in the Plan on
June 30, 1997 will continue to be eligible to participate in the
Plan on July 1, 1997 if he or she continues to be a Qualified
Employee.
(B) An Employee is eligible to participate in the Plan:
(1) for the purpose of having a rollover or transfer made on
his or her behalf pursuant to Section 3.4, on the date on which
he or she first completes an Hour of Service of the type
specified at Section 10.4(A)(1) as a Qualified Employee, and
(2) for the purposes of having Pre-Tax and Matching
Contributions made on his or her behalf pursuant to Sections 3.1
and 3.2 and being eligible to share in the allocation of Profit
Sharing Contributions pursuant to Section 3.3, on the later of
(a) the day on which he or she attains age 21 and (b) the last
day of the first Eligibility Service Computation Period during
which he or she completes one year of Eligibility Service, if he
or she is a Qualified Employee on the date on which he or she
would otherwise be eligible to participate; provided, however,
that any Employee hired prior to July 1, 1997 is not subject to
the requirement that he or she attain age 21 to be eligible to
participate in the Plan.
(C) If an Employee or former Employee has satisfied the age and
service requirements set forth in Subsection (B)(2) but is not a
Qualified Employee on the day on which he or she would otherwise
be eligible to participate in the Plan, he or she will become
eligible to participate as of the first following day on which he
or she performs an Hour of Service of the type specified at
Section 10.4(A)(1) as a Qualified Employee.
(D) Notwithstanding Subsection (B)(2), in conjunction with an
acquisition, the Company's Board may specify a special entry date
for those Qualified Employees with respect to whom pre-
acquisition service is taken into account pursuant to Section
10.7.
2.2. Transfer Among Participating Employers.
A Participant who transfers from one Participating Employer to
another Participating Employer as a Qualified Employee will
participate in the Plan for the Plan Year during which the
transfer occurs on the basis of his or her separate Eligible
Earnings for the Plan Year from each such Participating Employer.
2.3. Multiple Employment.
A Participant who is simultaneously employed as a Qualified
Employee with more than one Participating Employer will
participate in the Plan as a Qualified Employee of all such
Participating Employers on the basis of his or her separate
Eligible Earnings from each such Participating Employer.
2.4. Reentry.
An Active Participant who ceases to be a Qualified Employee will
be eligible to resume active participation in the Plan as of the
first following day on which he or she completes an Hour of
Service of the type specified at Section 10.4(A)(1) as a
Qualified Employee.
2.5. Condition of Participation.
Each eligible Qualified Employee, as a condition of
participation, is bound by all the terms and conditions of the
Plan and must furnish to the Administrator such pertinent
information and execute such instruments as the Administrator may
require.
2.6. Termination of Participation.
A Participant will cease to be such as of the later of the date
on which
(a) he or she ceases to be a Qualified Employee, or
(b) all benefits, if any, to which he or she is entitled
under the Plan have been distributed.
ARTICLE
3.
CONTRIBUTIONS
3.1. Pre-Tax Contributions.
(A) Subject to the limitations of Article IX, for each Plan Year
the Participating Employer of each Active Participant will make
Pre-Tax Contributions to the Trust on behalf of the Participant
in the amount by which the Participant's Eligible Earnings have
been reduced in accordance with the succeeding provisions of this
section. Pre-Tax Contributions will be paid to the Trustee as
soon as administratively practicable after the date on which the
Participant would have received the Eligible Earnings but for the
Participant's election pursuant to this section, but in no event
later than the fifteenth business day of the month following the
month in which the Participant would have received the Eligible
Earnings but for his or her election pursuant to this section.
(B) Except as provided in Subsection (C), an Active
Participant's Eligible Earnings will be reduced in accordance
with the following rules:
(1) An Active Participant may elect to reduce his or her
Eligible Earnings by any one percent increment from one percent
to a maximum of eight percent, and the percentage so elected
will automatically apply to his or her Eligible Earnings as
adjusted from time to time. Plan Rules may, however, specify
a lower maximum percentage for Active Participants who are
Highly Compensated Employees.
(2) In conjunction with an Active Participant's entering or
reentering the Plan pursuant to Article II, reduction of his or
her Eligible Earnings will begin as soon as administratively
practicable after the Administrator or the Administrator's
designate receives the Active Participant's complete and
accurate election. The election must be made in accordance
with and is subject to Plan Rules.
(3) An Active Participant may elect to change the percentage
rate at which his or her Eligible Earnings will be reduced. The
election must be made in accordance with and is subject to Plan
Rules. The election will become effective as soon as
administratively practicable after the date on which the
Administrator or the Administrator's designate receives a
complete and accurate election.
(4) An Active Participant may elect to suspend Eligible
Earnings reductions. The election must be made in accordance
with and is subject to Plan Rules. The election will become
effective as soon as administratively practicable after the
date on which the Administrator or the Administrator's designate
receives a complete and accurate election. Eligible Earnings
reductions for any Active Participant who makes a hardship
withdrawal pursuant to Section 6.1 will be automatically
suspended for the 12-month period beginning on the date of
the withdrawal distribution.
(5) An Active Participant whose Eligible Earnings reductions
have ceased by reason of automatic or voluntary suspension may,
after the end of the suspension period, resume Eligible Earnings
reductions in accordance with clause (3).
(C) Eligible Earnings reductions will be made in accordance with
Plan Rules. If any election or notice made by an Active
Participant in such manner as provided by the Administrator is
not processed on a timely basis or if, for any reason, an Active
Participant's Eligible Earnings are not reduced in accordance
with his or her election, no retroactive adjustments will be made
to take into account the effect of any such delay or failure.
Plan Rules may, however, permit an Active Participant to elect to
reduce his or her Eligible Earnings payable during any remaining
portion of the Plan Year in which the delay or failure occurred
at more than the otherwise applicable percentage to adjust for
the effect of such delay or failure so long as the total
reductions for the Plan Year do not exceed the applicable maximum
percentage or limitations of Article IX. No Pre-Tax
Contributions will be made on behalf of a Participant with
respect to a period during which he or she is not an Active
Participant.
3.2. Matching Contributions.
(A)
(1) Subject to Subsection (D) and the limitations of Article
IX, for each Plan Year the Participating Employer of each
Active Participant will make a Matching Contribution on behalf
of the Participant in an amount equal to the lesser of (a)
50 percent of the Pre-Tax Contributions made by the
Participating Employer on the Participant's behalf for the
Plan Year and (b) one and one-half percent of the
Participant's Eligible Earnings from the Participating
Employer for the Plan Year.
(B) A Participating Employer's Matching Contributions for a Plan
Year will be paid to the Trustee on such date or dates during or
following such Plan Year as the Participating Employer may elect
but in no case more than 12 months after the end of the Plan
Year.
(C) Matching Contributions will be made in the form of cash.
(D) No Matching Contributions will be made with respect to any
portion of an Active Participant's Pre-Tax Contributions that is
distributed to the Participant pursuant to Article IX; provided
that for this purpose unmatched Pre-Tax Contributions will be
deemed to be returned to the Participant first. If the
Administrator determines that any Matching Contributions that
have been added to a Participant's Matching Account should not
have been added by reason of this subsection, the contributions
will be subtracted from such Account as soon as administratively
practicable after the determination and will be applied to
satisfy the Matching Contribution obligations of the
Participating Employer that made the excess Matching
Contributions for the Plan Year in which such excess
contributions were made. If, because of the passage of time, the
excess cannot be applied to satisfy the Participating Employer's
Matching Contribution obligations for the Plan Year in which the
excess contribution was made, the excess will, subject to the
limitations of Article IX, be allocated, in the discretion of the
Administrator
(1) among the Matching Accounts of all Active Participants
who made Pre-Tax Contributions for the Plan Year as Qualified
Employees of the Participating Employer as if it were an
additional Matching Contribution by the Participating Employer
for such Plan Year, or
(2) as a corrective contribution pursuant to Section 3.6.
3.3. Voluntary Contributions.
Effective July 1, 1997, Voluntary Contributions are no longer
permitted under this Plan.
3.4. Profit Sharing Contributions.
(A) Each Participating Employer may, but is not required to,
make a Profit Sharing Contribution for any Plan Year in an
amount, if any, determined by the Participating Employer's Board.
(B) To be eligible to share in a Participating Employer's Profit
Sharing Contribution for a particular Plan Year, a Participant
must have entered the Plan as a Participant for the purpose of
being eligible to share in the allocation of the Profit Sharing
Contribution for the Plan Year, received Eligible Earnings for
the Plan Year from the Participating Employer with respect to a
period during which he or she was an Active Participant employed
by the Participating Employer and either -
(1) completed at least 500 Hours of Service during the Plan
Year and been employed with an Affiliated Organization on
the last day of the Plan Year, or
(2) terminated employment during the Plan Year
(a) at or after his or her Normal Retirement Date,
(b) on account of his or her death, or
(c) on account of his or her becoming Disabled;
provided, that this condition will be applied only
once with respect to a Participant, such sole
application being made for the Plan Year during
which this clause first applies and the conditions
under clause (1) are not satisfied.
(C) Subject to the limitations of Article IX, each eligible
Participant will receive an allocation of his or her
Participating Employer's Profit Sharing Contribution in the same
proportion as his or her Eligible Earnings for the Plan Year
bears to the total Eligible Earnings for the Plan Year of all
Participants eligible to receive an allocation of the
Participating Employer's Profit Sharing Contribution for the Plan
Year.
(D) A Participating Employer's Profit Sharing Contribution for a
Plan Year, if any, will be paid to the Trustee on such date or
dates during or following the Plan Year as the Participating
Employer may elect but in no case later than 12 months after the
end of the Plan Year.
3.5. Rollovers and Transfers.
(A) An Active Participant may, with the prior consent of the
Administrator, contribute to the Trust, in a direct rollover
pursuant to Code section 401(a)(31) or within 60 days of receipt,
(1) the balance of an individual retirement account to which
the only contributions have been one or more "eligible rollover
distributions," within the meaning of Code section 402(c)(4),
from a plan qualified under Code section 401(a), or
(2) an eligible rollover distribution from such a qualified
plan.
(B) With the prior consent of the Administrator, the accounts
under another plan qualified under Code section 401(a) of an
Active Participant may be transferred directly to the Trust.
Other than in connection with an acquisition, such a transfer
will not be permitted if, as a result of the transfer, the Plan
would be required to provide any option with respect to the form
or time of distribution or any other right, benefit or feature
not available under the Plan prior to the transfer.
(C) Other than in connection with an acquisition, any
contribution or transfer to the Trust pursuant to Subsection (A)
or (B) must be made in cash and will be credited to the Active
Participant's Rollover Account.
3.6. Corrective Contributions.
For any Plan Year a Participating Employer may contribute to the
Matching Contribution Accounts or Profit Sharing Accounts of
Active Participants who are not Highly Compensated Employees, or
any group of such Active Participants, such amounts as it deems
advisable to assist the Plan in satisfying the requirements of
Sections 9.2, 9.3 and 9.4, or any other requirement under the
Code or Treasury Regulations, for such Plan Year. Subject to the
limitations of Article IX, such contributions will be allocated
among the Matching Contribution Accounts of such Active
Participants in proportion to the Pre-Tax Contributions made on
their behalf for the Plan Year and to their Profit Sharing
Accounts in proportion to their Eligible Earnings for the Plan
Year. Each such contribution will be treated, for all purposes
of the Plan, in the same manner as other contributions allocated
to the same Account.
ARTICLE
4.
ACCOUNTS AND VALUATION
4.1. Establishment of Accounts.
The following Accounts will be established and maintained for
each Participant:
(a) A Pre-Tax Account, to which there will be credited
any Pre-Tax Contributions made on the Participant's
behalf;
(b) A Matching Account, to which there will be credited
any Matching Contributions made on the Participant's
behalf;
(c) A Profit Sharing Account, to which there will be
credited any Profit Sharing Contributions made on
the Participant's behalf;
(d) A Voluntary Account to which there will be credited
any Voluntary Contributions made by the Participant;
and
(e) A Rollover Account, to which there will be credited
any rollover or trust-to-trust transfers made by or
on behalf of the Participant.
One or more additional accounts may be established for any
Participant or group of similarly situated Participants in
connection with the merger of another plan into the Plan, in
which case provisions of the Plan applicable solely to such
Accounts will be set forth on an exhibit to the Plan in
accordance with Section 14.5.
4.2. Valuation and Account Adjustment.
(A) Subject to Subsection (B), Participants' Accounts will be
separately adjusted on a daily basis in a uniform and equitable
manner to reflect income, expense, gains and losses of the Fund
as well as contributions, withdrawals and distributions.
(B) Participants' Matching Accounts will be accounted for in a
uniform and equitable manner on the basis of the number of full
and fractional shares of Fingerhut Stock credited to the
Accounts. Accordingly, except as otherwise provided in Article 8
with respect to distributions of Matching Account balances in the
form of cash, Participants' Matching Accounts will not be
adjusted for the appreciation or depreciation in the value of
Fingerhut Stock, such appreciation or depreciation being
automatically reflected by the fair market value of shares of
Fingerhut Stock credited to the Accounts.
4.3. Allocations Do Not Create Rights.
The fact that amounts are added to the Accounts of a Participant
does not vest in the Participant any right, title or interest in
or to any portion of the Fund except at the time or times and
upon the terms and conditions expressly set forth in the Plan.
Notwithstanding any addition to an Account, the issuance of any
statement or the distribution of all or any portion of an Account
balance, the Administrator may cause the Account to be adjusted
to the extent necessary to correct any error in such Account,
whether caused by a misapplication of any provision of the Plan
or otherwise, and may recover from any distributee the amount of
any excess distribution. Any such adjustment will be made within
a reasonable time after the error is discovered.
ARTICLE
5.
PARTICIPANT INVESTMENT DIRECTION
5.1. Establishment of Investment Funds.
(A) In order to allow each Participant to determine the manner
in which his or her Accounts will be invested, the Trustee will
maintain, within the Trust, three or more separate investment
funds of such nature and possessing such characteristics as the
Administrator may specify from time to time. Each Participant's
Accounts will be invested in the investment funds in the
proportions directed by the Participant in accordance with the
procedures set forth in Sections 5.2 and 5.3. The Administrator
may, from time to time, establish additional investment funds or
eliminate any existing investment fund.
(B) Notwithstanding any other provision of the Plan to the
contrary, the Administrator may suspend Participant investment
activity (including such activity in connection with the
withdrawals and distributions) in any or all investment funds, or
impose special rules or restrictions of uniform application, for
a period determined by the Administrator to be necessary in
connection with
(1) the establishment or termination of any investment fund,
(2) the receipt by the Trustee from, or transfer by the Trustee
to, another trust of account balances in connection with an
acquisition or divestiture or otherwise,
(3) a change of Trustee or investment manager, or
(4) such other circumstances determined by the Administrator as
making such suspension or special rules or restrictions necessary
or appropriate.
5.2. Contribution Investment Directions.
(A) In conjunction with his or her enrollment in the Plan, a
Participant must direct the manner in which contributions to his
or her Accounts, other than his or her Matching Account, will be
invested among the investment funds maintained pursuant to
Section 5.1. The direction must be made in accordance with and
is subject to Plan Rules. To the extent a Participant fails to
direct the investment of contributions to his or her Accounts,
the contributions will be invested in accordance with Plan Rules.
(B) A Participant may direct a change in the manner in which
future contributions to his or her Accounts, other than his or
her Matching Account, will be invested among the investment funds
maintained pursuant to Section 5.1. The direction must be made
in accordance with and is subject to Plan Rules and will be
effective as soon as administratively practicable after the date
on which the Administrator or the Administrator's designate
receives the direction from the Participant.
(C) Plan Rules will include procedures pursuant to which
Participants are provided with the opportunity to obtain written
confirmation of investment directions made pursuant to this
Section.
5.3. Transfer Among Investment Funds.
(A) A Participant may direct the transfer of his or her Accounts
other than his or her Matching Account among the investment funds
maintained pursuant to Section 5.1. The direction must be made
in accordance with and is subject to Plan Rules and will be
effective on or as soon as administratively practicable after the
date on which the Administrator or the Administrator's designate
receives the direction from the Participant.
(B) Plan Rules will include procedures pursuant to which
Participants are provided with the opportunity to obtain written
confirmation of investment directions made pursuant to this
section.
(C) Plan Rules may impose uniform limitations and restrictions
applicable to transfers into and out of specific investment
funds.
5.4. Investment of Matching Account in Fingerhut Stock.
(A) A Participant's Matching Account will be invested in
Fingerhut Stock.
(B) Cash dividends paid on Fingerhut Stock credited to a
Participant's Matching Account will be used to acquire additional
shares of Fingerhut Stock which will be credited to the Account.
(C) Each Participant will be provided with the opportunity to
direct the manner in which shares of Fingerhut Stock credited to
his or her Matching Account as of the record date of any
stockholder action will be voted in connection with such action.
In the event of a public tender or exchange offer for shares of
Fingerhut Stock, each Participant will be entitled to direct
whether or not the shares of Fingerhut Stock credited to the
Participant's Matching Account will be tendered or exchanged.
The voting decisions relating to Fingerhut stock for which
Participants have failed to provide direction shall be directed
by the Employee Benefits Advisory Committee or its successor.
Voting, tender or exchange decisions will be effected in
accordance with applicable provisions of the Trust and Plan Rules
that are consistent with the provisions of the Trust.
5.5. Investment Direction Responsibility Resides With
Participants.
Neither any Affiliated Organization, the Administrator nor the
Trustee has any authority, discretion, responsibility or
liability with respect to a Participant's selection of the
investment funds or other directed investments in which his or
her Accounts will be invested, the entire authority, discretion
and responsibility for, and any results attributable to, the
selection being that of the Participant.
5.6. Beneficiaries and Alternate Payees.
Solely for purposes of this article, the term "Participant"
includes the Beneficiary of a deceased Participant and an
alternate payee under a qualified domestic relations order within
the meaning of Code section 414(p) unless otherwise provided in
such order, but only after
(1) the Administrator has determined the identity of the
Beneficiary and the amount of the Account balance to which he
or she is entitled in the case of a Beneficiary of a deceased
Participant, or
(2) the Administrator has, in accordance with Plan Rules, made
a final determination that the order is a qualified domestic
relations order and all rights to contest such determination in
a court of competent jurisdiction within the time prescribed by
Plan Rules have expired or been exhausted in the case of an
alternate payee.
ARTICLE
6.
WITHDRAWALS DURING EMPLOYMENT AND LOANS
6.1. Hardship Withdrawals.
(A) Subject to the provisions of Section 6.4, a Participant who
is an Employee may withdraw from his or her Pre-Tax Account an
amount not in excess of the portion of his or her Pre-Tax Account
balance consisting of Pre-Tax Contributions. In addition, a
Participant who is an Employee may withdraw an amount not in
excess of the vested portion of his or her Matching Account or
Profit Sharing Account. Such withdrawal(s) will be made only if
the Administrator or its designate determines that the
distribution is made on account of an immediate and heavy
financial need of the Participant and is necessary to satisfy
such financial need.
(B) A distribution will be deemed to be made on account of an
immediate and heavy financial need only if it is determined by
the Administrator or its designate to be on account of:
(1) expenses for medical care, described in Code section
213(d), incurred or to be incurred by the Participant,
the Participant's spouse or the Participant's dependent
(as described in Code section 152);
(2) costs directly related to the purchase (excluding
mortgage payments) of a principal residence of the Participant;
(3) payment of tuition, related educational expenses and room
and board expenses for the next 12 months of post-secondary
education for the Participant or his or her spouse, child or
other dependent;
(4) payments necessary to prevent the eviction of the
Participant from his or her principal residence or foreclosure
of the mortgage on the Participant's principal residence; or
(5) other hardships identified in Treasury Regulations.
(C) A distribution will be deemed to be necessary to satisfy the
immediate and heavy financial need only if the Administrator or
its designate determines that each of the following requirements
is satisfied.
(1) The distribution is not in excess of the sum of the amount
of the immediate and heavy financial need of the Participant
plus, if elected by the Participant, the amount necessary to
pay any federal, state or local taxes or penalties that the
Participant will incur in connection with the distribution, as
estimated by the Administrator in accordance with Plan Rules.
(2) The Participant has received all withdrawals and has taken
all nontaxable loans available under the Plan and all other
qualified plans maintained by any Affiliated Organization.
(3) All Pre-Tax Contributions under this Plan and all elective
deferrals and after-tax employee contributions by or on behalf
of the Participant under any other qualified or nonqualified
plan of deferred compensation maintained by any Affiliated
Organization are suspended for a period of 12 months following
the date of the distribution.
(4) For the Participant's taxable year following the taxable
year during which he or she receives the distribution, the
amount of elective deferrals under any qualified plan
maintained by any Affiliated Organization (including
Pre-Tax Contributions pursuant to the Plan) that may be
made on the Participant's behalf under Code section 402(g)
is or will be reduced by the sum of such elective deferrals
made on the Participant's behalf for the taxable year during
which he or she receives the distribution.
(D) The Administrator's determination of the existence of a
Participant's financial hardship and the amount that may be
withdrawn to satisfy the need created by such hardship will be
made in accordance with Treasury Regulations, and is final and
binding on the Participant. The Administrator may require the
Participant to make representations and certifications concerning
his or her entitlement to a withdrawal pursuant to this section
and is entitled to rely on such representations and
certifications unless the Administrator has actual knowledge to
the contrary. The Administrator is not obligated to supervise or
otherwise verify that amounts withdrawn are applied in the manner
specified in the Participant's withdrawal application.
6.2. Withdrawals After Attaining Age 59-1/2.
(A) Subject to the provisions of Section 6.4, a Participant who
is an Employee and has attained age 59 may withdraw all or any
portion of the vested balance of his or her Accounts.
(B) Withdrawals pursuant to this section will be charged first
to the Participant's Voluntary Account, then to the Rollover
Account, then to the Pre-Tax Account, then to the vested portion
of the Participant's Matching Account and then to the vested
portion of the Participant's Profit Sharing Account.
6.3. Other Withdrawals from Voluntary Account, Rollover Account
and Profit Sharing Account.
Subject to the provisions of Section 6.4, a Participant who
is an Employee may withdraw a portion of his or her
Voluntary Account, Rollover Account and Profit Sharing
Account, subject to the following:
(a) The Participant's Voluntary Account balance, if any,
will be charged with the total amount requested, to the
extent such amount does not exceed the amount then
credited to the Participant's Voluntary Account.
(b) If the requested withdrawal exceeds the amount that
can be charged against the Participant's Voluntary
Account, and the Participant has a balance in his or her
Rollover Account, the Participant's Rollover Account
will be charged with the amount by which the requested
withdrawal exceeds the Participant's Voluntary Account
balance, to the extent such excess does not exceed the
amount then credited to the Participant's Rollover
Account.
(c) If the requested withdrawal exceeds the amount that
can be charged against his or her Voluntary Account and
his or her Rollover Account, then the Participant's Profit
Sharing Account will be charged with the amount by which
the requested withdrawal exceeds his or her Voluntary
Account and Rollover Account balances. The amount that
may be withdrawn from the Participant's Profit Sharing
Account may not exceed the lesser of:
(i) the amount by which the lesser of the amount
set forth at (A) or (B), below, exceeds the aggregate
gross amount of all previous withdrawals made by
the Participant from his or her Profit Sharing
Account:
(A) fifty percent (50%) of the
vested percentage of his or
her Profit Sharing Account;
(B) twenty-five percent (25%) of
the Participant's Profit
Sharing Account plus the
aggregate gross amount of all
previous withdrawals made from
the Participant's Profit
Sharing Account.
(ii) If the Participant has been participating under
the Plan for less than five years, an amount such
that, after the withdrawal, the remaining balance in
the Participant's Profit Sharing Account is not less
than the aggregate amount of contributions credited
to his or her Profit Sharing Account during the two-
year period ending on the date on which the
withdrawal payment is made.
6.4. Rules for Withdrawals.
(A) An application for withdrawal must be made in accordance
with and is subject to Plan Rules.
(B) A withdrawal from a particular Account will be made on a pro
rata basis among all investment funds in which the Account is
invested.
(C) With respect to withdrawals under Section 6.3, only one
withdrawal may be made during any Plan Year.
(D) The minimum amount of any withdrawal is $200.
(E) Withdrawal distributions will be made by check drawn on the
Trust as soon as administratively practicable after the
Administrator's determination that a Participant is entitled to
receive the withdrawal distribution and will be based on the
balance of the Participant's Accounts as of the close of business
on the day before the day on which the distribution is made,
provided that on and after the date on which the Administrator
has announced to Participants that Fingerhut stock may be
distributed "in kind" and at the election of the Participant, a
withdrawal distribution from the Participant's Matching Account
will be made in full shares of Fingerhut Stock, with cash in lieu
of any fractional share.
(F) The provisions of Section 8.7(A) apply to any withdrawal
distribution that constitutes an eligible rollover distribution
within the meaning of Code section 402(c)(4).
(G) All Voluntary Contributions and all Fund earnings or losses
with respect thereto will be treated as a separate contract under
the Plan for purposes of Code section 72(d) and such
contributions and earnings or losses will be separately accounted
for in accordance with applicable Treasury Regulations. Insofar
as the Plan permitted Participants to effect in-service
withdrawals from their Voluntary Accounts on May 5, 1986,
notwithstanding Subsection (A) all withdrawals from such Accounts
pursuant to this Section 6.3 will be deemed to be made first from
the Participant's investment in the contract as of December 31,
1986, and second, from the above-referenced separate section
72(d) contract.
6.5. No Plan Loans.
Loans to Participants are not permitted under the Plan.
ARTICLE
7.
VESTING AND FORFEITURES
7.1. Vesting.
(A) Each Participant, at all times, has a fully vested
nonforfeitable interest in his or her Pre-Tax Account, Voluntary
Account and Rollover Account.
(B) A Participant will acquire a fully vested nonforfeitable
interest in his or her Matching Account and Profit Sharing
Account upon attaining his or her Normal Retirement Date while he
or she is an Employee.
(C) A Participant will acquire a fully vested nonforfeitable
interest in his or her Matching Account and Profit Sharing
Account if he or she dies or becomes Disabled while he or she is
an Employee.
(D) A Participant whose employment terminates prior to his or
her Normal Retirement Date other than by reason of his or her
death or becoming Disabled will acquire a vested nonforfeitable
interest in his or her Matching Account and Profit Sharing
Account to the extent provided in the following schedule:
Vested
Years of Vesting Interest
Service
Less Than One Year 0%
One Year 25%
Two Years 50%
Three Years 75%
Four or More Years 100%
7.2. Forfeiture Upon Distribution.
(A) If the entire vested balance of a Participant's Accounts is
distributed not later than the last day of the second Plan Year
following the Plan Year during which his or her employment
terminates, and if the amount of such distribution was not more
than $3500 or the distribution was made with the Participant's
consent, the nonvested portion of the Participant's Matching
Account and Profit Sharing Account will, at the time of such
distribution, be forfeited. A Participant who has no vested
interest in his or her Profit Sharing Account at termination of
employment will be deemed to have received a distribution of the
entire vested balance in such Account upon such termination.
(B) If a Participant described in Subsection (A) (1) received a
distribution of less than the entire balance of his or her
Accounts, (2) resumes employment with a Participating Employer as
a Qualified Employee, and (3) repays to the Trustee the full
amount distributed (excluding the portion of the distribution, if
any, attributable to his or her Voluntary Account) before the
earlier of (a) five years following the date of reemployment as a
Qualified Employee or (b) the date on which he or she incurs five
consecutive One-Year Breaks in Service following the
distribution, the amount of any forfeitures pursuant to
Subsection (A) will be restored to the Participant's Matching
Account and Profit Sharing Account, unadjusted for any changes in
Fund value occurring after the distribution. The restoration
will be made from forfeitures that arise for the Plan Year for
which the restoration is to be made. To the extent such
forfeitures are insufficient for such purpose, the Participating
Employer with whom the Participant was last employed as a
Qualified Employee prior to resumption of employment will
contribute the amount required to restore the Account. A
Participant described in the last sentence of Subsection (A) who
is reemployed prior to incurring five consecutive One Year Breaks
in Service following the distribution will be deemed to have
repaid his or her deemed distribution upon his or her
reemployment as a Qualified Employee.
7.3. Other Forfeitures.
(A) Except as provided in Section 7.2, the nonvested portion of
a Participant's Matching Account and Profit Sharing Account will
continue to be held in a subaccount until the Participant incurs
five consecutive One-Year Breaks in Service, at which time the
subaccount balance will be forfeited. If the Participant resumes
employment with an Affiliated Organization prior to incurring
five consecutive One-Year Breaks in Service, the subaccount will
be disregarded and its balance will be included in the
Participant's Matching Account and Profit Sharing Account
balances.
(B) A Participant's vested interest in his or her Profit Sharing
Account and Matching Account balances following a resumption of
employment in accordance with the last sentence of Subsection (A)
at any given time will not be less than the amount "X" determined
by the formula: X = P(AB + (R x D)) - (R x D), where P is the
Participant's vested percentage at the time of determination; AB
is the Account balance at the time of determination; D is the
amount of the distribution; and R is the ratio of the Account
balance at the time of determination, to the balance immediately
following the distribution.
7.4. Reallocation of Forfeitures.
All forfeitures occurring under this article in a Plan Year will
be allocated as of the last day of the Plan Year as follows:
(a) The forfeitures will first be applied to restore the
Matching Account and Profit Sharing Accounts of Participants
as provided in Section 7.2(B);
(b) Subject to Section 13.2 any remaining forfeitures will be
used by the Trustee to pay those Plan expenses designated
by the Administrator; and
(c) Any remaining forfeitures (including forfeitures of
Participants' Matching Accounts) will be allocated to the
Profit Sharing Accounts of those Participants (i) employed
with the Participating Employer with whom the Participant
whose Profit Sharing Account was forfeited was last
employed and (ii) eligible to share in the Participating
Employer's Profit Sharing Contribution for the Plan Year.
The allocations will be made in the same manner as the
Participating Employer's Profit Sharing Contribution for
the Plan Year is allocated or would have been allocated
had it been made.
ARTICLE
8.
DISTRIBUTIONS AFTER TERMINATION
8.1. Time and Form of Distribution.
(A) Following a Participant's termination of employment, the
Trustee will distribute to the Participant or, if the Participant
has died, to his or her Beneficiary, the aggregate vested balance
of the Participant's Accounts. The amount of any such
distribution made in the form of a lump sum payment will be equal
to the net proceeds from the liquidation of the vested balance of
the Accounts in connection with the distribution. Subject to the
remaining subsections of this section and Section 8.7,
distribution will be made in accordance with the following
provisions-
(1) If the aggregate vested balance of the Participant's
Accounts at the time of the distribution is not more than $3500,
distribution to the Participant, or the Participant's
Beneficiary in the case of his or her death, will be made in
the form of a lump sum payment as soon as administratively
practicable following the Participant's termination of
employment. This clause will not apply, however, if the
aggregate vested balance of the Participant's Accounts
exceeded $3500 at the time of any previous distribution to
the Participant.
(2) If clause (1) does not apply, distribution to the
Participant will be made in the form of a lump sum payment,
non-periodic payments or installment payments as elected by
the Participant in accordance with the provisions of this
Section 8.1 and Plan Rules. The distribution will be made
or commence, according to the Participant's election
(made in accordance with Plan Rules), on or as soon as
administratively practicable after such date as the
Participant specifies, but not later than the date specified
under Subsection (C) unless the Participant elects to defer
the distribution in the manner described in Subsection (B).
(3) Subject to clause (1) above, any distribution to the
Participant's Beneficiary will be made at such time or times
and in such manner as the Beneficiary elects in accordance
with Subsection (E).
(4) All distributions will be made by delivery of a check
drawn on the Trust; provided that at the election of the
Participant or Beneficiary, as the case may be, the number
of full shares of Fingerhut Stock credited to a
Participant's Matching Account immediately before the
distribution will be distributed in kind, with cash in
lieu of any fractional share
(B) Subject to the provisions of the other subsections of this
section, a Participant described in Subsection (A)(2) may elect
to defer commencement of his or her distribution under the Plan
by providing the Administrator a written, signed statement
indicating in which of the available forms the benefit will be
paid and specifying the date on which the payment is to be made
or commence, provided, such date may not be later than April 1 of
the calendar year following the calendar year in which the
Participant attains age 70. Such deferral election must be
provided not later than the thirtieth day (or such later date as
Plan Rules may allow) after the close of the Plan Year during
which there occurs the later of the Participant's termination of
employment or sixty-second birthday. Plan Rules may permit a
Participant to modify any such election in any manner determined
by the Administrator to be consistent with Code section
401(a)(14) and Treasury Regulations thereunder and the other
provisions of this section.
(C) Except in the case of a Participant who has elected to defer
his or her distribution pursuant to Subsection (B), distribution
to the Participant will be made, or commence, not later than the
sixtieth day following the close of the Plan Year during which
there occurs the later of -
(1) the date of his or her termination of employment, or
(2) his or her sixty-second birthday.
(D) If a Participant described in Subsection (A)(2) elects to
receive his or her distribution in the form of installment
payments, such installments will be substantially equal in amount
and will be made on a monthly, quarterly, semi-annual or annual
basis, for a period not extending beyond either the Participant's
life expectancy or the life expectancy of the Participant and his
or her Beneficiary; and, if the Participant's Beneficiary is not
his or her spouse, the period over which such payments are to be
made will be determined by reference to the applicable table of
joint life expectancies set forth in Treasury Regulation section
1.401(a)(9)-2. Notwithstanding the foregoing, a Participant who
is receiving installment payments may elect, in accordance with
Plan Rules, to increase or decrease the amount of the installment
payments or to receive a non-periodic payment of all or a portion
of the Participant's remaining Account balances. Prior to April
1 of the calendar year following the calendar year during which
he or she attains age 70, the Participant may elect, in writing
to the Administrator, whether the life expectancies for the
Participant and his or her spouse are to be recalculated on an
annual basis for purposes of determining the amount of each
installment payment hereunder. Any such election will become
irrevocable as of the date specified above. If no such election
is made, the life expectancies of the Participant and his or her
spouse will not be recalculated. Distribution in the form of
installment payments will be made on a pro rata basis among the
Accounts and investment funds in which the Accounts are invested.
(E) Subject to Subsection (A)(1), if a Participant dies before
receiving the full amount to which he or she is entitled, the
amount remaining will be distributed to the Participant's
Beneficiary at such time or times and in such manner as the
Beneficiary elects (subject to and in accordance with Plan
Rules), subject, however to the following rules:
(1) If the Participant dies after the April 1 of the calendar
year following the calendar year during which he or she has both
attained age 70 and terminated employment, distribution will be
made to the Beneficiary at a rate that would result in the
benefit being distributed at least as rapidly as if distribution
were made at the same rate as was in effect immediately prior to
the Participant's death. If the Participant is a "5-percent
owner" subject to the provisions of Subsection (F), then he or
she shall be treated as having terminated employment upon
attaining age 70.
(2) If the Participant dies before April 1 of the calendar year
following the calendar year during which he or she attains age
70, distribution will, at the Beneficiary's election, be made
either -
(a) in a lump sum payment no later than December 31 of the
calendar year which contains the fifth anniversary of
the date of the Participant's death, or
(b) in installments, commencing no later than December 31
of the calendar year immediately following the calendar
year in which the Participant died (unless the Beneficiary
is the Participant's spouse, in which case payments will
begin no later than such date specified above or
December 31 of the calendar year in which the Participant
would have attained age 70 if he or she had lived), and
being paid over a period not exceeding the Beneficiary's
remaining life expectancy, (as determined on the basis
of the Beneficiary's age as of the date on which payments
are required to commence under this clause (2) and, if
the Beneficiary is the Participant's surviving spouse, as
redetermined on an annual basis if so elected by such
surviving spouse).
A Beneficiary's election with respect to the time
and manner in which any amount remaining at the
Participant's death will be distributed must be made no
later than the earlier of the dates set forth in clause
2(a) and (b) above, and is irrevocable following such
date. If the Beneficiary fails to make an election
under clause (2), distribution will be made in the
manner set forth at clause (2)(a). If the
Participant's spouse is the Beneficiary and dies after
the Participant's death but before distributions to
such spouse have commenced, the foregoing rules will be
applied as if the surviving spouse were the
Participant, including the substitution of the
surviving spouse's date of death for the Participant's
date of death; provided, that the alternative
commencement date in clause (2)(b) relating to the date
on which the Participant would have attained age 70 had
he or she lived will not be available.
(F) Notwithstanding Subsection (C), distribution to a
Participant who is a "5-percent owner," within the meaning of
Code section 416, must be made or commenced not later than April
1 of the calendar year following the calendar year during which
he or she attains age 70, whether or not the Participant has
terminated employment, as if he or she had terminated employment.
Any contribution allocated to the account of a 5-percent owner
who has attained age 70 will be distributed (or distribution will
be commenced subject to Subsection (G)) not later than the last
day of the Plan Year following the Plan Year for which such
allocation was made.
(G) Notwithstanding any other provision of the Plan to the
contrary, distributions will be made in accordance with
regulations issued under Code section 401(a)(9), including
Treasury Regulation section 1.401(a)(9)-2, and any provisions of
the Plan reflecting Code section 401(a)(9) takes precedence over
any distribution options in the Plan that are inconsistent with
Code section 401(a)(9).
8.2. Beneficiary Designation.
(A) (1) Each Participant may designate, on a form provided
by the Administrator, one or more persons to be primary
Beneficiaries or alternative Beneficiaries for all or a
specified fractional part of his or her aggregate Accounts
and may change or revoke any such designation from time to
time. No such designation, change or revocation will be
effective unless executed by the Participant and received
by the Administrator during the Participant's lifetime.
Except as provided in Subsection (B), no such change or
revocation will require the consent of any person.
(2) If a Participant
(a) fails to designate a Beneficiary, or
(b) revokes a Beneficiary designation without
naming another Beneficiary, or
(c) designates as Beneficiaries one or more
persons none of whom survives the Participant,
for all or any portion of the Participant's
Accounts, such Accounts or portion will be
distributed to the first class of the following
classes of automatic Beneficiaries that includes a
member surviving the Participant:
Participant's spouse;
Participant's issue, per stirpes and not per capita;
Participant's parents;
Participant's brothers and sisters;
Representative of Participant's estate.
(3) When used in this section and,
unless the designation otherwise specifies, when
used in a Beneficiary designation: the term "per
stirpes" means in equal shares among living
children and the issue (taken collectively) of
each deceased child, with such issue taking by
right of representation; "children" means issue of
the first generation; and "issue" means all
persons who are descended from the person referred
to, either by legitimate birth or legal adoption.
The automatic Beneficiaries specified above and,
unless the designation otherwise specifies, the
Beneficiaries designated by the Participant, will
become fixed as of the Participant's death so
that, if a Beneficiary survives the Participant
but dies before the receipt of all payments due
such Beneficiary, any remaining payments will be
made to the representative of such Beneficiary's
estate. Any designation of a Beneficiary by name
that is accompanied by a description of
relationship or only by statement of relationship
to the Participant will be effective only to
designate the person or persons standing in such
relationship to the Participant at the
Participant's death.
(B) Notwithstanding Subsection (A), no designation of a
Beneficiary other than the Participant's spouse will be effective
unless such spouse consents to the designation. Any such consent
will be effective only with respect to the Beneficiary or class
of Beneficiaries so designated and only with respect to the
spouse who so consented.
8.3. Assignment, Alienation of Benefits.
(A) Except as required under a qualified domestic relations
order or by the terms of any loan from the Trust, no benefit
under the Plan may in any manner be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or charged, and any
attempt to do so will be void. No benefit under the Plan may in
any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of the person entitled to such
benefit.
(B) To the extent provided in a qualified domestic relations
order, distribution of benefits assigned to an alternate payee by
such order may be distributed to the alternate payee prior to the
Participant's earliest retirement age in the form of a lump sum
payment. The terms "qualified domestic relations order,"
"alternat payee" and "earliest retirement age" have the meanings
given in Code section 414(p).
8.4. Payment in Event of Incapacity.
If any person entitled to receive any payment under the Plan is
physically, mentally or legally incapable of receiving or
acknowledging receipt of the payment, and no legal representative
has been appointed for such person, the Administrator in his or
her discretion may (but is not required to) cause any sum
otherwise payable to such person to be paid to any one or more as
may be chosen by the Administrator from the following: the
Beneficiaries, if any, designated by such person, the institution
maintaining such person, a custodian for such person under the
Uniform Transfers to Minors Act of any state or such person's
spouse, children, parents or other relatives by blood or
marriage. Any such payment completely discharges all liability
under the Plan to the extent of the payment.
8.5. Payment Satisfies Claims.
Any payment to or for the benefit of any Participant, legal
representative or Beneficiary in accordance with the provisions
of the Plan will, to the extent of such payment, be in full
satisfaction of all claims against the Trustee, the Administrator
and all Affiliated Organizations, any of whom may require the
payee to execute a receipted release as a condition precedent to
such payment.
8.6. Disposition if Distributee Cannot be Located.
If the Administrator is unable to locate a Participant or
Beneficiary to whom a distribution is due, the Participant's
Accounts will continue to be held in the Fund until such time as
the Administrator has located the Participant or Beneficiary or
the Participant or Beneficiary makes a proper claim for the
benefit, as the case may be; provided, that, any Accounts not
claimed within the period prescribed by applicable escheat laws
will be paid to such governmental authorities, in such manner, as
is specified in such laws.
8.7. Direct Rollovers and Transfers.
(A) To the extent a distribution is an "eligible rollover
distribution," within the meaning of Code section 402(c)(4), the
Administrator will, if so instructed by the distributee in
accordance with Plan Rules, direct the Trustee to make the
distribution to an "eligible retirement plan," within the meaning
of Code section 402(c)(8). The foregoing provision will not
apply (1) if the aggregate taxable distributions to be made to
the distributee during the calendar year are less than $200 or
(2) if less than the entire taxable amount of the distribution is
to be distributed to the eligible retirement plan, and the amount
to be distributed to the eligible retirement plan is less than
$500.
(B) The Company may direct the Trustee to transfer the balance
of any or all of the Accounts of a Participant to the trustee of
any other plan, provided
(1) the other plan is qualified under Code section 401(a),
(2) the other plan satisfies the requirements set forth in
Code sections 401(k) and 411(d)(6) with respect to the
transferred Accounts to which such requirements are
applicable, and
(3) the trustee is willing to accept such transfer.
ARTICLE
9.
CONTRIBUTION LIMITATIONS
9.1. Pre-Tax Contribution Dollar Limitation.
The aggregate amount of Pre-Tax Contributions and other "elective
deferrals" (within the meaning of the Code section 402(g)(3))
under any other qualified plan maintained by any Affiliated
Organization with respect to a Participant for any taxable year
of the Participant may not exceed $7000 (automatically adjusted
for increases in the cost of living in accordance with Treasury
Regulations). The limitation for any Participant who received a
hardship distribution under Section 6.1 will, for the year
following the year in which such distribution was made, be
reduced as provided in Section 6.1(C)(4). If the foregoing
limitation is exceeded for any taxable year of the Participant,
the Participant will be deemed to have notified the Administrator
of such excess and the amount of Pre-Tax Contributions in excess
of the limitation, increased by Fund earnings or decreased by
Fund losses attributable to the excess determined in accordance
with Section 9.5, will be distributed to the Participant. Such
distribution may be made at any time after the excess
contributions are received, but not later than April 15 of the
taxable year following the taxable year to which such limitation
relates. The amount distributed to a Participant who has made
elective deferrals for the taxable year other than pursuant to
Section 3.1 will, to the extent of such other elective deferrals,
be determined in accordance with written allocation instructions
received by the Administrator from the Participant not later than
March 1 of the taxable year following the taxable year with
respect to which the Pre-Tax Contributions were made.
9.2. Actual Deferral Percentage Limitations.
(A) Notwithstanding Section 3.1, for any Plan Year, Pre-Tax
Contributions may be made on behalf of Active Participants who
are Highly Compensated Employees only if the requirements of Code
section 401(k)(3), as set forth in Subsection (B) are satisfied.
To the extent deemed necessary by the Administrator in order to
comply with such requirements, the Administrator may, in
accordance with Plan Rules, prospectively decrease the rate at
which a Participant's Eligible Earnings will be reduced.
(B)
(1) The requirements of Code section 401(k)(3) will be
satisfied for any Plan Year if, for that Plan Year, the
Plan satisfies the requirements of Code section 410(b)(1)
with respect to "eligible employees" and either of the
following tests.
(a) The "actual deferral percentage" for eligible
employees who are Highly Compensated Employees is
not more than the product of the actual deferral
percentage for all other eligible employees, multiplied
by one and one-quarter.
(b) The excess of the actual deferral percentage for
eligible employees who are Highly Compensated Employees
over the actual deferral percentage for all other
eligible employees is not more than two percentage
points and the actual deferral percentage for eligible
employees who are Highly Compensated Employees is not
more than the product of the actual deferral percentage of
all other eligible employees, multiplied by two.
(2) For purposes of this section,
(a) "eligible employee" means an Active Participant who
is eligible to have Pre-Tax Contributions made on his or
her behalf for the Plan Year in question or would be so
eligible but for a suspension imposed under Section
6.1(C)(3); and
(b) "actual deferral percentage," with respect to the
group of eligible employees who are not Highly Compensated
Employees, is the average of the ratios, calculated
separately for each eligible employee in such group,
of the amount of Pre-Tax Contributions made on behalf
of the eligible employee for the preceding Plan Year,
to the eligible employee's Testing Wages for the preceding
Plan Year, or the portion of the Plan Year during
which he or she was an eligible employee, as specified in
Plan Rules. If the Company so elects, the actual deferral
percentage for the eligible employees who are not Highly
Compensated Employees may be determined on the basis of the
Plan Year's group of eligible employees and their Pre-Tax
Contributions and Testing Wages for the Plan Years.
Except for the 1998 Plan Year, the Company may not
convert to use of the prior Plan Year data without IRS
consent. The actual deferral percentage with respect
to the group of eligible employees who are Highly
Compensated Employees is the average of the ratios,
calculated separately for each eligible employee in
such group, of the amount of Pre-Tax Contributions
made on behalf of the eligible employee for the
Plan Year, to the eligible employee's Testing Wages
for the Plan Year. In computing the actual deferral
percentage, the following general rules apply.
(i) Any Pre-Tax Contributions made on behalf of
an eligible employee who is not a Highly Compensated
Employee that are in excess of the limitation of
Section 9.1 will be excluded.
(ii) Any Pre-Tax Contributions that are distributed
to the eligible Employee pursuant to Section 9.6(C)
will be excluded.
(iii) Except as otherwise provided in Treasury
Regulations, Pre-Tax Contributions taken into account
in determining the actual contribution percentage
under Section 9.3(B)(2) will be excluded.
(iv) To the extent determined by the Administrator,
all or any portion of the Matching Contribution for
the Plan Year on behalf of all or any similarly
situated group of eligible employees will be included.
(v) Elective contributions under any other plan that
is aggregated with this Plan to satisfy the
requirements of Code section 410(b) will be included.
(vi) To the extent required by Treasury Regulations,
elective contributions made under any other qualified
cash or deferred arrangement of a qualified plan of
any Affiliated Organization on behalf of any eligible
employee who is a Highly Compensated Employee will be
included.
(C) If, for any Plan Year, the requirements of Subsection (B)
are not satisfied, the Administrator will determine the amount by
which Pre-Tax Contributions made on behalf of each eligible
employee who is a Highly Compensated Employee for the Plan Year
exceeds the permissible amount as determined under Subsection
(B). The determination will be made by successively decreasing
the rate of Eligible Earnings reductions for Highly Compensated
Employees who, during the Plan Year, had the greatest percentage
of Eligible Earnings reductions made on their behalf, to the next
lower percentage, then again decreasing the percentage of such
Highly Compensated Employees' Eligible Earnings reductions,
together with the percentage of Eligible Earnings reductions of
such Highly Compensated Employees who were already at such lower
percentage, to the next lower percentage, and continuing such
procedure for as many percentage decreases as the Administrator
deems necessary. The Administrator may, in his or her
discretion, make such reductions in any amount, in lieu of one
percent increments.
(D) At such time as the Administrator specifies following the
last day of the Plan Year for which the determination described
in Subsection (B) is made, but in no case later than the last day
of the following Plan Year, the excess determined pursuant to
Subsection (C) will be corrected by taking either or both of the
following steps.
(1) The aggregate amount of excess Pre-Tax Contributions so
determined, increased by Fund earnings or decreased by Fund
losses attributable to such excess as determined under Section
9.5, will be returned to Highly Compensated Employees. The
amount to be returned to Highly Compensated Employees pursuant
to the foregoing sentence with respect to any Plan Year will
be reduced by the portion of the amount, if any, distributed
pursuant to Section 9.1 that is attributable to Pre-Tax
Contributions that relate to such Plan Year, determined by
assuming that Pre-Tax Contributions in excess of the limitation
described in Section 9.1 for a given taxable year are the first
contributions made for a Plan Year falling within such taxable
year. Additional amounts to be returned shall be determined by
successively decreasing the amount of the Pre-Tax Contributions
for the Highly Compensated Employees who, during the Plan Year,
had the largest amount of Pre-Tax Contributions made on their
behalf, down to the next lower amount, and continuing such
procedure until an amount equal to the aggregate amount of
excess Pre-Tax Contributions has been removed from the Pre-Tax
Contribution Accounts of Highly Compensated Employees.
(2) The Participating Employer will make an additional
contribution for the Plan Year pursuant to Section 3.7.
(E) To the extent required or permitted by Treasury Regulations,
the Administrator will or may, as the case may be, apply the
limitations described in this section separately to each group of
eligible employees who are included in a unit of employees
covered by a collective bargaining agreement and those who are
not included or are included in a different unit.
9.3. Actual Contribution Percentage Limitations.
(A) Notwithstanding Section 3.2, for any Plan Year, Matching
Contributions may be made on behalf of Active Participants who
are Highly Compensated Employees with respect to that Plan Year
only to the extent that either of the following tests is
satisfied.
(1) The "actual contribution percentage" for "eligible
employees" who are Highly Compensated Employees is not more
than the product of the actual contribution percentage for
all other eligible employees, multiplied by one and
one-quarter.
(2) The excess of the actual contribution percentage for
eligible employees who are Highly Compensated Employees over
the actual contribution percentage for all other eligible
employees is not more than two percentage points and the
actual contribution percentage for Highly Compensated
Employees is not more than the product of the actual
contribution percentage for all other eligible employees,
multiplied by two.
(B) For purposes of this section,
(1) "eligible employee" means an Active Participant who is
eligible to make Voluntary Contributions or to have Matching
Contributions made on his or her behalf for the Plan Year in
question or would have been so eligible if he or she had elected
to make Pre-Tax Contributions for such Plan Year, or but for a
suspension imposed pursuant to Section 3.1(B)(6) or 3.3(B)(4),
and
(2) the "actual contribution percentage" with respect to either
of the two groups of eligible employees referenced above, is the
average of the ratios, calculated separately for each eligible
employee in the particular group, of the aggregate amount of
Matching Contributions made on behalf of and Voluntary
Contributions made by the eligible employee for the Plan Year,
to the Employee's Testing Wages for the Plan Year, or the
portion of the Plan Year during which he or she was an
eligible employee, as specified in Plan Rules. In computing
the "actual contribution percentage" the following rules apply.
(a) Except as otherwise provided in Treasury Regulations,
Matching Contributions taken into account in
determining the actual deferral percentage under
Section 9.2(B)(2)(b) will be excluded.
(b) Matching Contributions taken into account for
purposes of the minimum contribution required by
Section 14.3(A) will be excluded.
(c) Any Matching Contributions forfeited pursuant to
Section 9.6(C) will be excluded.
(d) To the extent determined by the Administrator,
all or any portion of the Pre-Tax Contributions
for the Plan Year on behalf of eligible employees
will be included.
(e) Matching contributions (within the meaning of Code
section 401(m)(4)(A)) and after-tax Contributions
made under any other plan that is aggregated with
this Plan to satisfy the requirements of Code section
410(b) will be included.
(f) To the extent required by Treasury Regulations,
matching contributions (within the meaning of Code
section 401(m)(4)(A)) and after-tax contributions
made under any other qualified plan of any Affiliated
Organization on behalf of or by any eligible employee
who is a Highly Compensated Employee will be included.
(C) If, for any Plan Year, the requirements of Subsection (A)
are not satisfied, the Administrator will determine the amount by
which Voluntary Contributions made by each Highly Compensated
Employee for the Plan Year and, if necessary, Matching
Contributions made on behalf of each Highly Compensated Employee
for the Plan Year exceeds the permissible amount as determined
under Subsection (A), such determination being made in accordance
with the procedure described in Section 9.2(C) with respect to
reductions of Eligible Earnings.
(D) At such time as the Administrator specifies on or following
the last day of the Plan Year for which the determination
described in Subsection (B) is made, but in no case later than
the last day of the following Plan Year, the excess determined
pursuant to Subsection (C) will be corrected by taking one or
more of the following steps.
(1) The aggregate amount of excess Voluntary and Matching
Contributions so determined with respect to Highly Compensated
Employees, increased by Fund earnings or decreased by Fund
losses attributable to such excess as determined under Section
9.5, will be distributed to Highly Compensated Employees.
The amount to be distributed pursuant to the foregoing
sentence with respect to any Plan Year shall be determined
by successively decreasing the amount of Voluntary
Contributions and Matching Contributions for the Highly
Compensated Employees who, during the Plan Year, had
the largest amount of Voluntary Contributions and Matching
Contributions made on their behalf, down to the next lower
amount, and continuing such procedure until an amount equal to
the aggregate amount of excess Voluntary and Matching
Contributions has been removed from the Voluntary Contribution
and Matching Accounts of Highly Compensated Employees.
(2) The Participating Employer will make an additional
contribution for the Plan Year pursuant to Section 3.5.
(E) To the extent provided in Treasury Regulations, the
limitations described in this section do not apply to any group
of eligible employees who are included in a unit of Employees
covered by a collective bargaining agreement.
9.4. Multiple Use Limitation.
(A) This section applies for any Plan Year for which the sum of
the actual deferral percentage, as determined under Section
9.2(B)(2)(b), for eligible employees who are Highly Compensated
Employees plus the actual contribution percentage, as determined
under Section 9.3(B)(2), for eligible employees who are Highly
Compensated Employees, exceeds the "aggregate limit." For
purposes of this subsection, the aggregate limit is the greater
of:
(1) The sum of:
(a) the product of one and one-quarter, multiplied by the
greater of:
(i) the actual deferral percentage, as determined
under Section 9.2(B)(2)(b), for the Plan Year for
eligible employees who are not Highly Compensated
Employees, or
(ii) the actual contribution percentage, as
determined under Section 9.3(B)(2), for the Plan
Year for eligible employees who are not Highly
Compensated Employees;
plus
(b) the sum of two percentage points plus the lesser of
the actual deferral percentage determined under item
(i) of clause (a) above or the actual contribution
percentage determined under item (ii) of clause (a)
above, with such sum in no case exceeding twice the
lesser of such actual deferral percentage or actual
contribution percentage;
or
(2) The sum of:
(a) the product of one and one-quarter, multiplied by
the lesser of:
(i) the actual deferral percentage, as determined
under Section 9.2(B)(2)(b), for the Plan Year
for eligible employees who are not Highly
Compensated Employees, or
(ii) the actual contribution percentage, as
determined under Section 9.3(B)(2), for the
Plan Year for eligible employees who
are not Highly Compensated Employees;
plus
(b) the sum of two percentage points plus the greater
of the actual deferral percentage determined under
item (i) of clause (a) above or the actual
contribution percentage determined under item (ii)
of clause (a) above, with such sum in no case
exceeding twice the lesser of such actual deferral
percentage or actual contribution percentage.
(B) If, for any Plan Year, the calculations under Subsection (A)
require that this section be applied, the Administrator will
determine the amount by which Matching Contributions made on
behalf of each Highly Compensated Employee for the Plan Year
causes the excess amount determined under Subsection (A), such
determination being made in accordance with the provisions of
Section 9.3(C). At such time as the Administrator specifies on
or following the last day of the Plan Year for which such
determination is made, but in no case later than the last day of
the following Plan Year, the excess will be corrected by taking
any one or more of the steps described in Sections 9.2(D) and
9.3(D).
(C) To the extent provided in Treasury Regulations, the
limitations described in this section do not apply to any group
of eligible employees who are included in a unit of employees
covered by a collective bargaining agreement.
9.5. Earnings on Excess Contributions.
The amount of Fund earnings or losses with respect to
contributions returned to a Participant pursuant to the
provisions of this article is an amount equal to the product of
the total earnings or losses for the Participant's Account to
which the excess contributions were credited for the Plan Year,
multiplied by a fraction, the numerator of which is the excess
amount of contributions made on the Participant's behalf to such
Account for the Plan Year, and the denominator of which is the
closing balance of such Account for the Plan Year, decreased by
the amount of earnings credited to that Account, or increased by
the amount of losses debited to that Account, for the Plan Year.
9.6. Aggregate Defined Contribution Limitations.
(A) Notwithstanding any contrary provisions of this Plan, there
will not be allocated to any Participant's Accounts for a Plan
Year any amount that would cause the aggregate "annual additions"
with respect to the Participant for the Plan Year to exceed the
lesser of:
(1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code section 415(b)(1)(A) for
the calendar year during which the Plan Year in question
begins); and
(2) 25 percent of the Participant's Section 415 Wages
for the Plan Year.
(B) For purposes of Subsection (A), the "annual additions" with
respect to a Participant for a Plan Year are the sum of -
(1) the aggregate amount of Pre-Tax, Matching, Voluntary and
Profit Sharing Contributions and forfeitures allocated for the
Plan Year to the Participant's Accounts under the Plan for the
Plan Year (including any Pre-Tax Contributions, Matching
Contributions and Voluntary Contributions that are distributed
pursuant to Section 9.2, 9.3 or 9.4, but excluding any Pre-Tax
Contributions in excess of the limitation of Section 9.1 that
are distributed to the Participant by the April 15 following
the Plan Year to which such contributions relate) and employer
contributions, employee contributions and forfeitures allocated
for the Plan Year to the Participant's accounts under the
Fingerhut Corporation's Fixed Contribution Retirement Plan and
any other qualified defined contribution plan maintained by any
Affiliated Organization; plus
(2) the amount, if any, attributable to post-retirement medical
benefits that is allocated to a separate account for the
Participant as a "key employee" (as defined in Section 14.3(C)),
to the extent required under Code section 419A(d)(1).
(C)
(1) If the Administrator determines that the limitation under
Subsection (A) may otherwise be exceeded for a Plan Year, to
the extent necessary to prevent such excess from occurring,
the amount of a Participant's Pre-Tax Contributions will be
prospectively reduced.
(2) If a further reduction of contributions is required, the
amount of the Matching Contribution that would otherwise be
allocated to the Participant's Matching Account will be reduced
and then the amount of the Profit Sharing Contribution that
would otherwise be allocated to the Participant's Profit
Sharing Account will be reduced and the aggregate amount of
the Matching Contribution and Profit Sharing Contribution for
the Plan Year will be reduce by the same amount.
(3) If, in spite of such reductions and as a result of
reasonable error in estimating the amount of the Participant's
Eligible Earnings or Section 415 Wages for the Plan Year, a
reasonable error in determining the amount of Pre-Tax
Contributions or other elective deferrals within the meaning of
Code section 402(g)(3) permitted under Code Section 415 or other
circumstances specified in Treasury Regulations, the limitation
would otherwise be exceeded, then, to the extent required to
prevent such excess, the amount of Voluntary Contributions made
by the Participant, together with earnings on such
contributions, will be returned to the Participant and then,
the amount of Pre-Tax Contributions made for the Participant,
together with earnings on such contributions, will be
distributed to the Participant and any Matching Contributions
attributable to the amount so distributed, together with
earnings on such contributions,will be forfeited and applied
as provided in Section 3.2(D).
9.7. Aggregate Defined Contribution/Defined Benefit Limitations.
(A) In no event will the amount of a Participant's annual
additions under the Plan for any Plan Year beginning before
January 1, 2000 exceed an amount that would cause the decimal
equivalent of the sum of the "defined benefit fraction" plus the
"defined contribution fraction" to exceed one.
(B) The "defined benefit fraction" is a fraction, the numerator
of which is the Participant's aggregate projected annual benefit
under all qualified defined benefit pension plans maintained by
any Affiliated Organization (determined as of the end of the Plan
Year), and the denominator of which is the lesser of:
(1) 125 percent of the maximum dollar benefit limitation in
effect under Code section 415(b)(1)(A) for the calendar year
during which the Plan Year in question begins; and
(2) 140 percent of the average Section 415 Wages of the
Participant during the three consecutive Plan Years during which
he or she was a Participant in any such defined benefit pension
plan that produce the highest average.
(C) The "defined contribution fraction" is a fraction, the
numerator of which is the sum of the annual additions with
respect to the Participant for the Plan Year under this Plan and
any other qualified defined contribution plans maintained by an
Affiliated Organization, determined in the manner described in
Section 9.6, and the denominator of which is the aggregate of the
lesser of:
(1) 125 percent of the maximum annual addition dollar limit in
effect under Code section 415(c)(1)(A) for the calendar year
during which the Plan Year in question begins; and
(2) 140 percent of 25 percent of the Participant's Section 415
Wages for the Plan Year,
applied for all years during which the Participant was an
Employee, without regard to whether there was a qualified
defined contribution plan in effect during all such years.
(D) If the annual additions that would otherwise be made with
respect to a Participant for a Plan Year would cause the
limitation of Subsection (A) to be exceeded, the Participant's
benefit under one or more qualified defined benefit pension plans
maintained by an Affiliated Organization will, to the extent
provided in such plans, be reduced to the extent necessary to
prevent such excess from occurring, and, if a sufficient
reduction cannot be made under such plans, the provisions of
Section 9.6(C) will be applied to reduce the amount of the annual
additions to the Participant's Accounts under this Plan for such
Plan Year to the extent necessary to prevent such excess.
9.8. Administrator's Discretion.
Notwithstanding the foregoing provisions of this article, the
Administrator may, in his or her discretion, apply the provisions
of Sections 9.1 through 9.7 in any manner permitted by Treasury
Regulations that will cause the Plan to satisfy the limitations
of the Code incorporated in such sections, and the
Administrator's good faith application of Treasury Regulations
will be binding on all Participants and Beneficiaries.
ARTICLE
10.
SERVICE RULES
10.1. Computation Period.
The "Computation Period" is -
(a) for the purpose of determining whether an
Employee has completed one year of Eligibility
Service, the 12-month period commencing with
the date on which he or she first completes an
Hour of Service of the type specified at
Section 10.4(A)(1) and, thereafter, Plan Years,
commencing with the Plan Year that includes
the first anniversary of such date; and
(b) for the purpose of determining the extent of
an Employee's Vesting Service, Plan Years.
If an Employee who terminates employment before completing at
least one year of Eligibility Service again becomes an Employee
after the end of the Computation Period of the type described in
clause (a) during which he or she terminated employment, his or
her previous service will be disregarded in determining his or
her new Computation Period pursuant to clause (a).
10.2. Eligibility Service.
The term "Eligibility Service" with respect to an Employee means
the aggregate number of Computation Periods of the type specified
at clause (a) of Section 10.1 during each of which the Employee
completes at least 1000 Hours of Service.
10.3. Vesting Service.
The term "Vesting Service" with respect to an Employee means,
except as otherwise provided in Section 10.6, the aggregate
number of Computation Periods of the type specified at clause (b)
of Section 10.1 during each of which the Employee completes at
least 500 Hours of Service. In addition, solely for the purpose
of determining the Vesting Service of a Participant who ceases to
be an Employee in connection with the disposition of an
Affiliated Organization or a substantial amount of the operating
assets of an Affiliated Organization, the former Affiliated
Organization or the entity that purchased the assets will be
deemed to be an Affiliated Organization until the Participant's
first termination of employment with the former Affiliated
Organization or entity that purchased the assets following the
disposition.
10.4. Hour of Service.
(A) Subject to the remaining subsections of this
section, the term "Hour of Service," with respect to an
Employee, includes and is limited to -
(1) each hour for which the Employee is paid, or
entitled to payment, for the performance of duties
for an Affiliated Organization;
(2) each hour for which the Employee is paid, or
entitled to payment, by an Affiliated Organization
on account of a period of time during which no duties
are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness (including disability), layoff, jury duty, military
duty or leave of absence;
(3) each hour for which the Employee is not paid or
entitled to payment but which is required by federal
law to be credited to the Employee on account of his or
her military service or similar duties;
(4) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Affiliated
Organization; provided, first, that Hours of Service taken into
account under clause (1) or (2) will not also be taken into
account under this clause (4); and second, that Hours of Service
taken into account under this clause (4) that relate to periods
specified in clause (2) will be subject to the rules under
Subsection (B); and
(5) each hour for which an Employee is not performing duties on
account of disability whether or not such Employee is actually
paid or entitled to payment for such period of time.
(B) The following rules will apply for purposes of determining
the Hours of Service completed by an Employee under Subsection
(A)(2) and (A)(5):
(1) No more than 501 hours will be credited to the Employee on
account of any single continuous period during which the
Employee performs no duties (whether or not such period
occurs in a single Computation Period).
(2) No more than the number of hours regularly scheduled for
the performance of duties for the period during which no duties
are performed will be credited to the Employee for such period.
(3) The Employee will not be credited with hours for which
payments are made solely to reimburse medical or medically
related expenses.
(4) A payment will be deemed to be made by or due from an
Affiliated Organization, regardless of whether such payment is
made by or due from the Affiliated Organization directly or
indirectly through a trust fund or insurer to which the
Affiliated Organization contributes or pays premiums.
(5) If the payment made or due is calculated on the basis of
units of time, the number of Hours of Service to be credited
will be the number of regularly scheduled working hours
included in the units of time on the basis of which the
payment is calculated; provided, that, if such a payment
is made to an Employee described in Subsection (D)(1),
the number of Hours of Service to be credited will be the
number of equivalent hours determined under Subsection (D)(1)
that are included in the units of time on the basis of which
the payment is calculated.
(6) If the payment made or due is not calculated on the basis
of units of time, the number of Hours of Service to be
credited will be equal to the amount of the payment, divided
by the Employee's most recent hourly rate of compensation
before the period during which no duties are performed.
(C) Hours of Service will be credited -
(1) in the case of Hours of Service described in Subsection
(A)(1), to the Computation Period in which the duties are
performed;
(2) in the case of Hours of Service described in Subsection
(A)(2) and (A)(5), to the Computation Period or Periods in which
the period during which no duties are performed occurs;
provided, that, if the payment is not calculated on the basis
of units of time, the Hours of Service will not be allocated
between more than the first two Computation Periods of such
period;
(3) in the case of Hours of Service described in Subsection
(A)(3), to the Computation Period or Periods determined by the
Administrator in accordance with the applicable federal law;
and
(4) in the case of Hours of Service described in Subsection
(A)(4), to the Computation Period or Periods to which the award
or agreement for back pay pertains.
(D) For purposes of determining the number of Hours of Service
completed by an Employee during a particular period of time -
(1) an Employee who is not subject to the overtime provisions
of the Fair Labor Standards Act of 1938, as from time to time
amended, will be credited with 45 Hours of Service for each week
during which he or she completes at least one Hour of Service;
(2) each other Employee will be credited with the number of
Hours of Service that he or she completes during such period.
(E) Notwithstanding the foregoing provisions of this section, an
individual will be credited with the number of Hours of Service
he or she completes, determined in the manner specified in
Subsections (A) through (E),
(1) while, although not an Employee, he or she is considered to
be a "leased employee" of an Affiliated Organization or of a
"related person" (within the meaning of Code sections 414(n)(2)
and 144(a)(3)), respectively, and
(2) with any other organization to the extent such Hours of
Service are required to be taken into account pursuant to
Treasury Regulations under Code section 414(o).
10.5. One-Year Break in Service.
An Employee will incur a "One-Year Break in Service" if the
Employee fails to complete at least 500 Hours of Service during a
Computation Period; provided, that, for purposes only of
determining whether an Employee has incurred such a One-Year
Break in Service, in addition to Hours of Service credited under
Section 10.4, there will be taken into account the number of
Hours of Service that otherwise would have been credited to the
Employee, or, if the number of such hours of service cannot be
determined, eight hours of service for each day on which the
Employee would have otherwise performed services for an
Affiliated Organization, during an authorized leave of absence,
while still employed with the Affiliated Organization, due to -
(a) the Employee's pregnancy,
(b) the birth of the Employee's child,
(c) the placement of a child with the Employee
in connection with the adoption of such child
by the Employee, or
(d) the Employee's caring for such child for a
period beginning immediately following such
birth or placement; provided, first, that the
total number of such additional Hours of
Service taken into account by reason of any
such absence will not exceed 501; second, that,
if the Employee would be prevented from incurring
a One-Year Break in Service for the Computation
Period in which such absence commenced solely
because the additional Hours of Service are so
credited, such Hours of Service will be credited
only to such Computation Period or, if a One-Year
Break in Service for such Computation Period would
not be so prevented, such additional Hours of
Service will be credited to the Computation
Period following the Computation Period during
which such absence commenced; and third, that,
notwithstanding the foregoing, no such
additional Hours of Service will be credited
unless the Employee furnishes to the
Administrator, on a timely basis, such
information as the Administrator reasonably
requires in order to establish the
number of days during which the Employee was
absent for one of the reasons set forth at
items (a) through (d). In addition, an
Employee will be credited with Hours of Service
for the purpose of determining whether he or she
has incurred a One-Year Break in Service to the
extent required by the Family and Medical Leave
Act of 1993.
10.6. Loss of Service.
If an Employee terminates employment and experiences at least
five consecutive One-Year Breaks in Service with respect to his
or her Vesting Service, then:
(a) if the Employee had a vested interest in any
Account prior to the Breaks in Service,
(i) Vesting Service completed prior to such Breaks
in Service will be taken into account in
determining his or her vested interest in his
or her Accounts attributable to contributions
made for periods after the Breaks in Service, and
(ii) the extent of the Employee's vested interest in
his or her Accounts as determined under Section
7.1 prior to the Breaks in Service will not be
increased by Vesting Service completed
following the Breaks in Service;
or
(b) if the Employee had no vested interest in any Account
prior to the Breaks in Service, the Employee's
Vesting Service completed prior to the Breaks in
Service will not be taken into account for any
purpose under the Plan.
10.7. Pre-Acquisition Service.
Service with an Affiliated Organization prior to the date on
which it became an Affiliated Organization (or, with another
entity prior to the acquisition of such entity's business or
assets by an Affiliated Organization) will be taken into account
under this Plan only if, to the extent and for the purposes,
provided in any agreement pursuant to which it became an
Affiliated Organization (or such business or assets were
acquired) or as provided by resolution of the Company's Board.
If such Hours of Service are to be taken into account, unless
otherwise specifically provided in such agreement or resolution,
such Hours of Service will be determined in accordance with the
provisions of this article. If less than the entire period of
employment with an Affiliated Organization prior to its becoming
such (or with another entity prior to the acquisition of its
business or assets) is to be taken into account, the extent to
which such period of employment is to be taken into account will
be specified in an exhibit to the Plan.
10.8. Transition from Elapsed Time.
(A) Eligibility Service. Employees who were employed by an
Affiliated Organization prior to July 1, 1997 will receive credit
for Eligibility Service as follows:
(1) Each Employee will be credited with a number of years of
Eligibility Service equal to the number of one year periods of
Recognized Service credited to the Employee under the Plan as
of July 1, 1997; and
(2) For the Computation Period which includes June 30, 1997,
each Employee employed on such date will receive credit for 1000
Hours of Service for the fractional period of service as of
July 1, 1997.
(B) Vesting Service. The amendment of the Plan converting from
the elapsed time method to the general method of counting Hours
of Service will be effective January 1, 1998, with the provisions
of the Plan regarding Recognized Service continuing through
January 1, 1998. Employees who are employed by an Affiliated
Organization on or prior to December 31, 1997 will receive credit
for Vesting Service as follows:
(1) Each Employee will be credited with a number of years of
Vesting Service equal to the number of one year periods of
Recognized Service credited to the Employee as of January 1,
1998.
(2) On and after January 1, 1998 each Employee will receive
credit for Vesting Service based on all Hours of Service
credited during a Computation Period.
ARTICLE
11.
ADOPTION, AMENDMENT AND TERMINATION
11.1. Adoption by Affiliated Organizations.
An Affiliated Organization may adopt this Plan and become a
Participating Employer with the prior approval of the
Administrator by furnishing to the Administrator a certified copy
of a resolution of its Board adopting the Plan. Any adoption of
the Plan by an Affiliated Organization, however, must either be
authorized by the Company's Board in advance or be ratified by
such Board prior to the end of the fiscal year of such Affiliated
Organization in which it adopts the Plan.
11.2. Authority to Amend and Procedure.
(A) The Company reserves the right to amend the Plan at any
time, to any extent that it may deem advisable. Each amendment
will be stated in a written instrument, approved in advance or
ratified by the Company's Board and executed in the name of the
Company by its President or Vice President and attested by the
Secretary or Assistant Secretary. On and after the effective
date of the amendment, all interested parties will be bound by
the amendment; provided, first, that no amendment will increase
the duties or liabilities of the Trustee without its written
consent; and, second, that no amendment will have any retroactive
effect so as to deprive any Participant, or any Beneficiary of a
deceased Participant, of any benefit already accrued or vested or
of any option with respect to the form of such benefit that is
protected by Code section 411(d)(6), except that any amendment
that is required to conform the Plan with government regulations
so as to qualify the Trust for income tax exemption may be made
retroactively to the Effective Date of the Plan or to any later
date.
(B) If the schedule for determining the extent to which benefits
under the Plan are vested is changed, each Participant with at
least three years of Vesting Service may elect to have his or her
vested benefits determined without regard to such change by
giving written notice of such election to the Administrator
within the period beginning on the date such change was adopted
(or the Plan's top heavy status changed) and ending 60 days after
the latest of (1) the date such change is adopted, (2) the date
such change becomes effective or (3) the date the Participant is
issued notice of such change by the Administrator or the Trustee.
Except as otherwise provided in an amendment permitted by
Treasury Regulations, if an optional form of benefit payment
protected under Code section 411(d)(6) is eliminated, each
Participant may elect to have that portion of the value of his or
her Accounts that was accrued as of the date of such elimination,
distributed in the optional form of benefit payment that was
eliminated.
(C) The provisions of the Plan in effect at the termination of a
Participant's employment will, except as specifically provided
otherwise by a subsequent amendment, continue to apply to such
Participant.
11.3. Authority to Terminate and Procedure.
The Company expects to continue the Plan indefinitely but
reserves the right to terminate the Plan in its entirety at any
time. Each Participating Employer expects to continue its
participation in the Plan indefinitely but reserves the right to
cease its participation in the Plan at any time. The Plan will
terminate in its entirety as of the date specified in a written
instrument adopted and executed in the manner of an amendment.
The Plan will terminate with respect to a particular
Participating Employer as of the date specified by the
Participating Employer in a written instrument approved in
advance or ratified by the Participating Employer's Board and
executed in the name of the Participating Employer by two duly
authorized officers.
11.4. Vesting Upon Termination, Partial Termination or
Discontinuance of Contributions.
Upon termination of the Plan or upon the complete discontinuance
of contributions by all Participating Employers, to the extent
required by Code section 411(d)(3) and Treasury Regulations
thereunder, the Accounts of each affected Participant will, to
the extent funded, vest in full. Upon a partial termination of
the Plan, the Accounts of each Participant as to whom the Plan
has been partially terminated will, to the extent funded, vest in
full.
11.5. Distribution Following Termination, Partial Termination
or Discontinuance of Contributions.
After termination or partial termination of the Plan or the
complete discontinuance of contributions under the Plan, the
Trustee will continue to hold and distribute the Fund at the
times and in the manner provided by Article 8 as if such event
had not occurred or, if the Administrator so directs in
accordance with Treasury Regulations, will distribute to each
Participant the entire balance of his or her Accounts.
ARTICLE
12.
DEFINITIONS, CONSTRUCTION AND INTERPRETATIONS
The definitions and the rules of construction and interpretations
set forth in this article will be applied in construing this
instrument unless the context otherwise indicates.
12.1. Account.
An "Account" with respect to a Participant is any or all of the
accounts maintained on his or her behalf pursuant to Section 4.1,
as the context requires.
12.2. Active Participant.
An "Active Participant" is a Participant who is a Qualified
Employee.
12.3. Administrator.
The "Administrator" of the Plan is the Company or the person to
whom administrative duties are delegated pursuant to Section
13.1, as the context requires.
12.4. Affiliated Organization.
An "Affiliated Organization" is the Company and:
(a) any corporation that is a member of a controlled
group of corporations (within the meaning of Section 1563(a) of
the Code without regard to Code sections 1563(a)(4) and
1563(e)(3)(C)) that includes the Company;
(b) any trade or business (whether or not
incorporated) that is controlled (within the meaning of Code
section 414(c)) by the Company;
(c) any member of an "affiliated service group"
(within the meaning of Code section 414(m)) of which the Company
is a member; or
(d) any other organization that, together with the
Company, is treated as a single employer pursuant to Code section
414(o) and Treasury Regulations;
provided, that, for purposes of applying the limitations set
forth at Sections 9.6 and 9.7 of the Plan, Code section 1563(a)
will be applied by substituting the phrase "more than 50 percent"
for the phrase "at least 80 percent" wherever it appears.
12.5. Board.
The "Board" is the board of directors of the Affiliated
Organization in question. When the Plan provides for an action
to be taken by the Board, the action may be taken by any
committee or individual authorized to take such action pursuant
to a proper delegation by the board of directors in question.
12.6. Beneficiary.
A "Beneficiary" is a person designated or otherwise determined
under the provisions of Section 8.2 as the distributee of
benefits payable after the death of a Participant. A person
designated as, or otherwise determined to be, a Beneficiary under
the terms of the Plan has no interest in or rights under the Plan
until the Participant in question has died. A Beneficiary will
cease to be such on the day on which all benefits to which he or
she is entitled under the Plan have been distributed.
12.7. Code.
The "Code" is the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes a
reference to such provision as it may be amended from time to
time and to any successor provision.
12.8. Company.
The "Company" is Fingerhut Corporation, any successor which will
maintain this Plan and any predecessor that has maintained this
Plan.
12.9. Disabled.
A Participant will be considered to be "Disabled" only if the
Administrator determines that, by reason of illness, bodily
injury or disease, he or she is unable to perform any occupation
for remuneration or profit and the disability is likely to be of
long and indefinite duration or to result in death.
12.10. Effective Date.
The "Effective Date" of the Plan is January 15, 1960.
12.11. Eligible Earnings.
(A) The "Eligible Earnings" of a Participant from a
Participating Employer for any Plan Year is the sum of all
remuneration paid to the Participant by the Participating
Employer during the portion of a Plan Year in which he or she is
an Active Participant that is reportable in the "wages, tips,
other compensation" box of Internal Revenue Form W-2, excluding
(to the extent otherwise included) bonuses paid under a long-term
incentive compensation plan, severance payments, taxable fringe
benefits, taxable lump sum moving expenses and other items of an
unusual or nonrecurring nature specified in Plan Rules, increased
by amounts that are deferred under Section 3.1 as Pre-Tax
Contributions and amounts by which a Participant's wages or
salary is reduced under a Code section 125 cafeteria plan.
(B) Notwithstanding Subsection (A), in no event will a
Participant's Eligible Earnings for any Plan Year be taken into
account to the extent they exceed $150,000 (or such dollar
amount, adjusted to reflect increases in the cost of living, as
in effect under Code section 401(a)(17) for the calendar year
during which the Plan Year begins).
12.12. Employee.
An "Employee" is an individual who performs services for an
Affiliated Organization as a common-law employee of the
Affiliated Organization.
12.13. Fingerhut Stock.
"Fingerhut Stock" means common stock issued by Fingerhut
Companies, Inc.
12.14. Fund.
The "Fund" is the total of all of the assets of every kind and
nature, both principal and income, held in the Trust at any
particular time or, if the context so requires, one or more of
the investment funds described in Section 5.1.
12.15. Governing Law.
To the extent that state law is not preempted by provisions of
the Employee Retirement Income Security Act of 1974, as amended,
or any other laws of the United States, this Plan will be
administered, construed, and enforced according to the internal,
substantive laws of the State of Minnesota, without regard to its
conflict of laws rules.
12.16. Headings.
The headings of articles and sections are included solely for
convenience. If there is a conflict between the headings and the
text, the text will control.
12.17. Highly Compensated Employee.
(A) A "Highly Compensated Employee" for any Plan Year is any
employee who -
(1) at any time during such Plan Year or the preceding Plan
Year, owns or owned (or is considered as owning or having owned
within the meaning of Code section 318) more than five percent
of the outstanding stock of an Affiliated Organization or stock
possessing more than five percent of the total combined voting
power of all outstanding stock of an Affiliated Organization,
or
(2) during the preceding Plan Year -
(a) had compensation in excess of $80,000 (or such dollar
amount, adjusted to reflect increases in the cost of
living, as in effect under Code section 414(q)(1)(B)
for the calendar year during which the Plan Year in
question begins), and
(b) had compensation which exceeded the compensation of
at least 80 percent of all employees, excluding,
for purposes of determining the number of employees
in such group but not for purposes of determining
the specific employees comprising the group, all
employees who
(i) have completed less than six months of service
with the Affiliated Organizations,
(ii) normally work fewer than 17 hours per week for
the Affiliated Organizations,
(iii) normally work for the Affiliated
Organizations during not more than six months during
any calendar year, or
(iv) have not attained age 21.
(B) For purposes of this section,
(1) an "employee" is any individual who is not described in
clause (b) of Section 12.31 and who, during the Plan Year for
which the determination is being made, performs services for an
Affiliated Organization as
(a) a common law employee,
(b) an employee pursuant to Code section 401(c)(1), or
(c) a leased employee who is treated as an employee of an
Affiliated Organization pursuant to Code section
414(n)(2) or 414(o)(2), and
(2) "compensation" for any Plan Year means an employee's
Section 415 Wages for the Plan Year (increased for any Plan Year
beginning before January 1, 1998 by the amount of any reductions
to the employee's compensation for the period in connection with
an election by the employee made pursuant to a plan maintained
by an Affiliated Organization under Code section 125 or 401(k)).
12.18. Matching Account.
The "Matching Account" is the account established pursuant to
Section 4.1(b) to evidence Matching Contributions made on behalf
of a Participant.
12.19. Matching Contributions.
"Matching Contributions" means contributions made pursuant to
Section 3.2 or 3.6.
12.20. Normal Retirement Date.
The "Normal Retirement Date" of a Participant is the day on which
he or she attains age 60.
12.21. Number and Gender.
Wherever appropriate, the singular number may be read as the
plural, the plural may be read as the singular, and the masculine
gender may be read as the feminine gender.
12.22. Participant.
A "Participant" is a current or former Qualified Employee who has
entered the Plan pursuant to the provisions of Article 2 and has
not ceased to be a Participant pursuant to Section 2.6.
12.23. Participating Employer.
A "Participating Employer" is the Company and any other
Affiliated Organization that has adopted the Plan, or all of them
collectively, as the context requires, and their respective
successors. An Affiliated Organization will cease to be a
Participating Employer upon a termination of the Plan as to its
Employees or upon its ceasing to be an Affiliated Organization.
12.24. Plan.
The "Plan" is the Fingerhut Corporation Profit Sharing Plan
established and maintained by this instrument, as from time to
time amended.
12.25. Plan Rule.
A "Plan Rule" is a rule, policy, practice or procedure adopted by
the Administrator.
12.26. Plan Year.
A "Plan Year" is the calendar year.
12.27. Pre-Tax Contribution Account.
The "Pre-Tax Contribution Account" is the account established
pursuant to clause (a) of Section 4.1 to evidence Pre-Tax
Contributions made on behalf of a Participant.
12.28. Pre-Tax Contributions.
"Pre-Tax Contributions" means contributions made pursuant to
Section 3.1.
12.29. Profit Sharing Account.
The "Profit Sharing Account" is the Account established pursuant
to Section 4.1(c) to evidence Profit Sharing Contributions made
on behalf of a Participant.
12.30. Profit Sharing Contributions.
"Profit Sharing Contributions" means contributions made pursuant
to Section 3.3 or 3.5.
12.31. Qualified Employee.
A "Qualified Employee" is an Employee who is a common-law
employee of a Participating Employer (as classified by the
Participating Employer at the time the services are performed
without regard to any subsequent reclassification), excluding,
however, any such person who -
(a) is covered by a collective bargaining agreement, for
whom retirement benefits were the subject of good
faith bargaining between such person's representative
and the Participating Employer, and who is not, as a
result of such bargaining, specifically covered by
this Plan; or
(b) is a nonresident alien who receives no earned income
(within the meaning of Code section 911(d)(2)) from a
Participating Employer that constitutes income from
sources within the United States (within the meaning
of Code section 861(a)(3)); or
(c) performs services for the participating Employer
outside the continental United States (including
Alaska) or Hawaii, or has his or her principal base
of operations to which he or she frequently returns
outside the continental United States (including
Alaska) or Hawaii, other than while on a temporary
assignment for the Participating Employer.
For purposes of this section only, a collective
bargaining agreement will be deemed to continue
after its formal expiration during collective
bargaining negotiations pending the execution
of a new agreement.
12.32. Rollover Account.
The "Rollover Account" is the account established pursuant to
clause (e) of Section 4.1 to evidence the amounts, if any, rolled
over from an individual retirement arrangement or another
qualified plan, or transferred directly from another qualified
plan with respect to a Participant, pursuant to Section 3.4.
12.33. Section 415 Wages.
(A) An individual's "Section 415 Wages" for any period is the
sum of his or her remuneration for the period from all Affiliated
Organizations that constitutes "compensation" within the meaning
of Code section 415(c)(3) and Treasury Regulations thereunder.
(B) Notwithstanding Subsection (A), the Administrator may, in
his or her discretion, for any Plan Year, determine the items of
remuneration that, in accordance with Treasury Regulations, will
be included in Section 415 Wages for such Plan Year; provided
that for each purpose under this Plan, the Administrator's
determination will be uniform throughout any Plan Year.
(C) For any Plan Year beginning before January 1, 1998, Section
415 Wages will not include the amount by which a Participant's
compensation is reduced under Code section 125 or 401(k).
12.34. Spousal Consent.
Whenever the consent of a Participant's spouse is required with
respect to any act of the Participant, such consent will be
deemed to have been obtained only if
(a) the Participant's spouse executes a written consent
to such act, which consent acknowledges the effect
of such act and is witnessed by a Plan representative
or a notary public; or
(b) the Administrator determines that no such consent can
be obtained because the Participant has no spouse,
because the Participant's spouse cannot be located,
or because of such other circumstances as may, under
Treasury Regulations, justify the lack of such consent.
Any such consent by the Participant's spouse or such
determination by the Administrator that such spouse's consent is
not required is effective only with respect to the particular
spouse of the Participant who so consented or with respect to
whom such determination was made. Any such consent by the
Participant's spouse to an act of the Participant under the Plan
is irrevocable with respect to that act.
12.35. Termination of Employment.
(A) For purposes of determining entitlement to a distribution
under this Plan, a Participant will be deemed to have terminated
employment only if he or she has completely severed his or her
employment relationship with all Affiliated Organizations or
become Disabled. Neither transfer of employment among Affiliated
Organizations nor absence from active service by reason of
disability leave, other than in connection with a Participant
becoming disabled, or any other leave of absence will constitute
a termination of employment.
(B) A Participant will be deemed to have terminated employment
in conjunction with the disposition of all or any portion of the
business operation of an Affiliated Organization which is a
disposition of a subsidiary or of substantially all of the assets
used in a trade or business of an Affiliated Organization within
the meaning of Code section 401(k)(10)(A) with respect to which
the requirements of Code section 401(k)(10)(B) and (C) are
satisfied.
(C) A Participant who, in conjunction with the disposition of
all or any portion of a business operation of an Affiliated
Organization which is not described in Subsection (B), transfers
employment to the acquirer of such business operation or to any
affiliate of such acquirer will not be considered to have
terminated employment. If a Participant is deemed to have
continued employment by reason of the preceding sentence, such
sentence will continue to apply to such Participant in the event
of any subsequent transfer of employment in conjunction with the
disposition of all or any portion of a business operation of the
initial acquirer or any subsequent acquirers which is not a
disposition of a subsidiary of such acquirer or of substantially
all of the assets used in a trade or business of such acquirer
within the meaning of Code section 401(k)(10)(A) with respect to
which the requirements of Code section 401(k)(10)(B) and (C) are
satisfied. Except in conjunction with such a disposition of a
subsidiary or substantially all of the assets used in a trade or
business of the seller, such a Participant will be considered to
have terminated employment only when he or she has severed the
employment relationship with all such acquirers and their
affiliates.
12.36. Testing Wages.
(A) An individual's "Testing Wages" for any period is his or her
Section 415 Wages for the period (increased for any Plan Year
beginning before January 1, 1998 by the amount by which a
Participant's compensation for the period is reduced in
connection with an election by the individual under a plan
maintained by an Affiliated Organization pursuant to Code section
125 or Code section 401(k)).
(B) In no event will an individual's Testing Wages for any Plan
Year be taken into account to the extent it exceeds $150,000 (or
such dollar amount, adjusted to reflect increases in the cost of
living, as in effect under Code section 401(a)(17) for the
calendar year during which the Plan Year begins).
(C) The Administrator may, in his or her discretion, for any
Plan Year, adopt any alternative definition of Testing Wages that
complies with Code section 414(s) and Treasury regulations
thereunder; provided, that for each purpose under this Plan, the
Administrator's determination will be uniform throughout any Plan
Year.
12.37. Treasury Regulations.
"Treasury Regulations" mean regulations, rulings, notices and
other promulgations issued under the authority of the Secretary
of the Treasury that apply to, or may be relied upon in the
administration of, this Plan.
12.38. Trust.
The "Trust" that is created by the Company for purposes of
implementing benefits under the Plan, and may, as from time to
time amended, be referred to as the "Fingerhut Plans Master
Trust."
12.39. Trustee.
The "Trustee" is the corporation and/or individual or individuals
who from time to time is or are the duly appointed and acting
trustee or trustees of the Trust.
12.40. Voluntary Contributions.
"Voluntary Contributions" means contributions made pursuant to
the provisions of the Plan in effect prior to July 1, 1997.
12.41. Voluntary Account.
"Voluntary Account" is the account established and maintained
under Section 4.1(d) to evidence the amount of a Participant's
Voluntary Contributions, if any, made to the Plan.
ARTICLE
13.
ADMINISTRATION OF PLAN
13.1. Administrator, Named Fiduciary.
The general administration of the Plan and the duty to carry out
its provisions will be vested in the Company, which will be the
"named fiduciary" of the Plan for purposes of the Employee
Retirement Income Security Act of 1974. Except in cases where
the Plan expressly requires action on behalf of the Company to be
taken by its Board of Directors, action on behalf of the Company
may be taken by any of the following:
(1) Board of Directors of the Company;
(2) the President and Chief Operating Officer of the Company;
(3) any person or persons, natural or otherwise, or committee,
to whom responsibilities for the operation and administration
of the Plan are allocated by the Company, by resolution of its
Board of Directors, but action of such person or persons, or
committee shall be within the scope of said allocation;
(4) any person or persons, natural or otherwise, or committee,
to whom responsibilities for the operation and administration of
the Plan are allocated by the Company, by written instrument
executed by the President and Chief Operating Officer of the
Company, but action of such person or persons or committee shall
be within the scope of said allocation. A copy of each such
written instrument shall be delivered to the secretary of the
Company and filed with its permanent records.
13.2. Compensation and Expenses.
An Employee performing administrative duties in connection with
the Plan will receive no compensation from the Fund for such
services, but may be reimbursed from the Fund for all sums
reasonably and necessarily expended in the performance of such
duties. The Administrator may retain such independent
accounting, legal, clerical and other services as may reasonably
be required in the administration of the Plan and may pay
reasonable compensation from the Fund for such services. Any
such reimbursement or compensation and all other costs of
administering the Plan will, to the extent not paid by the
Participating Employers, be paid by the Trustee from the Fund
upon statements issued by the Administrator.
13.3. Plan Rules.
The Administrator has the discretionary power to make, amend and
rescind such Plan Rules as he or she deems to be necessary or
advisable. Plan Rules will be uniform and nondiscriminatory with
respect to persons determined by the Administrator to be
similarly situated.
13.4. Administrator's Discretion.
The Administrator has the discretionary power and authority to
make all determinations necessary for administration of the Plan,
except those determinations that the Plan requires others to
make, and to construe, interpret, apply and enforce the
provisions of the Plan and Plan Rules, including the
discretionary power and authority to remedy ambiguities,
inconsistencies, omissions and erroneous Account balances. In
the exercise of discretionary powers, the Administrator will
treat all persons determined by the Administrator to be similarly
situated in a uniform and nondiscriminatory manner.
13.5. Indemnification.
The Participating Employers jointly and severally agree to
indemnify and hold harmless, to the extent permitted by law, each
director, officer, and employee of any Affiliated Organization
against any and all liabilities, losses, costs and expenses
(including legal fees) of every kind and nature that may be
imposed on, incurred by, or asserted against such person at any
time by reason of such person's services in connection with the
Plan, but only if such person did not act dishonestly or in bad
faith or in willful violation of the law or regulations under
which such liability, loss, cost or expense arises. The
Participating Employers have the right, but not the obligation,
to select counsel and control the defense and settlement of any
action for which a person may be entitled to indemnification
under this provision.
13.6. Benefit Claim Procedure.
If a request for a benefit by a Participant or Beneficiary of a
deceased Participant is denied in whole or in part, he or she
may, within 30 days after receipt of notice of the denial, file
with the Administrator a written claim objecting to the denial.
(Such a claim must be made to the Administrator prior to filing
any sort of lawsuit.) Not later than 90 days after receipt of
such claim, the Administrator will render a written decision on
the claim to the claimant. If the claim is denied in whole or in
part, such decision will include: the reasons for the denial; a
reference to the Plan provision that is the basis for the denial;
a description of any additional material or information necessary
for the claimant to perfect the claim; an explanation as to why
such information or material is necessary; and an explanation of
the Plan's claim procedure. Not later than 60 days after
receiving the Administrator's written decision, the claimant may
file with the Administrator a written request for review of the
Administrator's decision, and the claimant or the representative
may thereafter review Plan documents that relate to the claim and
submit written comments to the Administrator. Not later than 60
days after the Administrator's receipt of the request for review,
the Administrator will render a written decision on the claim,
which decision will include the specific reasons for the
decision, including reference to specific Plan provisions where
appropriate. The 90- and 60-day periods during which the
Administrator must respond to the claimant may be extended by up
to an additional 90 or 60 days, respectively, if circumstances
beyond the Administrator's control so require and if notice of
such extension is given to the claimant. A claimant must exhaust
the procedure described in this section before making any claim
of entitlement to benefits or objecting to any claim denial in
any court or other proceeding.
13.7. Correction of Errors.
If the Administrator determines that, by reason of administrative
error or other cause attributable to a Participating Employer,
the Account of any Participant has incurred a loss, the
Administrator may enter into an agreement with such Participating
Employer under which the Account is fully restored and may, upon
such restoration, release the Participating Employer from further
responsibility.
ARTICLE
14.
MISCELLANEOUS
14.1. Merger, Consolidation, Transfer of Assets.
If this Plan is merged or consolidated with, or its assets or
liabilities are transferred to, any other plan, each Participant
will be entitled to receive a benefit immediately after such
merger, consolidation or transfer (if such other plan were then
terminated) that is equal to or greater than the benefit he or
she would have been entitled to receive immediately before such
merger, consolidation or transfer (if this Plan had then
terminated).
14.2. Limited Reversion of Fund.
(A) Except as provided in Subsection (B), no corpus or income of
the Trust will at any time revert to Participating Employer or be
used other than for the exclusive benefit of Eligible Employees,
Participants and Beneficiaries by paying benefits and, if
applicable, administrative expenses of the Plan.
(B) Notwithstanding any contrary provision in the Plan,
(1) All contributions made by a Participating Employer to the
Trustee prior to the initial determination of the Internal
Revenue Service as to qualification of the Plan under Section
401(a) of the Code and the tax exempt status of the Trust under
Code section 501(a) will be repaid by the Trustee to such
Participating Employer, upon the Participating Employer's
written request, if the Internal Revenue Service rules that
the Plan, as adopted by that Participating Employer, is not
qualified or the Trust is not tax exempt; provided, that the
Participating Employer requests such determination within a
reasonable time after adoption of the Plan, and the repayment
by the Trustee to such Participating Employer is made within
one year after the date of denial of qualification of the Plan;
and
(2) To the extent a contribution is made by a Participating
Employer by a mistake of fact or a deduction is disallowed a
Participating Employer under Code section 404, the Trustee will
repay the contribution to such Participating Employer upon the
Participating Employer's written request; provided, that such
repayment is made within one year after the mistaken payment is
made or the deduction is disallowed, as the case may be. The
amount returned to the Participating Employer will not include
any investment gains or earnings but will be reduced by any
investment losses. Each contribution to the Plan by a
Participating Employer is expressly conditioned on such
contribution's being fully deductible by the Participating
Employer under Code section 404.
14.3. Top-Heavy Provisions.
(A)
(1) Notwithstanding the provisions of Sections 3.1, 3.2 and
3.3, for any Plan Year during which the Plan is a top-heavy
plan, the amount of contributions (excluding Pre-Tax
Contributions) made and allocated for such Plan Year on
behalf of each Active Participant who is not a key employee
and who is employed with an Affiliated Organization on the last
day of the Plan Year, expressed as a percentage of the
Participant's Testing Wages for the Plan Year, must be at
least equal to the lesser of
(a) three percent, or
(b) the largest percentage of such Testing Wages at which
contributions (including Pre-Tax Contributions) are
made and allocated on behalf of any key employee for
such Plan Year.
(2) If, in addition to this Plan, an Affiliated Organization
maintains another qualified defined contribution plan or one or
more qualified defined benefit pension plans during a Plan Year,
the provisions of clause (1) will be applied for such Plan Year
(a) by taking into account the employer contributions
(other than elective deferrals for a non-key
employee) on behalf of the Participant under all
such defined contribution plans;
(b) without regard to any Participant who is not a key
employee and whose accrued benefit, expressed as a
single life annuity, under a defined benefit pension
plan maintained by the Affiliated Organization for
such Plan Year is not less than the product of -
(i) the Participant's average Testing Wages for the
period of consecutive years not exceeding the
period of consecutive years (not exceeding five)
when the Participant had the highest aggregate
Testing Wages, disregarding years in which the
Participant completed less than 1000 Hours of
Service, multiplied by
(ii) the lesser of (A) two percent per year of service,
disregarding years of service beginning after the
close of the last Plan Year in which such defined
benefit plan was a top heavy plan, or (B) 20
percent.
(B) For purposes of Subsection (A),
(1)
(a) The Plan will be a "top-heavy plan" for a particular
Plan Year if, as of the last day of the initial Plan
Year or, with respect to any other Plan Year, as of
the last day of the preceding Plan Year, the
aggregate of the Account balances of key employees
is greater than 60 percent of the aggregate of the
Account balances of all Participants.
(b) For purposes of calculating the aggregate Account
balances for both key employees and employees who
are not key employees:
(i) Any distributions made within the five-year
period preceding the Plan Year for which the
determination is being made, other than a
distribution transferred or rolled over to a
plan maintained by an Affiliated Organization,
will be included;
(ii) Amounts transferred or rolled over from a plan
not maintained by an Affiliated Organization at
the initiation of the Participant will be
excluded;
(iii) The Account balances of any key employee and any
employee who is not a key employee who has not
performed an Hour of Service of the type
specified in Section 10.4(A)(1) at any time
during the five-year period ending on the date
as of which the determination is being made
will be excluded; and
(iv) The terms "key employee" and "employee" will
include the Beneficiaries of such persons who
have died.
(2)
(a) Notwithstanding the provisions of clause (1), this
Plan will not be a top-heavy plan if it is part of
either a "required aggregation group" or a
"permissive aggregation group" and such aggregation
group is not top-heavy. An aggregation group will
be top-heavy if the sum of the present value of
accrued benefits and account balances of key
employees is more than 60 percent of the sum of
the present value of accrued benefits and account
balances for all Participants, such accrued
benefits and account balances being calculated
in each case in the same manner as set forth in
clause (1).
(b) Each plan in a required aggregation group will be
top-heavy if the group is top-heavy. No plan in a
required aggregation group will be top-heavy if the
group is not top-heavy.
(c) If a permissive aggregation group is top-heavy, only
those plans that are part of an underlying top-heavy,
required aggregation group will be top-heavy. No plan
in a permissive aggregation group will be top-heavy
if the group is not top-heavy.
(3) The "required aggregation group" consists of (i) each plan
of an Affiliated Organization in which a key employee
participates, and (ii) each other plan of an Affiliated
Organization that enables a plan in which a key employee
participates to meet the nondiscrimination requirements of Code
sections 401(a)(4) and 410.
(4) A "permissive aggregation group" consists of those plans
that are required to be aggregated and one or more plans
(providing comparable benefits or contributions) that are not
required to be aggregated, which, when taken together, satisfy
the requirements of Code sections 401(a)(4) and 410.
(5) For purposes of applying clauses (2), (3) and (4) of this
Subsection (B), any qualified defined contribution plan
maintained by an Affiliated Organization at any time within the
five-year period preceding the Plan Year for which the
determination being made which, as of the date of such
determination, has been formally terminated, has ceased
crediting service for benefit accruals and vesting and has
been or is distributing all plan assets to participants or their
beneficiaries, will be taken into account to the extent required
or permitted under such clauses and under Code section 416.
(C) A "key employee" is any individual who is or was employed
with an Affiliated Organization and who, at any time during the
Plan Year in question or any of the preceding four Plan Years is
or was:
(1) An officer of the Affiliated Organization (an
administrative executive in regular and continued service
with the Affiliated Organization) whose compensation for such
Plan Year exceeds 50 percent of the amount in effect under
Code section 415(b)(1)(A) for such Plan Year, but in no case
will there be taken into account more than the lesser of (a)
50 individuals or (b) the greater of (i) three individuals or
(ii) ten percent of the number of the Affiliated Organization
employees, excluding for purposes of determining the number of
such officers, any employees that are excluded pursuant to
Section 12.17(A)(2)(b);
(2) The owner of an interest in the Affiliated Organization,
that is not less than the interest owned by at least ten other
individuals employed with the Affiliated Organization; provided,
that, such owner will not be a key employee solely by reason of
such ownership for a Plan Year if he or she does not own more
than one-half of one percent of the value of the outstanding
interests of the Affiliated Organization or if the amount of his
or her compensation for such Plan Year is less than the amount
in effect under Code section 415(c)(1)(A) for such Plan Year;
(3) The owner of more than five percent of the Affiliated
Organization's outstanding stock or more than five percent of
the total combined voting power of the Affiliated Organization
stock; or
(4) The owner of more than one percent of the Affiliated
Organization's outstanding stock or more than one percent of the
total combined voting power of the Affiliated Organization's
stock, whose compensation for such Plan Year exceed $150,000.
For purposes of this Subsection (C), the term
"compensation" has the same meaning as in Section 12.17(B)
(2) and ownership of an Affiliated Organization stock will
be determined in accordance with Code section 318;
provided, that subparagraph 318(a)(2)(C) will be applied by
substituting the phrase "5 percent" for the phrase "50 percent"
wherever it appears in such Code section.
(D) If an Affiliated Organization maintains a qualified defined
contribution plan and a qualified defined pension plan, the
limitation on combined contributions and accrued benefits will be
adjusted by substituting "100 percent" for "125 percent" in the
definitions of the defined benefit fraction and the defined
contribution fraction in Section 9.7; provided, first, that this
Subsection (D) will be applied prospectively only to prohibit
additional contributions allocated, and forfeitures reallocated,
to and defined benefit accruals for, a Participant and will not
reduce any allocations or reallocations made to, or benefits
accrued for, such Participant prior to the Plan Year for which it
first becomes effective; and, second, that if the Plan would not
be a top heavy plan if "90 percent" were substituted for "60
percent" in clause (1)(a) of Subsection (B), this Subsection (D)
will not apply if -
(1) the aggregate employer contribution (other than elective
contributions) under all such qualified defined contribution
plans on behalf of each Participant who is not a key employee
and who is employed with an Affiliated Organization on the last
day of the Plan Year is not less than seven and one-half
percent of his or her Testing Wages for the Plan Year, or
(2) the accrued benefit for each Participant under the
qualified defined benefit pension plan is not less than the
benefit described in Subsection (A)(2)(b), applied by
substituting "3 percent" for "2 percent" in item (A) of clause
(ii) and "30 percent" for "20 percent" in item (B) of clause
(ii).
14.4. No Employment Rights Created.
The establishment and maintenance of the Plan neither give any
Employee a right to continuing employment nor limit the right of
an Affiliated Organization to discharge or otherwise deal with
the Employee without regard to the effect such action might have
on his or her initial or continued participation in the Plan.
14.5. Special Provisions.
Special provisions of the Plan applicable only to certain
Participants will be set forth on an exhibit to the Plan. In the
event of a conflict between the terms of the exhibit and the
terms of the Plan, the exhibit controls.
14.6. USERRA.
(A) The provisions of this Section 14.6 apply only to a
Qualified Employee whose reemployment rights are protected under
the Uniformed Services Employment and Reemployment Rights Act of
1994 ("USERRA") and are intended to comply with the requirements
of Code section 414(u).
(B) Notwithstanding any other provisions of this Plan to the
contrary, any Qualified Employee who leaves the employ of a
Participating Employer for qualified military service and returns
to employment with a Participating Employer will be entitled to
the restoration of benefits under this Plan which would have
accrued but for the Qualified Employee's absence due to qualified
military service.
(C) The Qualified Employee shall be entitled to make Voluntary
Contributions to the Plan subject only to the limitations of the
Plan with respect to Voluntary Contributions applicable for the
Plan Year to which the contribution relates and not those
applicable to the Plan Year in which the contribution is made.
(D) The Participating Employer shall make Pre-Tax Contributions
to the Plan on behalf of the Qualified Employee for the Plan
Years during which the Qualified Employee has qualified military
service in the amount by which the Participant's Eligible
Earnings have been reduced in accordance with Section 3.1 and the
following additional rules:
(1) the Qualified Employee may elect to make additional
reductions of his Eligible Earnings subject to the maximum
amount the Employee may have reduced his or her Eligible
Earnings during the period of qualified military service;
(2) the Employee may elect to reduce his Eligible Earnings
under this Section 14.6(D) at any time during the period
which begins on his or her date of reemployment and has
the same length as the lesser of five years or the period
of the Employee's qualified military service multiplied by
three;
(3) the additional Pre-Tax Contributions under this Section
14.6(D) are not subject to the Actual Deferral Percentage
Limitation of Section 9.2.
(E) The Participating Employer will make any additional Matching
Contributions with respect to the Qualified Employee's Pre-Tax
Contributions under Section 3.2 which would have been required if
such Pre-Tax Contributions had actually been made during the
Qualified Employee's period of qualified military service. These
additional Matching Contributions are not subject to the Actual
Contribution Percentage Limitations of Section 9.3.
(F) The Participating Employer's obligation to contribute
restored benefits to the Plan on behalf of a reemployed Qualified
Employee is subject to the following rules and conditions:
(1) the Qualified Employee shall not be treated as having
incurred a One-Year Break in Service within the meaning of
Section 10.5 by reason of his or her qualified military service;
(2) any period of qualified military service shall be treated
as Vesting Service under Section 10.3 with respect to the
Participating Employer;
(3) for purposes of Section 3.4(B)(1), a Qualified Employee
shall be treated as employed by the Participating Employer and
accruing service during any period of qualified military
service;
(4) for purposes of determining the Qualified Employee's
Eligible Earnings and Section 415 Wages, the Qualified Employee
shall be treated as receiving compensation from the
Participating Employer during the period of qualified
military service in an amount equal to the compensation
he or she would have received during such period if he or
she were not in qualified military service determined
based on the rate of pay the Qualified Employee would
have received from the Participating Employer but
for the absence due to qualified military service; provided,
however, if the compensation the Qualified Employee would have
received from the Participating Employer is not reasonably
certain, then the Qualified Employee's rate of compensation will
be equal to his or her average compensation for the 12-month
period preceding the qualified military service (or, if shorter,
the period of employment immediately preceding the qualified
military service);
(5) contributions to the Trust on behalf of the Qualified
Employee will be subject to the limitations of Article IX only
with respect to the Plan Years to which such contribution
relates;
(6) the Qualified Employee will not be entitled to any
crediting of earnings on contributions for any period prior
to actual payment to the Trust; and
(7) the Qualified Employee will not be entitled to restoration
of any forfeitures which were not allocated to his or her
Account as a result of his or her qualified military service.
(G) For purposes of this Section 14.6, "qualified military
service" means any service in the uniformed services as defined
in USERRA by a Qualified Employee who is entitled to reemployment
rights with a Participating Employer under USERRA.
EXHIBIT A
Special Rules applicable to Employees of Customer
Communications Center, Inc.
This Exhibit A sets forth special rules applicable to
Employees of Customer Communications Center, Inc. ("CCCI") in
connection with the adoption of the Plan by CCCI.
1. For purposes of the definition of "Qualified Employee"
under Section 12.28, a Qualified Employee shall be any Employee
of CCCI who has transferred from the employment of an Affiliated
Organization and immediately prior to such transfer was an Active
Participant under the Plan.
Dates Referenced Herein
| This ‘10-K’ Filing | | Date | | Other Filings |
|---|
| |  |
| | 1/1/00 | | None on these Dates |
| Filed on: | | 3/25/98 |
| | 1/1/98 |
| For Period End: | | 12/31/97 |
| | 7/1/97 |
| | 6/30/97 |
| List all Filings |
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