Exhibit 10.13

 

K-Swiss Inc. 401(k) and Profit Sharing Plan

 

The CORPORATEplan for RetirementSM

Service Agreement

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

EXECUTION PAGE (FIDELITY’S COPY)

 

This Agreement shall be effective upon execution by both parties. By executing
this Agreement, the parties agree to terms and conditions contained in the
Agreement and the following attached Appendices:

 

Service Agreement

--------------------------------------------------------------------------------

  

Original

Effective
Date

--------------------------------------------------------------------------------

        Revision
Date(s)

--------------------------------------------------------------------------------

Articles I and II

   05/26/1994          

Appendix A - Investment Schedule and Services

              

Appendix B - Enrollment and Education Services

              

Appendix C - Contribution Processing Services

              

Appendix D - Loan and Withdrawal Services

             06/01/2005

Appendix E - Compliance Services

              

Appendix F - Miscellaneous Additional Services

             06/01/2005

 

In witness whereof, the parties hereto have caused this Agreement to be executed
by their duly authorized officers.

 

Employer:   Employer:

/s/ George Powlick

--------------------------------------------------------------------------------

 

/s/ Cheryl Kuchinka

--------------------------------------------------------------------------------

(Signature)   (Signature)

GEORGE POWLICK

--------------------------------------------------------------------------------

 

CHERYL KUCHINKA

--------------------------------------------------------------------------------

(Print Name)   (Print Name)

Vice President

--------------------------------------------------------------------------------

 

Plan Administrator

--------------------------------------------------------------------------------

(Title)   (Title)

5-23-05

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

(Date)   (Date)      

 

Note: Only one authorized signature is required to execute this Agreement unless
the Employer’s corporate policy mandates two authorized signatures.

 

Fidelity Management Trust Company:

 

--------------------------------------------------------------------------------

(Signature)

 

--------------------------------------------------------------------------------

(Print Name)

 

--------------------------------------------------------------------------------

(Title)

 

--------------------------------------------------------------------------------

(Date)

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

EXECUTION PAGE (EMPLOYER’S COPY)

 

This Agreement shall be effective upon execution by both parties. By executing
this Agreement, the parties agree to terms and conditions contained in the
Agreement and the following attached Appendices:

 

Service Agreement

--------------------------------------------------------------------------------

  

Original

Effective Date

--------------------------------------------------------------------------------

        Revision
Date(s)

--------------------------------------------------------------------------------

Articles I and II

   05/26/1994          

Appendix A - Investment Schedule and Services

              

Appendix B - Enrollment and Education Services

              

Appendix C - Contribution Processing Services

              

Appendix D - Loan and Withdrawal Services

             06/01/2005

Appendix E - Compliance Services

              

Appendix F - Miscellaneous Additional Services

             06/01/2005

 

In witness whereof, the parties hereto have caused this Agreement to be executed
by their duly authorized officers.

 

Employer:   Employer:

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

(Signature)   (Signature)

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

(Print Name)   (Print Name)

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

(Title)   (Title)

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

(Date)   (Date)      

 

Note: Only one authorized signature is required to execute this Agreement unless
the Employer’s corporate policy mandates two authorized signatures.

 

Fidelity Management Trust Company:

 

--------------------------------------------------------------------------------

(Signature)

 

--------------------------------------------------------------------------------

(Print Name)

 

--------------------------------------------------------------------------------

(Title)

 

--------------------------------------------------------------------------------

(Date)

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

APPENDIX D – LOAN AND WITHDRAWAL SERVICES

 

Loans and withdrawals from the Plan shall be processed in accordance with the
provisions of the Plan and this Appendix D. Fidelity shall provide loan and
withdrawal processing services subject to the terms and conditions of this
Appendix D.

 

{seq appendixD \* MERGEFORMAT }. Participant Loans

 

Loan setup fee per loan:

   $75.00

Fee Paid By:

   Participants

Annual loan maintenance fee per loan:

   $25.00

Fee Paid By:

   Participants

 

Sponsor-Approved Loans

 

This Section includes the Loan Policy adopted in accordance with the Plan. All
other provisions governing Participant loans are included in the Plan. This
Section is effective for loans made on or after the Effective Date of the
CORPORATEplan for RetirementSM. Subject to paragraph f. below, other loans made
under the Plan shall continue under their existing terms until they are repaid.

 

  a. Administration - The Employer shall collect and remit all principal and
interest payments to Fidelity, keep the proceeds of such loan repayments
separate from the other assets of the Employer, clearly identifying such assets
as Plan assets, and cancel and surrender the promissory note and other loan
documentation to the Participant when a loan has been paid in full.

 

The Employer hereby directs Fidelity that all Participant loans shall be
considered sponsor-approved and thus require the Employer to review and approve
all loan requests via Plan Sponsor Webstation (or any other service subsequently
employed by Fidelity to facilitate electronic plan sponsor administration,
hereinafter PSW) . The Employer must provide Fidelity with all applicable loan
repayment frequencies for Participants by location, division, or region. Plans
converting to The CORPORATEplan for RetirementSM must provide the highest
outstanding loan balance(s) in the twelve months prior to the conversion date.
If the Employer fails to provide this information, the Employer must separately
determine the amount of loan available to a Pariticipant when reviewing and
approving loan requests via PSW for the first twelve months of the Plan’s
administration under The CORPORATEplan for RetirementSM.

 

  b. Application Procedure - The Participant shall use Automated Channels
(Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web
Internet service, or any other service subsequently employed by Fidelity to
facilitate electronic plan administration) to apply for a loan. Participant loan
requests that cannot be serviced via Automated Channels shall be referred to the
Employer for assistance. To originate a Participant loan, the Participant shall
direct Fidelity as to the term and amount of the loan to be made from his/her
account. Such directions shall be made by use of the Automated Channels
maintained for such purpose by Fidelity or its agent. The Automated Channels
shall determine, based on the current value of the Participant’s account on the
date of the request and any guidelines provided by the Employer, the amount
available for the loan. The vested percentage on Fidelity’s Participant
Recordkeeping System (FPRS) shall be used to process the loan. The Employer is
responsible for ensuring that the proper vested percentage for each Participant
is

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

always maintained on FPRS. Based on the interest rate supplied by the Employer
in accordance with the terms of the Plan, the Automated Channels shall advise
the Participant of such interest rate, as well as the installment payment
amounts. Unless the Plan Administrator directs otherwise in writing, Fidelity is
hereby directed to deduct a fee of $15 per delivery from Participant accounts,
as a reasonable Plan expense, for express delivery of loan checks for
Participants who have requested expedited delivery of their checks. Fidelity
shall distribute the loan note with the proceeds check directly to the
Participant. Fidelity shall also distribute the required Truth-In-Lending
disclosures, if applicable, to the Participant. To facilitate recordkeeping,
Fidelity may destroy the original of any promissory note made in connection with
a loan to a Participant under the Plan, provided that Fidelity first creates a
duplicate by a photographic optical scanning or other process. The duplicate
shall yield a reasonable facsimile of the promissory note and the Participant’s
signature thereon. The duplicate may be reduced or enlarged in size from the
actual size of the original promissory note.

 

  c. Conditions and Limitations -

 

  i. Minimum Principal Amount. The minimum principal amount of any loan is
$1,000.00.

 

  ii. Duration. The repayment period of any loan shall be no more than five
years unless such loan is for the purchase of a Participant’s primary residence,
in which case the repayment period may not extend beyond 10 years from the date
of the loan. A loan becomes immediately due and payable upon a Participant’s
termination of employment or death.

 

  iii. Sources. The Administrator may provide that loans only be made from
certain contribution sources within Participant Account(s) by notifying the
Trustee in writing of the restricted source.

 

  iv. Purpose: A loan will be granted only for hardship withdrawal purposes.

 

  v. Repayment Method. A loan to an Employee shall be repaid at least quarterly
by payroll. If repayment is not made by payroll deduction, a loan shall be
repaid by the Employee to the Employer. Loan repayments are forwarded to
Fidelity, by the Employer, in the same manner and frequency as contributions.

 

  vi. Outstanding Loans. A Participant may have up to two loans outstanding at a
time. A Participant with two existing loans outstanding may not apply for
another loan until one of the existing loans is paid in full. Also, a
Participant may not (1) refinance an existing loan, (2) apply for an additional
loan for the purpose of paying off an existing loan or (3) apply for more than
one loan during each Plan Year.

 

  d. Interest Rate - The Employer shall determine and communicate to Fidelity a
reasonable rate of interest based on the prevailing interest rates charged by
persons in the business of lending money for loans which would be made under
similar circumstances. The interest rate shall remain fixed throughout the
duration of the loan.

 

  e. Prepayment - A Participant may prepay the entire outstanding loan balance
prior to maturity without penalty.

 

  f. Repayment Suspension / Re-amortization - Loan repayments may not be
suspended or re-amortized except as provided in this subsection. Loan repayments
may only be suspended if:

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

(i) the participant is on a leave of absence (LOA) from the Employer without
pay, or at a rate of pay (after income and employment tax withholding) that is
less than the amount of the installment payments required under the terms of the
loan, but repayments may never be suspended for more than 12 months; or, (ii)
the participant is on an LOA due to qualified military service pursuant to
Internal Revenue Code (IRC) Section 414(u). Loan payments suspended due to an
LOA must resume following the conclusion of the LOA (or the 12 month period
described in the previous sentence). The Employer is required to inform Fidelity
of the dates for all loan repayment suspensions and resumptions, but this
information may be transmitted electronically. In the case of payments resuming
following suspension due to an LOA, the loan may be re-amortized to allow for
level payments, but the amount of each payment must not be less than the amount
required under the terms of the original loan. When loan repayments are to
resume following a participant’s LOA, the Employer must direct Fidelity as to
whether or not to re-amortize the remaining balance of the loan. The repayment
period for the remaining balance of a loan may never be extended beyond 5 years
from the date of the original loan unless there is an LOA pursuant to IRC
Section 414(u) or the loan is a personal residence loan. The Employer may also
direct Fidelity to re-amortize loans for participants whose payroll frequency
has changed during the period of the loan or whose established loan repayment
frequency was incorrect, but that re-amortization cannot extend payments beyond
the original term of the loan.

 

  g. Default - A Participant’s loan shall be considered in default at the end of
the calendar quarter following a calendar quarter (end of the ‘cure period’) for
which there is outstanding any part of any payment due (principal or interest).
The Employer agrees to provide to Fidelity information regarding the status of
participants relating to loan repayments. Fidelity agrees to provide the
Employer with information regarding the repayment status of outstanding loans
and thereafter to provide notices to Participants regarding late, missing or
insufficient payments relating to loans they have outstanding. The Employer
hereby directs Fidelity to default loans of Participants, in accordance with the
Plan, after Participants have defaulted by the terms of their loans, but in no
event later than the date legally required. Notwithstanding the above, based
upon the information Fidelity has provided regarding the repayment status of
outstanding loans, the Employer may direct Fidelity not to provide notices of
delinquency for specific Plan Participants, however, an Employer cannot direct
Fidelity to delay the loan default.

 

  h. Pre-existing Loans - Loans existing prior to the Effective Date of the
CORPORATEplan for RetirementSM shall continue under their existing terms until
repaid. Also, for all such loans, the Employer or Administrator shall continue
to act as the Trustee’s agent in holding physical custody of promissory notes
and other loan documentation and for canceling and surrendering of such notes
and other loan documentation to the Participant when such a loan has been paid
in full. A Participant may not apply for a new loan until that Participant has
less loans outstanding than the number of loans allowed pursuant to paragraph
c., vi. Outstanding Loans, above. Fidelity shall not accept any pre-existing
loans that require Fidelity to hold as security for the loan property other than
the Participant’s vested account.

 

  i. Fees - Loan Set-Up fees shall be billed or charged in full on the first
invoice date following origination of the loan. Annual loan maintenance fees
shall be accrued and billed or charged quarterly in arrears. Notwithstanding any
provision or designation herein to the contrary, the Employer shall be
responsible for the payment of annual loan maintenance fees on pre-existing
loans unless the loan terms allow payment by Participants.

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

{seq appendixD \* MERGEFORMAT }. Participant Withdrawals

 

Pre-Approved Withdrawals

 

Participant withdrawals and distributions shall be processed in accordance with
the provisions of the Plan and subject to the following terms and conditions:

 

  a. The Employer hereby directs Fidelity that all Participant withdrawals shall
be considered pre-approved by the Employer and there shall not be any advance
notification to Fidelity of any Participant withdrawal.

 

  b. Participants shall use Automated Channels (Fidelity Automated Retirement
Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other
service subsequently employed by Fidelity to facilitate electronic plan
administration) to request withdrawals. Participant withdrawals that cannot be
serviced via the Automated Channels shall be referred to the Employer for
assistance. The Employer understands that currently the following types of
withdrawals cannot be completed through Automated Channels:

 

  i. distributions as a result of the Plan’s failure of any required Internal
Revenue Code test

 

  ii. minimum required distributions

 

  iii. distributions to an alternate payee under a qualified domestic relations
order prior to establishment of an Account for the alternate payee

 

  iv. distributions to a beneficiary prior to establishment of an Account for
the beneficiary

 

  v. installment payments

 

The Employer agrees that Fidelity may expand the Automated Channels service to
include other types of withdrawals by giving notice (which may be an electronic
transmission) to the Employer in advance. The Employer is responsible for
updating the status codes, applicable dates, and other appropriate information
for participants via Plan Sponsor Webstation (PSW), or other agreed upon
transmission.

 

  c. Participant withdrawals shall be processed any business day during any
month. The Automated Channels shall determine the amount available for
withdrawal based on the current value of the Participant’s Account on the date
of the request and any guidelines provided by the Employer. The vested
percentage on Fidelity’s Participant Recordkeeping System (FPRS) shall be used
to process the distribution. The Employer is responsible for ensuring that the
proper vested percentage for each Participant is always maintained on FPRS.
Fidelity shall distribute withdrawals directly to Participants based upon the
addresses of record. Unless the Plan Administrator directs otherwise in writing,
Fidelity is hereby directed to deduct a fee of $15 per delivery from Participant
accounts, as a reasonable Plan expense, for express delivery of withdrawal
checks for Participants who have requested expedited delivery of their checks.

 

  d. Currently, the following distributions require Plan Administrator review
and approval prior to such distributions being processed:

 

  i. withdrawals subject to spousal consent

 

  ii. hardship withdrawals

 

  iii. protected benefit forms only available to a specified class of
participants

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

If, subsequent to the execution of this Agreement, the Employer directs Fidelity
in writing that some or all types of distribution shall no longer be considered
pre-approved, then the Employer shall review and approve each such distribution
request through PSW.

 

Plan Number:40293   CPR Service Agreement

--------------------------------------------------------------------------------

APPENDIX F – MISCELLANEOUS

 

The provision(s) as identified in this Appendix F shall supercede the referenced
provision(s) of this Agreement, subject to the terms and conditions contained
herein. For provision(s) below identified as exceptions to the Plan (requiring
an amendment to the CORPORATEplan for RetirementSM), the Employer hereby agrees
to obtain a favorable determination letter on the Plan from the Internal Revenue
Service.

 

Title: Appendix D, Section 1, Subsection c.(vi): Outstanding Loans:

Description: Service Agreement, Appendix D, Section 1, Subsection c.(vi):
Outstanding Loans will be deleted and replaced in its entirety with the
following: vi. Outstanding Loans. A Participant may have two loans outstanding
at a time. A Participant with two existing loans may not apply for another loan
until one of the existing loans is paid in full. Also, a Participant may not (1)
refinance an existing loan, (2) apply for an additional loan for the purpose of
paying off an existing loan, or (3) apply for more than one loan during each
Plan Year.

 

Exception Fee: Fee Waived

 

Plan Number:40293   CPR Service Agreement