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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ....... to .......
Commission File Number: 0-17995
AMTECH CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Texas 75-2216818
(State of Incorporation) (I.R.S. Employer
Identification Number)
17304 Preston Road
Building E-100
Dallas, Texas 75252
(Address of Principal Executive Offices)
(214) 733-6600
(Registrant's Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO
SECTION 12(b) OF THE ACT:
None Not Applicable
(Title of Class) (Name of Exchange on Which Registered)
SECURITIES REGISTERED PURSUANT TO
SECTION 12(g) OF THE ACT:
Common Stock
$0.01 Par Value
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [x] No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
As of February 29, 1996, there were 14,685,036 shares of Amtech Corporation
$0.01 par value Common Stock issued and 14,605,036 shares outstanding,
14,307,838 of which having an aggregate market value of $91,212,467 were held by
non-affiliates. For purposes of the above statement, all directors and officers
of the Registrant are presumed to be affiliates.
Portions of the Proxy Statement for the Registrant's 1996 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Form 10-K, and
portions of the Registrant's 1995 Annual Report to Shareholders are incorporated
by reference into Parts II and IV of this Form 10-K.
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Part I
Item 1. Business
Overview
In 1994 and 1995, through a series of strategic acquisitions and
investments, the Company transitioned from a company primarily focused on
designing, manufacturing and marketing radio frequency electronic identification
products principally for the transportation industry, to a company that designs,
manufactures, markets, installs and supports a wide array of wireless data and
security technology products and solutions for a variety of industries. Today,
the Company is a leading global supplier of wireless data technologies and
solutions for the intelligent transportation, electronic security and logistics
markets. The Company is organized into the three market-oriented groups
described below, each with a core competency in a radio frequency technology:
Electronic Security Group (ESG), encompassing the Cotag International and
Cardkey Systems product and service lines; Transportation Systems Group (TSG),
headed by Amtech Systems Corporation; and Interactive Data Group (IDG),
comprised of WaveLink Technologies, Inc. The Company designs, manufactures,
markets, installs and supports systems that make high-value assets and scarce
resources more productive and secure. These systems make extensive use of the
Company's proprietary wireless data and security technologies. The Company also
continues to explore new markets and business opportunities based on these
state-of-the-art technologies.
The Company was incorporated in Texas in 1988. The Company's executive
offices are located at 17304 Preston Road, Building E-100, Dallas, Texas 75252
(telephone (214) 733-6600). The Company has seven directly wholly-owned
operating subsidiaries: Amtech Systems Corporation, Amtech World Corporation,
AMGT Corporation, Amtech SARL, Cardkey Systems, Inc., Amtech Europe Limited and
Cardkey Systems Pacific Pty. Limited. At December 31, 1995, the Company's
affiliate WaveLink Technologies, Inc. was 72% owned by the Company (assuming the
conversion of WaveLink convertible debt securities held by the Company).
Market Groups
Electronic Security Group ("ESG")
The Company's ESG was created through the acquisition in January 1995 of
Cotag International, headquartered in Cambridge, England, and the acquisition in
August 1995 of Cardkey Systems, headquartered in Simi Valley, California and
Reading, England. The ESG
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designs, manufactures, markets, installs and supports its state-of-the-art
electronic security equipment and full-service solutions for electronic security
needs to corporate and government markets throughout the world. The ESG's
products and services are marketed under the "Cotag/(R)/" and "Cardkey/(R)/"
brand names. This equipment and systems, which are marketed directly to end
users and through resellers, are targeted primarily to the electronic access
control, asset management and tracking, healthcare security and security
management markets. In 1995, the ESG accounted for approximately 40 percent of
the Company's revenues.
Cardkey, whose name has been synonymous with access control for 50 years,
is a leading supplier of electronic access control and alarm monitoring systems,
which it sells through a global network of direct sales offices and resellers.
Cardkey has supplied products and systems to thousands of corporate and national
and state government customers, including the Tennessee Valley Authority, Coca-
Cola Company, Sony Corporation, and Toyota Motor Corporation.
Cotag specializes in advanced hands-free proximity cards, tags and readers
and has developed systems using these products for electronic access control and
security management, which it sells through a global network of resellers and
installers. Cotag's applications of low frequency RFID technology have made it
a leader in hands-free proximity devices.
The ESG's radio frequency proximity electronic security technologies
compete against a variety of "traditional" modes of security access control,
such as magnetic stripe cards and Wiegand cards. There are a variety of
suppliers of these traditional types of security access control equipment, and
this market is very competitive. Within the proximity segment of the security
access control market, there are relatively few suppliers. No particular
supplier of proximity security equipment is dominant in the market, although
certain of the ESG's competitors are part of corporations significantly larger
than the Company. The market for the ESG's full-service solutions for
electronic security needs is served by a variety of suppliers--and hence is
extremely competitive--although the ESG is one of the larger suppliers in this
specific arena. The Company believes that the principal competitive factors in
the ESG's market are brand name identification, product performance, quality,
price, and customer service.
The ESG, whose principal offices are located in Simi Valley, California,
and Reading, Cambridge and Manchester, England, employs nearly 500 people. The
ESG's products are manufactured at the ESG's manufacturing facility located in
Cambridge, England and the Company's facility in Albuquerque, New Mexico. The
Cambridge facility is registered by the British Standards Institute to the ISO
9002 standard for quality management systems. The Albuquerque, New Mexico
manufacturing process is quality-certified in the field of electronics by the
International Standards Organization to the ISO 9001 Quality Standard
Certification. The ESG's full-service solutions for electronic security needs
also meet Underwriters Laboratories' standards 1076 and 294.
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Transportation Systems Group ("TSG")
The Company's TSG designs, manufactures, markets, installs and supports
wireless equipment and systems that permit the remote identification of, and
communications with, objects through the use of high frequency radio frequency
signals rather than bar codes, magnetic cards, or other means. When an object
with an attached tag passes through an area covered by a reader, data is
electronically retrieved from or written to the tag through the Company's
patented implementation of a technique referred to as "modulated backscatter."
These products, which are marketed under the "Amtech/(R)/" brand name, directly
and through resellers, are targeted primarily to the rail, electronic toll
collection and traffic management ("ETTM"), intermodal, airport, access control,
and motor freight markets. In 1995, the TSG accounted for 60 percent of the
Company's revenues.
The TSG's technology is compatible with a variety of national and
international standards, as follows: (i) the mandatory standard for automatic
equipment identification ("AEI") adopted by the Association of American
Railroads ("AAR"), which requires that all railcars, locomotives, and other rail
equipment operating in interchange service in North America (approximately
1,500,000 units of equipment) be equipped with two AEI tags (which tagging was
substantially completed in 1994); (ii) the standard for AEI adopted by the Union
Internationale des Chemins de fer ("UIC"), which selected the TSG's high-speed
read/write DYNICOM/(TM)/ RFID technology as a standard for the UIC's 32 member
railroads in greater Europe that choose to implement AEI for international
vehicles; (iii) the international standard for automatic identification of
intermodal containers adopted by the International Standards Organization
("ISO"); (iv) the national standard for automatic identification of intermodal
containers adopted by the American National Standards Institute ("ANSI"); and
(v) the standard adopted by the American Trucking Associations ("ATA") for
automatic identification of tractors, trailers and related motor carrier
equipment. Except for the mandatory AEI standard adopted by the AAR, compliance
with the standards outlined above is voluntary. Taken together, however, the
TSG believes these standards create a disincentive for participants in these
markets to make significant investments in systems that are not compatible with
the standards.
The TSG has granted licenses to manufacture certain products utilizing its
patented technologies. In 1991, the TSG granted certain exclusive and non-
exclusive manufacturing licenses to Alcatel Amtech S.A., the Company's 49% owned
affiliate in Europe, through which the TSG primarily markets its products and
services in Europe. Also, the TSG has committed to the AAR, ISO, ANSI, and the
UIC that, if requested, it will license certain technology underlying the
standard on reasonable commercial terms to qualified companies.
The ETTM, motor freight, airport, and access control markets are extremely
competitive. The fragmented nature of these markets, the absence of industry-
wide standards, and the variety of competing systems have resulted in intense
competition. During 1995, the Company's single largest customer was the MTA
Bridges and Tunnels, a New York public toll authority, for which the TSG is
installing an electronic toll collection system. See "Customers" below.
Conversely, The TSG has not encountered any material competition from competing
AEI manufacturers in
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offering its AEI systems to the rail and intermodal markets, since the TSG's AEI
equipment and systems are the only products that, to the TSG's knowledge, comply
with the AEI industry standards referenced above. Significant competition in
providing AEI systems to the rail and intermodal markets may be encountered in
the future to the extent that licenses are granted to competing vendors pursuant
to the license offers noted above. The Company believes that the principal
competitive factors in the TSG's market are product performance, quality, price,
brand-name identification, and customer service.
The TSG, whose principal offices are located in Dallas, Texas, and
Albuquerque, New Mexico, employs approximately 300 employees. The TSG's
products are manufactured at the Company's 70,000 square-foot manufacturing
facility located in Albuquerque, New Mexico. The TSG, including its
manufacturing process, is quality-certified by the Association of American
Railroads to its Quality Standard M-1003 and by the International Standards
Organization to its ISO 9001 Quality Standard certification for the field of
electronics.
Interactive Data Group ("IDG")
The Company's IDG was created as a result of the Company's investment
through December 1995 of approximately $1,850,000 of convertible debt and equity
financing to WaveLink Technologies, Inc., a start-up enterprise headquartered in
Mississauga, Ontario, Canada ("WaveLink"). As of December 31, 1995, the
Company owned 72% of the WaveLink equity (assuming the conversion of the
WaveLink convertible debt securities held by the Company). In the near-term,
the Company anticipates making additional equity and convertible debt
investments in WaveLink, which would increase the Company's ownership position.
The IDG designs, manufactures and markets, and will support, advanced
wireless radio frequency data collection ("RFDC") products and systems that
allow wireless information exchange between mobile computer users and host
computer applications via radio frequency channels. These products combine the
capability of wireless technology with products designed to collect, transmit
and receive data. The IDG's products can be used by businesses to create
databases on a real-time basis for more effective asset management.
In 1995, the IDG made significant progress in developing its initial
product line, which is to be marketed under the "WaveLink/tm"/ trademark. Also,
during the fourth quarter of 1995, prototypes of the IDG's initial product line
were previewed at trade shows in Asia, Europe and North America. WaveLink is
currently manufacturing and marketing its initial products on a limited scale
and these products are expected to be released to volume production in mid-1996.
The IDG expects to market its products directly and through a variety of
distribution channels, and they will be manufactured at the Company's
Albuquerque, New Mexico facility. The initial targeted markets for the IDG's
products include warehousing and distribution, manufacturing, and transportation
terminal management. Later target markets will include medical and retail. These
markets for the IDG's products are dominated by six well-established
competitors. The Company believes that the principal competitive factors in the
IDG's markets are product performance, quality, price, and customer service.
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The IDG, whose principal offices are located in Mississauga, Ontario,
Canada, and Dallas, Texas, currently employs approximately 20 employees.
Research and Development
Research and development expenses for the Company amounted to $9,334,000,
$6,222,000, and $4,407,000 in 1995, 1994, and 1993, respectively.
Patents and Trademarks
The Company owns numerous patents and has filed patent applications in the
United States and a number of foreign countries covering features of the
Company's tags and reader systems marketed by the TSG and by the ESG, as well as
the Company's implementation of the methods by which the tags and readers
communicate. Although management believes that its patents provide some
competitive advantage, the Company believes that its success is primarily
dependent on the skills, technical competence and marketing abilities of the
Company's personnel. In addition, "AMTECH," "CARDKEY," "COTAG," "TOLLTAG," and
other marks are registered trademarks of the Company in the United States and
various foreign countries. The Company also licenses certain cryptographic
technologies from a third party.
Customers
During the year ended December 31, 1995, the MTA Bridges and Tunnels, a
New York public toll authority, accounted for 21% of the Company's sales. During
the year ended December 31, 1994, Science Applications International Corporation
("SAIC") and CCTC International, Inc. ("CCTC"), distributors of the Company,
accounted for 21% and 13% of the Company's sales, respectively. During the year
ended December 31, 1993, SAIC (including sales to Video Masters, Inc., which was
acquired by SAIC during 1993) and CCTC accounted for 25% and 14% of the
Company's sales, respectively. During these periods, no other customer accounted
for 10% or more of sales.
Sales Backlog
The Company's backlog, calculated as the aggregate of sales prices of
orders received from customers less revenue recognized, was approximately
$36,000,000 at February 29, 1996, as compared with approximately $24,000,000 at
February 28, 1995. Approximately 70% of the February 29, 1996, backlog is
anticipated to be realized as revenue in 1996.
Export Sales
Export sales in the Americas, the Far East, and Europe for the years 1995,
1994, and 1993 (excluding sales by the TSG's joint ventures) were as follows:
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<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1995 1994 1993
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<S> <C> <C> <C>
The Americas (excluding the
U.S.) $ 6,593,000 $ 8,805,000 $ 9,362,000
Far East 3,938,000 1,577,000 2,011,000
Europe 2,867,000 1,557,000 2,593,000
----------- ----------- -----------
$13,398,000 $11,939,000 $13,966,000
=========== =========== ===========
</TABLE>
The following table presents information about the Company's operations in
different geographic areas as a result of the Company's 1995 business
acquisitions:
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
(In thousands)
Canada
U.S. Europe and Other Eliminations Total
------- ------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
Sales:
Unaffiliated
customers $64,916 $14,763 $ 392 $ ---- $80,071
Inter-area
transfers 586 230 208 (1,024) -----
------- ------- ------- ------- -------
$65,502 $14,993 $ 600 $(1,024) $80,071
======= ======= ======= ======= =======
Operating
loss $(2,488) $(2,182) $(1,372) $ ---- $(6,042)
======= ======= ======= ======= =======
Identifiable
assets $78,863 $12,803 $ 1,713 $ ---- $93,379
======= ======= ======= ======= =======
</TABLE>
Government Regulation
The Federal Communications Commission ("FCC") regulates the radio frequency
emissions of electronic devices in the United States. The FCC generally requires
that certain of the Company's products be issued a grant of equipment
authorization before the products may be marketed for use in the United States
(i.e., imported, sold, leased, or advertised for sale or lease). To date, the
TSG's and ESG's products have been demonstrated to operate within the FCC's
regulatory standards. The IDG has begun the process of obtaining FCC equipment
authorization for its products. Furthermore, the FCC requires that a license
be obtained for each site at which certain of the TSG's and IDG's products are
to be installed or used. Neither the TSG, the ESG, nor to the Company's
knowledge, their customers, have experienced any
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material difficulty in operating the products in compliance with relevant FCC
regulations or in obtaining the necessary site licenses.
Many foreign jurisdictions also require "type approval" by regulatory
agencies prior to the sale or shipment of radio frequency transmitting products,
as well as an operating license for each site. Type approvals have been obtained
for the TSG's and the ESG's products in many of the major industrial nations in
the world, and the Company believes that these products can be readily adapted
to applicable regulations in most, if not all, other countries. The IDG has
begun the process of seeking the required international type approvals for its
products and has obtained initial approvals in Europe.
The Company's products are required to operate within national and
international established standards for electrical safety and radio frequency
non-ionizing radiation emissions promulgated by, among others, the European
Union, the American National Standards Institute, the Occupational Safety and
Health Administration, and the International Electrotechnical Commission. In
addition, there are other applicable safety standards such as those of the
Underwriters Laboratories and the Canadian Standards Association.
Sale of the Company's products in foreign jurisdictions may require the
approval of domestic and foreign regulatory agencies, which may impede or
preclude the Company's efforts to penetrate such markets. The Company cannot
predict the extent or impact of future legislation or regulation by federal,
state or local authorities in the United States or foreign countries.
I
tem 2. Properties
The TSG leases approximately 56,000 square feet of space for the Company's
and the TSG's corporate offices in Dallas, Texas, under a lease that expires in
November 1997. The TSG also owns an approximately 70,000 square foot
manufacturing, product engineering, and research and development facility
located on an 8.33 acre site in Albuquerque, New Mexico. The ESG leases two
facilities used for manufacturing and corporate offices in Cambridge, England of
approximately 15,800 and 11,800 square feet under, respectively, a short-term
lease expiring March 1997 and a 125 year ground lease that commenced in
September 1979, and a 23,200 square foot facility and a 13,400 square foot
facility used for corporate offices in Reading, England under 25 year ground
leases that commenced in 1979. The ESG also leases an approximately 41,000
square foot corporate office facility in Simi Valley, California under a five
year lease that commenced in October 1995. The IDG leases an approximately
9,500 square foot facility in Mississauga, Ontario, Canada as its corporate
offices under a five year lease that commenced in 1994. In addition, the
Company leases a variety of smaller office spaces in various locations
throughout the U.S, Europe, and Australia.
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Item 3. Legal Proceedings
The Company is a plaintiff and a counter-defendant in a lawsuit pending in
federal district court in Dallas, Texas. The suit includes patent infringement
and unfair competition claims brought against the Company in February 1993 by
AT/Comm Incorporated ("AT/Comm"), one of the TSG's competitors in the electronic
toll collection market. All claims asserted against the Company have been
dismissed. Once certain motions brought by the Company against AT/Comm are
resolved, the court will issue a final judgment in favor of the Company with
respect to the dismissed claims. Any final judgment is, of course, subject to
appeal, as are the trial court's decisions to dismiss AT/Comm's claims.
WaveLink and certain of its employees are the subject of a $7,800,000 suit
brought in October 1994 by Teklogix, Inc., their former employer and a
competitor in the IDG's markets. The suit, which is pending in the Ontario
(Canada) Court of Justice, General Division, alleges improper use of
confidential information, theft of technology, misappropriation of business
opportunities and similar improprieties. WaveLink has denied any wrongdoing by
it or its employees and intends to vigorously defend the litigation.
While the final outcome of these matters cannot be predicted with
certainty, the Company believes that the final resolution of these matters will
not have a material adverse effect on the consolidated financial position of the
Company.
Item 4. Submission of Matters to Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information required by this Item is incorporated by reference from the
Company's 1995 Annual Report to Shareholders, page 21.
Item 6. Selected Financial Data
The information required by this Item is incorporated by reference from the
Company's 1995 Annual Report to Shareholders, page 18.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this Item is incorporated by reference from the
Company's 1995 Annual Report to Shareholders, pages 19-21.
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Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated by reference from the
Company's 1995 Annual Report to Shareholders, pages 22-31.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by reference from the
section "Management -- Directors and Executive Officers" in the Company's 1996
Proxy Statement.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference from the
section "Management -- Compensation of Executive Officers and Directors" in the
Company's 1996 Proxy Statement. Information in the section and subsection titled
"Report of Board of Directors on Annual Compensation" and "Performance Graph"
is not incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference from the
section "Security Ownership of Certain Beneficial Owners" in the Company's 1996
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference from the
section "Management -- Compensation of Executive Officers and Directors --
Transactions with Management and Related Parties" in the Company's 1996 Proxy
Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
Index to Consolidated Financial Statements
------------------------------------------
The following consolidated financial statements of Amtech Corporation,
included in the Company's 1995 Annual Report to Shareholders for the year ended
December 31, 1995, are incorporated by reference in Item 8:
<TABLE>
<CAPTION>
Page in 1995
Annual Report to
Shareholders
----------------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors 22
Consolidated Statements of Operations
for each of the three years in the
period ended December 31, 1995 23
Consolidated Balance Sheets at
December 31, 1995 and 1994 24
Consolidated Statements of Cash Flows
for each of the three years in the
period ended December 31, 1995 25
Consolidated Statements of Stockholders'
Equity for each of the three years in the
period ended December 31, 1995 26
Notes to Consolidated Financial Statements 27-31
</TABLE>
(a)(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
of the absence of the conditions under which they are required or because the
information required is included in the consolidated financial statements or
notes thereto.
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(a)(3) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 -- Purchase Agreement among Amtech Corporation, Assa Abloy, AB,
etal. Filed under exhibit number 2.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1995, and incorporated herein by reference.
2.2* -- List of exhibits to Purchase Agreement among Amtech Corporation,
Assa Abloy, AB, etal. The Registrant agrees to furnish
supplementally to the Commission upon request a copy of these
exhibits.
2.3 -- Amendment to Purchase Agreement listed in Exhibit 2.1. Filed
under exhibit number 2.2 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995, and
incorporated herein by reference.
2.4 -- Promissory Note of Viking Acquisition Company, in the original
principal amount of $6,000,000, dated August 1, 1995, payable to
Cardkey Systems, Inc. Filed under exhibit number 2.3 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995, and incorporated herein by reference.
2.5 -- Guaranty of Amtech Corporation, dated August 1, 1995. Filed under
exhibit number 2.4 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1995, and incorporated
herein by reference.
3.1 -- Articles of Incorporation of the Company, together with all
amendments thereto. Filed under exhibit number 3.1 in the
Company's Registration Statement on Form S-1 (Commission No. 33-
46398) and incorporated herein by reference.
3.2 -- Restated and Amended Bylaws of the Company, dated January 24,
1995. Filed under exhibit number 3.2 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
4.1 -- Specimen Certificate for Common Stock of the Company. Filed under
exhibit number 4.1 in the Company's Registration Statement on
Form S-1 (Commission No. 33-31209) and incorporated herein by
reference.
10.1 -- Joint Venture Agreement, dated as of October 1, 1991, between the
Company and Alcatel AVI S.A. Filed under exhibit number 2.1 in
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1991, and incorporated herein by
reference.
</TABLE>
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<TABLE>
<S> <C>
10.2 -- AVI-2 Manufacturing, Distribution and Technology License
Agreement, dated as of October 10, 1991, between the Company and
Alcatel Amtech S.A. Filed under exhibit number 2.2 in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1991, and incorporated herein by reference.
10.3 -- ISO Manufacturing, Distribution and Technology License Agreement,
dated as of October 10, 1991, between the Company and Alcatel
Amtech S.A. Filed under exhibit number 2.3 in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1991, and incorporated herein by reference.
10.4 -- 1988 Stock Option Plan of the Company. Filed under exhibit number
10.44 in the Company's Registration Statement on Form S-1
(Commission No. 33-31209) and incorporated herein by reference.
10.5 -- 1989 Stock Option Plan of the Company. Filed under exhibit number
10.45 in the Company's Registration Statement on Form S-1
(Commission No. 33-31209) and incorporated herein by reference.
10.6* -- 1990 Stock Option Plan of the Company. Filed under Appendix A in
the Company's Proxy Statement for the Annual Meeting of
Shareholders on May 24, 1990, and incorporated herein by
reference. Filed herewith.
10.7 -- 1992 Stock Option Plan of the Company. Filed under Annex A in the
Company's Proxy Statement for the Annual Meeting of Shareholders
on April 16, 1992, and incorporated herein by reference.
10.8* -- 401(k) Retirement Plan of the Company.
10.9 -- 1995 Long-Term Incentive Plan of the Company. Filed under Annex A
in the Company's Proxy Statement for the Annual Meeting of
Shareholders held April 21, 1995, and incorporated herein by
reference.
10.10 -- Director Retainer Plan. Filed under exhibit number 10.2 in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1993, and incorporated herein by reference.
10.11 -- Agreement between the Association of American Railroads and
Amtech Corporation, dated July 6, 1990. Filed under exhibit
number 10.37 in the Company's Registration Statement on Form S-1
(Commission No. 33-46398) and incorporated herein by reference.
10.12 -- Letter to American National Standards Institute, Secretariat of
International Standards Organization, dated July 31, 1989. Filed
under exhibit number 10.38 in the Company's Registration
Statement on Form S-1 (Commission No. 33-46398) and incorporated
herein by reference.
10.13 -- Agreement among Alcatel AVI S.A., Amtech Corporation and Alcatel
Amtech S.A. dated August 26, 1994. Filed under exhibit number
10.26 in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1994, and incorporated
herein by reference.
10.14 -- Amended Employment Agreement, dated January 1, 1991, by and
between the Company and G. Russell Mortenson. Filed under exhibit
</TABLE>
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<TABLE>
<S> <C>
number 10.10 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10.15 -- Amendment to Employment Agreement, dated January 10, 1992, by and
between the Company and G. Russell Mortenson. Filed under exhibit
number 10.11 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10.16 -- Second Amendment to Employment Agreement, effective November 10,
1992, by and between the Company and G. Russell Mortenson. Filed
under exhibit number 10.13 in the Company's Annual Report on Form
10-K for the year ended December 31, 1992, and incorporated
herein by reference.
10.17 -- Third Amendment to Employment Agreement, dated October 19, 1994,
by and between Amtech Corporation and G. Russell Mortenson. Filed
under exhibit number 10.27 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994, and
incorporated herein by reference.
10.18 -- Fourth Amendment to Employment Agreement, effective January 1,
1995, by and between Amtech Corporation and G. Russell Mortenson.
Filed under exhibit number 10.18 in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.19* -- Fifth Amendment to Employment Agreement, effective January 1,
10.20 -- Employment Agreement, dated August 1, 1990, by and between Amtech
Systems Corporation and Jeremy A. Landt. Filed under exhibit
number 10.12 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10.21 -- Amendment to Employment Agreement, dated November 10, 1992, by
and between Amtech Systems Corporation and Jeremy A. Landt. Filed
under exhibit number 10.22 in the Company's Annual Report on Form
10-K for the year ended December 31, 1992, and incorporated
herein by reference.
10.22 -- Second Amendment to Employment Agreement, effective October 19,
1994, by and Amtech Systems Corporation and Jeremy A. Landt.
Filed under exhibit number 10.21 in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.23 -- Third Amendment to Employment Agreement, effective January 1,
1995,by and between Amtech Systems Corporation and Jeremy A.
Landt. Filed under exhibit number 10.22 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.24 -- Employment Agreement, dated August 6, 1991, by and between Amtech
Corporation and Steve M. York. Filed under exhibit number 10.13
in the
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Company's Annual Report on Form 10-K for the year ended December
31, 1991, and incorporated herein by reference.
10.25 -- Amendment No. 1 to Employment Agreement, effective May 7, 1993,
by and between Amtech Corporation and Steve M. York. Filed under
exhibit number 10.24 in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated herein by
reference.
10.26 -- Second Amendment to Employment Agreement, dated October 19, 1994,
by and between Amtech Corporation and Steve M. York. Filed under
exhibit number 10.28 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994, and
incorporated herein by reference.
10.27 -- Third Amendment to Employment Agreement, effective January 1,
1995, by and between Amtech Corporation and Steve M. York. Filed
under exhibit number 10.26 in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, and incorporated
herein by reference.
10.28 -- Fourth Amendment to Employment Agreement, effective August 1,
1995, by and between Amtech Corporation and Steve M. York. Filed
under exhibit number 10.2 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1995, and
incorporated herein by reference.
10.29 -- Employment Agreement, effective January 25, 1995, by and between
Cotag International Limited and Stuart M. Evans. Filed under
exhibit number 10.3 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1995, and
incorporated herein by reference.
10.30 -- First Amendment to Employment Agreement, effective August 1,
1995, by and between Cotag International Limited and Stuart M.
Evans. Filed under exhibit number 10.4 in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
1995, and incorporated herein by reference.
10.31* -- Employment Agreement, effective November 16, 1995, by and between
Amtech Systems Corporation and Jeffrey S. Wetherell.
10.32* -- Employment Agreement, effective August 1, 1995, by and between
Cardkey Systems, Inc. and Michael H. Wolpert.
10.33* -- Employment Agreement, effective December 29, 1994, by and between
WaveLink Technologies, Inc. and N.A. (Nino) Zaino.
13.1* -- Portions of the 1995 Annual Report to Shareholders that are
incorporated by reference into Parts II and IV of this Form 10-K.
21.1* -- Subsidiaries of the Company.
23.1* -- Consent of Independent Auditors.
24.1 -- Power of attorney (included on page 17 of this Annual Report on
Form 10-K).
27.1* -- Financial Data Schedule
* Filed herewith
</TABLE>
15
<PAGE>
(b) Reports on Form 8-K
No reports of the registrant on Form 8-K have been filed with the
Securities and Exchange Commission during the three months ended December 31,
1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on March 18, 1996.
AMTECH CORPORATION
By: /s/ Steve M. York
------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer and Treasurer
16
<PAGE>
POWER OF ATTORNEY
We, the undersigned, directors and officers of Amtech Corporation (the
"Company"), do hereby severally constitute and appoint G. Russell Mortenson and
Steve M. York and each or either of them, our true and lawful attorneys and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and to file the same with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each or either of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys and
agents, and each of them, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ G. Russell Mortenson President, Chief Executive March 18, 1996
- --------------------------- Officer and Director
(G. Russell Mortenson) (Principal Executive Officer)
/s/ Steve M. York Senior Vice President, Chief March 18, 1996
- --------------------------- Financial Officer, and Treasurer
(Steve M. York) (Principal Financial and
Accounting Officer)
/s/ David P. Cook Director March 18, 1996
- ---------------------------
(David P. Cook)
/s/ Gary J. Fernandes Director March 18, 1996
- ---------------------------
(Gary J. Fernandes)
/s/ Robert M. Gintel Director March 18, 1996
- ---------------------------
(Robert M. Gintel)
/s/ Elmer W. Johnson Director March 18, 1996
- ---------------------------
(Elmer W. Johnson)
/s/ Dr. Jeremy A. Landt Director March 18, 1996
- ---------------------------
(Dr. Jeremy A. Landt)
/s/ James S. Marston Director March 18, 1996
- ---------------------------
(James S. Marston)
/s/ Antonio R. Sanchez, Jr. Director March 18, 1996
- ---------------------------
(Antonio R. Sanchez, Jr.)
</TABLE>
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 -- Purchase Agreement among Amtech Corporation, Assa Abloy, AB,
etal. Filed under exhibit number 2.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1995, and incorporated herein by reference.
2.2* -- List of exhibits to Purchase Agreement among Amtech Corporation,
Assa Abloy, AB, etal. The Registrant agrees to furnish
supplementally to the Commission upon request a copy of any of
these exhibits.
2.3 -- Amendment to Purchase Agreement listed in Exhibit 2.1. Filed
under exhibit number 2.2 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995, and
incorporated herein by reference.
2.4 -- Promissory Note of Viking Acquisition Company, in the original
principal amount of $6,000,000, dated August 1, 1995, payable to
Cardkey Systems, Inc. Filed under exhibit number 2.3 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995, and incorporated herein by reference.
2.5 -- Guaranty of Amtech Corporation, dated August 1, 1995. Filed under
exhibit number 2.4 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1995, and incorporated
herein by reference.
3.1 -- Articles of Incorporation of the Company, together with all
amendments thereto. Filed under exhibit number 3.1 in the
Company's Registration Statement on Form S-1 (Commission No. 33-
46398) and incorporated herein by reference.
3.2 -- Restated and Amended Bylaws of the Company, dated January 24,
1995. Filed under exhibit number 3.2 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
4.1 -- Specimen Certificate for Common Stock of the Company. Filed under
exhibit number 4.1 in the Company's Registration Statement on
Form S-1 (Commission No. 33-31209) and incorporated herein by
reference.
10.1 -- Joint Venture Agreement, dated as of October 1, 1991, between the
Company and Alcatel AVI S.A. Filed under exhibit number 2.1 in
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1991, and incorporated herein by
reference.
10.2 -- AVI-2 Manufacturing, Distribution and Technology License
Agreement, dated as of October 10, 1991, between the Company and
Alcatel Amtech S.A. Filed under exhibit number 2.2 in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1991, and incorporated herein by reference.
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
10.3 -- ISO Manufacturing, Distribution and Technology License Agreement,
dated as of October 10, 1991, between the Company and Alcatel
Amtech S.A. Filed under exhibit number 2.3 in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1991, and incorporated herein by reference.
10.4 -- 1988 Stock Option Plan of the Company. Filed under exhibit number
10.44 in the Company's Registration Statement on Form S-1
(Commission No. 33-31209) and incorporated herein by reference.
10.5 -- 1989 Stock Option Plan of the Company. Filed under exhibit number
10.45 in the Company's Registration Statement on Form S-1
(Commission No. 33-31209) and incorporated herein by reference.
10.6* -- 1990 Stock Option Plan of the Company. Filed under Appendix A in
the Company's Proxy Statement for the Annual Meeting of
Shareholders on May 24, 1990, and incorporated herein by
reference. Filed herewith.
10.7 -- 1992 Stock Option Plan of the Company. Filed under Annex A in the
Company's Proxy Statement for the Annual Meeting of Shareholders
on April 16, 1992, and incorporated herein by reference.
10.8* -- 401(k) Retirement Plan of the Company.
10.9 -- 1995 Long-Term Incentive Plan of the Company. Filed under Annex A
in the Company's Proxy Statement for the Annual Meeting of
Shareholders held April 21, 1995, and incorporated herein by
reference.
10.10 -- Director Retainer Plan. Filed under exhibit number 10.2 in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1993, and incorporated herein by reference.
10.11 -- Agreement between the Association of American Railroads and
Amtech Corporation, dated July 6, 1990. Filed under exhibit
number 10.37 in the Company's Registration Statement on Form S-1
(Commission No. 33-46398) and incorporated herein by reference.
10.12 -- Letter to American National Standards Institute, Secretariat of
International Standards Organization, dated July 31, 1989. Filed
under exhibit number 10.38 in the Company's Registration
Statement on Form S-1 (Commission No. 33-46398) and incorporated
herein by reference.
10.13 -- Agreement among Alcatel AVI S.A., Amtech Corporation and Alcatel
Amtech S.A. dated August 26, 1994. Filed under exhibit number
10.26 in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1994, and incorporated
herein by reference.
10.14 -- Amended Employment Agreement, dated January 1, 1991, by and
between the Company and G. Russell Mortenson. Filed under exhibit
number 10.10 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10.15 -- Amendment to Employment Agreement, dated January 10, 1992, by and
between the Company and G. Russell Mortenson. Filed under exhibit
number 10.11 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
10.16 -- Second Amendment to Employment Agreement, effective November 10,
1992, by and between the Company and G. Russell Mortenson. Filed
under exhibit number 10.13 in the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference.
10.17 -- Third Amendment to Employment Agreement, dated October 19, 1994,
by and between Amtech Corporation and G. Russell Mortenson. Filed
under exhibit number 10.27 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994, and
incorporated herein by reference.
10.18 -- Fourth Amendment to Employment Agreement, effective January 1,
1995, by and between Amtech Corporation and G. Russell Mortenson.
Filed under exhibit number 10.18 in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.19* -- Fifth Amendment to Employment Agreement, effective January 1,
1996, by and between Amtech Corporation and G. Russell Mortenson.
10.20 -- Employment Agreement, dated August 1, 1990, by and between Amtech
Systems Corporation and Jeremy A. Landt. Filed under exhibit
number 10.12 in the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.
10.21 -- Amendment to Employment Agreement, dated November 10, 1992, by
and between Amtech Systems Corporation and Jeremy A. Landt. Filed
under exhibit number 10.22 in the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference.
10.22 -- Second Amendment to Employment Agreement, effective October 19,
1994, by and between Amtech Systems Corporation and Jeremy A.
Landt. Filed under exhibit number 10.21 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.23 -- Third Amendment to Employment Agreement, effective January 1,
1995, by and between Amtech Systems Corporation and Jeremy A.
Landt. Filed under exhibit number 10.22 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.24 -- Employment Agreement, dated August 6, 1991, by and between Amtech
Corporation and Steve M. York. Filed under exhibit number 10.13
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference.
10.25 -- Amendment No. 1 to Employment Agreement, effective May 7, 1993,
by and between Amtech Corporation and Steve M. York. Filed under
exhibit number 10.24 in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated herein by
reference.
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
10.26 -- Second Amendment to Employment Agreement, dated October 19, 1994,
by and between Amtech Corporation and Steve M. York. Filed under
exhibit number 10.28 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994, and
incorporated herein by reference.
10.27 -- Third Amendment to Employment Agreement, effective January 1,
1995, by and between Amtech Corporation and Steve M. York. Filed
under exhibit number 10.26 in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, and incorporated
herein by reference.
10.28 -- Fourth Amendment to Employment Agreement, effective August 1,
1995, by and between Amtech Corporation and Steve M. York. Filed
under exhibit number 10.2 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1995, and
incorporated herein by reference.
10.29 -- Employment Agreement, effective January 25, 1995, by and between
Cotag International Limited and Stuart M. Evans. Filed under
exhibit number 10.3 in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1995, and
incorporated herein by reference.
10.30 -- First Amendment to Employment Agreement, effective August 1,
1995, by and between Cotag International Limited and Stuart M.
Evans. Filed under exhibit number 10.4 in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
1995, and incorporated herein by reference.
10.31* -- Employment Agreement, effective November 16, 1995, by and between
Amtech Systems Corporation and Jeffrey S. Wetherell.
10.32* -- Employment Agreement, effective August 1, 1995, by and between
Cardkey Systems, Inc. and Michael H. Wolpert.
10.33* -- Employment Agreement, effective December 29, 1994, by and between
WaveLink Technologies, Inc. and N.A. (Nino) Zaino.
13.1* -- Portions of the 1995 Annual Report to Shareholders that are
incorporated by reference into Parts II and IV of this
Form 10-K.
21.1* -- Subsidiaries of the Company.
23.1* -- Consent of Independent Auditors.
24.1 -- Power of attorney (included on page 17 of this Annual Report on
Form 10-K).
27.1* -- Financial Data Schedule
</TABLE>
* Filed herewith
21
<PAGE>
EXHIBIT 2.2
LIST OF SCHEDULES TO PURCHASE AGREEMENT
AMONG AMTECH CORPORATION, ASSA ABLOY AB, ETAL.
----
Exhibit A -- Assets
Exhibit B -- Excluded Assets and Excluded Liabilities
Exhibit C -- Assumed Liabilities
Exhibit D -- Balance Sheets
Schedule 4.1 -- Jurisdictions where Sellers have assets or are qualified to
transact business
Schedule 4.3 -- Liens
Schedule 4.4 -- Condition of Assets
Schedule 4.7 -- GAAP Financial Statement Preparation
Schedule 4.9 -- Absence of Material Adverse Changes
Schedule 4.10 -- Taxes, Tax Returns, Notices and Reports, and Other Tax
Related Information
Schedule 4.11 -- Litigation
Schedule 4.14 -- Contracts
Schedule 4.16 -- Employees
Schedule 4.17 -- Excluded Employee Benefit Plan Liabilities
Schedule 4.18 -- Employment Contracts
Schedule 4.19 -- Intellectual Property
Schedule 4.20 -- Insurance
Schedule 4.21 -- Sellers' Interest in Competitors
Schedule 4.24 -- Material Assets and Liabilities of Cardkey Systems Pacific
Pty. Limited
Schedule 4.26 -- Governmental Authorizations
Schedule 6.11 -- Business Names Acquired
Schedule 7.4 -- Excluded Employees
<PAGE>
EXHIBIT 10.6
AMTECH CORPORATION
1990 STOCK OPTION PLAN
----------------------
1. Purpose. The purpose of the Plan is to benefit the Company and its
-------
Subsidiaries by offering certain present and future Employees a favorable
opportunity to acquire shares of Stock of the Company over a period of years,
thereby giving such Employees a permanent stake in the growth and prosperity of
the Company, encouraging such Employees to continue their services with the
Company and its Subsidiaries, and motivating such Employees to devote their best
efforts to the business and profitability of the Company and its Subsidiaries.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change of Control" shall mean the occurrence, at any time during the
specified term of an Option, of any of the following events:
(1) The Company is merged or consolidated or reorganized into or with
another Person and as a result of such merger, consolidation or
reorganization less than seventy-five percent (75%) of the outstanding
voting securities or other material capital interests of the surviving,
resulting or acquiring Person are owned in the aggregate by Persons who
were shareholders
of the Company immediately prior to such merger,
consolidation or reorganization;
(2) The Company sells all or substantially all of its business or
assets to any other Person, less than seventy-five percent (75%) of the
outstanding voting securities or other material capital interests of which
are owned in the aggregate by Persons who were shareholders of the Company,
directly or indirectly, immediately prior to such sale; or
(3) Any Person (or group of Persons acting in concert), other than the
Company, becomes the beneficial owner, directly or indirectly, of thirty-
five percent (35%) or more of the issued and outstanding shares of voting
securities of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" shall mean Amtech Corporation, a Texas corporation.
(e) "Date of Grant" shall mean, with respect to each Option granted by the
Plan Administrator pursuant to the Plan, the date specified in Section 1 of the
Option Agreement relating to such Option.
(f) "Director" shall mean any duly elected and qualified member of the
Board.
<PAGE>
(g) "Disability" shall mean any medically determinable physical or mental
impairment that, in the opinion of the Plan Administrator, based upon medical
reports and other evidence satisfactory to the Plan Administrator, can
reasonably be expected to prevent an Employee from performing substantially all
of his customary duties of employment for a continuous period of not less than
twelve (12) months.
(h) "Employee" shall mean any salaried employee of the Company or any
Subsidiary, except a salaried employee who is serving as a Director.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" shall mean the closing price of the Stock as quoted
on NASDAQ/NMS on the last business day immediately preceding the date on which
the Option is granted or the date of exercise, as the case may be.
(k) "NASDAQ/NMS" shall mean the NASDAQ National Market System.
(l) "Option" shall mean any right to purchase Stock which has been granted
pursuant to the Plan.
(m) "Option Agreement" shall mean an agreement executed by an officer of
the Company and an Optionee evidencing the grant of an Option pursuant to the
Plan.
(n) "Optionee" shall mean any Employee who receives an Option or any Person
who acquires an Option by reason of the death of an Employee.
(o) "Person" shall mean an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, an unincorporated organization or a
government or political subdivision thereof.
(p) "Plan" shall mean the Amtech Corporation 1990 Stock Option Plan.
(q) "Plan Administrator" shall mean the Board or, in the alternative, any
committee of three or more Directors authorized by the Board to administer the
Plan.
(r) "Resignation" shall mean the voluntary termination by an Employee of
his employment relationship with the Company under circumstances other than
voluntary Retirement.
(s) "Retirement" shall mean the termination of an Employee's employment in
accordance with the requirements of a written retirement plan, policy or rule of
the Company which has been duly adopted by the Board.
2
<PAGE>
(t) "Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under
the Exchange Act as it may be amended from time to time and any successor
provision to Rule 16b-3 under the Exchange Act.
(u) "Securities Act" shall mean the Securities Act of 1933, as amended.
(v) "Stock" shall mean the $.01 par value Common Stock of the Company.
(w) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company in which each of the corporations (other
than the last corporation) in the unbroken chain owns shares of capital stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of capital stock of one of the other corporations in such chain at the
date of grant of an Option.
3. Shares Subject to the Plan. Except as otherwise required by the
--------------------------
provisions of Section 9 hereof, the aggregate number of shares of Stock issuable
upon the exercise of Options granted pursuant to the Plan shall not exceed
345,045 shares. Such shares may either be authorized but unissued shares or
treasury shares.
The exercise price of each Option granted pursuant to the Plan shall be
determined by the Plan Administrator and, subject to the provisions of Section 9
hereof, shall be not less than the Fair Market Value, at the time the Option is
granted, of the shares of Stock subject to the Option.
Subject to the limitations provided above, if an Option should expire or
become unexercisable for any reason without having been exercised in full, the
unpurchased shares of Stock that were subject thereto shall, unless the Plan
shall have terminated, be available for the grant of other Options under the
Plan.
4. Administration of the Plan. The following provisions shall govern the
--------------------------
administration of the Plan:
(a) The Plan shall be administered by the Plan Administrator.
(b) The Plan Administrator is authorized (but only to the extent not
contrary to the express provisions of the Plan) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan and
to the Options granted under the Plan, to determine the form and content of
Options to be issued under the Plan (including the exercise price, the
exercise period and the exercise increments of each such Option) and to
make such other determinations and exercise such other powers and authority
as may be necessary or advisable for the administration of the Plan. Each
Option granted pursuant to the Plan shall be evidenced by the Option
Agreement in such form as may be determined by the Plan Administrator.
3
<PAGE>
(c) A majority of the members of the Plan Administrator eligible to
act shall constitute a quorum for purposes of acting with respect to the
Plan, and the action of a majority of the members present who are eligible
to act at any meeting at which a quorum is present shall be deemed the
action of the Plan Administrator.
(d) All decisions, determinations and interpretations of the Plan
Administrator with respect to the Plan and Option Agreements executed
pursuant thereto shall be final and conclusive on all persons affected
thereby.
(e) Neither the Plan Administrator nor any member thereof shall be
liable for any act, omission, interpretation, construction or determination
made in connection with the Plan in good faith, and the members of the Plan
Administrator shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the full extent permitted by law. The members
of the Plan Administrator shall be named as insureds under any directors
and officers liability insurance coverage that may be in effect from time
to time.
5. Eligibility. All Employees of the Company and its Subsidiaries are
-----------
eligible to receive Options under the Plan. The Plan Administrator is
authorized to select from the Employees who are eligible to receive Options
under the Plan the particular Employees who will receive Options and to
determine the number of Options and the number of shares of Stock under each
Option. In granting Options, the Plan Administrator shall take into
consideration the contribution an Employee has made or may make to the success
of the Company or its Subsidiaries and such other factors as the Plan
Administrator shall determine. The Plan Administrator shall also have the
authority to consult with and receive recommendations from Directors and
Employees of the Company and its Subsidiaries with regard to these matters. In
no event shall any Employee or his legal representatives, heirs, legatees,
distributees or successors have any right to participate in the Plan except to
such extent, if any, as the Plan Administrator shall determine.
6. Term of the Plan. The Plan shall continue in effect until terminated
----------------
pursuant to Section 15; provided, however, that all Options granted pursuant to
the Plan must be granted within 10 years from the effective date of the Plan.
7. Termination of Employment - Exercise Thereafter. In the event of
-----------------------------------------------
termination of an Optionee's employment due to death, Retirement, Resignation,
Disability or termination by the Company for any reason other than "cause" (such
five events each being a "Qualified Termination"), the Option may be exercised
by the Optionee or his estate, personal representative or beneficiary to the
full extent that the Optionee was entitled to exercise the same on the day
immediately prior to such termination (i) at any time within the one-year period
commencing on the day next following such termination if such termination is due
to death of the Optionee; (ii) at any time within the thirty-day period
commencing on the day next following the effective date
4
<PAGE>
of such termination if such termination is due to the Resignation of the
Optionee; or (iii) at any time within the six-month period commencing on the day
next following such termination in the case of any other Qualified Termination.
In the event that the Optionee's employment is terminated for any reason other
than a Qualified Termination, the Option shall automatically expire
simultaneously with such termination. For purposes of this Section, "cause"
shall mean (x) the failure, in the sole opinion of the Company or the Subsidiary
which employs Optionee, of Optionee to adequately perform the duties assigned to
Optionee (other than any such failure resulting from Optionee's Disability); (y)
the engagement by Optionee in misconduct which, in the sole opinion of the
Company or the Subsidiary which employs Optionee, is or may have the effect of
being materially injurious to the Company or its Subsidiaries; or (z) the
conviction of Optionee of any felony or crime of moral turpitude.
8. Transferability. An Option granted pursuant to the Plan shall not be
---------------
transferable by the Optionee otherwise than by will or the laws of descent and
distribution, and the Option shall be exercisable, during the Optionee's
lifetime, only by Optionee or his legal representative or guardian. More
particularly (but without limiting the generality of the foregoing), an Option
may not be assigned, transferred (except as aforesaid), pledged or hypothecated
in any way (whether by operation of law or otherwise), and shall not be subject
to execution, attachment or similar process, without the prior written consent
of the Company. Any attempted assignment, contrary to the provisions hereof,
and the levy of any attachment or similar process upon the Option, which would
otherwise effect a change in the ownership of the Option, shall terminate the
Option.
9. Adjustment. The number of shares subject to the Plan and to Options
----------
granted pursuant to the Plan shall be adjusted as follows: (a) in the event that
the outstanding Stock is changed by reason of a stock dividend, stock split,
recapitalization or combination of shares, the number of shares of Stock subject
to the Plan and to Options granted pursuant to the Plan shall be proportionately
adjusted; or (b) in the event of any merger, consolidation or reorganization of
the Company with any other corporation or corporations, there shall be
substituted for each share of Stock then subject to the Plan and to Options
granted pursuant to the Plan the number and kind of shares of stock or other
securities to which the holders of shares of Stock will be entitled pursuant to
the transaction. In the event of any such adjustment, the purchase price per
share shall be proportionately adjusted.
10. Change of Control. Any Option previously granted under the Plan to an
-----------------
Optionee who is an Employee on the date of a Change of Control shall become
exercisable in full on such date and, except in the case of a termination of
employment for cause in conjunction with or following the Change of Control, may
be exercised by the Optionee at any time during the remainder of the term of the
Option, without regard to any exercise increments established pursuant to any
applicable Option Agreement. In the case of a termination of employment for
cause in conjunction with or following a Change of Control, the Option may be
exercised by the Optionee at any time within a period of not less than six
months nor more than three (3) years (the length of which period shall be within
the discretion of the Plan Administrator and shall be
5
<PAGE>
evidenced conclusively by the giving of appropriate and timely notice to the
Optionee in accordance with the terms of the applicable Option Agreement) after
the date of such termination.
11. Exercise of Option. An Option may be exercised by giving written
------------------
notice to the Company, attention of the Treasurer. The notice shall (i) state
the election to exercise the Option and the number of shares in respect of which
it is being exercised; (ii) be signed by the Optionee; and (iii) be accompanied
by the representation and covenant required under Section 12 hereof and any
other written representations, covenants, and undertakings that the Company may
prescribe to satisfy securities laws and regulations or other requirements. In
addition, the notice shall be accompanied by (a) cash in an amount equal to the
full purchase price of the shares to be purchased, a certified or bank cashier's
check payable to the order of the Company in an amount equal to the full
purchase price of the shares to be purchased, shares of Stock or a combination
of these methods of payment; or (b) if the shares to be purchased are covered by
an effective registration statement under the Securities Act, a written
statement signed by the Optionee that the exercise is a "cashless exercise"
through a brokerage firm in accordance with Section 220.3(e)(4) of Regulation T
issued by the Board of Governors of the Federal Reserve System ("Reg T")
pursuant to the Exchange Act, in which latter event the Company will use its
best efforts to comply with the requirements of Reg T. In the event that shares
of Stock are used as a method of payment, the per share value of Stock shall be
the Fair Market Value on the date of exercise. The certificate or certificates
for the shares as to which the Option shall have been so exercised shall be
registered in the name of the Optionee or his designee and shall be delivered to
or upon the written order of the Optionee. The Company shall be entitled to
place the following legend (or a legend which is substantially similar to the
following legend) upon, and to issue appropriate stop transfer instructions with
respect to, the certificate or certificates representing the shares issued upon
exercise of the Option:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS (THE "STATE LAWS"), AND SUCH SHARES MAY
NOT BE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE LAWS COVERING SUCH TRANSFER IS THEN IN EFFECT; OR
(B) AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER, HAS BEEN FURNISHED
STATING THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE LAWS."
All shares of Stock issued as provided herein shall be duly and validly issued,
fully paid and non-assessable.
12. Securities Law Restrictions. The Company shall not be obligated to
---------------------------
issue any shares purchased upon exercise of an Option until, in the opinion of
the Company and its counsel, such issuance will not involve any violation of
applicable federal and state securities laws, the rules and regulations
promulgated thereunder and the requirements of any stock
6
<PAGE>
exchange upon which the Stock may then be listed. Acceptance of an Option by an
Optionee shall constitute the Optionee's agreement that any shares of Stock
purchased upon the exercise of the Option shall be acquired for the Optionee's
own account and not with a view to distribution and that each notice of the
exercise of any portion of the Option shall be accompanied by a written
representation and covenant signed by the Optionee, in such form as may be
specified by the Company, confirming such agreement and containing such other
provisions as may be prescribed by the Company. The Company may, at its
election, release an Optionee from the Optionee's agreement to take for the
Optionee's own account and not with a view to distribution of the shares of
Stock purchased upon exercise of the Option, if in the opinion of the Company
such covenant ceases to be necessary for compliance with the applicable federal
and state securities laws (including the rules and regulations promulgated
thereunder) and the requirements of any stock exchange upon which the Stock may
be then listed.
13. Listing or Registration of Stock. Each Option granted pursuant to the
--------------------------------
Plan is subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification of
the shares of Stock subject to the Option upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting or exercise of the Option or the issue or purchase of shares
under the Option, the Option may not be exercised in whole or in part until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall be under no obligation to effect or obtain any such listing,
registration, qualification, consent or approval if the Board shall determine,
in its discretion, that such action would not be in the best interests of the
Company. The Company shall not be liable for damages due to a delay in the
delivery or issuance of any stock certificates for any reason whatsoever,
including, but not limited to, a delay caused by listing, registration or
qualification of the shares of Stock subject to an Option upon any securities
exchange or under any federal or state law or the effecting or obtaining of any
consent or approval of any governmental body with respect to the granting or
exercise of the Option or the issue or purchase of shares under the Option.
14. Modification of Options. At any time and from time to time the Plan
-----------------------
Administrator may execute an instrument providing for modification, extension,
or renewal of any outstanding Option, provided that no such modification,
extension or renewal shall (i) impair the Option in any respect without the
consent of the holder of the Option or (ii) conflict with the provisions of Rule
16b-3.
15. Amendment and Termination of the Plan. The Board may alter, suspend
-------------------------------------
or discontinue the Plan, except that no action of the Board may increase the
benefits accruing to Employees under the Plan, increase (other than as provided
in Section 9) the maximum number of shares permitted to be issued upon the
exercise of Options granted pursuant to the Plan or materially modify the
requirements as to eligibility for participation in the Plan unless such action
of the Board shall be subject to approval by the shareholders of the Company.
7
<PAGE>
16. Shareholder Rights. The holder of an Option shall have none of the
------------------
rights of a shareholder with respect to the shares of Stock subject to the
Option until such shares shall have been issued to him upon the due exercise of
the Option.
17. Withholding of Taxes. The Plan Administrator may make such provisions
--------------------
and take such steps as it may deem necessary or appropriate for the withholding
of any taxes which the Company or any Subsidiary is required by any law or
regulation of any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Option, including, but
not limited to, the withholding of the issuance of all or any portion of the
shares of Stock subject to the Option until the Optionee reimburses the Company
or the applicable Subsidiary for the amount the Company or the applicable
Subsidiary is required to withhold with respect to such taxes, canceling any
portion of the issuance in an amount sufficient to reimburse the Company or the
applicable Subsidiary for the amount it is required to so withhold, or taking
any other action reasonably required to satisfy the withholding obligation of
the Company or the applicable Subsidiary.
18. Restrictions on Stock. The Plan Administrator may impose such
---------------------
restrictions on the ownership and transfer of shares of Stock issued upon
exercise of Options granted pursuant to the Plan as it deems desirable and any
such restrictions shall be set forth in the Option Agreement evidencing the
Options; provided, however, that any such restrictions shall not be materially
more burdensome than the restrictions imposed upon the other outstanding,
unregistered shares of Stock.
19. Reservation of Stock. The Company during the term of the Plan will
--------------------
reserve and keep available such number of shares of Stock as shall be sufficient
to satisfy the requirements of the Plan.
20. Continued Employment Not Presumed. Nothing in the Plan or any
---------------------------------
document describing it nor the grant of an Option shall give an Optionee the
right to continue in employment with the Company or any of its Subsidiaries or
affect the right of the Company or a Subsidiary to terminate the employment of
any Optionee with or without cause.
21. Effective Date. The Plan shall become effective on the date of the
--------------
later of adoption by the Board and adoption by the shareholders of the Company
in accordance with Rule 16b-3.
CERTIFICATE
-----------
The foregoing Amtech Corporation 1990 Stock Option Plan was adopted by the
Board (as therein defined) on March 28, 1990 and by the shareholders of the
Company on May 24, 1990.
-----------------------------------------
Phillip A. Wylie, Secretary
8
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EXHIBIT 10.8
TABLE OF CONTENTS BANK ONE TRUST COMPANY, N.A.
PROTOTYPE RETIREMENT PLAN NO. 1
ARTICLE TITLE PAGE
I NAME, PURPOSE AND EFFECTIVE DATE OF PLAN 1
II DEFINITIONS 1
III PARTICIPATION REQUIREMENTS 14
IV PLAN CONTRIBUTIONS 17
V PARTICIPANT ACCOUNTS, ALLOCATION OF CONTRIBUTIONS
AND VALUATION OF ASSETS 21
VI PROVISIONS APPLICABLE TO TOP HEAVY PLANS 22
VII 415 LIMITATIONS ON ALLOCATIONS 25
VIII 401(k) SALARY SAVINGS CONTRIBUTION LIMITATIONS
AND REFUNDS 31
IX EMPLOYEE CONTRIBUTIONS AND EMPLOYER MATCH
CONTRIBUTIONS - LIMITATIONS,
REFUNDS AND FORFEITURES 35
X IN-SERVICE WITHDRAWALS 38
XI PARTICIPANT LOANS 40
XII RETIREMENT AND DEATH BENEFITS 42
XIII BENEFITS UPON TERMINATION OF SERVICE 57
XIV PLAN FIDUCIARY RESPONSIBILITIES 60
XV TRUSTEE AND TRUST FUND INVESTMENTS 64
XVI THE INSURER 72
XVII LIFE INSURANCE POLICIES 72
XVIII TRANSFER OF ASSETS, ROLLOVER CONTRIBUTIONS 74
XIX CLAIMS PROCEDURE 76
XX AMENDMENT AND TERMINATION 77
XXI MISCELLANEOUS 79
<PAGE>
BANK ONE TRUST COMPANY, N.A.
PROTOTYPE RETIREMENT PLAN NO. 1
BANK ONE TRUST COMPANY, N.A. ("Bank One") is the sponsor of this Prototype
Retirement Plan, which an Employer may adopt by executing a Plan Adoption
Agreement. The Trustee who is to act as
Trustee hereunder shall indicate
acceptance of the provisions of this Plan and Trust upon the page and in the
manner provided for that purpose, whereupon this instrument shall be a valid and
binding Plan and Trust in accordance with its terms and provisions.
ARTICLE I
NAME, PURPOSE AND EFFECTIVE DATE OF PLAN
1.01 This Plan shall be known as Bank One Prototype Retirement Plan No. 1.
This Plan is Bank One Basic Plan Document No. 01.
1.02 This Plan and Trust has been established for the exclusive benefit of the
eligible Employees of each Employer and their Beneficiaries, and as far as
possible shall be interpreted and administered in a manner consistent with
this intent and consistent with the requirements of Code Section 401. If
the Employer's plan fails to attain or retain qualification under Code
Section 401, such plan shall no longer participate under this Prototype
Plan and will be considered an individually designed plan.
1.03 Subject to Article VII and to Section 20.05, under no circumstances shall
any property of the Trust, or any contributions made by the Employer under
its Plan or Trust, be used for, or diverted to, purposes other than for
the exclusive benefit of the Employees of such Employer, or their
Beneficiaries.
1.04 The Effective Date of this Plan and Trust shall be the date specified as
such in Item 6 of the Adoption Agreement.
ARTICLE II
DEFINITIONS
As used in this Agreement, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context.
2.01 "Accrued Benefit" means the sum of the balances of the separate accounts
maintained on a Participant's behalf pursuant to Section 5.01.
2.02 "Administrator" means the person or persons designated by the Employer in
Item 10 of the Adoption Agreement to administer the Plan on behalf of the
Employer.
2.03 "Adoption Agreement" means the separate agreement executed by each
Employer adopting the Plan, in which the Employer's selection of options
under the Plan are indicated.
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<PAGE>
2.04 "Age" means the age of a person at his last birthday.
2.05 "Beneficiary" means the person, trust, organization or estate designated
to receive Plan benefits payable on or after the death of a Participant.
2.06 "Compensation" means a Participant's Section 3401(a) wages, Section
6041/etc. compensation or Section 415 safe-harbor compensation (as defined
below), whichever is elected by the Employer in Section 2.06 of the
Adoption Agreement. For any Self-Employed Individual covered under the
Plan, Compensation will mean Earned Income. Compensation shall include
only that compensation which is actually paid to the Participant during
the determination period. Except as provided elsewhere in the Plan, the
determination period shall be the period elected by the Employer in the
Adoption Agreement.
(1) Section 3401(a) wages. Wages as defined in Code Section 3401(a) for
the purposes of income tax withholding at the source but determined
without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in
Code Section 3401(a)(2)).
(2) Section 6041/etc. compensation (Wages, Tips and Other Compensation
Box on Form W-2). Compensation defined as wages within the meaning
of Section 3401(a) of the Code and all other payments of
compensation to the Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to
furnish the Employee a written statement under Sections 6041(d),
6051(a)(3) and 6052 of the Code, determined without regard to any
rules under Section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed.
(3) 415 safe-harbor compensation. Wages, salaries, and fees for
professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible
in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Section 1.62-2(c) of the
Regulations)), and excluding the following:
(a) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for
the taxable year in which contributed, or Employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee, or
any distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
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<PAGE>
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(d) Other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
contract described in Section 403(b) of the Code (whether or
not the contributions are actually excludible from the gross
income of the Employee).
Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by
the Employer on behalf of a Participant pursuant to a salary reduction
agreement and which is not includible in the gross income of the
Participant under Sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
In the case of an incorporated Employer which adopts a non-standardized
plan with a non-integrated allocation formula, if the Plan is not a Top
Heavy Plan, the Employer may specify in Section 2.06 of the Adoption
Agreement that certain items of Compensation may be disregarded.
Notwithstanding the above, if the Employer is incorporated, for the first
year of Plan participation, Compensation paid prior to the date the
Employee becomes a Participant shall be excluded if the Employer so
specified in Section 2.06 of the Adoption Agreement.
If so elected by the Employer, Compensation shall be limited to the dollar
amount specified in Section 2.06 of the Adoption Agreement.
For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining all
benefits provided under the Plan for any determination period shall not
exceed $150,000. This limitation shall be adjusted for inflation by the
Secretary in multiples of $10,000 by applying an inflation adjustment
factor and rounding the result down to the next multiple of $10,000
(increases of less than $10,000 are disregarded). If a Plan determines
Compensation over a period of time that contains fewer than 12 calendar
months, then the annual Compensation limit is an amount equal to the
annual Compensation limit for the calendar year in which the Compensation
period begins multiplied by the ratio obtained by dividing the number of
full months in the period by 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except
in applying such rules, the term "family" shall include only the spouse of
the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a result of the
application of such rules the adjusted $150,000 limitation is exceeded,
then (except for purposes of determining the portion of Compensation up to
the integration level if this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion
to each such individual's Compensation as determined under this Section
prior to the application of this limitation.
If Compensation for any prior determination period is taken into account
in determining the Employee's contributions or benefits for the current
determination period, the Compensation for such prior determination period
is subject to the applicable annual Compensation limit in effect for
-3-
<PAGE>
that prior period. For this purpose, for years beginning before January
1, 1990, the applicable annual Compensation limit is $200,000. For years
beginning on or after January 1, 1990, and before January 1, 1994, the
applicable annual compensation limit is as follows: for 1990, $209,200;
for 1991, $222,220; for 1992, $228,860; and for 1993, $235,840. In
addition, in determining allocations in Plan Years beginning on or after
January 1, 1994, the annual periods beginning before that date is
$150,000.
For purposes of Articles VIII and IX, Compensation shall also include
amounts attributable to services performed in the given Plan Year and paid
within 2 1/2 months of the given Plan Year or that would have been paid
within such timeframe but for their contribution as a Salary Savings
Contribution within 12 months of the given Plan Year.
2.07 "Earned Income" means net earnings from self-employment for services
actually rendered to the trade or business for which this Plan is
established, in which trade or business personal services of an Owner-
Employee or a Self-Employed Individual are a material income-producing
factor. Earned Income of such trade or business shall also include gains
(other than gains from the sale of a capital asset, as defined in the
Code) and net earnings derived from the sale or other disposition of, the
transfer of any interest in, or the licensing of the use of, property
(other than good will) by an individual whose personal efforts created
such property. Net earnings will be determined without regard to items
not included in gross income and the deductions allocable to such items.
Net earnings shall be reduced by contributions by the Employer to a
qualified retirement plan to the extent deductible under Code Section 404.
For taxable years beginning after December 31, 1989, net earnings shall be
determined after the federal income tax deduction allowed to the Employer
by Section 164(f) of the Code for self-employment taxes.
2.08 "Employee" means any Self-Employed Individual and any common-law employee
who is employed by the Employer maintaining the Plan or by any other
employer required to be aggregated with such Employer under Sections
414(b), (c), (m) or (o) of the Code. The term "Employee" shall also
include any leased employee deemed to be an employee of any employer
described in the previous paragraph pursuant to Sections 414(n) or (o) of
the Code.
The term "leased employee" means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any
other person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially full
time basis for a period of at least one year and such services are of a
type historically performed by employees in the business field of the
recipient Employer. Contributions or benefits provided a leased employee
by the leasing organization which are attributable to services performed
for the recipient Employer shall be treated as provided by the recipient
Employer.
A leased employee shall not be considered an employee of the recipient if:
(i) such employee is covered by a money purchase pension plan providing:
(1) a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Section 7.14 of the Plan, but including
amounts contributed by the employer pursuant to a salary reduction
agreement which are excludable from the employee's gross income under
Sections 125, 402(e)(3), 402(h) or 403(b) of the Code, (2) immediate
participation, and (3) full and immediate vesting; and (ii) leased
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<PAGE>
employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
2.09 "Employer" means the entity specified in Item 1 of the Adoption Agreement,
any Participating Employer who completed and executed the Adoption
Agreement, any successor employer which shall maintain this Plan and, in
the case of a Non-Standardized Plan, any Predecessor Employer specified in
Item 16 of the Adoption Agreement. Participating Employers shall be
listed in Item 4 of the Adoption Agreement.
2.10 "Family Member" means, with respect to any Employee or former Employee,
such Employee's or former Employee's spouse and lineal ascendants and
descendants, and the spouses of lineal ascendants and descendants.
2.11 "Fiduciary" means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises
any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation,
direct or indirect, with respect to any monies or other property of the
Plan or has any authority or responsibility to do so, or (c) has any
discretionary authority or discretionary responsibility in the
administration of the Plan, including, but not limited to, the Trustee,
the Employer and the Plan Administrator.
2.12 "Five Percent Owner" means, in the case of a corporation, any person who
owns (or is considered as owning within the meaning of Code Section 318)
more than five percent of the outstanding stock of the Employer or stock
possessing more than five percent of the total combined voting power of
all stock of the Employer. In the case of an Employer that is not a
corporation, "Five Percent Owner" means any person who owns or under
applicable regulations is considered as owning more than five percent of
the capital or profits interest in the Employer. In determining
percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), and (m) shall be treated as
separate employers.
2.13 "Former Participant" means a person who has been an active Participant but
who has ceased to actively participate in the plan for any reason.
2.14 "401(a) Employer Contribution" means a profit sharing or money purchase
pension contribution made by the Employer to the Trust pursuant to Section
4.01 of the Plan and Adopt ionAgreement (Section 4.01(1) of the Adoption
Agreement in the case of a 401(k) Plan). 401(a) Employer contributions
are subject to the 401(a) Employer Contribution vesting schedule elected
by the Employer in Section 13.01(1) of the Adoption Agreement.
2.15 "401(a) Employer Match Contribution" means, in the case of a 401(k) plan,
a match contribution made by the Employer to the Trust pursuant to Section
4.01 of the Plan and Section 4.01(3) of the Adoption Agreement. 401(a)
Employer Match Contributions are subject to the Match Contribution vesting
schedule elected by the Employer in Section 13.01(1) of the Adoption
Agreement.
2.16 "401(k) Employer Contribution" means a 401(k) Plan contribution made by
the Employer to the Trust pursuant to Sections 4.01 and 4.03 of the Plan
and Section 4.01(2) of the Adoption Agreement. 401(k) Employer
Contributions shall be 100% vested and nonforfeitable at all times.
-5-
<PAGE>
2.17 "401(k) Employer Match Contribution" means a match contribution made to
the Trust pursuant to Section 4.01 of the Plan and Section 4.01(3) of the
Adoption Agreement. 401(k) Employer Match Contributions shall be 100%
vested and nonforfeitable at all times.
2.18 "Highly Compensated Employee" means and includes highly compensated active
Employees and highly compensated former Employees.
A highly compensated active Employee includes any Employee who performs
service for the Employer during the determination year and who, during the
look-back year:
(i) received Compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section 415(d) of the Code);
(ii) received Compensation from the Employer in excess of $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and was a member of
the top-paid group for such year; or
(iii) was an officer of the Employer and received Compensation during such
year that is greater than 50 percent of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code.
The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back
year" and the Employee is one of the 100 Employees who received the
most Compensation from the Employer during the determination year;
and
(ii) Employees who are Five Percent Owners at any time during the look-
back year or determination year.
If no officer has satisfied the Compensation requirement in (iii) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
A highly compensated former Employee includes any Employee who separated
from service (or was deemed to have separated) prior to the determination
year, performs no service for the Employer during the determination year,
and was a highly compensated active Employee for either the separation
year or any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year, a Family
Member of either a Five Percent Owner who is an active or former Employee
or a Highly Compensated Employee who is one of the 10 most highly
compensated Employees ranked on the basis of Compensation paid by the
Employer during such year, then the Family Member of the Five Percent
Owner or top-ten highly compensated Employee shall be aggregated. In such
case, the Family Member and Five Percent Owner or top-ten highly
compensated Employee shall be treated as a single Employee
-6-
<PAGE>
receiving compensation and Plan contributions or benefits equal to the sum
of such Compensation and contributions or benefits of the Family Member
and Five Percent Owner or top-ten highly compensated Employee.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the top 100 Employees, the number of Employees treated as officers
and the Compensation that is considered, will be made in accordance with
Section 414(q) of the Code and the Regulations thereunder. The "top-paid
group" are the top 20% of Employees ranked on the basis of Compensation
for the year in question. In determining the number of Employees in the
top twenty percent, those Employees described in Code Section 414(q)(8)
and 414(q)(11) shall be excluded.
If elected by the Employer in Section 2.18 of the Adoption Agreement, the
preceding Section will be modified by substituting $50,000 for $75,000 in
(i) and by disregarding (ii). This simplified definition of Highly
Compensated Employee will apply only to Employers that maintain
significant business activities (and employ Employees) in at least two
significantly separate geographic areas.
2.19 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the
duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer 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, incapacity
(including disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service shall be credited under
this paragraph for any single continuous period (whether or not such
period occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These Hours
shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made.
In addition to the foregoing rules, Hours of Service will be credited for
employment with other members of an affiliated service group (under
Section 414(m) of the Code), a controlled group of corporations (under
Section 414(b) of the Code), or a group of trades or businesses under
common control (under Section 414(c) of the Internal Revenue Code), of
which the adopting Employer is a member, and any other entity required to
be aggregated with the Employer pursuant to Section 414(o) of the Code and
the Regulations thereunder.
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Hours of Service will also be credited for any individual considered an
Employee for purposes of the Plan under Sections 414(n) or (o) of the
Internal Revenue Code and the Regulations thereunder.
Solely for purposes of determining whether a One Year Break in Service, as
defined in Section 2.28, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work
for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual but
for such absence, or in any case in which such Hours cannot be determined,
8 Hours of Service per day of such absence. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means
an absence (1) by reason of the pregnancy of the individual, (2) by reason
of a birth of a child of the individual, (3) by reason of the placement of
a child with the individual in connection with the adoption of such child
by such individual, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The Hours
of Service credited under this paragraph shall be credited (1) in the
computation period in which the absence begins if the crediting is
necessary to prevent a break in service in that period, or (2) in all
other cases, in the following computation period.
Hours of Service shall be determined on the basis of the method selected
in Section 2.19 of the Adoption Agreement.
2.20 "Insurer" means any legal reserve life insurance or annuity company.
2.21 "Internal Revenue Code" or "Code" means the Internal Revenue Code of 1986,
as amended and any future Internal Revenue Code or similar Internal
Revenue laws.
2.22 "Investment Manager" means any Fiduciary (other than a Trustee or named
fiduciary):
(a) who has the power to manage, acquire, or dispose of any assets of
the Plan;
(b) who is (1) registered as an investment adviser under the Investment
Advisers Act of 1940; (2) a bank, as defined in that Act; or (3) an
insurance company qualified to perform services described in
paragraph (a) under the laws of more than one state; and
(c) who has acknowledged in writing that it is a Fiduciary with respect
to the Plan.
2.23 "Key Employee" means any Employee or former Employee (and the
beneficiaries of any such Employee) who, at any time during the Plan Year
or any of the preceding four Plan Years, is:
(a) an officer of the Employer (as that term is defined within the
meaning of the regulations under Section 416 of the Code) having an
annual Compensation which exceeds 50% of the dollar limitation under
Section 415(b)(1)(A) of the Code (or for Plan Years beginning prior
to January 1, 1989, which exceeds 150% of the dollar limitation
under Section 415(c)(1)(A) of the Code) in effect for the calendar
year in which such Plan Year ends. If there are 500 or more
Employees, in no event will more than 50 Employees be considered Key
Employees by reason of being officers. If there are fewer than 500
Employees, in no event will more than the greater of 3 Employees or
10% of all Employees be considered Key Employees by reason of being
officers. For purposes of the preceding sentence, in
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determining the number of Employees, Employees described in Code
Section 414(q)(8) shall be disregarded.
In the case of one or more employers treated as a single employer
under Sections 414(b), (c) or (m) of the Code, whether or not an
individual is an officer shall be determined based upon his
responsibilities with respect to the employer or employers for which
he is directly employed, and not with respect to the controlled
group of corporations, employers under common control or affiliated
service group.
(b) one of the ten Employees owning (or considered as owning within the
meaning of Code Section 318) both more than a 1/2 percent ownership
interest in value and the largest percentage ownership interests in
value of any employers required to be aggregated under Code Sections
414(b), (c) and (m). Only those Employees whose Compensation for
the Plan Year exceeds the dollar limitation under Code Section
415(c)(1)(A) in effect for the calendar year in which such Plan Year
ends shall be considered an owner under this Subsection (b). For
purposes of this Subsection (b) if more than one Employee owns the
same interest in the Employer, the Employee having the highest
annual Compensation shall be treated as owning a larger interest.
(c) a "Five Percent Owner" of the Employer.
(d) a "one percent owner" of the Employer having an annual Compensation
for the Plan Year from the Employer of more than $150,000. In the
case of a corporation, "one percent owner" means any person who owns
(or is considered as owning within the meaning of Section 318 of the
Code) more than one percent of the outstanding stock of the Employer
or stock possessing more than one percent of the total combined
voting power of all stock of the Employer. In the case of an
Employer that is not a corporation, "one percent owner" means any
person who owns (or under applicable regulations is considered as
owning) more than one percent of the capital or profits interest in
the Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code Sections
414(b), (c) and (m) shall be treated as separate employers.
However, in determining whether an individual has Compensation of
more than $150,000, Compensation from each employer required to be
aggregated under Sections 414(b), (c) and (m) of the Internal
Revenue Code shall be taken into account.
The determination of who is a Key Employee will be made in accordance with
Section 416(i)(1) of the Internal Revenue Code and the Regulations
thereunder. For purposes of determining whether a Participant is a Key
Employee, the Participant's annual Compensation means Compensation as
defined in Section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Sections 125,
402(e)(3), 402(h) or 403(b) of the Code.
2.24 "Limitation Year" means a calendar year or any other twelve consecutive
month period elected by the Employer. The Limitation Year shall be
specified by the Employer in Section 2.24 of the Adoption Agreement. All
qualified plans of the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different twelve consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
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2.25 "Non-Highly Compensated Employee" means any employee who is neither: (a)
a Highly Compensated Employee nor (b) a Family Member of either: (1) a
Five Percent Owner or (2) a Highly Compensated Employee who is also one of
the ten most highly compensated Employees for the current Plan Year.
2.26 "Non-Key Employee" means any Employee who is not a Key Employee.
2.27 "Normal Retirement Age" means the age specified in Adoption Agreement
Section 2.27 at which time a Participant shall become eligible to receive
his normal retirement benefit. A Participant shall become fully vested in
his Accrued Benefit upon attaining his Normal Retirement Age. In the
event a mandatory retirement age is enforced by the Employer which is less
than the Normal Retirement Age specified in the Adoption Agreement, such
mandatory age shall be deemed to be the Normal Retirement Age.
2.28 (a) "One Year Break in Service" means, except for purposes of
determining plan entry under Article III (Participation
Requirements), any Plan Year or any corresponding twelve consecutive
month period for periods prior to the commencement of the first
twelve-month Plan Year during which the Employee has not completed
more than 500 Hours of Service.
(b) For purposes of determining plan entry under Article III, "One Year
Break in Service" means a twelve consecutive month period, computed
with reference to the date the Employee's employment commenced,
during which the Employee does not complete more than 500 Hours of
Service.
Notwithstanding the above, an authorized leave of absence shall not cause
a One Year Break in Service. An "authorized leave of absence" means a
temporary cessation from active employment with the Employer pursuant to
an established nondiscriminatory policy, due to illness, military service,
or other reason.
2.29 "Owner-Employee" means with respect to an unincorporated business, a sole
proprietor who owns the entire interest in the Employer or a partner who
owns more than 10% of either the capital interest or the profits interest
in the Employer.
2.30 "Participant" means any eligible Employee who participates in the Plan as
provided in Article III and has not for any reason become ineligible to
participate further in the Plan.
2.31 "Plan" means the Employer's retirement plan as herein set forth, together
with the Employer's Adoption Agreement.
2.32 "Plan Anniversary" means the first day of each Plan Year that begins after
the Plan Effective Date. The Plan Anniversary shall be specified in Item
17 or 18 of the Adoption Agreement.
2.33 "Plan Year" means the twelve consecutive month period commencing on each
Plan Anniversary, except that the first Plan Year shall be the period
commencing on the Plan Effective Date and ending on the day preceding the
first Plan Anniversary.
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2.34 "Policy" means any form of individual life insurance contract, including
any supplementary agreements or riders in connection therewith, issued by
the Insurer on the life of a Participant. Any life insurance death
benefits referred to in the following paragraphs of this Section 2.34
pertain to amounts purchased with other than Voluntary After-Tax
Contributions. A Policy may include a provision for waiver of premium or
waiver of premiums and monthly income during disability.
(a) If ordinary life insurance contracts are purchased for a
Participant, the aggregate life insurance premium for a Participant
shall be less than 50% of the aggregate Employer contributions made
on behalf of such Participant plus allocations of any forfeitures
credited to the account of such Participant. For purposes of these
incidental insurance provisions, ordinary life insurance contracts
are contracts with both non-decreasing death benefits and non-
increasing premiums.
(b) If term insurance, universal life policies or any other life
insurance policies which are not ordinary life insurance contracts
are used, the aggregate life insurance premium for a Participant
shall not exceed 25% of the aggregate Employer contributions made on
behalf of such Participant plus allocation of any forfeitures
credited to the account of such Participant.
(c) If a combination of ordinary life insurance and other life insurance
policies is used, the sum of one-half of the ordinary life insurance
premiums and all other life insurance premiums shall not exceed 25%
of the aggregate Employer contributions made by the Employer on
behalf of the Participant.
The limitation on aggregate life insurance premium payments stated in this
Section 2.34 shall not apply to any funds, from whatever source, which
have accumulated in the Participant's Account for a period of two (2) or
more years, and are applied toward the purchase of such life insurance.
Provided, however, that in no event may Tax Deductible Voluntary
Contributions be invested in Policies of life insurance.
Subject to Section 12.08, Joint and Survivor Annuity Requirements, at the
election of the Participant, the Policies on a Participant's life will be
converted to cash or an annuity or distributed to the Participant upon
commencement of benefits.
2.35 "Profits" means, for any taxable year of the Employer, the net income or
profits of the Employer for such year without any deduction for taxes,
based upon its income or contributions to the Trust, and the accumulated
net earnings or profits of the Employer, as the Employer shall determine
upon the basis of its books of account in accordance with its regular
accounting practices.
2.36 "Qualified Joint and Survivor Annuity" means an immediate annuity for the
life of the Participant, with a survivor annuity for the life of his
spouse, if any, in an amount equal to 50% of the amount of the annuity
payable during the joint lives of the Participant and his spouse, and
which is the amount of benefit which can be purchased with the
Participant's Accrued Benefit.
2.37 "Rollover Contribution" means a contribution made to the Trust pursuant to
Section 18.01 of the Plan.
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2.38 "Salary Savings Contribution" means a contribution made by the Employer to
the Trust pursuant to Section 4.03 of the Plan and Adoption Agreement.
2.39 "Self-Employed Individual" means a person who has Earned Income for the
taxable year under the trade or business or partnership with respect to
which this Plan was adopted; also, an individual who would have had Earned
Income but for the fact that the trade or business had no Profits for the
taxable year. A partner who owns 10% or less of the capital or profits
interest in a partnership and all Owner-Employees are Self-Employed
Individuals.
2.40 "Service" means the entire period of an Employee's employment with the
Employer. If the Employer has adopted a Non-Standardized Plan, Service
with Predecessor Employers listed in Item 16 of the Adoption Agreement
shall also be treated as Service with the Employer.
2.41 "Super Top Heavy Plan" means for any Plan Year beginning after December
31, 1983 that any of the following conditions exists:
(a) If the top heavy ratio (as defined in Article VI) for this Plan
exceeds 90 percent and this Plan is not part of any required
aggregation group or permissive aggregation group of plans.
(b) If this Plan is a part of a required aggregation group of plans but
not part of a permissive aggregation group and the top heavy ratio
for the group of plans exceeds 90 percent.
(c) If this Plan is a part of a required aggregation group and part of a
permissive aggregation group of plans and the top heavy ratio for
the permissive aggregation group exceeds 90 percent.
See Article VI for requirements and additional definitions applicable to
Super Top Heavy Plans.
2.42 "Suspense Account" means the account established by the Trustee for
maintaining contributions and forfeitures which have not yet been
allocated to Participants.
2.43 "Taxable Wage Base" means the maximum amount of earnings which may be
considered wages for a year under Section 3121(a)(1) of the Code as in
effect on the first day of the Plan Year.
2.44 "Tax Deductible Voluntary Contribution" means a deductible employee
contribution described in Code Section 72(o)(5). Such contributions will
be 100% vested and nonforfeitable at all times. No such contributions
will be accepted for tax years beginning after 1986.
2.45 "Top Heavy Plan" means for any Plan Year beginning after December 31, 1983
that any of the following conditions exists:
(a) If the top heavy ratio (as defined in Article VI) for this Plan
exceeds 60 percent and this Plan is not part of any required
aggregation group or permissive aggregation group of plans.
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(b) If this Plan is a part of a required aggregation group of plans but
not part of a permissive aggregation group and the top heavy ratio
for the group of plans exceeds 60 percent.
(c) If this Plan is a part of a required aggregation group and part of a
permissive aggregation group of plans and the top heavy ratio for
the permissive aggregation group exceeds 60 percent.
See Article VI for requirements and additional definitions applicable to
Top Heavy Plans.
2.46 "Top Heavy Plan Year" means that, for a particular Plan Year commencing
after December 31, 1983, the Plan is a Top Heavy Plan.
2.47 "Total and Permanent Disability" means the inability of a Participant to
engage in any substantial gainful activity by reason of a physical or
mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
12 months. The permanence and degree of such impairment shall be
supported by medical evidence.
In determining the nature, extent and duration of any Participant's
disability, the Plan Administrator may select a physician to examine the
Participant. The final determination of the nature, extent and duration
of such disability shall be made solely by the Plan Administrator upon the
basis of such evidence as he deems necessary and acting in accordance with
uniform principles consistently applied.
2.48 "Trust" means the Plan and Trust set forth herein, as adopted by the
Employer. The Trust of the Employer shall be separate and apart from the
Trust of any other employer which adopts this Plan.
2.49 "Trustee" means Bank One or such other individual(s), bank or trust
company which has agreed to be the Trustee of the Employer's Plan. The
Trustee shall be specified in Item 9 of the Adoption Agreement.
2.50 "Trust Fund" means any and all property held by the Trustee pursuant to
the Plan and Trust.
2.51 "Valuation Date" means the last day of the Plan Year or, if more
frequently, such other date or dates as may be directed by the Employer.
2.52 "Voluntary After-Tax Contribution" means an after-tax contribution made by
a Participant to the Trust. Such contributions are subject to Section
4.04 of the Plan.
2.53 "Year of Service" means, except for any periods otherwise disregarded in
the Adoption Agreement, any Plan Year or any corresponding twelve
consecutive month period for periods prior to the commencement of the
first twelve consecutive month Plan Year during which the Employee
completes at least 1,000 Hours of Service; provided, however, that for
purposes of determining eligibility for participation under Article III,
Year of Service shall mean any twelve consecutive month period during
which he completes 1,000 Hours of Service computed from the date an
Employee first performs an Hour of Service, or any anniversary thereof (or
again performs an Hour of Service upon re-employment following a
termination resulting in a One Year Break in Service).
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2.54 "Benefiting" means a Participant is treated as benefiting under the Plan
for any Plan Year during which the Participant received or is deemed to
receive an allocation in accordance with Section 1.410(b)-3(a) of the
Internal Revenue Code.
2.55 "Straight life annuity" means an annuity payable in equal installments for
the life of the Participant that terminates upon the Participant's death.
ARTICLE III
PARTICIPATION REQUIREMENTS
3.01 ACTION BY EMPLOYER - An Employer may adopt this Plan and Trust by:
(a) executing the Adoption Agreement and such other forms as the Trustee
may require,
(b) designating the Trustee to act as Trustee under the Plan and Trust,
and
(c) having the designated Trustee execute this Trust and accept the
Employer's participation by signing the Adoption Agreement as
completed by the Employer.
3.02 (a) EMPLOYEE PARTICIPATION - Profit Sharing Plan, Money Purchase Pension
Plan, 401(k) Plan - Those Employees eligible to become Participants
shall be specified in Section 3.02(1) of the Adoption Agreement.
If the Employer is maintaining a Profit Sharing or Money Purchase
Pension Plan or if the Employer is maintaining a 401(k) Plan and the
Employer specifies in Section 4.01 of the Adoption Agreement that
the Employer will make 401(a) Employer Contributions or 401(k)
Employer Contributions to the Trust, each eligible Employee who
complies with the requirements set forth in this Plan and Trust
shall become a Participant on the entry date specified in Section
3.02(2) of the Adoption Agreement if he is employed on such date.
(b) EMPLOYEE PARTICIPATION - Salary Savings Plan - If specified by the
Employer in Section 4.03 of the Adoption Agreement, on or after an
eligible Employee's Salary Savings Plan entry date the Employee may
direct the Employer to reduce his Compensation or Earned Income in
order that the Employer may make Salary Savings Contributions to the
Trust on the Employee's behalf. Any such Employee shall become a
Participant in the Salary Savings Plan on the date his compensation
reduction agreement becomes effective. Any such direction shall be
made by filing an appropriate form with the Plan Administrator. The
Compensation or Earned Income of any eligible Employee electing
salary savings shall be reduced by the percentage or dollar amount
requested by the Employee (which percentage or dollar amount may not
be less than any minimum or more than any maximum specified by the
Employer in Section 4.03 of the Adoption Agreement); provided,
however, that the Plan Administrator may reduce the Employee's
Compensation by a smaller percentage or dollar amount or refuse to
enter into or comply with a salary savings agreement with the
Employee if the requirements of the Code Section 401(k) would
otherwise be violated or if the Participant has previously
discontinued a salary savings agreement. No Participant shall be
permitted to have Salary
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Savings Contributions made under this Plan, or any other qualified
plan maintained by the Employer, during any taxable year in excess
of the dollar limitation under Code Section 402(g) in effect at the
beginning of such taxable year. Any salary savings agreement shall
become effective on the first day of the first payroll period which
begins at least 15 days after an appropriate form is received by the
Plan Administrator or such earlier date as may be agreeable to the
Plan Administrator. The reduction in Compensation will remain in
effect until terminated in accordance with the rules set forth in
the Plan and Trust.
A Participant may elect at any time to discontinue his salary
savings agreement with the Employer, and may change his salary
savings agreement subject to any limitation specified by the
Employer in Section 4.03 of the Adoption Agreement. Any such change
or discontinuance shall become effective on the first day of the
first payroll period which begins at least 15 days after a written
notice thereof is received by the Plan Administrator.
(c) REELIGIBILITY OF FORMER EMPLOYEES - Notwithstanding the rules set
forth in Section 3.02(a), in the case of a Profit Sharing Plan,
Money Purchase Pension Plan or 401(k) Plan to which the Employer is
making 401(a) Employer Contributions or 401(k) Employer
Contributions, a former Employee who had previously met the Age and
Service requirements specified in Section 3.02 of the Adoption
Agreement or a Former Participant, either of whom again becomes
eligible to participate in the Plan, will become a Participant on
the date of his recommencement of Service, unless his prior Service
is disregarded under the rules set forth in Sections 3.02(3)(a) or
3.02(3)(b) of the Adoption Agreement, if designated as applicable by
the Employer. Any other former Employee or Participant who again
becomes eligible will become a Participant on the entry date
determined under the rules set forth in Section 3.02(a).
Notwithstanding the rules set forth in Section 3.02(b) of the Plan,
a former Employee who had previously met the Age and Service
requirements specified in Section 3.02 of the Adoption Agreement or
a Former Participant, either of whom again becomes eligible to
participate in the Plan, will again be eligible to enter into a
compensation reduction agreement with the Employer on the date of
his recommencement of Service, unless his prior Service is
disregarded under the rules set forth in Sections 3.02(3)(a) or
3.02(3)(b) of the Adoption Agreement, if designated as applicable by
the Employer. Any other former Employee or Participant who again
becomes eligible may enter into a compensation reduction agreement
with the Employer on or after his entry date, as determined under
the rules set forth in Section 3.02(a).
(d) INELIGIBILITY, PARTICIPATION IN OTHER PLANS - In the event that the
Employer specifies in the Adoption Agreement that Employees eligible
for other qualified pension or profit sharing plans to which the
Employer contributes are not eligible to participate in this Plan, a
Participant for whom a contribution is subsequently made under such
other qualified pension or profit sharing plan shall no longer
participate under this Plan; and in the event of such subsequent
contribution the further rights of such Participant shall be
determined in accordance with Section 3.04.
3.03 CHANGE IN EMPLOYEE STATUS - The Plan Administrator shall notify the
Trustee in the event a Participant's status with respect to the Plan shall
change, and shall furnish the Trustee with such additional information
relative to the Plan as the Trustee may from time to time request.
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3.04 CLASSIFICATION CHANGES - In the event of a change in job classification or
in the event Section 3.02(d) becomes applicable to a Participant, such
that an Employee, although still in the employment of the Employer, no
longer is an eligible Employee, all contributions and forfeitures to be
allocated on his behalf shall cease and any amount credited to the
Employee's Accounts on the date the Employee shall become ineligible shall
continue to vest, become payable or be forfeited, as the case may be, in
the same manner and to the same extent as if the Employee had remained a
Participant.
In the case of a Profit Sharing Plan, Money Purchase Pension Plan or
401(k) Plan under which an Employer is to make 401(a) or 401(k) Employer
Contributions or Match Contributions, if a Participant becomes ineligible
to share in future Employer contributions and forfeitures because he is no
longer a member of an eligible class of Employees, but has not incurred a
One Year Break in Service (as defined in Section 2.28(a)), such Employee
shall again be eligible to share in Employer contributions and forfeitures
immediately upon his return to an eligible class of Employees. If such
Participant incurs such a One Year Break in Service, his eligibility to
again participate shall be determined pursuant to Section 3.02(c).
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee shall
participate immediately if such Employee has satisfied the minimum Age and
Service requirements and would have previously become a Participant had he
been in the eligible class.
3.05 LEAVE OF ABSENCE - The Accounts of a Participant who is on an authorized
leave of absence (as described in Section 2.28) shall share in the
allocation of Employer contributions, including (if applicable), 401(k)
Employer and Match Contributions and forfeitures to the extent that the
Participant receives Compensation from the Employer, if such Participant
otherwise satisfies the requirements of Section 4.01 of the Adoption
Agreement, and such Accounts shall continue to share in allocation of
Trust Fund income or losses under the provisions of Article V.
3.06 ADDITIONAL RULES FOR PLANS COVERING OWNER-EMPLOYEES - If this Plan
provides contributions or benefits for one or more Owner-Employees who
control both the business for which this Plan is established and one or
more other trades or businesses, this Plan and the plan established for
other trades or businesses must, when looked at as a single plan, satisfy
Code Sections 401(a) and (d) for the employees of this and all other
trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or
more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable
plan of the trade or business which is not controlled.
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For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business if
the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or business, or
(2) in the case of a partnership, own more than 50 percent of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such Owner-
Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
3.07 OMISSION OF ELIGIBLE EMPLOYEE - If, in any Plan Year, any Employee who
should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution by the
Employer for the year has been made and allocated, the Employer shall make
a subsequent contribution with respect to the omitted Employee in the
amount which the Employer would have contributed with respect to him had
he not been omitted. Such contribution shall be made regardless of
whether or not it is deductible, in whole or in part, by the Employer in
any taxable year under applicable provisions of the Code.
3.08 INCLUSION OF INELIGIBLE EMPLOYEE - If, in any Plan Year, any person who
should not have been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made until after
a contribution for the year has been made and allocated, the Employer
shall not be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is allowable
with respect to such contribution. In such event, the amount contributed
with respect to the ineligible person shall constitute a forfeiture for
the Plan Year in which the discovery is made.
ARTICLE IV
PLAN CONTRIBUTIONS
4.01 EMPLOYER CONTRIBUTIONS - The Employer shall make Profit Sharing, Money
Purchase Pension or, in the case of a 401(k) Plan, 401(a) Employer, 401(k)
Employer and Employer Match contributions to the Trust for each Plan Year
to the extent and in the manner specified in Section 4.01 of the Adoption
Agreement.
In addition to Employer Contributions authorized by Section 4.01 of the
Adoption Agreement, the Employer shall also be authorized (but shall not
be required) to reimburse the Trust Fund for all expenses and fees
incurred in the administration of the Plan or Trust and paid out of the
assets of the Trust Fund. Such expenses shall include, but shall not be
limited to, fees for professional services (including Trustee fees),
printing, postage, and brokerage or other commissions.
The Employer may contribute Employer Contributions for each Plan Year to
the Trustee on any date or dates which the Employer may select, subject to
the consent of the Trustee; provided that, to then be deductible, the
total contributions for each Plan Year shall be paid within the time
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prescribed by law for the deduction of such contributions for purposes of
the Employer's Federal Income Tax for such year.
4.02 MINIMUM EMPLOYER CONTRIBUTIONS FOR TOP HEAVY PLANS
(a) Minimum Allocation for Non-Key Employees - Notwithstanding anything
in the Plan to the contrary except (b) through (f) below, for any
Top Heavy Plan Year, the sum of the Employer's contributions and
forfeitures allocated to the Accounts of each Non-Key Employee
Participantshall be equal to at least three percent of such Non-Key
Employee's Compensation. However, should the sum of the Employer's
contributions and forfeitures allocated to the Accounts of each Key
Employee for such Top Heavy Plan Year be less than three percent of
each Key Employee's Compensation and the Employer has no defined
benefit plan which designates this Plan to satisfy Section 401(a)(4)
or 410 of the Code, the sum of the Employer's contributions and
forfeitures allocated to the Accounts of each Non-Key Employee shall
be equal to the largest percentage allocated to the Accounts of a
Key Employee.
The minimum contribution provided for in this Section shall be
determined without regard to any Social Security contribution,
without regard to Salary Savings Contributions and without regard to
401(k) or 401(a) Employer Match Contributions to the extent such
match contributions are necessary to satisfy Sections 8.02 or 9.02.
For purposes of computing the minimum contribution provided for in
this Section, Compensation shall mean Section 3401(a) wages, Section
6041/etc. compensation or Section 415 safe-harbor compensation (as
such terms are defined in Section 2.06), whichever is elected by the
Employer in Section 2.06 of the Adoption Agreement or, in the case
of a Self-Employed Individual, Earned Income.
(b) Extra Minimum Allocation Permitted for Top Heavy Plans other than
Super Top Heavy Plans - If a Key Employee is a Participant in both a
defined contribution plan and a defined benefit plan that are both
part of a required or permissive aggregation group of Top Heavy
Plans (but neither of such plans is a Super Top Heavy Plan), the
defined contribution and the defined benefit fractions described in
Article VII shall remain unchanged, provided each Non-Key Employee
who is a Participant receives an extra allocation (in addition to
the minimum allocation set forth above) equal to not less than one
percent of such Non-Key Employees' Compensation.
(c) For purposes of the minimum allocations set forth above, the
percentage allocated to the Accounts of any Key Employee shall be
equal to the ratio of the sum of the Employer's contribution and
forfeitures allocated on behalf of such Key Employee divided by the
first $150,000 of Compensation (as defined for purposes of Article
VII).
(d) For any Top Heavy Plan Year, the minimum allocations set forth above
shall be allocated to the Accounts of all Non-Key Employees who are
Participants and who are employed by the Employer on the last day of
the Plan Year, including (1) Non-Key Employee Participants who have
failed to complete a Year of Service; (2) Non-Key Employees
otherwise eligible to participate in the Plan who declined to make
any mandatory employee contributions or Salary Savings Contributions
to the Plan; and (3) Non-Key Employees whose Compensation is less
than a stated amount.
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(e) Notwithstanding anything herein to the contrary, in any Plan Year in
which a Non-Key Employee is a Participant in both this Plan and a
defined benefit pension plan included in a Required or Permissive
Aggregation Group of Top Heavy Plans, the Employer shall not be
required to provide a Non-Key Employee with both the full separate
minimum defined benefit plan benefit and the full separate minimum
defined contribution plan allocation described in this Section.
Therefore, if the Employer maintains such a defined benefit and
defined contribution plan, the top-heavy minimum benefits shall be
provided as follows:
(i) If a Non-Key Employee is a participant in such defined benefit
plan but is not a participant in this defined contribution
plan, the minimum benefits provided for Non-Key Employees in
the defined benefit plan shall be provided to the employee if
the defined benefit plan is a Top Heavy or Super Top Heavy
Plan and the minimum contributions described in this Section
4.02 shall not be provided.
(ii) If a Non-Key Employee is a participant in such defined benefit
plan and is also a participant in this defined contribution
plan, the provisions of Subsections (a) and (b) above shall be
applicable to each such Non-Key Employee meeting the
requirements of Subsection (d) above, except that the minimum
contribution shall be increased from 3% to 5% and the extra
minimum contribution, if applicable, shall be increased from
1% to 2 1/2%. The minimum benefits for Non-Key Employee
participants in Top Heavy or Super Top Heavy Plans provided in
the defined benefit plan shall not be applicable to any such
Non-Key Employee who receives the full maximum contribution
described in the preceding sentence.
Notwithstanding anything herein to the contrary, no minimum
contribution will be required under this Plan (or the minimum
contribution under this Plan will be reduced, as the case may be)
for any Plan Year if the Employer maintains another qualified
defined contribution plan and the Employer has specified in Section
4.02 of the Adoption Agreement that the minimum allocation
requirement applicable to Top Heavy or Super Top Heavy Plans will be
met in the other plan.
(f) The minimum allocation required under this Section 4.02 (to the
extent required to be nonforfeitable under Code Section 416(b)) may
not be forfeited under Code Sections 411(a)(3)(B) or 411(a)(3)(D)).
4.03 SALARY SAVINGS CONTRIBUTIONS - The Employer shall make Salary Savings
Contributions to the Trust for each Plan Year to the extent and in the
manner specified in Article III and in Section 4.03 of the Adoption
Agreement.
The Employer shall pay its Salary Savings Contributions to the Trustee
within 30 days of the date such contributions would have been payable to
the Employee in the absence of the Salary Savings Agreement.
4.04 VOLUNTARY AFTER-TAX CONTRIBUTIONS - If the Employer has adopted a 401(k)
Plan, if and to the extent permitted by Section 4.04 of the Adoption
Agreement, a Participant may make Voluntary After-Tax Contributions to the
Trust. For Plan Years beginning after 1986, such contributions must
satisfy Article IX.
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If the Employer's Plan is not a 401(k) Plan, the Plan will not accept
Voluntary After-Tax Contributions for Plan Years beginning after the Plan
Year in which this amended and restated Plan is adopted by the Employer.
Voluntary After-Tax Contributions for Plan Years beginning after December
31, 1986 will be limited so as to meet the nondiscrimination test of Code
Section 401(m).
A Participant shall have the right at any time to request a withdrawal in
cash of the portion of his Accrued Benefit attributable to his Voluntary
After-Tax Contributions. If necessary to comply with the requirements of
Section 12.08, the Plan Administrator shall require the consent of the
Participant's spouse before making any withdrawal. Any such consent shall
satisfy the requirements of Section 12.08. Any such amount requested to
be withdrawn shall be paid within 90 days following the date written
request therefor is received by the Plan Administrator. In-service
withdrawals shall be subject to any requirements, restrictions or
limitations imposed under Section 10.03. Values not so withdrawn,
including any increments earned on withdrawn amounts prior to withdrawal,
shall be distributed to the Participant or his Beneficiary at such time
and in such manner as the Trust otherwise provides for Account
distributions.
No forfeitures will occur solely as a result of an Employee's withdrawal
of Voluntary After-Tax Contributions.
The portion of a Participant's Accrued Benefit attributable to Voluntary
After-Tax Contributions shall be 100% vested and nonforfeitable at all
times.
4.05 TAX DEDUCTIBLE VOLUNTARY CONTRIBUTIONS - The Plan Administrator will not
accept Tax Deductible Voluntary Contributions which are made for a taxable
year beginning after December 31, 1986. Contributions made prior to that
date will be maintained in a separate account which will be nonforfeitable
at all times. The account will share in the gains and losses of the trust
in the same manner as described in Section 5.04 of the Plan. No part of
the Tax Deductible Voluntary Contribution Account will be used to purchase
life insurance. Subject to Section 12.08, Joint and Survivor Annuity
Requirements, the Participant may withdraw any part of his Tax Deductible
Voluntary Contribution Account by making a written application to the Plan
Administrator.
4.06 PAYMENT OF CONTRIBUTIONS TO TRUSTEE - The Employer shall make payment of
all contributions, including Participant contributions which shall be
remitted to the Employer by payroll deduction or otherwise, directly to
the Trustee in accordance with this Article IV but subject to Section
4.07.
4.07 RECEIPT OF CONTRIBUTIONS BY TRUSTEE - The Trustee shall receive and hold
under the Trust any contributions, in cash or other property acceptable to
it, received from the Employer, any Participant or any trust qualified
under Section 401 of the Code, pursuant to the terms of the Plan, other
than cash it is instructed to remit to the Insurer for deposit with the
Insurer. However, the Employer may pay contributions directly to the
Insurer and such payment shall be deemed a contribution to the Trust to
the same extent as if payment had been made to the Trustee. All such
contributions shall be accompanied by written instructions from the
Employer accounting for the manner in which they are to be credited and
specifying the appropriate Participant Account to which they are to be
allocated. All Employer contributions shall be credited by the Trustee to
a Suspense Account until allocated to Participants as provided in the
Trust.
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The Trustee shall be responsible for such sums as are actually received by
it as Trustee hereunder. The Trustee shall have no duty or responsibility
to ascertain whether any contributions should be made to it pursuant to
the Plan, to bring any action to enforce any obligation to make any
contribution under the Plan or to determine if the amount contributed is
in accordance with the Plan or Code.
ARTICLE V
PARTICIPANT ACCOUNTS, ALLOCATION OF
CONTRIBUTIONS AND VALUATION OF ASSETS
5.01 PARTICIPANT ACCOUNTS - Separate accounts shall be maintained for the
portion of a Participant's Accrued Benefit attributable to the following:
(1) Salary Savings Contributions; (2) Profit Sharing, Money Purchase or,
in the case of a 401(k) Plan, 401(a) Employer Contributions; (3) 401(k)
Employer Contributions; (4) 401(k) Match Contributions; (5) 401(a) Match
Contributions; (6) Voluntary After-Tax Contributions; (7) Tax Deductible
Voluntary Contributions; and (8) Rollover Contributions. Each separate
account shall be credited with the applicable contributions, earnings and
losses, distributions, and other applicable adjustments.
5.02 METHOD FOR ALLOCATION OF PROFIT SHARING CONTRIBUTIONS OR EMPLOYER
CONTRIBUTIONS TO 401(k) PLANS - For each Plan Year, 401(k) Employer
Contributions shall be allocated among eligible Participants in proportion
to Compensation. Profit Sharing Contributions or, in the case of a 401(k)
Plan, 401(a) Employer Contributions will be allocated as specified by the
Employer in the Adoption
Agreement among all eligible Participants for such Plan Year. Employer
Match Contributions shall be allocated among eligible Participants as
specified by the Employer in Section 4.01(3)(b) or (c) of the Adoption
Agreement.
5.03 APPLICATION OF FORFEITURES - For each Plan Year, amounts forfeited during
such year pursuant to Article XIII (Benefits upon Termination of Service)
shall be allocated or applied as specified in Section 5.03 of the Adoption
Agreement. The Plan Administrator shall choose the type of Employer
Contributions which provide the basis for allocating forfeitures or which
are to be reduced by forfeitures, on a uniform and consistent basis.
Forfeitures arising hereunder will be allocated only for the benefit of
Employees of the Employer who adopted this Plan.
5.04 ANNUAL VALUATION OF TRUST FUND - The Trustee, as of the last Valuation
Date of each Plan Year and prior to the allocation of contributions or
forfeitures, shall determine the net value of the Trust Fund assets (other
than investments specifically allocated to Participant Accounts
("earmarked investments"), such as mutual fund shares, amounts allocated
to Participant Accounts under any group annuity contract or any Policies
purchased as investments for Participant Accounts) and the amount of net
income or net loss allowable thereto and shall report such value to the
Employer in writing. In determining such value the Trustee shall value
assets at fair market value. The net value of the Trust Fund shall
include any life insurance Policies held by the Trustee on the lives of
Key Employees pursuant to Section 17.03. Key man life insurance policies
shall be valued at their respective cash surrender values as of the
Valuation Date. The resulting net income or loss of the Trust Fund shall
then be debited or credited to each Participant's
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Accounts in the same ratio as each such Account bears to the aggregate of
all such Accounts. After such crediting of the valuation to each
Participant's Account, contributions and forfeitures shall be allocated to
each such Account, as set forth in the Adoption Agreement.
Earmarked investments allocated to Participant Accounts will be valued
separately as of each Valuation Date at their fair market value and on
each such Date earnings, expenses and gains and losses attributable to
such investments will be debited or credited to the appropriate
Participant Account.
5.05 STATEMENT OF ACCOUNT - As soon as practicable after the end of each Plan
Year, the Plan Administrator shall present to each Participant a statement
of his Accounts showing the credit to his Accounts at the beginning of
such Year, any changes during the Year, the credit to his Accounts at the
end of the Year, and such other information as the Plan Administrator may
determine. However, the statements of a Participant's Accounts shall not
operate to vest in any Participant any right or interest to any assets of
the Trust except as the Trust specifically provides.
ARTICLE VI
PROVISIONS APPLICABLE TO TOP HEAVY PLANS
6.01 TOP HEAVY PLAN REQUIREMENTS
(a) For any Top Heavy Plan Year, the Plan shall provide the following:
(i) the minimum vesting requirements for Top Heavy Plans set forth
in Section 13.01 of the Adoption Agreement; and
(ii) the minimum contribution requirements set forth in Section
4.02 of the Plan.
(b) Once a Plan has become a Top Heavy Plan, if the Employer so
specifies in Section 6.01(b) of the Adoption Agreement, the minimum
contribution requirements for Top Heavy Plans set forth in Section
4.02 of the Plan shall be applicable in all subsequent Plan Years,
regardless of whether such years are Top Heavy Plan Years.
(c) Once a Plan has become a Top Heavy Plan, the vesting requirements
described in Section 13.01(2) of the Adoption Agreement shall be
applicable to all subsequent Plan Years, regardless of whether such
years are Top Heavy Plan Years.
If the Plan is or becomes a Top Heavy Plan in any Plan Year beginning
after December 31, 1983, the provisions of this Article VI will supersede
any conflicting provision in the Plan or Adoption Agreement.
The top heavy minimum vesting schedule applies to all benefits within the
meaning of Code Section 411(a)(7) except those attributable to Employee
and Salaried Savings contributions, including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued before the
Plan became top heavy. Further, no decrease in a Participant's
nonforfeitable percentage may occur in the event the Plan's status as top
heavy changes for any Plan Year. However, this Section does not apply to
the Account balances of any Employee who does not have
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an Hour of Service after the Plan has initially become top heavy and such
Employee's Account balance attributable to Employer contributions and
forfeitures will be determined without regard to this Section.
6.02 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year commencing
after December 31, 1983, if any of the following conditions exists:
(i) If the top heavy ratio for this Plan exceeds 60 percent and
this Plan is not part of any required aggregation group or
permissive aggregation group of plans.
(ii) If this Plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top heavy ratio for the group of plans exceeds 60 percent.
(iii) If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top
heavy ratio for the permissive aggregation group exceeds 60
percent.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
commencing after December 31, 1983 if any of the following
conditions exists:
(i) If the top heavy ratio for this Plan exceeds 90 percent and
this Plan is not part of any required aggregation group or
permissive aggregation group of plans.
(ii) If this Plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top heavy ratio for the group of plans exceeds 90 percent.
(iii) If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top
heavy ratio for the permissive aggregation group exceeds 90
percent.
(c) The Plan top heavy ratio shall be determined as follows:
(i) Defined Contribution Plans Only: If the Employer maintains
one or more defined contribution plans (including any
Simplified Employee Pension Plan, as defined in Section 401(k)
of the Code) and the Employer has not maintained any defined
benefit plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the
top-heavy ratio for this Plan alone or for the required or
permissive aggregation group, as appropriate, is a fraction,
the numerator of which is the sum of the account balances of
all Key Employees as of the determination date(s) (including
any part of any account balance distributed in the 5-year
period ending on the determination date(s)), and the
denominator of which is the sum of all account balances
(including any part of any account balance distributed in the
5-year period ending on the determination date(s)), both
computed in accordance with Section 416 of the Code and the
Regulations
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thereunder. Both the numerator and denominator of the top-
heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but which is
required to be taken into account on that date under Section
416 of the Code and the Regulations thereunder.
(ii) Defined Contribution and Defined Benefit Plans: If the
Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
determination date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive aggregation
group, as appropriate, is a fraction, the numerator of which
is the sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined
in accordance with (i) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans
for all Key Employees as of the determination date(s), and the
denominator of which is the sum of the account balances under
the aggregated defined contribution plan or plans for all
Employees, determined in accordance with (i) above, and the
present value of accrued benefits under the defined benefit
plan or plans for all Employees as of the determination
date(s), all determined in accordance with Section 416 of the
Code and the Regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and
denominator of the top-heavy ratio are increased for any
distribution of an accrued benefit made in the five-year
period ending on the determination date.
(iii) Determination of Values of Account Balances and Accrued
Benefits: For purposes of (i) and (ii) above the value of
Account balances and the present value of Accrued Benefits
will be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on the
determination date, except as provided in Section 416 of the
Code and the Regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances
and accrued benefits of a Participant (1) who is not a Key
Employee but who was a Key Employee in a prior year, or (2)
who has not had at least one Hour of Service with any Employer
maintaining the Plan at any time during the 5-year period
ending on the determination date will be disregarded. The
calculation of the top-heavy ratio, and the extent to which
distributions, rollovers, and transfers are taken into account
will be made in accordance with Section 416 of the Code and
the Regulations thereunder. Deductible employee contributions
will not be taken into account for purposes of computing the
top-heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with
reference to the determination dates that fall within the same
calendar year.
The Accrued Benefit of a Participant other than a Key Employee
shall be determined under (i) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer; or (ii) if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional
rule of Section 411(b)(1)(C) of the Code.
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(d) Permissive aggregation group: The required aggregation group of
plans plus any other plan or plans of the Employer which, when
considered as a group with the required aggregation group, would
continue to satisfy the requirements of Code Sections 401(a)(4) and
410.
(e) Required aggregation group: (1) Each qualified plan of the Employer
in which at least one Key Employee participates, and (2) any other
qualified plan of the Employer which enables a plan described in (1)
to meet the requirements of Code Sections 401(a)(4) or 410.
(f) Determination date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
(g) Valuation date: The date elected by the Employer in Section 6.02(g)
of the Adoption Agreement as of which Account balances or accrued
benefits are valued for purposes of calculating the top heavy ratio.
(h) Present value: Present value shall be based only on the interest
and mortality rates specified in Section 6.02(h) of the Adoption
Agreement.
ARTICLE VII
415 LIMITATIONS ON ALLOCATIONS
(See Section 7.13 - 7.23 for definitions applicable to this Article VII).
7.01 If the Participant does not participate in, and has never participated in
another qualified plan or a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Employer, an individual medical account,
as defined in Code Section 415(l)(2) maintained by the Employer, or a
simplified employee pension, as defined in Section 408(k) of the Code,
maintained by the Employer which provides an Annual Addition, the amount
of Annual Additions which may be credited to the Participant's Accounts
for any Limitation Year will not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If the
Employer contribution that would otherwise be contributed or allocated to
the Participant's Accounts would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount, the amount
contributed or allocated will be reduced so that the Annual Additions for
the Limitation Year will equal the Maximum Permissible Amount.
7.02 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount
on the basis of a reasonable estimation of the Participant's annual
Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated.
7.03 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
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7.04 If, pursuant to Section 7.03, as the result of the allocation of
forfeitures, or because a reasonable error is made in determining the
amount of elective deferrals (within the meaning of Section 402(g)(3) of
the Code) that may be made with respect to any individual under the limits
of Section 415 of the Code, there is an Excess Amount, such excess shall
not be deemed annual additions in that Limitation Year. In addition, such
Excess Amount will not be taken into account for the ACP or ADP tests
(described in Articles VIII and IX of the Plan) and will be disposed of as
follows:
(a) Any Voluntary After-Tax Contributions, to the extent they would
reduce the Excess Amount, will be returned to the Participant;
(b) Any Salary Savings Contributions, to the extent they would reduce
the Excess Amount, will be returned to the Participant;
(c) If, after the application of paragraphs (a) and (b) above, an Excess
Amount still exists, the Excess Amount will be held unallocated in a
Suspense Account. The Suspense Account will be applied to reduce
future Employer contributions for all remaining Participants in the
next Limitation Year and each succeeding Limitation Year if
necessary.
If a Suspense Account is in existence at any time during the
Limitation Year pursuant to this Section, it will not participate in
the allocation of the Trust's investment gains and losses.
If a Suspense Account is in existence at any time during a
particular Limitation Year, all amounts in the Suspense Account must
be allocated and reallocated to Participants' accounts before any
Employer or any Employee contributions may be made to the Plan for
that Limitation Year. Excess amounts may not be distributed to
Participants or Former Participants.
(d) 401(a) and 401(k) Employer Match Contributions attributable to
excess Annual Additions under the terms of this paragraph will be
treated as forfeitures under the Plan.
Sections 7.05 through 7.10 apply if, in addition to this Plan, the Participant
is covered under another qualified Master or Prototype defined contribution
plan, a welfare benefit fund, maintained by the Employer, an individual medical
account maintained by the Employer or a simplified employee pension maintained
by the Employer that provides an Annual Addition, as defined in Section 7.13,
during any Limitation Year.
7.05 The Annual Additions which may be credited to a Participant's Accounts
under this Plan for any such Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a
Participant's account under the other plans and welfare benefit funds for
the same Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans maintained by the
Employer are less than the Maximum Permissible Amount and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's Accounts under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the Annual Additions under all such
plans for the Limitation Year will equal the Maximum Permissible Amount.
If the Annual Additions with respect to the Participant under such other
defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible
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Amount, no amount will be contributed or allocated to the Participant's
Accounts under this Plan for the Limitation Year.
7.06 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount
in the manner described in Section 7.02.
7.07 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
7.08 If, pursuant to Section 7.07 or as a result of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and such
other plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions last
allocated, except that Annual Additions attributable to a welfare benefit
fund or an individual medical account will be deemed to have been
allocated first regardless of the actual allocation date.
7.09 If an Excess Amount was allocated to a Participant on an allocation date
of this Plan which coincides with an allocation date of another plan, the
Excess Amount attributed to this Plan will be the product of,
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of (i) the Annual Additions allocated to the Participant
for the Limitation Year as of such date under this Plan to (ii) the
total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified Master or Prototype defined contribution plans.
7.10 Any Excess Amount attributed to this Plan will be disposed in the manner
described in Section 7.04.
(This Section applies only to Employers who, in addition to this Plan,
maintain one or more qualified defined contribution plans other than a
Master or Prototype Plan.)
7.11 If the Employer also maintains another qualified defined contribution plan
which is not a Master or Prototype Plan, Annual Additions which may be
credited to any Participant's Accounts under this Plan for any Limitation
Year will be limited in accordance with Sections 7.05 through 7.10 as
though the other plan were a Master or Prototype Plan unless the Employer
provides other limitations in Article VII of the Adoption Agreement.
(This Section applies to Employers who, in addition to this Plan, maintain
or have maintained a defined benefit plan covering any Participant in this
Plan.)
7.12 If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan, the sum of the
Participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any Limitation Year. The Annual Additions
which may be credited to the Participant's Account under this Plan for any
Limitation Year will be limited in accordance with Article VII of the
Adoption Agreement.
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(Section 7.13 - 7.23 are definitions used in this Article VII.)
7.13 Annual Additions - The sum of the following amounts credited to a
Participant's Accounts for the Limitation Year:
(a) Employer Contributions (including Salary Savings Contributions);
(b) employee contributions;
(c) forfeitures;
(d) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Section 415(l)(2) of the Internal Revenue
Code, which is part of a pension or annuity plan maintained by the
Employer, are treated as Annual Additions to a defined contribution
plan. Also, amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits allocated
to the separate account of a Key Employee, as defined in Code
Section 419A(d)(2), under a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Employer, are treated as Annual
Additions to a defined contribution plan; and
(e) allocations under a simplified employee pension.
For this purpose, any Excess Amount applied under Sections 7.04 or 7.10 in
the Limitation Year to reduce Employer contributions will be considered
Annual Additions for such Limitation Year.
7.14 Compensation - For purposes of this Article VII, Compensation means a
Participant's Section 3401(a) wages, Section 6041/etc. compensation or
Section 415 safe-harbor compensation (as such terms are defined in Section
2.06), whichever is elected by the Employer in Section 2.06 of the
Adoption Agreement.
For any Self-Employed Individual, Compensation means Earned Income.
For Limitation Years beginning after December 31, 1991, for purposes of
applying the limitations of this Article, Compensation for a Limitation
Year is the Compensation actually paid or made available during such
Limitation Year.
7.15 Defined Benefit Fraction - A fraction, the numerator of which is the sum
of the Participant's Projected Annual Benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and
the denominator of which is the lesser of 125 percent of the dollar
limitation determined for the Limitation Year under Section 415(b) and (d)
of the Internal Revenue Code or 140 percent of the Highest Average
Compensation, including any adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after December 31, 1986,
in one or more defined benefit plans maintained by the Employer which were
in existence on May 6, 1986, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under such plans
which the Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any changes in the
terms and conditions of the Plan after, May 5, 1986. The
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preceding sentence applies only if the defined benefit plans individually
and in the aggregate satisfied the requirements of Section 415 for all
Limitation Years beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 percent
shall be substituted for 125 percent unless the extra minimum allocation
is made pursuant to Section 4.02 of the Plan. However, for any Plan Year
in which this Plan is a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in any event.
7.16 Defined Contribution Dollar Limitation - $30,000 or, if greater, one-
fourth of the defined benefit dollar limitation set forth in Section
415(b)(1) of the Code in effect for the Limitation Year.
7.17 Defined Contribution Fraction - A fraction, the numerator of which is the
sum of the Annual Additions to the Participant's Accounts under all the
defined contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years (including the
Annual Additions attributable to the Participant's nondeductible employee
contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer and the Annual Additions attributable to all
welfare benefit funds, individual medical accounts, and simplified
employee pensions maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and all
prior Limitation Years of service with the Employer (regardless of whether
a defined contribution plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of 125 percent of
the dollar limitation determined under Code Sections 415(b) and (d) in
effect under Section 415(c)(1)(A) of the Code or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the
first Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1987,
and disregarding any changes in the terms and conditions of the Plan made
after May 6, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as
Annual Additions.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 percent
shall be substituted for 125 percent unless the extra minimum allocation
is made pursuant to Section 4.02. However, for any Plan Year in which
this Plan is a Super Top Heavy Plan, 100 percent shall be substituted for
125 percent in any event.
7.18 Employer - For purposes of this Article, Employer shall mean the Employer
that adopts this Plan and all members of a controlled group of
corporations (as defined in Code Section 414(b)) as modified by Code
Section 415(h), all trades or businesses under common control (as defined
in
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Code Section 414(c) as modified by Code Section 415(h)), or all members of
an affiliated service group (as defined in Code Section 414(m)) of which
the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to Regulations under Code Section
414(o).
7.19 Excess Amount - The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
7.20 Highest Average Compensation - The average Compensation for the three
consecutive Years of Service with the Employer that produce the highest
average. A Year of Service with the Employer is the 12-consecutive month
period defined in Section 2.53 of the Plan.
7.21 Master or Prototype Plan - A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
7.22 Maximum Permissible Amount - The lesser of $30,000 (or, beginning January
1, 1988, such larger amount determined by the Commissioner for the
Limitation Year). The maximum Annual Addition that may be contributed or
allocated to a Participant's Account under the Plan for any Limitation
Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation; or
(b) 25 percent of the Participant's Compensation for the Limitation
Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits (within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code) which is otherwise treated as an Annual
Addition under Section 415(c)(1) or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the Defined Contribution Dollar
Limitation multiplied by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
7.23 Projected Annual Benefit - The annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is expressed
in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the
terms of the Plan assuming:
(a) the Participant will continue employment until Normal Retirement Age
under the Plan (or current Age, if later), and
(b) the Participant's Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
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ARTICLE VIII
401(k) SALARY SAVINGS CONTRIBUTION LIMITATIONS AND REFUNDS
8.01 DEFINITIONS - For purposes of this Article, the following definitions
shall apply:
(a) "Actual Deferral Percentage" means the ratio (expressed as a
percentage) of Salary Savings Contributions, made on behalf of an
Eligible Participant, to that Participant's Compensation for the
Plan Year (but INCLUDING compensation disregarded through an
election of Section 2.06(d) of the Adoption Agreement (in the case
of a Non-Standardized Plan) and EXCLUDING Compensation prior to the
date of Plan participation if so specified in Section 2.06 of the
Adoption Agreement). Two Actual Deferral Percentages shall be
calculated and used, one including and the second excluding any
Salary Savings Contributions that are included in the Contribution
Percentage of the Participant as defined in Section 9.01(b). The
Plan Administrator may include 401(k) Employer Contributions and
401(k) Employer Match Contributions made for the Participant in the
above described numerator, if such inclusion is made on a uniform
nondiscriminatory basis for all Participants; however, 401(k)
Employer Match Contributions that are included in the Actual
Deferral Percentage of the Participant may not be included in the
numerator of the Contribution Percentage of the Participant as
defined in Section 9.01(b). To be considered as contributed for a
given Plan Year for purposes of inclusion in a given Actual Deferral
Percentage, Contributions must be made by the end of the 12 month
period immediately following that given Plan Year.
For purposes of determining the Actual Deferral Percentage of a
Highly Compensated Employee who is either: (1) a Five Percent
Owner; or (2) one of the ten most Highly Compensated Employees for
the current Plan Year, the Salary Savings Contribution of any Family
Member of the Participant shall be included in the numerator, the
compensation of any such Family Member shall be included in the
denominator, and the resulting fraction shall be considered as being
for one Highly Compensated Employee. Additionally, the 401(k)
Employer Contributions and 401(k) Employer Match Contributions made
on behalf of each Family Member shall be included in the numerator,
if such contributions are being included in the numerators for all
Eligible Participants on a uniform nondiscriminatory basis.
Additionally, if one or more other plans allowing contributions
under Code Section 401(k) are considered with this Plan as one for
purposes of Code Section 401(a)(4) or 410(b), the Actual Deferral
Percentages for all Eligible Participants under all such plans shall
be determined as if this Plan and all such other plans were one; for
Plan Years beginning after 1989, such plans must have the same Plan
Year. If any Highly Compensated Employee is also an Eligible
Participant in one or more other plans allowing contributions under
Code Section 401(k), the Actual Deferral Percentage for that
Employee shall be determined as if this Plan and all such other
plans were one; if such plans have different Plan Years, the Plan
Years ending with or within the same calendar year shall be used.
(b) "Aggregate Limit" means the sum of:
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(i) (A) 125 percent of the greater of the Average Actual Deferral
Percentage (ADP) of the Non-Highly Compensated Employees
for the Plan Year, or the Average Contribution Percentage
(ACP) (as described in Article IX) of the Non-Highly
Compensated Employees under the Plan subject to Code
Section 401(m) for the Plan Year; and
(B) two plus the lesser of such ADP or ACP. In no event,
however, shall this amount exceed 200 percent of the
lesser of the relevant ADP or the relevant ACP.
(ii) (A) 125 percent of the lesser of the ADP of the Non-Highly
Compensated Employees for the Plan Year, or the ACP (as
described in Article IX) of the Non-Highly Compensated
Employees under the Plan subject to Code Section 401(m)
for the Plan Year; and
(B) two plus the greater of such ADP or ACP. In no event,
however, shall this amount exceed 200 percent of the
greater of the relevant ADP or the relevant ACP.
(c) "Average Actual Deferral Percentage" means the average (expressed as
a percentage) of the Actual Deferral Percentages of a group.
(d) "Eligible Participant" means a Participant eligible to have Salary
Reduction Contributions made on his behalf.
(e) "Excess 401(k) Contributions" means the excess of: (i) the
numerator of the Actual Deferral Percentage of a Highly Compensated
Employee over (ii) the maximum numerator permitted under Section
8.02, determined by reducing the numerators of Highly Compensated
Employees in order of their Actual Deferral Percentages beginning
with the highest of such percentages.
(f) "Excess Deferrals" means: (1) the excess of Salary Reduction
Contributions for any Participant over $7,000 or such other amount
as is designated by the Secretary of the Treasury as the limit under
Code Section 402(g); and (2) any amount identified in Section 8.06.
8.02 AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS - The Average Actual Deferral
Percentage for Highly Compensated Employees for each Plan Year and the
Average Actual Deferral Percentage for Non-Highly Compensated Employees
for the same Plan Year must satisfy one of the following tests:
(a) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the Average Actual Deferral Percentage for Eligible Participants who
are Non-Highly Compensated Employees for the Plan Year multiplied by
1.25; or
(b) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the Average Actual Deferral
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Percentage for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 2, provided that the
Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees does not exceed the Average Actual
Deferral Percentage for Eligible Participants who are Non-Highly
Compensated Employees by more than two (2) percentage points.
If one or more Highly Compensated Employees has an Actual Deferral
Percentage and a Contribution Percentage under this or any other plan
maintained by the Employer, both the Average Actual Deferral and Average
Contribution Percentages for Highly Compensated Employees are greater than
125% of the Average Actual Deferral or Average Contribution Percentage for
Non Highly Compensated Employees, respectively, and the sum of the Average
Actual Deferral and Actual Contribution Percentages for Highly Compensated
Employees exceeds the Aggregate Limit, then the Average Actual Deferral
Percentage of the Highly Compensated Employees shall be reduced until the
limit is not so exceeded, by reducing the numerators of Highly Compensated
Employees in the order of their Actual Deferral Percentage beginning with
the highest of such percentages. The amount by which any numerator is so
reduced shall be treated as an Excess 401(k) Contribution.
8.03 REFUND OF EXCESS 401(k) CONTRIBUTIONS - Notwithstanding any other
provision of this Plan except Section 8.05, Excess 401(k) Contributions,
plus any income and minus any loss allocable thereto that are attributable
to Salary Savings Contributions and 401(k) Employer Contributions shall be
distributed to the affected Participant. The income or loss allocable to
Excess 401(k) Contributions shall be the income or loss allocable to the
401(k) Contributions for the Plan Year multiplied by a fraction, the
numerator of which is the Participant's Excess 401(k) Contributions for
the Plan Year and the denominator of which is the sum of all Accounts of
the contribution types to which Excess 401(k) Contributions have been
attributed as of the beginning of the Plan Year and the sum of such
contribution types made during the Plan Year, determined without regard to
any income or loss occurring during such Plan Year. The Plan
Administrator shall make every effort to make all required distributions
and forfeitures within 2 1/2 months of the end of the affected Plan Year;
however, in no event shall such distributions be made later than the end
of the following Plan Year. Distributions and forfeitures made later than
2 1/2 months after the end of the affected Plan Year will be subject to
tax under Code Section 4979.
Excess 401(k) Contributions of Participants who are subject to the family
member aggregation rules of Code Section 414(q)(6) shall be allocated
among the family members in proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of each family member that are
combined to determine the combined Actual Deferral Percentage.
All forfeitures arising under this Section shall be applied or allocated
as specified in Section 5.03 of the Adoption Agreement and treated as
arising in the Plan Year after that in which the Excess 401(k)
Contributions were made; however, no forfeitures arising under this
Section shall be allocated to the Account of any affected Highly
Compensated Employee.
For a period of four, 12-month periods beginning from the given Plan Year,
or such other period as the Secretary of the Treasury may designate, the
Employer shall maintain records showing what contributions and
compensation were used to satisfy this Section and Section 8.02.
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8.04 ACCOUNTING FOR EXCESS 401(k) CONTRIBUTIONS - Amounts distributed under
this Article shall be treated as being made from Salary Savings
Contributions, 401(k) Employer Contributions and 401(k) Employer Match
Contributions as determined on a uniform nondiscriminatory basis by the
Plan Administrator.
8.05 SPECIAL 401(k) EMPLOYER CONTRIBUTIONS - Notwithstanding any other
provisions of this Plan except Section 8.09, in lieu of distributing
Excess 401(k) Contributions as provided in Section 8.03, the Employer may
make 401(k) Employer Contributions and/or 401(k) Employer Match
Contributions on behalf of Non-Highly Compensated Employees that are
sufficient to satisfy either of the Average Actual Deferral Percentage
Tests; any such 401(k) Employer Contributions must be allocated among the
Non-Highly Compensated Employees in the ratio in which each such
Participant's Compensation for the Plan Year bears to the total
Compensation for such Participants for the Plan Year (subject to any
limitations in accordance with Section 8.01).
8.06 MAXIMUM SALARY SAVINGS CONTRIBUTIONS - No Employee shall be permitted to
have Salary Savings Contributions made under this Plan, or any other
qualified plan of the Employer, during any calendar year in excess of
$7,000 (or such other amount as is designated by the Secretary of the
Treasury as the limit under Code Section 402(g)).
8.07 PARTICIPANT CLAIMS - Participants under other plans described in Code
Sections 401(k), 408(k) or 403(b) may submit a claim to the Plan
Administrator specifying the amount of their Excess Deferral. Such claim
shall: (1) be in writing; (2) be submitted no later than March 1 of the
year after the Excess Deferral was made; and (3) state that such amount,
when added to amounts deferred under other plans described in Code
Sections 401(k), 408(k) or 403(b), exceeds $7,000 (or such other amount as
the Secretary of the Treasury may designate).
8.08 DISTRIBUTION OF EXCESS DEFERRALS - Notwithstanding any other provision of
this Plan, Excess Deferrals and income allocable thereto shall be
distributed to the affected Participant no later than the April 15
following the calendar year in which such Excess Deferrals were made.
Income or loss allocable to Excess Deferrals shall be the income or loss
allocable to Salary Savings Contributions for the Plan Year multiplied by
a fraction, the numerator of which is the Participant's Excess Deferrals
for the Plan Year and the denominator of which is the Participant's Salary
Savings Contribution Account as of the beginning of the Plan Year and the
sum of such contribution types made during the Plan Year, determined
without regard to any income or loss occurring during such Plan Year. If
a Participant does not notify the Plan of his or her Excess Deferrals, the
Participant shall be "deemed" to have made Excess Deferrals based on
deferrals allocated under the Plan and to other plans of the same Employer
and the Employer shall notify the Plan of such Excess Deferrals.
8.09 OPERATION IN ACCORDANCE WITH REGULATIONS - The determination and treatment
of Actual Deferral Percentages and Excess 401(k) Contributions, and the
operation of the Average Actual Deferral Percentage Test shall be in
accordance with such additional requirements as may be prescribed by the
Secretary of the Treasury.
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ARTICLE IX
EMPLOYEE CONTRIBUTIONS AND EMPLOYER MATCH CONTRIBUTIONS -
LIMITATIONS, REFUNDS AND FORFEITURES
9.01 DEFINITIONS - For purposes of this Article, the following Definitions
shall be used:
(a) "Average Contribution Percentage" means the average (expressed as a
percentage) of the Contribution Percentages of a group.
(b) "Contribution Percentage" means the ratio (expressed as a
percentage) of: the Salary Savings, Voluntary After-Tax, 401(k)
Employer Match and Regular 401(a) Employer Match Contributions made
on behalf of the Participant to the Participant's Compensation for
the Plan Year (but INCLUDING Compensation disregarded through an
election of Section 2.06(e) of the Adoption Agreement (in the case
of a Non-Standardized Plan) and EXCLUDING Compensation prior to the
date of Plan participation if so specified in Section 2.06 of the
Adoption Agreement). The Plan Administrator may include 401(k)
Employer Contributions for the Participant in the above described
numerator, if such inclusion is made on a uniform nondiscriminatory
basis for all Participants. To be considered as contributed for a
given Plan Year for purposes of inclusion in a given Contribution
Percentage, Contributions must be made by the end of the twelve-
month period immediately following that given Plan Year. The Plan
Administrator may not include 401(k) Employer Match Contributions in
the numerator to the extent such Contributions are included in the
numerator of the Actual Deferral Percentage of the Participant, as
defined in Section 8.01(a), and may not include Salary Savings
Contributions unless Section 8.02 can be satisfied by both including
and excluding such Salary Savings Contributions.
For purposes of determining the Contribution Percentage of a Highly
Compensated Employee who is either: (i) a Five Percent Owner; or
(2) one of the ten most Highly Compensated Employees for the current
Plan Year, the Salary Savings Contributions of any Family Member of
the Participant and the 401(k) and Regular Employer Match
Contributions made on behalf of such Family Member shall be included
in the numerator, and the Compensation of any such Family Member
shall be included in the denominator. Additionally, the 401(k)
Employer Contributions and Salary Savings Contributions made for
such Family Member shall be included in the numerator, if such
contributions are being included in the numerators of all Eligible
Participants on a uniform basis.
Additionally, if one or more other plans allowing contributions
under Code Section 401(k), after tax employee contributions or
employer matching contributions are considered with this Plan as one
for purposes of Code Section 401(a)(4) or 410(b), the Contribution
Percentages for all Eligible Participants under all such plans shall
be determined as if this Plan and all such other plans were one; for
Plan Years beginning after 1989, such Plans must have the same Plan
Year.
If any Highly Compensated Employee is also an Eligible Participant
in one or more other plans allowing contributions under Code Section
401(k), after-tax employee contributions or employer matching
contributions, the Contribution Percentage for that Employee shall
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be determined as if this Plan and all such other plans were one; if
such plans have different Plan Years, the Plan Years ending with or
within the same calendar year shall be used.
Any 401(k) or 401(a) Employer Match Contribution matching an Excess
401(k) Contribution shall be treated as a forfeiture.
(c) "Eligible Participant" means a Participant eligible to have Salary
Savings, Voluntary After-Tax or 401(k) or Regular 401(a) Employer
Matching Contributions made on his or her behalf.
(d) "Excess 401(m) Contributions" means the excess of: (1) the
numerator of the Contribution Percentage of a Highly Compensated
Employee; over (2) the maximum numerator permitted under Section
9.02 determined by reducing the numerators of Highly Compensated
Employees in order of their Contribution Percentages beginning with
the highest of such Percentages.
9.02 AVERAGE CONTRIBUTION TESTS - The Average Contribution Percentage for
Highly Compensated Employees for each Plan Year and the Average
Contribution Percentage for Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
(a) The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the Average Contribution Percentage for Eligible Participants who
are Non-Highly Compensated Employees for the Plan Year multiplied by
1.25; or
(b) The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the Average Contribution Percentage for Eligible Participants who
are Non-Highly Compensated Employees for the Plan Year multiplied by
2, provided that the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees does not exceed
the Average Contribution Percentage for Eligible Participants who
are Non-Highly Compensated Employees by more than two (2) percentage
points.
9.03 REFUND AND FORFEITURE OF EXCESS 401(m) CONTRIBUTIONS - Notwithstanding any
other provision of this Plan except Sections 9.05 and 9.06, Excess 401(m)
Contributions and income allocable thereto treated as Salary Savings,
Voluntary After-Tax, 401(k) Employer Match or 401(k) Employer
Contributions shall be distributed to the affected Highly Compensated
Employee. Excess 401(m) Contributions and income allocable thereto
treated as 401(a) Employer Match Contributions shall be forfeited or
distributed in accordance with Section 13.01(b). Income or loss allocable
to Excess 401(m) Contributions shall be income or loss allocable to the
aforementioned accounts for the Plan Year multiplied by a fraction, the
numerator of which is the Participant's Excess 401(m) Contributions for
the Plan Year and the denominator of which is the sum of all Accounts of
the contribution types to which Excess 401(m) Contributions have been
attributed as of the beginning of the Plan Year and the sum of such
contribution types made during the Plan Year, determined without regard to
any income or loss occurring during such Plan Year. The Plan
Administrator shall make every effort to refund and forfeit all Excess
401(m) Contributions within 2 1/2 months of the end of the affected Plan
Year; however, in no event shall
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Excess 401(m) Contributions be refunded or forfeited later than the end of
the following Plan Year. Excess 401(m) Contributions of Participants who
are subject to the family member aggregation rules of Section 414(q)(6) of
the Code shall be allocated among the family members in proportion to the
Employee and Employer Match Contributions (or amounts treated as Employer
Match Contributions) of each family member that is combined to determine
the combined Actual Contribution Percentage. If such Excess 401(m)
Contributions are distributed more than 2 1/2 months after the last day of
the Plan Year in which such excess amounts arose, a ten (10) percent
excise tax will be imposed on the Employer maintaining the Plan with
respect to those amounts. Excess 401(m) Contributions shall be treated as
Annual Additions under the Plan. All forfeitures arising under this
Section shall be applied or allocated as specified in Section 5.03 of the
Adoption Agreement and treated as arising in the Plan Year after that in
which the Excess 401(m) Contributions were made; however, no forfeitures
arising under this Section shall be allocated to the Account of any
affected Highly Compensated Employee.
For a period of four, 12-month periods beginning from the given Plan Year,
or such other period as the Secretary of the Treasury may designate, the
Employer shall maintain records showing what contributions and
compensation were used to satisfy this Section and Section 8.02.
9.04 ACCOUNTING FOR EXCESS 401(m) CONTRIBUTIONS - Amounts distributed and
forfeited under this Article shall be treated as being made from 401(k)
and 401(a) Employer Match Contributions and 401(k) Employer Contributions
as determined on a uniform nondiscriminatory basis by the Plan
Administrator.
9.05 SPECIAL 401(k) EMPLOYER CONTRIBUTIONS - Notwithstanding any other
provisions of this Plan except Section 9.08, in lieu of refunding or
forfeiting Excess 401(m) Contributions as provided in Section 9.03, the
Employer may make 401(k) Employer Contributions, allocated among Non-
Highly Compensated Employees in the ratio in which each such Participant's
Compensation for the Plan Year bears to the total Compensation for such
Participants for the Plan Year (subject to any limitations in accordance
with Section 9.01).
9.06 SPECIAL EMPLOYER MATCH CONTRIBUTIONS - Notwithstanding any other provision
of this Plan except Section 9.08, in lieu of refunding or forfeiting
Excess 401(m) Contributions as provided in Section 9.03, the Employer may
make 401(k) or 401(a) Employer Match Contributions on behalf of Non-Highly
Compensated Employees that are sufficient to satisfy either of the Average
Contribution Tests.
9.07 ORDER OF DETERMINATIONS - The determination of Excess 401(m) Contributions
shall be made after first determining Excess Deferrals, and then
determining Excess 401(k) Contributions.
9.08 OPERATION IN ACCORDANCE WITH REGULATIONS - The determination and treatment
of Contribution Percentages and Excess 401(m) Contributions, and the
operation of the Average Contribution Percentage Test shall be in
accordance with such additional requirements as may be prescribed by the
Secretary of the Treasury.
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ARTICLE X
IN-SERVICE WITHDRAWALS
10.01 WITHDRAWALS OF TAX DEDUCTIBLE VOLUNTARY CONTRIBUTIONS, AFTER-TAX
CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS - A Participant shall have the
right at any time to request the Plan Administrator for a withdrawal in
cash of amounts in his Tax Deductible Voluntary Contribution Account or
Voluntary After-Tax Contribution Account. Withdrawals of Voluntary After-
Tax Contributions will be subject to Section 4.04.
In the case of a Profit Sharing or 401(k) Plan, if elected by the Employer
in Section 10.01 of the Adoption Agreement, a Participant shall also have
the right at any time (or at any time after he attains Age 59 1/2, if so
specified by the Employer in the Adoption Agreement) to request the Plan
Administrator for a withdrawal in cash of amounts in his Rollover Account,
subject to Section 18.01.
10.02 WITHDRAWALS AFTER AGE 59 1/2; WITHDRAWALS FROM 401(k) ACCOUNTS - In the
case of a Profit Sharing or 401(k) Plan, if and to the extent permitted by
the Employer in Section 10.02 of the Adoption Agreement, a Participant may
request a withdrawal of all or a portion of his vested Accrued Benefit for
any reason at any time after he attains Age 59 1/2. In the case of a
401(k) Account, a Participant shall have the right at any time to request
the Plan Administrator for a withdrawal in cash of Salary Savings
Contributions (and earnings thereon accrued as of December 31, 1988) for
"financial hardship". The Retirement Plan Committee shall determine
whether an event constitutes a financial hardship. Such determination
shall be based upon non-discriminatory rules and procedures adopted by the
Committee, which shall be conclusive and binding upon all persons. Such
procedures shall specify the requirements for requesting and receiving
distributions on account of hardship, including what forms must be
submitted and to whom. Hardship distributions are subject to the spousal
consent requirements contained in Sections 401(a)(11) and 417 of the Code.
The processing of applications and any distributions of amounts under this
Section shall be made as soon as administratively feasible. The amount of
a distribution based upon "financial hardship," cannot exceed the amount
required to meet the immediate financial need created by the hardship (and
not reasonably available from other resources of the Participant), plus
any amounts estimated to be necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to result from such
distribution.
In order to qualify as a hardship distribution, a distribution must be
made on account of an immediate and heavy financial need and must be
necessary to satisfy that need. A distribution will be deemed to be on
account of an immediate and heavy financial need if made to satisfy the
following expenditures:
(a) Medical expenses (as described in Code Section 213(d)) previously
incurred by the Employee or his or her spouse and dependents (as
defined in Code Section 152) or necessary for such persons to obtain
medical care (as described in Code Section 213(d));
(b) Purchase of a principal residence for the Employee (excluding
mortgage payments);
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(c) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Employee, his or her
spouse, children or dependents;
(d) Expenditures to avoid eviction from or foreclosure on the Employee's
principal residence.
A distribution will be considered as necessary to satisfy an immediate and
heavy financial need of the Employee only if:
(i) The Employee has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained
by the Employer;
(ii) All Plans maintained by the Employer provide that the Employee's
elective deferrals (and Employee Contributions) will be suspended
for twelve months after the receipt of the hardship distribution;
and
(iii) All Plans maintained by the Employer provide that the Employee may
not make elective deferrals for the Employee's taxable year
immediately following the taxable year of the hardship distribution
in excess of the applicable limit under section 402(g) of the Code
for such taxable year less the amount of such Employee's elective
deferrals for the taxable year of the hardship distribution.
10.03 RULES FOR IN-SERVICE WITHDRAWALS - The Plan Administrator may impose a
dollar minimum for partial withdrawals. If the amount in the
Participant's appropriate Account is less than the minimum, the Plan
Administrator shall pay the Participant the entire vested amount then in
the Participant's Account from which the withdrawal is to be made if a
withdrawal of the entire amount is otherwise permissible under the rules
set forth in this Article. If the entire amount cannot be paid under such
rules, whatever amount is permissible shall be paid.
Any amount to be withdrawn shall be paid within 90 days following the date
written request therefor is received by the Plan Administrator. All
requests must be consented to by the Participant's spouse in a Qualified
Election as described in Section 12.08(c)(iii), unless the withdrawal is
from the Participant's Tax Deductible Voluntary Contribution Account or an
account to which Section 12.08(e) applies. Notwithstanding the foregoing,
any request for a withdrawal of amounts allocated to a group annuity
contract shall be subject to any time limits, restrictions or penalties
that may be provided in the contract.
If a distribution is made at a time when a Participant has a
nonforfeitable right to less than 100 percent of the Account balance
derived from Employer contributions and the Participant may increase the
nonforfeitable percentage in the Account:
(a) A separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
(b) At any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the
formula:
X = P(AB + (R X D)) - (R X D)
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For purposes of applying the formula: P is the nonforfeitable percentage
at the relevant time, AB is the Account balance at the relevant time, D is
the amount of the distribution, and R is the ratio of the Account balance
at the relevant time to the Account balance after distribution.
ARTICLE XI
PARTICIPANT LOANS
11.01 GENERAL RULES - If and to the extent permitted by the Employer in Section
11.01 of the Adoption Agreement, loans may be made to Participants and
Beneficiaries from time to time by the Trustee when directed by the Plan
Administrator upon the written request of an eligible borrower. Loans
will be made available to Former Participants to the extent required by
Regulations issued by the Department of Labor under Section 408(b) of
ERISA and to other Former Participants to the extent required to satisfy
Code Section 401(a)(4) and Regulations promulgated thereunder.
Applications for loans will be made to the Plan Administrator using forms
provided by the Plan Administrator. Loan applications meeting the
requirements of this Article will be granted. All borrowers must execute
a promissory note meeting the requirements of this Article.
The minimum loan amount shall be as specified in the Adoption Agreement
and, in any event, shall not be greater than $1,000.
Plan loans shall be granted on a uniform nondiscriminatory basis. Loans
shall not be made available to Highly Compensated Employees in an amount
greater than the amount available to other Employees; for this purpose a
loan amount shall not be considered greater if the maximum percentage of
vested Accrued Benefit is not greater for any Highly Compensated Employee
than it is for any Non-Highly Compensated Employee. Such loans shall be
adequately secured, shall be at a reasonable rate of interest and shall
provide for periodic payment over a reasonable amount of time. No loan
shall exceed the value of the borrower's vested Accrued Benefit. For
loans made after October 18, 1989, no more than 50% of a borrower's vested
Accrued Benefit (less any portion attributable to Tax Deductible Voluntary
Contributions) may be used as security for a Plan loan. Other permissible
forms of security include assets that can be foreclosed upon, such that
the value of the asset, less any likely costs of perfecting a security
interest in the collateral and of foreclosure, can reasonably be expected
to always equal or exceed the value of the loan. The Plan Administrator
shall exercise discretion in accordance with Section 14.05 in determining
if such other collateral is reasonable.
Notwithstanding the above, loans may not be made to an Owner-Employee or a
shareholder-employee if the loan is not permissible under the applicable
provisions of the Internal Revenue Code or the Employee Retirement Income
Security Act of 1974 (ERISA), as amended.
A "shareholder employee" is an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as owning
within the meaning of Code Section 318(a)(1), on any day during the
taxable year of such corporation, more than five percent of the
outstanding stock of such corporation.
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Tax Deductible Voluntary Contributions, plus earnings thereon, may not be
used as security for Plan loans.
11.02 LOAN AMOUNTS AND REPAYMENTS -
(a) No loan shall be made to the extent such loan exceeds an amount
equal to the lesser of (i) or (ii) below:
(i) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans to the Participant from the Plan
during the one-year period ending on the day before the date
on which such loan was made over the outstanding balance of
loans from the Plan on the date on which such loan was made;
or
(ii) one-half (1/2) of the present value of the nonforfeitable
Accrued Benefit of the Participant under the Plan.
(b) Loans shall require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly,
over a period not to exceed five (5) years; provided, however, that
loans used to acquire any dwelling unit which, within a reasonable
time, is to be used (determined at the time the loan is made) as a
principal residence of the Participant may provide for level
repayment of principal and interest, with payment to be no less
frequent than quarterly, over a reasonable period of time that
exceeds five (5) years.
For purposes of the above limitation, all loans from all plans of the
Employer and other members of a group of employers described in Code
Sections 414(b), (c) and (m) are aggregated.
The Plan Administrator shall determine a reasonable rate of interest for
each loan by identifying the rate(s) charged for similar and equivalent
commercial loans by institutions in the business of making loans.
Default shall occur upon the earlier of any uncured failure to make
payments in accordance with the promissory note or the death of the
borrower. In the event of default, attachment of all assets securing the
loan shall be made as soon as is administratively feasible, except that no
attachment of any part of the borrower's Accrued Benefit shall occur until
a distributable event for that part of the borrower's Accrued Benefit has
occurred for such borrower.
Notwithstanding the foregoing, no loans may be made to a married
Participant in the absence of a valid spousal consent to such loan in
accordance with Section 12.08(c)(iii), if the loan is secured by an
Account other than one to which Section 12.08(e) applies. Such consent
must: be given within 90 days of the making of the loan; be in writing;
acknowledge the effect of the loan and be witnessed by a Plan
representative or a notary public. Such consent shall be binding with
respect to the consenting spouse and any subsequent spouse with respect to
that loan. A new consent will be required if the Account balance is used
for renegotiation, extension, renewal, or other revision of the loan. If
a valid spousal consent has been obtained in accordance with the above
paragraph or is not needed because the loan is secured by an Account to
which Section 12.08(e) applies, then notwithstanding any other provision
of this Plan, the portion of the Participant's vested Account balance used
as a security interest held by the Plan by reason of a loan outstanding to
the
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Participant shall be taken into account for purposes of determining the
amount of the Account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan.
If less than 100% of the Participant's vested Account balance (determined
without regard to the preceding sentence) is payable to the surviving
spouse, then the Account balance shall be adjusted by first reducing the
vested Account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving
spouse.
ARTICLE XII
RETIREMENT AND DEATH BENEFITS
12.01 NORMAL RETIREMENT BENEFIT - Each Participant's Accrued Benefit shall
become 100% vested and nonforfeitable when the Participant attains his
Normal Retirement Age.
Every Participant may terminate his employment with the Employer and
retire upon the attainment of his Normal Retirement Age. Upon such date
all amounts credited to such Participant's Accounts shall become
distributable to him in accordance with this Article.
The Plan Administrator shall notify the Trustee when the Normal Retirement
Age of each Participant shall occur and shall also advise the Trustee as
to the manner in which retirement benefits are to be distributed to a
Participant, subject to the provisions of this Article. Upon receipt of
such notification and subject to the other provisions of this Article, the
Trustee shall take such action as may be necessary in order to distribute
the Participant's Accrued Benefit.
12.02 EARLY RETIREMENT BENEFIT - If there shall be a termination of a
Participant's employment on or after he attains his Early Retirement Age,
if any, (as defined in Section 12.02 of the Adoption Agreement), he shall
be deemed to have retired early and such Participant shall be 100% vested
in the amount credited to his Accounts as of the date of his early
retirement.
12.03 LATE RETIREMENT BENEFIT - If a Participant shall continue in active
employment following his Normal Retirement Age, he shall continue to
participate under the Plan and Trust. Upon actual retirement, such
Participant shall be entitled to the amount then credited to his Accounts.
12.04 DISABILITY BENEFIT - A Participant whose employment shall be terminated
prior to his Normal Retirement Age as a result of Total and Permanent
Disability shall be 100% vested in the amount credited to his Accounts as
of the date of such termination.
12.05 DEATH BENEFIT - If a Participant or Former Participant shall die prior to
the commencement of any benefit otherwise provided under this Article XII,
his Beneficiary shall be entitled to a death benefit. The amount of the
death benefit shall be equal to the amount credited to his Participant's
Accounts as of the date of death, including the death proceeds of any
Policies allocated to such Accounts.
If a Participant shall die subsequent to the commencement of any benefit
otherwise provided under this Article XII, the death benefit, if any,
shall be determined in accordance with the benefit option in effect for
the Participant.
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The Plan Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of the
Account of a deceased Participant or a deceased Former Participant as the
Plan Administrator deems necessary. The Plan Administrator's
determination of death and of the right of any person to receive payment
shall be conclusive and binding on all persons.
12.06 DESIGNATION OF BENEFICIARY - Each Participant shall designate his
Beneficiary on a form or forms provided by the Plan Administrator, and
such designation may include primary and contingent beneficiaries;
provided, however, that if a Participant or Former Participant is married
on the date of his death, the Participant's then spouse shall be the
Participant's Beneficiary unless such spouse consented to the designation
of another Beneficiary in accordance with Section 8.08. The proceeds of
any life insurance Policy shall be paid to the Trustee as beneficiary and
the Trustee shall pay over the proceeds to the appropriate Plan
Beneficiary. If a Participant does not designate a Beneficiary and is not
married on the date of his death, the estate of the Participant shall be
deemed to be the designated Beneficiary.
12.07 DISTRIBUTION OF BENEFITS - The Plan Administrator shall direct the Trustee
to make, or cause the Insurer to make, payment of any benefits provided
under this Article XII. The Plan Administrator shall be solely
responsible for determining eligibility for and the amount of any such
benefits, and the Trustee shall have no obligation or duty to review any
such determination.
Subject to Section 12.08, Joint and Survivor Annuity Requirements, the
requirements of this Section shall apply to any distribution of a
Participant's interest and will take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified, the provisions of
this Section apply to calendar years beginning after December 31, 1984.
All distributions required under the Plan shall be determined and made in
accordance with the proposed regulations under Code Section 401(a)(9),
including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the latest of the close of the Plan
Year in which:
(a) the Participant attains Age 65 (or Normal Retirement Age, if
earlier);
(b) occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or,
(c) the Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution when a benefit is immediately distributable,
within the meaning of Section 12.09 of the Plan, shall be deemed to be an
election to defer commencement of payment of any benefit sufficient to
satisfy this Section.
Except as provided below and in Section 12.09, in no event will benefits
begin to be distributed prior to the later of age 62 or Normal Retirement
Age without the consent of the Participant. The consent of the
Participant's spouse will also be required for any such distribution
unless (i) the
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Plan is a profit sharing plan described in Subsection 12.08(e) or (ii) the
benefit is paid in the form of a Qualified Joint and Survivor Annuity.
The consent of neither the Participant nor his or her spouse is required
if the present value of the Participant's vested Accrued Benefit does not
exceed $3,500 (in the case of a Plan subject to the Qualified Joint and
Survivor Annuity Requirements of Section 12.08, if the present value of
the vested Accrued Benefit exceeded $3,500 at the time of any
distribution, the present value of the vested Accrued Benefit at any
subsequent time till be deemed to exceed $3,500). In such event the Plan
Administrator shall pay such benefit to the Participant or his Beneficiary
in a lump sum and no other settlement option shall be available. However,
unless the Plan is a plan described in Subsection 12.08(e), no
distribution shall be made pursuant to the preceding sentence after the
annuity starting date (as described in Subsection 12.08(c)) unless the
Participant and his or her spouse (or the Participant's surviving spouse)
consent in writing to such distribution. Except as provided in Sections
12.05 and 12.08, or, to the extent an election of Section 12.07(b) of the
Adoption Agreement is effective, a Participant, with spousal consent where
applicable, shall have the sole right to receive this benefit in
accordance with one or more of the following ways, and which may be paid
in cash or in kind, or a combination of them:
(a) an annuity for the life of the Participant.
(b) an annuity for the life of the Participant and upon his death 100%,
66 2/3% or 50% (whichever is specified when this option is elected)
of the annuity amount will be continued to his contingent annuitant.
No further annuity benefits are payable after the death of both the
Participant and his contingent annuitant.
(c) an annuity for the joint lives of the Participant and his joint
annuitant with 100%, 66 2/3% or 50% (whichever is specified when
this option is elected) of such amount payable as an annuity for
life to the survivor. No further benefits are payable after the
death of both the Participant and his joint annuitant.
(d) an annuity for the life of the Participant with installment payments
for a period certain not longer than the life expectancy of the
Participant.
(e) installment payments for a period certain not longer than the life
expectancy of the Participant and his designated Beneficiary.
To the extent an election of Section 12.07(b) of the Adoption Agreement is
effective, a Participant, with spousal consent where applicable, shall
have the sole right to receive his or her benefit in one sum, paid in cash
or in kind or a combination thereof.
All optional forms of benefit shall be actuarially equivalent.
If the Employer adopts a Non-standardized Profit Sharing Plan or a Non-
standardized 401(k) Plan, then such Employer may elect, at Section
12.07(b) of the Adoption Agreement, to make distributions in Employer
stock as an optional form of payment pursuant to the terms of the Addendum
to Section 12.07(b) of the Adoption Agreement, describing the procedures
applicable to such distributions as prepared by the Plan's legal counsel.
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If an annuity contract is purchased for and distributed to a Participant
or a Participant's spouse, the annuity contract must be nontransferable.
Any such annuity contract distributed shall comply with the requirements
of this Plan.
Notwithstanding the above:
(a) Required Beginning Date. The entire interest of a Participant must
be distributed or begin to be distributed no later than the
Participant's required beginning date.
(b) Limits on Distribution Periods. As of the first distribution
calendar year, distributions, if not made in a single-sum, may only
be made over one of the following periods (or a combination
thereof):
(i) the life of the Participant,
(ii) the life of the Participant and a designated Beneficiary,
(iii) a period certain not extending beyond the life expectancy of
the Participant, or
(iv) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
(c) Determination of amount to be distributed each year. If the
Participant's interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or
after the required beginning date:
(i) Individual account.
(A) If a Participant's benefit is to be distributed over (1)
a period not extending beyond the life expectancy of the
Participant or the joint life and last survivor
expectancy of the Participant and the Participant's
designated Beneficiary, or (2) a period not extending
beyond the life expectancy of the designated Beneficiary,
the amount required to be distributed for each calendar
year, beginning with distributions for the first
distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit
by the applicable life expectancy.
(B) For calendar years beginning before January 1, 1989, if
the Participant's spouse is not the designated
Beneficiary, the method of distribution selected must
assure that at least 50% of the present value of the
amount available for distribution is paid within the life
expectancy of the Participant.
(C) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year
shall not be less than the quotient obtained by dividing
the Participant's benefit by the lesser of (1) the
applicable life expectancy or (2) if the Participant's
spouse is not the designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of
Section
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1.401(a)(9)-2 of the proposed regulations. Distributions
after the death of the Participant shall be distributed
using the applicable life expectancy in Paragraph (A)
above as the relevant divisor without regard to proposed
regulations Section 1.401(a)(9)-2.
(D) The minimum distribution required for the Participant's
first distribution calendar year must be made on or
before the Participant's required beginning date. The
minimum distribution for other calendar years, including
the minimum distribution for the distribution calendar
year in which the Employee's required beginning date
occurs, must be made on or before December 31 of that
distribution calendar year.
(d) Other forms.
(i) If the Participant's benefit is distributed in the form of an
annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements
of Section 401(a)(9) of the Code and the proposed regulations
thereunder.
(e) Death Distribution Provisions.
(i) Distribution beginning before death. If the Participant dies
after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(ii) Distribution beginning after death. If the Participant dies
before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in
accordance with (A) or (B) below:
(A) if any portion of the Participant's interest is payable
to a designated Beneficiary, distributions may be made
over the life or over a period certain not greater than
the life expectancy of the designated Beneficiary
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died;
(B) if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to
begin in accordance with (A) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
Participant died, and (2) December 31 of the calendar
year in which the Participant would have attained age 70
1/2.
If the Participant has not made an election pursuant to
this Paragraph (ii) by the time of his or her death, the
Participant's designated Beneficiary must elect the
method of distribution no later than the earlier of (1)
December 31
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of the calendar year in which distributions would be
required to begin under this Section, or (2) December 31
of the calendar year which contains the fifth anniversary
of the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the
designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar
year containing the fifth anniversary of the
Participant's death.
(iii) For purposes of Paragraph (ii) above, if the surviving spouse
dies after the Participant, but before payments to such spouse
begin, the provisions of Paragraph (ii), with the exception of
Subparagraph (B) therein, shall be applied as if the surviving
spouse were the Participant.
(iv) For purposes of this Subsection (e), any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of
majority.
(v) For the purposes of this Subsection (e), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Paragraph (iii)
above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to Paragraph (ii)
above). If the distribution in the form of an annuity
described in paragraph (d)(i) above irrevocably commences to
the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
(f) Definitions
(i) Applicable life expectancy. The life expectancy (or joint and
last survivor expectancy) calculated using the attained age
of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated, such succeeding calendar year.
(ii) Designated Beneficiary. The individual who is designated as
the Beneficiary under the Plan in accordance with Code Section
401(a)(9) and the proposed Regulations thereunder.
(iii) Distribution calendar year. A calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first distribution
calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required
beginning date. For distributions beginning after the
Participant's death, the first distribution calendar year is
the calendar year in which distributions are required to begin
pursuant to Subsection (e) above.
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(iv) Life expectancy. Life expectancy and joint and last survivor
expectancy are computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income
Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the
case of distributions described in Subparagraph (e)(ii)(B)
above) by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or spouse) and
shall apply to all subsequent years. The life expectancy of a
nonspouse Beneficiary may not be recalculated.
(v) Participant's benefit.
(A) The Account(s) balance(s) as of the last Valuation Date
in the calendar year immediately preceding the
distribution calendar year (valuation calendar year)
increased by the amount of any contributions or
forfeitures allocated to the Account(s) balance(s) as of
dates in the valuation calendar year after the Valuation
Date and decreased by distributions made in the valuation
calendar year after the Valuation Date.
(B) Exception for second distribution calendar year. For
purposes of Subparagraph (A) above, if any portion of the
minimum distribution for the first distribution calendar
year is made in the second distribution calendar year on
or before the required beginning date, the amount of the
minimum distribution made in the second distribution
calendar year shall be treated as if it had been made in
the immediately preceding distribution calendar year.
(vi) Required beginning date.
(A) General rule. The required beginning date of a
Participant is the first day of April of the calendar
year following the calendar year in which the Participant
attains age 70 1/2.
(B) Transitional rules. The required beginning date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (1) or (2)
below:
(1) Non-5-percent owners. The required beginning date of
a Participant who is not a 5-percent owner is the
first day of April of the calendar year following the
calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(2) 5-percent owners. The required beginning date of a
Participant who is a 5-percent owner during any year
beginning after December 31, 1979, is the first day
of April following the later of:
(I) the calendar year in which the Participant
attains age 70 1/2, or
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(II) the earlier of the calendar year with or within
which ends the Plan Year in which the
Participant becomes a 5-percent owner, or the
calendar year in which the Participant retires.
The required beginning date of a Participant who is
not a 5-percent owner who attains age 70 1/2 during
1988 and who has not retired as of January 1, 1989,
is April 1, 1990.
(C) 5-percent owner. A Participant is treated as a 5-percent
owner for purposes of this Section if such Participant is
a 5-percent owner as defined in Section 416(i) of the
Code (determined in accordance with Code Section 416 but
without regard to whether the plan is top-heavy) at any
time during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2 or
any subsequent Plan Year.
(D) Once distributions have begun to a 5-percent owner under
this Section, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a
subsequent year.
(g) Transitional Rule
(i) Notwithstanding the other requirements of this Section 12.07
and subject to the requirements of Section 12.08, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5-percent owner, may be made in
accordance with all of the following requirements (regardless
of when such distribution commences):
(A) The distribution by the Trust is one which would not have
disqualified such Trust under Section 401(a)(9) of the
Internal Revenue Code as in effect prior to amendment by
the Deficit Reduction Act of 1984.
(B) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in
the Trust is being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
(C) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January
1, 1984.
(D) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(E) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution
will commence, the period over which distributions will
be made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority. The method of distribution
selected must assure that at least 50 percent of the
present value of the amount available for distribution is
paid within the life expectancy of the Participant.
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(ii) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the
Employee.
(iii) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in Subparagraphs (i)(A) and (E)
above.
(iv) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and
the proposed regulations thereunder. If a designation is
revoked subsequent to the date distributions are required to
begin, the Trust must distribute by the end of the calendar
year following the calendar year in which the revocation
occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy Section
401(a)(9) of the Code and the proposed regulations thereunder,
but for the Section 242(b)(2) election. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements
in Section 1.401(a)(9)-2 of the proposed regulations. Any
changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution
or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to
be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring
life). In the case in which an amount is transferred or rolled
over from one plan to another plan, the rules in Q&A J-2 and
Q&A J-3 of Section 1.401(a)(9)-1 of the proposed regulations
shall apply.
12.08 JOINT AND SURVIVOR ANNUITY REQUIREMENTS - The provisions of this Section
12.08 shall apply to any Participant who is credited with at least one
Hour of Service with the Employer on or after August 23, 1984, and such
other Participants as provided in Subsection (e).
(a) Qualified Joint and Survivor Annuity.
Unless an optional form of benefit is selected pursuant to a
qualified election within the 90-day period ending on the annuity
starting date, a married Participant's vested Account balance will
be paid in the form of a Qualified Joint and Survivor Annuity, as
described in Section 2.36, and an unmarried Participant's vested
Account balance will be paid in the form of a life annuity. The
Participant may elect to have such annuity distributed upon
attainment of the earliest retirement age under the Plan.
(b) Qualified Preretirement Survivor Annuity.
Unless an optional form of benefit has been selected within the
election period pursuant to a qualified election, if a Participant
dies before the annuity starting date, then the
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Participant's vested Account balance shall be applied toward the
purchase of an annuity for the life of the surviving spouse. The
surviving spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
(c) Definitions.
(i) Election period: The period which begins on the first day of
the Plan Year in which the Participant attains age 35 and ends
on the date of the Participant's death. If a Participant
separates from service prior to the first day of the Plan Year
in which age 35 is attained, with respect to the Account
balance as of the date of separation, the election period
shall begin on the date of separation.
Pre-Age 35 waiver: A Participant who will not yet attain age
35 as of the end of any current Plan Year may make a special
qualified election to waive the qualified preretirement
survivor annuity for the period beginning on the date of such
election and ending on the first day of the Plan Year in which
the Participant will attain age 35. Such election shall not
be valid unless the Participant receives a written explanation
of the qualified preretirement survivor annuity in such terms
as are comparable to the explanation required under paragraph
(d)(i). Qualified preretirement survivor annuity coverage
will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new
waiver on or after such date shall be subject to the full
requirements of this Section 12.08.
(ii) Earliest retirement age: The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
(iii) Qualified election: A waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement survivor
annuity. Any waiver of a Qualified Joint and Survivor Annuity
or a qualified preretirement survivor annuity shall not be
effective unless: (A) the Participant's spouse consents in
writing to the election; (B) the election designates a
specific Beneficiary, including any class of Beneficiaries or
any contingent Beneficiaries, which may not be changed without
spousal consent (or the spouse expressly permits designations
by the Participant without any further spousal consent); (C)
the spouse's consent acknowledges the effect of the election;
and (D) the spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the election designates
a form of benefit payment which may not be changed without
spousal consent (or the spouse expressly permits designations
by the Participant without any further spousal consent). If
it is established to the satisfaction of a Plan representative
that there is no spouse or that the spouse cannot be located,
a waiver will be deemed a qualified election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such spouse.
A consent that permits designations by the Participant without
any requirement of further consent by such spouse must
acknowledge that the spouse
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has the right to limit consent to a specific Beneficiary, and
a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of such
rights. A revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any time
before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has
received notice as provided in Subsection (d) below.
(iv) Spouse (surviving spouse): The spouse or surviving spouse of
the Participant, provided that a former spouse will be treated
as the spouse or surviving spouse to the extent provided under
a qualified domestic relations order as described in Section
414(p) of the Internal Revenue Code.
(v) Annuity starting date: The first day of the first period for
which an amount is paid as an annuity or any other form.
(vi) Vested Account balance: The aggregate value of the
Participant's vested Accrued Benefit derived from Employer and
employee contributions (including rollovers), whether vested
before or upon death, including the proceeds of insurance
contracts, if any, on the Participant's life. The provisions
of this Section 12.08 shall apply to a Participant who is
vested in amounts attributable to Employer contributions,
employee contributions (or both) at the time of death or
distribution.
(d) Notice Requirements.
(i) In the case of a Qualified Joint and Survivor Annuity as
described in Subsection (a), the Plan Administrator shall, no
less than 30 days and no more than 90 days prior to the
annuity starting date, provide each Participant a written
explanation of: (A) the terms and conditions of a Qualified
Joint and Survivor Annuity; (B) the Participant's right to
make and the effect of an election to waive the Qualified
Joint and Survivor Annuity form of benefit; (C) the rights of
a Participant's spouse; and (D) the right to make, and the
effect of, a revocation of a previous election to waive the
Qualified Joint and Survivor Annuity.
(ii) In the case of a qualified preretirement survivor annuity as
described in Subsection (b), the Plan Administrator shall
provide each Participant within the applicable period for such
Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such
manner as would be comparable to the explanation provided for
meeting the requirements of paragraph (d)(i) applicable to a
Qualified Joint and Survivor Annuity.
The applicable period for a Participant is whichever of the
following periods ends last: (A) the period beginning with
the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age
35; (B) a reasonable period ending after the individual
becomes a Participant; (C) a reasonable period ending
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after Paragraph (iii) below ceases to apply to the
Participant; (D) a reasonable period ending after this Section
first applies to the Participant. Notwithstanding the
foregoing, notice must be provided within a reasonable period
ending after separation from service in the case of a
Participant who separates from service before attaining age
35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (B),
(C) and (D) is the end of the two-year period beginning one
year prior to the date the applicable event occurs, and ending
one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is
attained, notice shall be provided within the two-year period
beginning one year prior to separation and ending one year
after separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
(iii) Notwithstanding the other requirements of this Subsection (d),
the respective notices prescribed by this Section need not be
given to a Participant if (1) the Plan "fully subsidizes" the
costs of a Qualified Joint and Survivor Annuity or qualified
preretirement survivor annuity, and (2) the Plan does not
allow the Participant to waive the Qualified Joint and
Survivor Annuity or qualified preretirement survivor annuity
and does not allow a married Participant to designate a
nonspouse Beneficiary.
For purposes of this paragraph (iii), a Plan fully subsidizes
the costs of a benefit if no increase in cost, or decrease in
benefits to the Participant may result from the Participant's
failure to elect another benefit.
(e) Safe Harbor Rules.
(i) This Subsection shall apply to a Participant in a profit-
sharing plan, and to any distribution, made on or after the
first day of the first Plan Year beginning after December 31,
1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in
section 72(o)(5)(B) of the Code, and maintained on behalf of a
participant in a money purchase pension plan, (including a
target benefit plan) if the following conditions are
satisfied: (1) the Participant does not or cannot elect
payments in the form of a life annuity; and (2) on the death
of a Participant, the Participant's vested Account balance
will be paid to the Participant's surviving spouse, but if
there is no surviving spouse, or if the surviving spouse has
consented in a manner conforming to a qualified election, then
to the Participant's designated beneficiary. The surviving
spouse may elect to have distribution of the vested Account
balance commence within the 90 day period following the date
of the Participant's death. The Account balance shall be
adjusted for gains or losses occurring after the Participant's
death in accordance with the provisions of the Plan governing
the adjustment of Account balances for other types of
distributions. This Subsection (e) shall not be operative
with respect to a Participant in a profit-sharing plan if the
plan is a direct or indirect transferee of a defined benefit
plan, money purchase plan, a target benefit plan, stock bonus,
or profit-sharing plan which is
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subject to the survivor annuity requirements of Sections
401(a)(11) and section 417 of the Code. If this Subsection
(e) is operative, then the provisions of this Section 12.08,
other than Subsection (f), shall be inoperative.
(ii) The Participant may waive the spousal death benefit described
in this Subsection (e) at any time provided that no such
waiver shall be effective unless it satisfies the conditions
of Paragraph (c)(iii) (other than the notification requirement
referred to therein) that would apply to the Participant's
waiver of the qualified preretirement survivor annuity.
(iii) For purposes of this Subsection (e), vested Account balance
shall mean the Participant's separate account balance
attributable solely to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the
Code.
(f) Transitional Rules.
(i) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by the previous Subsections of this Section 12.08 must be
given the opportunity to elect to have the prior Subsections
of this Section 12.08 apply if such Participant is credited
with at least one Hour of Service under this Plan or a
predecessor plan in a Plan Year beginning on or after January
1, 1976, and such Participant had at least 10 years of vesting
service when he or she separated from service.
(ii) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under
this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan
Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance
with Paragraph (f)(iv) below.
(iii) The respective opportunities to elect (as described in
Paragraphs (f)(i) and (ii) above) must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
(iv) Any Participant who has elected pursuant to Paragraph (f)(ii)
and any Participant who does not elect under Paragraph (f)(i)
or who meets the requirements of Paragraph (f)(i) except that
such Participant does not have at least 10 years of vesting
service when he or she separates from service, shall have his
or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in
the form of a life annuity:
(A) Automatic joint and survivor annuity. If benefits in the
form of a life annuity become payable to a married
Participant who:
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(1) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while still
working for the Employer; or
(3) begins to receive payments on or after the Qualified
Early Retirement Age; or
(4) separates from service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement
Age) and after satisfying the eligibility
requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive
such benefits;
then such benefits will be received under this Plan in
the form of Qualified Joint and Survivor Annuity, unless
the Participant has elected otherwise during the election
period. The election period must begin at least 6 months
before the Participant attains the Qualified Early
Retirement Age and end not more than 90 days before the
commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant at any
time.
(B) Election of early survivor annuity. A Participant who is
employed after attaining the Qualified Early Retirement
Age will be given the opportunity to elect, during the
election period, to have a survivor annuity payable on
death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the
payments which would have been made to the spouse under
the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her
death. Any election under this provision will be in
writing and may be changed by the Participant at any
time. The election period begins on the later of (1) the
90th day before the Participant attains the Qualified
Early Retirement Age, or (2) the date on which
participation begins, and ends on the date the
Participant terminates employment.
(C) For purposes of this paragraph (f)(iv)
(1) Qualified Early Retirement Age is the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement
benefits,
(ii) the first day of the 120th month beginning
before the Participant reaches Normal
Retirement Age, or
(iii) the date the Participant begins participation.
(2) Qualified Joint and Survivor Annuity is an annuity
for the life of the Participant with a survivor
annuity for the life of the spouse as described in
Section 2.36.
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12.09 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) If the value of a Participant's vested Accrued Benefit derived from
Employer and Employee Contributions exceeds (or at the time of any
prior distribution exceeded) $3,500, and the Accrued Benefit is
immediately distributable, the Participant and the Participant's
spouse (or where either the Participant or the spouse has died, the
survivor) must consent to any distribution of such Accrued Benefit.
The consent of the Participant and the Participant's spouse shall be
obtained in writing within the 90-day period ending on the annuity
starting date.
The annuity starting date is the first day of the first period for
which an amount is paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the Participant's
spouse of the right to defer any distribution until the
Participant's Accrued Benefit is no longer immediately
distributable. Such notification shall include a general
description of the material features, and an explanation of the
relative values of, the optional forms of benefit available under
the Plan in a manner that would satisfy the notice requirements of
Section 417(a)(3) of the Code, and shall be provided no less than 30
days and no more than 90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need consent to
the commencement of a distribution in the form of a Qualified Joint
and Survivor Annuity while the Accrued Benefit is immediately
distributable. (Furthermore, if payment in the form of a Qualified
Joint and Survivor Annuity is not required with respect to the
Participant pursuant to Subsection 12.08(e) of the Plan, only the
Participant need consent to the distribution of an Accrued Benefit
that is immediately distributable.) The consent of neither the
Participant nor the Participant's spouse shall be required to the
extent that a distribution is required to satisfy Section 401(a)(9)
or Section 415 of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option (purchased from a
commercial provider) and if the Employer or any entity within the
same controlled group as the Employer does not maintain another
defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), the
Participant's Accrued Benefit may, without the Participant's
consent, be distributed to the Participant. However, if any entity
within the same controlled group as the Employer maintains another
defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code) then the
Participant's Accrued Benefit will be transferred, without the
Participant's consent, to the other plan if the Participant does not
consent to an immediate distribution.
An Accrued Benefit is immediately distributable if any part of the
Accrued Benefit could be distributed to the Participant (or
surviving spouse) before the Participant attains (or would have
attained if not deceased) the later of Normal Retirement Age or age
62.
12.10 DISTRIBUTION TO A MINOR PARTICIPANT OR BENEFICIARY - In the event a
distribution is to be made to a minor, then the Plan Administrator may, in
the Administrator's sole discretion, direct that such distribution be paid
to the legal guardian of the minor, or if none, to a parent of such minor
or a responsible adult with whom the minor maintains his residence, or to
the custodian for such minor under the Uniform Gift to Minors Act, if such
is permitted by the laws of the state in which said minor resides. Such a
payment to the legal guardian or parent of a minor
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or to such a custodian shall fully discharge the Trustee, Employer, and
Plan from further liability on account thereof.
12.11 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN - In the event that all, or
any portion, of the distribution payable to a Participant or his
Beneficiary hereunder shall, at the expiration of five years after it
shall become payable, remain unpaid solely by reason of the inability of
the Plan Administrator, after sending a registered letter, return receipt
requested, to the payee's last known address, and after further diligent
effort, to ascertain the whereabouts of such Participant or his
Beneficiary, the amount so distributable shall be forfeited and allocated
in accordance with the terms of this Plan. In the event a Participant or
Beneficiary is located subsequent to his benefit being forfeited, such
benefit shall be restored.
ARTICLE XIII
BENEFITS UPON TERMINATION OF SERVICE
13.01 GENERAL - Upon a Participant's termination of Service, for any reason
other than death, disability, Normal, Early or Late Retirement, the
interests and rights of any Participant shall be limited to those
contained in this Article XIII.
(a) FULLY VESTED AND NONFORFEITABLE PORTION OF A PARTICIPANT'S ACCRUED
BENEFIT. Each Participant's 401(k) Employer and Match Accounts,
Salary Savings Account, Rollover Account, Tax Deductible Voluntary
Contribution Account, Voluntary After-Tax Contribution Account and
any additional portion of a Participant's Accrued Benefit
attributable to Employee contributions shall be fully vested and
nonforfeitable at all times.
(b) VESTED EMPLOYER CONTRIBUTIONS. Each Participant's 401(a) Employer
and Match Accounts shall be vested to the extent specified in
Section 13.01 of the Adoption Agreement, and the remainder, if any,
shall be forfeited in accordance with Plan Sections 13.03 and 13.04
and applied as specified in the Adoption Agreement pursuant to
Section 5.03.
For purposes of computing a Participant's nonforfeitable right to that
portion of his Accrued Benefit derived from Employer contributions, Years
of Service and One Year Breaks in Service will be measured by the Plan
Year.
13.02 FORFEITURES; DISTRIBUTION OF VESTED AMOUNTS - If a Participant terminates
Service, the present value of the Participant's vested Accrued Benefit is
not greater than $3,500, and the Employer has elected the lump sum option
provided in Section 13.02(1)(a) of the Adoption Agreement, the Participant
will receive a lump sum distribution of the present value of the entire
vested portion of such Accrued Benefit and the nonvested portion will be
forfeited and applied in accordance with Section 13.03. In the case of a
Plan subject to the Qualified Joint and Survivor Annuity requirements of
Section 12.08, if the present value of the vested Accrued Benefit exceeded
$3,500 at the time of any distribution, the present value of the vested
Accrued Benefit at any subsequent time will be deemed to exceed $3,500.
However, unless the Plan is a profit sharing plan described in Subsection
12.08(e), no such cash-out distribution shall be made after the
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annuity starting date (as described in Subsection 12.08(c)) unless the
Participant and his or her spouse (or the Participant's surviving spouse)
consent in writing to such distribution. For purposes of this paragraph,
if the value of the Participant's vested Accrued Benefit is zero, the
Participant shall be deemed to have received a distribution of such vested
Accrued Benefit, whether Section 13.02(1)(a) or (b) is elected.
If a Participant terminates Service, and the present value of the
Participant's vested Accrued Benefit exceeds $3,500, or if the value of
such vested Accrued Benefit does not exceed $3,500 but the Employer has
elected Section 13.02(1)(b) of the Adoption Agreement, the payment of such
vested benefit shall be deferred to the earliest of the Participant's
death, Total and Permanent Disability or attainment of Normal Retirement
Age, at which time such vested benefit shall be payable in accordance with
Article XII. Notwithstanding the foregoing, at any time on or after the
date specified in Section 13.02(2) of the Adoption Agreement, a terminated
Participant may request in writing that his entire vested Accrued Benefit
be distributed. Partial distributions of vested benefits will not be
permitted. Unless the Plan is a profit sharing plan described in
Subsection 12.08(e), the Participant and the Participant's spouse (or
surviving spouse) must consent to any distribution of vested benefits.
The Participant may request any form of distribution permissible under
Article XII, including the distribution of a nontransferable annuity
contract. The benefit payable as a result of any election pursuant to
this paragraph will be the benefit which can be provided by the then
current value of the Participant's vested Accrued Benefit. If the
provisions of this paragraph become operative, the nonvested portion of
the Participant's Accrued Benefit shall be forfeited when the Participant
incurs five consecutive One Year Breaks in Service or, if earlier, when
the Participant or his spouse (or surviving spouse) receives a
distribution of his vested Accrued Benefit. Any such forfeitures shall be
applied in accordance with Section 13.03.
13.03 APPLICATION OF FORFEITURES - The nonvested portion of the Accrued Benefit
of any terminated Participant will be applied to reduce Employer
Contributions or to pay Plan administrative expenses for the Plan Year
following the Plan Year in which the forfeiture occurs (or, if the
Employer so specifies in Section 5.03 of the Adoption Agreement, such
nonvested amounts shall be allocated in the same manner as Employer
Contributions at the end of the Plan Year in which the forfeiture occurs).
13.04 RESUMPTION OF SERVICE: RESTORATION OF BENEFITS UPON REEMPLOYMENT -
(a) A Participant who terminates Service and who subsequently resumes
employment with the Employer will again become a Participant on the
entry date determined in accordance with Section 3.02 of the Plan.
(b) If a Former Participant is subsequently reemployed, the following
rules shall also be applicable:
(i) If any Former Participant shall be reemployed by the Employer
before incurring five consecutive One Year Breaks in Service,
and such Former Participant had received (or had been deemed
to receive) a distribution of his vested Accrued Benefit prior
to his reemployment, his forfeited Account balance shall be
reinstated if he repays the full amount attributable to
Employer Contributions which was distributed to him, not
including, at the Participant's option, amounts attributable
to any Salary Savings Contributions. Such repayment must be
made
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by the Former Participant before the earlier of five years
after the first date on which the Participant is first
reemployed by the Employer, or the date on which the
individual incurs five consecutive One Year Breaks in Service
following the date of distribution. A Participant who was
deemed to receive a distribution of his vested Accrued Benefit
shall be deemed to have repaid such amount as of the date he
again becomes a Participant. In the event the Former
Participant does repay the full amount distributed to him, the
forfeited portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the date of distribution.
(ii) Restorations of forfeitures will be made as of the date that
the Plan Administrator is notified that the required repayment
has been received (or deemed received) by the Trustee. Any
forfeiture amount that must be restored to a Participant's
Account will be taken from any forfeitures that have not yet
been applied and, if the amount of forfeitures available for
this purpose is insufficient, the Employer will make a timely
supplemental contribution of an amount sufficient to enable
the Trustee to restore the forfeiture amount to the
Participant's Account.
(iii) If a Former Participant resumes Service after incurring five
consecutive One Year Breaks in Service, forfeited amounts will
not be restored under any circumstances, but unless the Rule
of Parity has been elected in Section 13.01(3)(d) of the
Adoption Agreement and such Rule applies, both pre-break and
post-break service will count for the purposes of vesting the
Employer-derived Account balance that accrued after such
Breaks.
If a Former Participant resumes Service before incurring five
consecutive One Year Breaks in Service, both the pre-break and
post-break service will count in vesting both any restored
pre-break and post-break-Employer-derived Account balance.
13.05 SERVICE WITH AFFILIATES - As indicated in Section 2.19 of the Plan, in
determining a Participant's vesting percentage and in determining for
purposes of this Article whether an Employee has terminated Service or has
a One Year Break in Service, Hours of Service completed with a controlled
business shall be deemed to be Hours of Service completed with the
Employer.
13.06 EARLY RETIREMENT ELECTION - Notwithstanding anything in the Plan to the
contrary, a Participant who becomes entitled to a benefit deferred to his
Normal Retirement Age under this Article upon a termination of
participation may elect to receive an immediate early retirement benefit
at any time on and after the date he attains the age required for early
retirement as elected in Section 12.02 of the Adoption Agreement and prior
to his Normal Retirement Age. A Participant eligible to make an election
under this Section may request any optional benefit permitted under
Section 12.07.
The benefit payable as a result of any election pursuant to this Section
will be the benefit which can be provided by the current value of the
Participant's Accounts.
13.07 AMENDMENT TO VESTING SCHEDULE - No amendment to the Vesting Schedule shall
deprive a Participant of his nonforfeitable rights to benefits accrued to
the date of the amendment.
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Further, if the Vesting Schedule of the Plan is amended, or the Plan is
amended in any way that directly or indirectly affects the computation of
a Participant's nonforfeitable percentage or if the Plan is deemed amended
by an automatic change to or from a top-heavy vesting schedule, each
Participant with at least 3 Years of Service with the Employer may elect,
within a reasonable period after the adoption of the amendment or change,
to have their nonforfeitable percentage computed under the Plan without
regard to such amendment. For Participants who do not have at least 1
Hour of Service in any Plan Year beginning after December 31, 1988, the
preceding sentence shall be applied by substituting "5 Years of Service"
for "3 Years of Service" where such language appears. The period during
which the election may be made shall commence with the date the amendment
is adopted and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
ARTICLE XIV
PLAN FIDUCIARY RESPONSIBILITIES
14.01 PLAN FIDUCIARIES - The Plan Fiduciaries shall be:
(a) the Employer;
(b) the Trustee of the Plan;
(c) the Plan Administrator;
(d) the Retirement Plan Committee;
and such other person or persons as may be designated as a Fiduciary by
the Employer in accordance with the further provisions of this Article.
14.02 GENERAL FIDUCIARY DUTIES - Each Plan Fiduciary shall discharge its duties
solely in the interest of the Participants and their Beneficiaries and
act:
(a) for the exclusive purpose of providing benefits to Participants and
their Beneficiaries and defraying reasonable expenses of
administering the Plan;
(b) with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims;
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(c) by diversifying the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is clearly
prudent not to do so, if the Fiduciary has the responsibility to
invest plan assets; and
(d) in accordance with the documents and instruments governing the Plan
insofar as such documents and instruments are consistent with the
provisions of current laws and regulations.
Each Plan Fiduciary shall perform the duties specifically assigned to it.
No Plan Fiduciary shall have any responsibility for the performance or
non-performance of any duties not specifically allocated to it.
14.03 POWERS, DUTIES AND RESPONSIBILITIES OF THE EMPLOYER -
(a) The Employer shall be empowered to appoint and remove the Trustee,
the Plan Administrator and the Retirement Plan Committee from time
to time as it deems necessary for the proper administration of the
Plan, to assure that the Plan is being operated for the exclusive
benefit of the Participants and their Beneficiaries in accordance
with the terms of this Agreement, the Internal Revenue Code, and the
Employee Retirement Income Security Act of 1974 (ERISA), as amended.
(b) The Employer shall establish a "funding policy and method," i.e., it
shall determine whether the Plan has a short term need for liquidity
(e.g., to pay benefits) or whether liquidity is a long term goal and
investment growth (and stability of same) is a more current need, or
shall appoint a qualified person to do so. The Employer or its
delegate shall communicate such needs and goals to the Trustee, who
shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to the investment
of the Trust Fund. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the
requirements of Title I of ERISA.
(c) The Employer may in its discretion appoint an Investment Manager to
manage all or a designated portion of the assets of the Plan. In
such event, the Trustee shall follow the directives of the
Investment Manager in investing the assets of the Plan managed by
the Investment Manager. While there is an Investment Manager, the
Employer shall have no obligation under this Plan with regard to the
performance or non-performance of the duties delegated to the
Investment Manager.
(d) The Employer shall periodically, but not less frequently than
annually, review the performance of any Fiduciary or other person to
whom duties have been delegated or allocated by it under the
provisions of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal periodic
review by the Employer or by a qualified person specifically
designated by the Employer, through day-to-day conduct and
evaluation, or through other appropriate ways.
14.04 POWERS, DUTIES AND RESPONSIBILITIES OF THE TRUSTEE - The specific powers,
duties and responsibilities of the Trustee are set forth in Article XV.
In general the Trustee shall:
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(a) invest Plan assets, subject to direction from the Employer, from any
duly appointed Investment Manager or from Participants to the extent
the Plan permits Participants to direct the investment of their
Accounts;
(b) maintain adequate records of receipts, disbursements and other
transactions involving the Plan; and
(c) prepare such reports, statements, tax returns and other forms as may
be required under the Trust or applicable laws and regulations.
14.05 POWERS, DUTIES AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR - The
Employer may appoint one or more Plan Administrators. Any person,
including, but not limited to, the Employer's directors, shareholders,
officers and Employees shall be eligible to serve as the Administrator.
Any person so appointed shall signify his acceptance by filing written
acceptance with the Employer. An Administrator may resign by delivering
his written resignation to the Employer or be removed by the Employer by
delivery of written notice of removal.
The Employer, upon the resignation or removal of an Administrator, may
designate in writing a successor to this position. If the Employer does
not appoint an Administrator, the Employer will function as the Plan
Administrator.
The specific powers and responsibilities of the Plan Administrator are to:
(a) administer the Plan on a day-to-day basis in accordance with the
provisions of this Plan and all other pertinent documents;
(b) retain and maintain Plan records including Participant census data,
participation dates, compensation records, and such other records as
may be necessary or desirable for proper Plan administration;
(c) prepare and arrange for delivery to Participants such summaries,
descriptions, announcements and reports as are required to be given
to Participants under applicable laws and regulations;
(d) file with the U.S. Department of Labor, the Internal Revenue Service
and other regulatory agencies on a timely basis all required
reports, forms and other documents; and
(e) prepare and furnish to the Trustee sufficient records and data to
enable the Trustee to properly perform its obligations under the
Trust.
Notwithstanding anything in the Plan and Trust to the contrary, the Plan
Administrator shall have total discretion to fulfill the above fiduciary
responsibilities as he sees fit on a uniform and consistent basis and as
he believes a prudent person acting in a like capacity and familiar with
such matters would do.
14.06 POWERS, DUTiES AND RESPONSIBILITIES OF THE RETIREMENT PLAN COMMITTEE -The
Employer may appoint a Retirement Plan Committee consisting of three or
more members,
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one of whom shall be designated by the Employer as Chairman. Each member
of the Committee and its chairman shall serve at the pleasure of the
Employer.
If a Committee is not appointed, the duties and responsibilities set forth
in this Section and in Article XIX shall be those of the Plan
Administrator.
If the Employer appoints a Retirement Plan Committee, the Committee shall:
(a) interpret and construe the Plan;
(b) determine questions of eligibility and of rights of Participants and
their Beneficiaries;
(c) provide guidelines for the Plan Administrator, as required for the
orderly and uniform administration of the Plan; and
(d) exercise overall control of the operation and administration of the
plan in matters not allocated to some other Fiduciary either by the
terms of this Plan or by delegation from the Employer.
Notwithstanding anything in the Plan and Trust to the contrary, the
Retirement Plan Committee shall have total discretion to fulfill the above
fiduciary responsibilities as they see fit on a uniform and consistent
basis and as they believe a prudent person acting in a like capacity and
familiar with such matters would do.
14.07 APPOINTMENT OF ADVISORS - The Employer may appoint Plan counsel,
accountants, actuaries, specialists, advisors and such other persons as it
deems necessary or desirable in connection with the administration of this
Plan.
14.08 INFORMATION FROM EMPLOYER - To enable the Plan Administrator to perform
his functions, the Employer shall supply full and timely information to
the Plan Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service, their
retirement, death, disability, or termination of employment, and such
other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee and the Retirement Plan Committee
of such of the foregoing facts as may be pertinent to their duties under
the Plan. All Fiduciaries may rely upon such information as is supplied
by the Employer and shall have no duty or responsibility to verify such
information.
14.09 PAYMENT OF EXPENSES - All expenses of administration may be paid out of
the Trust Fund unless paid by the Employer. Such expenses shall include
any expenses incident to the functioning of the Plan Administrator, the
Trustee and the Retirement Plan Committee, including, but not limited to,
fees of counsel, accountants, and other specialists, and other costs of
administering the Plan. Until paid, the expenses shall constitute a
liability of the Trust Fund. However, the Employer may reimburse the
Trust for any administration expense incurred pursuant to the above. Any
administration expense paid to the Trust as a reimbursement shall not be
considered as an Employer contribution.
14.10 ALLOCATION AND DELEGATION OF PLAN ADMINISTRATOR AND TRUSTEE
RESPONSIBILITIES - If more than one person is appointed as Plan
Administrator or Trustee, the
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responsibilities of each Administrator and Trustee may be specified by the
Employer and accepted in writing by each Fiduciary. In the event that no
such delegation is made by the Employer, the Plan Administrators and
Trustees may allocate their responsibilities among themselves, in which
event they shall notify the Employer in writing of such action and
indicate their specific responsibilities. The Employer and other
Fiduciaries thereafter shall accept and rely upon any documents executed
by the appropriate Fiduciary until such time as the Employer revokes any
such allocation or designation.
14.11 MAJORITY ACTIONS - Except where there has been an allocation and
delegation of Fiduciary responsibilities pursuant to Section 14.10, if
there shall be more than one Plan Administrator or Trustee, they shall act
by majority vote, but may authorize one or more of them to sign all papers
on their behalf. The Retirement Plan Committee shall act by majority vote
of all members.
All actions, determinations, interpretations and decisions of Plan
Fiduciaries with respect to any matter within their jurisdiction will be
conclusive and binding on all persons. Any person may rely conclusively
upon any action if certified by the appropriate Fiduciary.
14.12 LIABILITY FOR BREACH BY CO-FIDUCIARY - The Employer, Plan Administrator,
Retirement Plan Committee and Trustee shall not be liable or responsible
for the acts of commission or omission of another Fiduciary unless (i)
such Fiduciary knowingly participated in or knowingly attempted to conceal
the act or omission of another Fiduciary and knew the act or omission was
a breach of fiduciary responsibility by the other Fiduciary; or (ii) such
Fiduciary has knowledge of a breach by the other Fiduciary and does not
take reasonable efforts to remedy the breach; or (iii) such Fiduciary's
breach of its own fiduciary responsibility permitted the other Fiduciary
to commit a breach.
14.13 RECORDS AND REPORTS - Each Fiduciary shall keep a record of all actions
taken and shall keep all other books of account, records, and other data
that may be necessary for proper administration of the Plan. The Plan
Administrator shall be responsible for supplying all information and
reports to the Internal Revenue Service, the Department of Labor,
Participants, Beneficiaries and others as required by law.
ARTICLE XV
TRUSTEE AND TRUST FUND INVESTMENTS
15.01 IN GENERAL - Subject to the direction of the Employer or any duly
appointed Investment Manager (pursuant to the terms of Sections 15.01 and
15.04 of the Adoption Agreement) or subject to the direction of
Participants (to the extent the Plan provides for Participant investment
direction pursuant to Section 15.05 of the Adoption Agreement), the
Trustee shall receive all contributions to the Trust and shall hold,
invest, manage, and control the whole or any part of the assets in
accordance with the provisions of the Trust. The Trustee, in signing the
Trust, accepts and agrees to carry out all of the provisions of the Trust.
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The Trustee shall have no responsibility or authority in connection with
the determination of the amounts to be transferred to it from time to time
on behalf of Participants or as Employer contributions.
No duties or obligations shall be imposed upon the Trustee with respect to
the Trust Fund by any instrument to which the Trustee is not a party,
unless they have been specifically undertaken by the Trustee by the
express terms of this Plan.
15.02 APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE - The Employer shall
select an individual or individuals or institution to serve as Trustee.
The Trustee may resign at any time by giving written notice to the
Employer, such resignation to take effect not less than thirty (30) days
after the delivery thereof to the Employer (unless notice of a shorter
duration shall be accepted as adequate). The Employer may remove any
Trustee at any time by giving notice to the Trustee, such removal to take
effect not less than thirty (30) days after the delivery thereof to the
Trustee (unless notice of a shorter duration shall be accepted as
adequate). No such removal of the Trustee shall become effective,
however, until all sums due hereunder to the Trustee for its compensation
and expenses shall have been paid to it, nor until the appointment by the
Employer and qualification of a successor Trustee to which the Trustee may
make transfer and delivery of the Trust Fund.
Any successor Trustee hereunder may be either a corporation authorized and
empowered to exercise trust powers or may be one or more individuals. In
either event, the appointment of a successor Trustee shall not be
effective until such successor Trustee delivers its written acceptance of
trust to the Trustee resigning or being replaced. All of the provisions
set forth herein with respect to the Trustee shall relate to each
successor Trustee so appointed with the same force and effect as if such
successor Trustee had been originally named herein as the Trustee
hereunder.
In the case of the resignation or removal of the Trustee, the Employer or
the Trustee shall have the right to a settlement of the Trustee's
accounts, as provided in Section 15.10. Upon the completion of such
accounting and upon the appointment of a successor Trustee, the resigning
or removed Trustee shall transfer and deliver the Trust Fund to such
successor Trustee, after reserving such reasonable amount as it shall deem
necessary to provide for its expenses in the settlement of its account,
the amount of any compensation due to it and any sums chargeable against
the Trust Fund for which it may be liable, but if the sums so reserved are
not sufficient for such purposes, the resigning or removed Trustee shall
be entitled to reimbursement for any deficiency from the successor Trustee
and the Employer, and each of them, and shall thereupon be discharged from
further accountability for the Trust Fund by reason of any matter embraced
in such accounting, and shall be under no further duty, obligation or
responsibility for the disposition by such successor Trustee of the Trust
Fund or any part thereof, but the Trustee shall, in any event, properly
account for any such sums reserved by it.
15.03 POWERS OF TRUSTEE - The Trustee shall have all of the power necessary for
carrying out the purposes of this Trust, and without limiting the powers
and authority of the Trustee, except as provided in Subsection (s) below,
the Trustee shall have the right at any time and from time to time with
respect to any or all of the property which shall at any time or times
form part of the principal or income of the Trust Fund:
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(a) To invest and reinvest or otherwise deposit the Trust assets in
savings accounts, time deposit accounts, certificates of deposit,
money market funds, or other evidences of deposit issued by the
Trustee and/or other national bank, savings and loan institution,
state member bank, state non-member bank, or other depository
institution which now or in the future is an affiliate or subsidiary
of the Trustee or of Banc One Corporation; and to invest and
reinvest in any property, real, personal or mixed, wherever situated
and whether or not productive of income or consisting of wasting
assets, including without limitation, common and preferred stocks,
bonds, notes, (including notes evidencing the indebtedness of
Participants, former Participants and Beneficiaries, for amounts
borrowed from the Trust Fund) debentures (including convertible
stocks and securities), Qualifying Employer Securities (as defined
in Section 407(d)(5) of ERISA), financial futures contracts, options
to purchase or sell securities, mortgages, equipment trust
certificates, investment trust certificates, shares of investment
companies, certificates of indebtedness, acceptances, bills of
exchange, treasury bills, commercial paper, (including participation
in pooled commercial paper accounts), real property, leaseholds,
tangible and intangible personal property, life insurance Policies,
individual and group annuity contracts and guaranteed investment
contracts issued by a duly licensed insurance company, including any
such policies and contracts issued by any such insurance company
which may be an affiliate of the Trustee, bank investment contracts,
repurchase agreements, variable rate or amount notes, interests in
trusts, interests in or shares of regulated investment companies or
other investment companies, including investment companies for which
the Trustee, or an affiliate of the Trustee, may act as investment
advisor (whether or not incorporated and whether or not registered
under the Investment Company Act of 1940), evidences of dollar
denominated indebtedness in domestic or foreign corporations or
other enterprises, and indebtedness of foreign governments, foreign
agencies and international organizations, without regard to the
proportion any such property may bear to the entire amount of the
Trust Fund; provided, however, that the Trust Fund shall be
diversified so as to minimize the risk of large losses unless under
the circumstances it is clearly not prudent to do so, in the sole
discretion of the Trustee;
(b) To sell for cash or on credit, to grant options, convert, redeem,
exchange for other securities or other property, or otherwise to
dispose of any securities or other property at any time held by it;
(c) To retain any property at any time received by it as Trustee;
(d) To settle, compromise or submit to arbitration, any claims, debts or
damages, due or owing to or from the Trust, to commence or defend
suits or legal proceedings and to represent the Trust in all suits
or legal proceedings; provided, however, that the Trustee shall not
be required to take any such action unless it shall have been
indemnified by the Employer to its satisfaction against liability or
expenses it might incur therefrom;
(e) To participate in any plan of reorganization, consolidation, merger,
combination, liquidation or other similar plan relating to property
held by it and to consent to or oppose any such plan or any action
thereunder or any contract, lease, mortgage, purchase, sale or other
action by any person;
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(f) To exercise any conversion privilege and/or subscription right
available in connection with any securities or other property at any
time held by it, to oppose or to consent to the reorganization,
consolidation, merger, or readjustment of the finances of any
corporation, company or association or to the sale, mortgage, pledge
or lease of the property of any corporation, company or association
any of the securities of which may at any time be held by it and to
do any act with reference thereto, including the exercise of
options, the making of agreements or subscriptions and the payment
of expenses, assessments or subscriptions, which may be deemed
necessary or advisable in connection therewith, and to hold and
retain any securities or other property which it may so acquire;
(g) To extend the time of payment of any obligation held by it;
(h) To hold uninvested any moneys received by it, without liability for
interest thereon, until such moneys shall be invested, reinvested or
disbursed;
(i) To exercise, personally or by general or by limited power of
attorney, any right, including the right to vote, appurtenant to any
securities or other property held by it at any time;
(j) For the purposes of the Trust, to borrow money in such amounts and
upon such terms and conditions as shall be deemed advisable or
proper to carry out the purposes of the Trust and to pledge any
securities or other property for the repayment of any such loan;
(k) To manage, administer, operate, insure, lease for any number of
years, develop, improve, repair, alter, demolish, mortgage, pledge,
grant options with respect to, or otherwise deal with any real
property or interest therein at any time held by it, and to cause to
be formed a corporation or trust to hold title to any such real
property with the aforesaid powers, all upon such terms and
conditions as may be deemed advisable;
(l) To renew or extend or participate in the renewal or extension of any
mortgage, upon such terms as may be deemed advisable, and to agree
to a reduction in the rate of interest on any mortgage or to any
other modification or change in the terms of any mortgage or of any
guarantee pertaining thereto, in any manner and to any extent that
may be deemed advisable for the protection of the Trust Fund or the
preservation of the value of the investment; to waive any default
whether in the performance of any covenant or condition of any
mortgage or in the performance of any guarantee, or to enforce any
such default in such manner and to such extent as may be deemed
advisable; to exercise and enforce any and all rights of
foreclosure, to bid in property on foreclosure, to take a deed in
lieu of foreclosure with or without paying a consideration therefor
and in connection therewith to release the obligation on the bond
secured by such mortgage, and to exercise and enforce in any action,
suit or proceedings at law or in equity any rights or remedies in
respect to any such mortgage or guarantee;
(m) To employ suitable agents, including custodians, record keepers,
auditors, depositories and counsel, who may be counsel for the
Employer, and to act in accordance with their advice and to pay
their reasonable expenses and compensation. The opinion of such
counsel on any question submitted to such counsel shall be full and
complete protection in respect to any action taken or suffered by
the Trustee hereunder in good faith and in accordance with the
opinion of such counsel;
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(n) To cause any property or securities at any time held in the Trust
Fund to be registered in the name of one or more nominees of the
Trustees, without disclosure of the trust, or in the name of a
nominee of any custodian, or to hold any securities at any time held
in trust in bearer form so that they will pass by delivery; to
combine certificates representing securities with certificates of
the same issue held by the Trustee in other fiduciary capacities or
to deposit or to arrange for the deposit of such securities with a
depository or clearing corporation, even though where deposited such
securities may be held in the name of the nominee of such depository
with other securities deposited therewith by other persons,
provided, however, that the books and records of the Trustee shall
at all times show that all such securities are part of the Trust
Fund;
(o) To make, execute and deliver, as Trustee, any and all deeds, leases,
mortgages, conveyances, contracts, waivers, releases or other
instruments in writing necessary or proper for the accomplishment of
any of the foregoing powers;
(p) To invest and reinvest (or withdraw from investment) all or any
portion of the funds hereunder in units of participation in one or
more Collective Investment Trusts, including a Collective Investment
Trust established and maintained by the Trustee or any other party
in interest. The Trustee's authority to invest in such units of
participation shall not be limited by any statute, other rule of
law, or custom prohibiting or restricting the commingling of trust
assets. As long as any of the funds hereunder are so invested, the
terms of any such Collective Investment Trust, together with any
amendments heretofore or hereafter made thereto, are hereby
incorporated into this Trust and made a part hereof, as long as any
of the funds hereunder are invested therein, as fully as if the same
had been set out herein at length, and shall apply to all assets
transferred to said Collective Investment Trust. The Trustee shall
not be obligated to invest the funds so contributed in a Collective
Investment Trust until the Plan (if a Non-Standardized Plan) has
been approved by the Internal Revenue Service;
(q) To lend any securities to brokers or dealers and to secure the same
in any manner and, during the term of any such loan, to permit the
securities so lent to be transferred in the name of, and voted by,
the borrower or others;
(r) To invest in Qualifying Employer Securities, as that term is defined
in ERISA Section 407(d)(5), subject to all applicable provisions of
ERISA and the Code, as amended from time to time, and the
regulations promulgated thereunder. If the Plan is a Non-
standardized Profit Sharing Plan or a Non-standardized 401(k) Plan,
then the Employer may elect to permit the aggregate investments in
Qualifying Employer Securities to exceed 10% of the value of the
Plan's assets.
(s) Generally, to do all acts, whether or not expressly authorized, that
the Trustee may deem necessary or desirable for the protection of
the Trust Fund;
(t) If the Employer has appointed an Investment Manager with respect to
the Plan with the power to direct the investment and reinvestment of
all or part of the Trust Fund, the Investment Manager shall, unless
its appointment provides otherwise, have the power to direct the
Trustee in the exercise of the powers described in paragraphs (a)
through (r) above with respect to all or part of the Trust Fund, as
the case may be, and the Trustee
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shall, upon receipt of a copy of the Investment Manager's
appointment and written acknowledgement of such appointment,
satisfactory in form to the Trustee, exercise such powers as
directed in writing by the Investment Manager, unless it knows that
such direction is a breach of the Investment Manager's duty to act
with care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims. The Trustee shall not be
liable for any diminution in the value of the Trust Fund as a result
of following any such direction or as a result of not exercising any
such powers in the absence of any such direction; and
(u) If a Participant, in accordance with Section 15.05 of the Adoption
Agreement, may individually direct the investment of any part or all
of the Trust Fund credited to his/her Accounts, the Participant
shall have the power to direct the Trustee in the exercise of the
powers described in paragraphs (a) through (s) above and paragraph
(u) below with respect to such portion of the Trust Fund, and the
Trustee shall, upon receipt of a written direction from the
Participant, exercise such powers in accordance with such direction.
The Trustee shall not be liable for investments made in compliance
with such written directions or for any diminution in the value of
such portion of the Trust Fund as a result of following such
directions, and, further, shall be under no duty or obligation to
review, evaluate or reevaluate the investments made pursuant to such
directions.
15.04 EMPLOYER OR INVESTMENT MANAGER MAY DIRECT INVESTMENT PROGRAM - The
Employer, at its discretion, shall have full authority to direct the
Trustee in the investments of all or a portion of the Trust Fund or the
Employer may appoint an Investment Manager to so direct the Trustee as
indicated in Sections 15.01 and 15.04 of the Adoption Agreement. Any such
direction shall be in writing bearing an authorized signature, and may be
of a continuing nature or otherwise.
15.05 PARTICIPANT DIRECTED INVESTMENTS - If and to the extent so specified by
the Employer in Section 15.05 of the Adoption Agreement, each Participant
may direct the Trustee to separate and keep separate all or a portion of
his Accounts; and further each Participant is authorized and empowered, in
his sole and absolute discretion, to give directions to the Trustee in
such form as the Trustee may require concerning the investment of such
portion of his Accounts, which directions must be followed by the Trustee
subject, however, to Subsection 15.03(u) and to the restrictions on
payment of life insurance premiums described in Section 2.34. Neither the
Trustee nor any other person, including the Plan Administrator, shall be
under any duty to question any investment direction of the Participant
authorized by this Section or make any suggestions to the Participant in
connection therewith, and the Trustee shall comply as promptly as
practicable with directions given by the Participant hereunder. Any such
direction may be of continuing nature or otherwise and may be revoked by
the Participant at any time in such form as the Trustee may require. The
Trustee shall not be responsible or liable for any loss or expense which
may arise from or result from compliance with any directions from the
Participant nor shall the Trustee be responsible for, or liable for, any
loss or expense which may result from the Trustee's refusal or failure to
comply with any directions from the Participant. The Trustee may refuse
to comply with any direction from the Participant in the event the
Trustee, in its sole and absolute discretion, deems such directions
improper by virtue of applicable law. Any costs and expenses related to
compliance with the Participant's directions shall be borne by the
Participant's Account.
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15.06 RELIANCE ON INSTRUCTIONS - The Trustee may rely on any order, request, or
other paper believed by the Trustee to be genuine and to be signed or
presented by the proper party or parties and may rely upon the Plan
Administrator for the mailing addresses of Participants and Employees.
15.07 VOTING AND OTHER ACTION - Subject to the provisions of Sections 15.13 and
15.14, the Employer specifically reserves the right to direct the Trustee
with respect to the voting of all stocks, securities and other investments
held by the Trustee as part of the Trust Fund.
15.08 DISCLOSURE - The Trustee is not authorized to disclose and shall not
disclose the name, address, or security positions of the beneficial owners
of the Trust in response to requests concerning shareholder communications
under Section 14 of the Securities Exchange Act of 1934, the rules and
regulations thereunder, or any similar statute, regulation, or rule in
effect from time to time.
15.09 RETURNS AND REPORTS - The Plan Administrator shall furnish to the Trustee,
and the Trustee shall furnish to the Plan Administrator, such information
relevant to the Trust as may be required under the Internal Revenue Code
and Regulations and by the Federal Department of Labor. The Trustee shall
keep such records and file with the Internal Revenue Service such returns
and other information concerning the Trust as may be required of it under
the Internal Revenue Code and Regulations issued or forms adopted
thereunder.
15.10 RECORDS AND ACCOUNTS - The Trustee shall keep accurate and detailed
records and accounts of all of its receipts and disbursements. The
Trustee's books and records with respect to the Trust Fund shall be open
to inspection by the Employer at all reasonable times during business
hours of the Trustee. The Trustee shall render from time to time, and not
less frequently than once per year, accounts of its transactions to the
Employer and certify to the accuracy thereof. The Employer may approve
such accounts by an instrument in writing delivered to the Trustee. In
the absence of the filing in writing with the Trustee by the Employer of
exceptions or objections to any such account within sixty (60) days, the
Employer shall be deemed to have approved such account; and in such case,
or upon the written approval of the Employer of any such account, the
Trustee shall be released, relieved and discharged with respect to all
matters and things set forth in such account as though such account had
been settled by the decree of a court of competent jurisdiction. No
person other than the Employer may require an accounting or bring any
action against the Trustee with respect to the Trust or its action as
Trustee. The Trustee or the Employer shall have the right to apply at any
time to a court of competent jurisdiction for judicial settlement of any
account of the Trustee not previously settled as herein provided or for
the determination of any question of construction or for instructions. In
any such action or proceeding it shall be necessary to join as parties
only the Trustee and the Employer (although the Trustee may also join such
other parties as it may deem appropriate), and any judgment or decree
entered therein shall be conclusive.
In the case of the revocation or termination of this Trust, or in case of
the resignation or removal of the Trustee, the Employer and the Trustee
shall have the right to a settlement of the Trustee's accounts, which
accounting may be made either (i) by agreement of settlement between the
Trustee and the Employer, or (ii) by judicial settlement in an action,
suit or proceeding instituted by the Employer or the Trustee in a court of
competent jurisdiction.
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15.11 INDEMNIFICATION OF TRUSTEE - The Employer shall indemnify and save
harmless the Trustee from and against any and all claims, loss, damages,
expenses (including reasonable counsel fees) and liability to which the
Trustee may be subjected by reason of any act done or omitted to be done
except where the same is finally adjudicated to be due to the negligence
or wilful misconduct of the Trustee.
If the Trustee is at any time acting as a successor Trustee, the Employer
shall indemnify and save harmless the Trustee from and against any and all
claims, losses, damages, expenses (including reasonable counsel fees),
taxes and liability incurred by or assessed against it as a successor
Trustee, as a direct or indirect result of any act or omission of a
predecessor Trustee or any act or omission of any other person occurring
prior to the date of appointment of the Trustee as successor Trustee. In
addition, the Trustee shall not be liable for any losses to the Trust Fund
resulting from the disposition of any investment which shall have been
made by a predecessor Trustee or for the retention thereof if the Trustee
is unable to dispose of such investment because of any Federal or state
securities laws, restrictions or the unmarketable or illiquid nature of
such investments, or if an orderly liquidation is difficult under
prevailing conditions.
15.12 FEES AND TAXES, EXPENSES AND COMPENSATION OF TRUSTEE - The Trustee shall
pay out of the Trust Fund all real and personal taxes and other taxes of
any and all kinds levied or assessed under existing or future laws against
the Trust Fund. The Trustee shall be paid its reasonable expenses for the
management and administration of the Trust Fund, including without
limitation reasonable expenses of counsel, custodians, and other agents
employed by the Trustee, and reasonable compensation for its services as
Trustee hereunder, the amount of which shall be agreed upon from time to
time by the Employer and the Trustee in writing; provided, however, that
if the Trustee forwards an amended fee schedule to the Employer requesting
its agreement thereto and the Employer fails to object thereto within
thirty (30) days of its receipt, the amended fee schedule shall be deemed
to be agreed upon by the Employer and the Trustee. Such expenses and
compensation may be paid by the Employer, but if they are not paid by the
Employer, they shall be paid by the Trustee from the Trust Fund.
15.13 VOTING EMPLOYER STOCK - Each Participant and Beneficiary shall have the
power to direct the Trustee in the voting of all Qualifying Employer
Securities, as that term is defined in ERISA Section 407(d)(5), allocated
to that person's Accounts. All voting of Qualifying Employer Securities
shall be in compliance with all applicable rules and regulations of the
Securities and Exchange Commission and all applicable rules of or any
agreement with any stock exchange on which the Employer stock being voted
is traded. The Trustee shall vote all Qualifying Employer Securities as
directed by the Participant.
15.14 TENDER OFFERS - Each Participant and Beneficiary shall have the sole right
to direct the Trustee as to the manner in which to respond to a tender or
exchange offer for Qualifying Employer Securities, as that term is defined
in ERISA Section 407(d)(5), allocated to such person's Accounts. The
Employer shall use its best efforts to notify or cause to be notified each
Participant and Beneficiary of any tender or exchange offer and to
distribute or cause to be distributed to each Participant and Beneficiary
such information as is distributed in connection with any tender or
exchange offer to holders generally of Employer stock, together with the
appropriate forms for directing the Trustee as to the manner in which to
respond to such tender or exchange offer. Upon timely receipt of such
directions from the Participant or Beneficiary, the Trustee shall respond
to the tender or exchange offer in accordance with, and only in accordance
with, such directions. If
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the Trustee does not receive timely directions from a Participant or
Beneficiary, the Trustee shall respond to the tender or exchange offer for
Employer stock on behalf of the Participant or Beneficiary in such manner
as the Trustee deems appropriate.
ARTICLE XVI
THE INSURER
16.01 INSURER NOT A PARTY TO THE TRUST - The Insurer shall be protected in
treating the Trustee as absolute owner of any individual or group annuity
contract, guaranteed investment contract or other contract or life
insurance Policy issued to the Trustee and may rely on directions received
from the Trustee. The Insurer shall not be required to take or permit any
action contrary to the provisions of any such contract or life insurance
Policy issued hereunder, or be bound to allow any benefit or privilege to
any Plan Participant covered by the contract or Policy which is not
provided for in such contract or Policy.
The Insurer shall deal with and accept the signature of the Trustee in
connection with any changes or actions under its group annuity contract or
Policy and shall have no liability to inquire as to the Trustee's
authority nor to determine that the Trustee has obtained any necessary
direction, signature, or consents. Any sums paid out by the Insurer under
any of the terms of any group annuity contract or life insurance Policy to
the Trustee or in accordance with his direction or to any other person or
persons to whom payment should be made shall be a complete and full
discharge of liability of such payment, and the Insurer shall have no
obligations as to the disposition of any funds to be paid.
The Insurer shall be fully protected in accepting premiums on any group
annuity contract or life insurance Policy it may issue under this Trust
and shall have no responsibility to make any inquiry as to the Trustee's
authority to make such payment.
The Insurer shall be fully protected at all times in dealing with the
person or corporation who is Trustee according to the latest notification
received by the Insurer at its Home Office.
No amendment to this Trust shall, regardless of its provisions, deprive
the Insurer of any of its exemptions and immunities hereunder.
ARTICLE XVII
LIFE INSURANCE POLICIES
17.01 GENERAL RULES - If and to the extent permitted by the Employer, at the
request and direction of a Participant the Trustee shall invest in life
insurance Policies, subject to the following:
(a) each Policy shall be issued by the Insurer to the Trustee only and
shall provide for premiums payable in accordance with the terms of
the Policy. Purchase of Policies in accordance with this Section
17.01 shall constitute an investment of amounts allocated to the
appropriate Account of the Participant, and each such Account shall
be reduced by the amount paid for such Policies,
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(b) as provided in Section 12.06, the Trustee shall be designated as
Beneficiary of any Policy issued hereunder, and upon the death of
the Participant the Trustee shall pay or apply the Policy proceeds
for the benefit of the appropriate Plan Beneficiary,
(c) each Policy shall be a Policy between the Insurer and Trustee and
shall reserve to the Trustee all rights, options and benefits,
(d) each life insurance Policy shall provide a full or increasing death
benefit,
(e) each Policy shall provide settlement options (including lump sum
cash payment in the event of the surrender or maturity of such
Policy) subject, however, to Section 12.07,
(f) any dividend payable while a Policy is on a premium paying basis
shall be applied or accumulated as indicated on the Policy
application for the benefit of the Participant on whose life the
Policy was issued,
(g) all classes of life insurance Policies purchased hereunder shall be
alike or substantially alike as to settlement option provisions,
cash values, and as to other Policy provisions, subject, however, to
the provisions of Sections 17.01(h), 17.01(i) and 17.01(j),
(h) if an eligible Employee is determined to be insurable by the Insurer
at its standard rates, a Policy shall be obtained upon his life, if
available from the Insurer, which provides a life insurance death
benefit prior to retirement to which the eligible Employee is
entitled,
(i) if an eligible Employee is not insurable at the standard rates of
such Insurer, if permitted under the Policy being issued, the Policy
shall provide for a reduced but increasing death benefit as
determined by the Insurer (usually called increasing or graded death
benefit),
(j) if an eligible Employee is not insurable at the standard rates of
the Insurer, each Employee may elect to pay any excess premium that
may be required in order to obtain a Policy providing for full death
benefits described in Section 17.01(h), if the Insurer shall agree
to issue such a Policy,
(k) the Insurer shall only issue Policies which conform to the terms of
the Plan.
17.02 PROCEDURE FOLLOWED TO OBTAIN POLICIES - The Trustee shall apply to the
Insurer for Policies on the lives of Participants with completed
applications as may be required by the Insurer, such Policies to have
benefits which are purchasable by a premium equal to the portion of the
contribution allocated for that purpose.
17.03 KEY MAN INSURANCE - The Trustee shall have the power, which shall be
exercised upon direction of the Employer or any duly appointed Investment
Manager, to invest in life insurance Policies on the lives of key
Employees of the Employer, payable on death to the Trust as beneficiary.
Such Policies shall be vested exclusively in the Trustee for the benefit
of the Trust, and death proceeds received under any such Policy shall be
considered to be an additional Employer Contribution.
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ARTICLE XVIII
TRANSFER OF ASSETS, ROLLOVER CONTRIBUTIONS
18.01 TRANSFER FROM OTHER QUALIFIED PLANS - With the consent of the Plan
Administrator, the Trustee may accept funds and property transferred from
other pension, profit sharing or stock bonus plans qualified under Code
Section 401(a) or 403(a) or Rollover Amounts, provided that the plan from
which such funds and property are transferred permits the transfer to be
made.
In the event of a transfer to this Plan, the Trustee shall maintain a 100%
vested and nonforfeitable account for the amount transferred and its share
of the Trust Fund's accretions or losses, to be known as the Participant's
Rollover Account. At the Trustee's direction, the Plan Administrator
shall separately account for transferred funds and Rollover Amounts within
a Participant's Rollover Account.
"Rollover Amount" means any rollover contribution or eligible rollover
distribution described in Code Section 402(a)(5) (for years prior to
1993), 402(c)(4) (for years after 1992), 403(a)(4) or 408(d)(3)(A)(ii).
An Employee who makes a contribution to the Plan described in this Section
shall become a Plan Participant on the date the Trustee accepts the
contribution. However, no 401(a) or 401(k) Employer Contributions or
Employer Match Contributions will be made on behalf of such Employee nor
will the Employee be eligible to enter into a salary reduction agreement,
to share in Plan forfeitures or to make Voluntary After-Tax Contributions
until the Employee satisfies the Plan eligibility requirements set forth
in Section 3.02 of the Adoption Agreement.
In the case of a Profit Sharing or 401(k) Plan, if elected by the Employer
in Section 10.01 of the Adoption Agreement, a Participant shall have the
right at any time (or at any time after he attains Age 59 1/2, if so
specified by the Employer in the Adoption Agreement) to request a
withdrawal in cash of the portion of his Accrued Benefit attributable to
his Rollover Contributions. If necessary to comply with the requirements
of Section 12.08, the Plan Administrator shall require the consent of the
Participant's spouse before making any withdrawal. Any such consent shall
satisfy the requirements of Section 12.08. Subject to any limitations or
restrictions imposed pursuant to Section 10.03, any such amount requested
to be withdrawn shall be paid within 90 days following the date written
request therefor is received by the Plan Administrator. Values not so
withdrawn, including any increments earned on withdrawn amounts prior to
withdrawal, shall be distributed to the Participant or his Beneficiary at
such time and in such manner as the Trust otherwise provides for Account
distributions.
No forfeitures will occur solely as a result of an Employee's withdrawal
of Rollover Contributions.
The portion of a Participant's Accrued Benefit attributable to Rollover
Contributions shall be 100% vested and nonforfeitable at all times.
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18.02 PARTICIPANT TRANSFERS TO OTHER QUALIFIED PLANS -
(a) For distributions made prior to January 1, 1993, upon the request of
a Participant upon his termination of employment, the Trustee, at
the direction of the Plan Administrator, shall transfer the vested
portion of his Accrued Benefit, if any, to another pension, profit
sharing or stock bonus plan maintained by such Participant's
employer and meeting the requirements of Code Section 401(a) or
403(a), provided that the plan to which such transfer is to be made
permits the transfer.
(b) (i) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this
Article, for distributions made on or after January 1, 1993, a
distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of
an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
(ii) Definitions.
(A) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that
an eligible rollover distribution does not include: any
distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with
respect to employer securities).
(B) Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in section
408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement
annuity.
(C) Distributee: A distributee includes an Employee or
former Employee. In addition, the Employee's or former
Employee's surviving spouse or former spouse who is the
alternate payee under a qualified domestic relations
order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse.
(D) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
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(c) Unless the Plan is a profit sharing plan described in Subsection
12.08(e), if the Participant's vested Accrued Benefit attributable
to Employer and Employee contributions and Plan transfers exceeds
(or at the time of any prior distribution exceeded) $3,500, the Plan
Administrator shall require the consent of the Participant's spouse
before authorizing the transfer. Any such spousal consent shall
satisfy the requirements of Section 12.08.
ARTICLE XIX
CLAIMS PROCEDURE
19.01 CLAIMS FIDUCIARY - The Retirement Plan Committee will act as Claims
Fiduciary except to the extent that the Employer has allocated the
function to someone else.
Notwithstanding anything in the Plan and Trust to the contrary, the Claims
Fiduciary shall have total discretion to fulfill their fiduciary
responsibilities as they see fit on a uniform and consistent basis and as
they believe a prudent person acting in a like capacity and familiar with
such matters would do.
19.02 CLAIMS FOR BENEFITS - Claims for benefits under the Plan must be made in
writing to the Plan Administrator. For the purpose of this procedure,
"claim" means a request for a Plan benefit by a Participant or a
Beneficiary of a Participant. If the basis of the claim includes
documentation not a part of the records of the Plan or of the Employer,
all such documentation must be included with the claim.
19.03 NOTICE OF DENIAL OF CLAIM - If a claim is wholly or partially denied, the
Plan Administrator shall notify the claimant of the denial of the claim
within a reasonable period of time. Such notice of denial (i) shall be in
writing, (ii) shall be written in a manner calculated to be understood by
the claimant, and (iii) shall contain (a) the specific reason or reasons
for denial of the claim, (b) a specific reference to the pertinent Plan
provisions upon which the denial is based, (c) a description of any
additional material or information necessary for the claimant to perfect
the claim, along with the explanation why such material or information is
necessary, and (d) an explanation of the Plan's claim review procedure.
Unless special circumstances require an extension of time for processing
the claim, the Plan Administrator shall notify the claimant of the claim
denial no later than 90 days after the Administrator's receipt of the
claim. If such an extension is required, written notice of the extension
shall be furnished to the claimant prior to the termination of the initial
90-day period. In no event shall such extension exceed a period of 90
days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring the extension of time and the
date by which the Plan Administrator expects to render the final decision.
19.04 REQUEST FOR REVIEW OF DENIAL OF CLAIM - Within 120 days of the receipt by
the claimant of the written notice of denial of the claim or if the claim
has not been granted within a reasonable period of time, the claimant or
his duly authorized representative may file a written request with the
Claims Fiduciary to conduct a full and fair review of the denial of the
claimant's claim for benefit. In connection with the claimant's appeal of
the denial of his benefit, the claimant or his duly authorized
representative may review pertinent documents and may submit issues and
comments in writing.
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19.05 DECISION ON REVIEW OF DENIAL OF CLAIM - The Claims Fiduciary shall deliver
to the claimant a written decision on the claim promptly, but not later
than 60 days after the receipt of the claimant's request for review,
except that if there are special circumstances which require an extension
of time for processing, the aforesaid 60-day period may be extended to 120
days by written notice delivered to the claimant prior to the expiration
of the initial 60-day period. Such decision shall (i) be written in a
manner calculated to be understood by the claimant, (ii) include specific
reasons for the decision, and (iii) contain specific references to the
pertinent Plan provisions upon which the decision is based.
Notwithstanding any provisions elsewhere to the contrary, the Claims
Fiduciary shall have total discretion to make decisions as they see fit on
a uniform and consistent basis, as they believe a prudent person acting in
a like capacity and familiar with such matters would do.
ARTICLE XX
AMENDMENT AND TERMINATION
20.01 AMENDMENT OF PLAN - The right is reserved to the Employer to amend its
Plan at any time and from time to time and all parties or any person
claiming any interest hereunder shall be bound thereby; except no person
having an already vested interest in such Plan shall be deprived of any
interest already existing nor have such interest adversely affected. No
such amendment shall have the effect of vesting in the Employer any right,
title or interest to any assets held under the Trust.
The decision of the Employer shall be binding upon the Participants and
all other persons and parties interested, as to whether or not any
amendment does deprive a Participant or any other person or adversely
affects such interest. The consent of the Trustee shall not be necessary
to any Plan amendment unless in its opinion its duties or liabilities have
been increased. No amendment to the Adoption Agreement shall be made or
shall be valid if it would result in causing the Employer's Plan to become
disqualified under the controlling provisions of the Internal Revenue Code
or any of its applicable Regulations or applicable and controlling rulings
of the Secretary of the Treasury or his delegate, or under final decisions
of any Federal Court. Participants shall be notified of any Plan
amendments. No such amendment shall affect any other Employer who had
adopted this Plan.
No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's Accrued Benefit. Notwithstanding the
preceding sentence, a Participant's Account balance may be reduced to the
extent permitted under Section 412(c)(8) of the Internal Revenue Code.
For purposes of this paragraph, a Plan amendment which has the effect of
decreasing a Participant's Account balance or eliminating an optional form
of benefit, with respect to benefits attributable to service before the
amendment shall be treated as reducing an Accrued Benefit. Furthermore,
no amendment to the Plan shall have the effect of decreasing a
Participant's vested interest determined without regard to such amendment
as of the later of the date such amendment is adopted or the date it
becomes effective.
The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when such
language is necessary to satisfy Section 415 or Section 416 of the Code
because of the required aggregation of multiple plans, and (3) add certain
model amendments published by the Internal Revenue Service which
specifically provide
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that their adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason will no
longer participate in this master or prototype plan and will be considered
to have an individually designed plan.
In the case of any merger, consolidation with or transfer of assets or
liabilities by the Employer to another Plan, each Participant in the Plan
on the date of the transaction shall have a benefit in the surviving Plan
(determined as if such Plan were terminated immediately after the
transaction) at least equal to the benefit to which he would have been
entitled to receive immediately prior to the transaction if the Plan had
then terminated. However, this provision shall not be construed to be a
termination or discontinuance of Plan or to be a guarantee of a specific
level of benefits from this Plan.
20.02 AMENDMENT OF PROTOTYPE PLAN AND ADOPTION AGREEMENT - Subject to Section
20.01, Bank One may amend this Prototype Plan and Trust and Adoption
Agreement, and, if amended, shall mail or deliver to each adopting
Employer who has registered with Bank One a copy of such amendment as it
has been approved by the Internal Revenue Service. Each Employer and
Trustee shall be deemed to have consented to any such amendment by its
original execution of the Adoption Agreement for this Plan and Trust
unless Bank One is otherwise advised in writing by the Employer.
20.03 EMPLOYER MAY DISCONTINUE PLAN - The Employer reserves the right at any
time to reduce its annual payments, to partially terminate the Plan or to
terminate the Plan in its entirety. Any such termination or partial
termination of such Plan shall become effective immediately upon receipt
by the Trustee of a written notice from the Employer of such action.
In the event of the liquidation of the Employer or the bona fide sale of
the controlling interest thereof, such Employer or its successors or
assigns shall not be obligated to continue this Plan.
In the event of termination of the Plan there shall be a 100% vesting and
nonforfeitability of all rights and benefits under this Trust and Plan of
all affected Participants irrespective of their length of participation
under the Plan. However, the Trust shall remain in existence, and all of
the provisions of the Trust shall remain in force which are necessary in
the sole opinion of the Trustees, other than the provisions relating to
Employer contributions. All of the assets on hand on the date of
termination or discontinuance of contributions shall be held, administered
and distributed by the Trustees in the manner provided in the Plan, except
that a Participant shall have a 100% vested and nonforfeitable interest in
his Accrued Benefit, subject to Section 20.05.
Subject to Section 20.05, in the event of Plan termination any other
remaining assets of the Trust Fund shall also be vested in Participants on
a pro rata basis based on their respective Account balances (other than
their Tax Deductible Voluntary Contribution and Rollover Accounts) in
relation to the aggregate of all such Account balances.
In the event of a partial termination of Plan, this section will only
apply to those Participants who are affected by such partial termination
of Plan.
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In the event that the Employer shall decide to terminate completely the
Plan and Trust, they shall be terminated as of a date to be specified in a
notice to be delivered to the Trustees. Upon termination of the Plan and
Trust, after payment of all expenses and proportional adjustment of
Participants' Accounts to reflect such expenses, fund profits or losses
and reallocations to the date of termination, each Participant shall be
entitled to receive any amounts then credited to his Accounts. The
Trustee may make payment of such amounts in cash, in assets of the fund,
or in the form of an immediate or deferred annuity, whichever the Plan
Administrator may direct.
20.04 DISCONTINUANCE OF CONTRIBUTIONS - In the case of a Profit Sharing Plan, in
the event that the Employer shall completely discontinue its
contributions, the Accounts of each affected Participant shall be fully
vested and nonforfeitable. After a discontinuance of contributions, Plan
benefits shall be payable to Participants or their Beneficiary upon death,
disability, retirement, termination of employment or termination of Plan
in accordance with the provisions of the Plan applicable upon the
occurrence of any such event.
20.05 RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL CIRCUMSTANCES -
Notwithstanding any provisions of this Plan and Trust to the contrary:
(a) Any contributions made by the Employer because of a mistake of fact
must be returned to the Employer within one year of the
contribution.
(b) In the event the deduction of the contribution made by the Employer
is disallowed under Section 404 of the Code, such contribution(to
the extent disallowed) must be returned to the Employer within one
year of the disallowance of the deduction.
(c) In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue
Code, any contribution made incident to that initial qualification
by the Employer must be returned to the Employer within one year
after date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
The return of a Plan contribution to the Employer under Subsection (a) or
(b) above satisfies the requirements of this Section only if the amount so
returned does not include earnings or other gain attributable to such
contributions. Further, a return will satisfy the requirements of this
Section only if the amount of the contribution so returned is reduced by
any loss attributable to the contribution.
Except as provided in this Section 20.05 and in Article VII, under no
circumstances or conditions whatsoever shall any funds or the income
therefrom which at any time have been contributed to this Plan ever inure
to the benefit of the Employer.
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ARTICLE XXI
MISCELLANEOUS
21.01 PROTECTION OF EMPLOYEE INTEREST - No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily
or involuntarily, except where an assignment is made to provide security
for a loan made in accordance with Article XI or an assignment is
otherwise not prohibited by Code Section 401(a)(13) and the Regulations
thereunder. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect
to a Participant pursuant to a domestic relations order, unless such order
is determined to be: a qualified domestic relations order, as defined in
Code Section 414(p), a domestic relations order entered before January 1,
1985 and under which payments commenced prior to that date, or a domestic
relations order entered before January 1985 and under which payments did
not commence by January 1, 1985 and which the Plan Administrator chooses
to treat as a qualified domestic relations order.
21.02 MEANING OF WORDS USED IN PLAN AND TRUST - Wherever any words are used
herein in the masculine gender, they shall be construed as though they
were also used in the feminine or neutral gender in all cases where they
would so apply. Wherever any words are used herein in the singular form,
they shall be construed as though they were also used in the plural form
in all cases where they would so apply.
Titles used herein are for general information only and this Plan and
Trust is not to be construed by reference thereto.
21.03 PLAN DOES NOT CREATE NOR MODIFY EMPLOYMENT RIGHTS - The Plan and Trust
shall not be construed as creating or modifying any contract of employment
between the Employer and any Participant. All Employees of the Employer
shall be subject to discharge to the same extent that they would have been
if this Plan had never been adopted.
21.04 COUNTERPARTS OF PLAN, TRUST AND ADOPTION AGREEMENT - This Plan and Trust
and Adoption Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument and may be sufficiently
evidenced by any one counterpart.
21.05 STATE LAW WHICH GOVERNS - This Plan and Trust shall be governed by the
laws of the State of domicile of the Trustee to the extent that they are
not pre-empted by the laws of the United States of America.
21.06 OBLIGATION OF TRUST - This Plan and Trust shall be binding upon the
parties hereto, upon each Participant and upon the Beneficiaries, heirs,
executors, administrators, distributees and assigns of the individual
Participants; the heirs, executors, administrators, and successors of the
Trustee; and the successors and assigns of the Employer, subject, however,
to the provisions of Article XX hereof.
21.07 PARTICIPANT'S BENEFITS LIMITED TO ASSETS - Each Participant by his
participation in the Trust shall be conclusively deemed to have agreed to
look solely to the assets held under the Trust for the payment of any
benefit to which he may be entitled by reason of his participation.
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21.08 RECEIPT AND RELEASE FOR PAYMENTS - Any payment to any Participant, his
legal representative, Beneficiary, or to any guardian, custodian or
committee appointed for such Participant or Beneficiary in accordance with
the provisions of this Plan and Trust, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee, the
Employer and the Insurer, any of whom may require such Participant, legal
representative, Beneficiary, guardian, custodian or committee, as a
condition precedent to such payment, to execute a receipt and release
thereof in such form as shall be determined by the Trustee, Employer or
Insurer.
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PLAN 001
ADOPTION AGREEMENT
FOR
BANK ONE TRUST COMPANY, N.A. ("BANK ONE")
PROTOTYPE RETIREMENT PLAN NO. 1
For the benefit of its employees, the undersigned adopts this 401(k) Plan and in
connection therewith makes the following statements and designations, which
designations are subject to change as required to obtain approval by the
Internal Revenue Service. This Adoption Agreement has been designated as Plan
No. 001 by the IRS and should only be used with Bank One Basic Plan Document No.
01.
NON-STANDARDIZED 401(k) PLAN - NON-INTEGRATED AND INTEGRATED
ALLOCATION FORMULAS
- --------------------------------------------------------------------------------
1.Name of Employer:
Amtech Corporation
- --------------------------------------------------------------------------------
2.Address of Employer: Dominion Place 3. Employer's Telephone
17304 Preston Road, E100 Number: (214) 733-6600
Dallas, Texas 75252
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4.Name, Address and EIN/Tax I.D. Numbers of Other Participating Employers
Adopting Plan:
Please see Foot Note #1 on Page 19.
- --------------------------------------------------------------------------------
5.Name of Employer's 401(k) Plan:
Amtech Corporation Retirement Plan
- --------------------------------------------------------------------------------
6.(a) Original Effective 7. Date of Adoption Agreement:
Date of Plan and Trust:
January 1, 1989 February 1, 1996
- --------------------------------------------------------------------------------
(b) Effective Date of this 8. Plan Number Assigned by
Restated Plan and Trust: the Employer:
[x]001 [_]002
[_]003 [_]004 [_]____
October 1, 1995
- --------------------------------------------------------------------------------
9.Name and Address of Trustee(s):
[_] Bank OneTrust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0193
(614) 248-6420
[x] Bank One, Texas, N.A.
----------------------------------------------
8111 Preston Road, 2nd Floor
----------------------------------------------
Dallas, Texas 75225
- --------------------------------------------------------------------------------
10.Name, Address and EIN/Tax I.D. Number of Plan Administrator (if other than
Employer):
- --------------------------------------------------------------------------------
-1-
<PAGE>
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11. Designation of Retirement Plan Committee (if applicable): N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12.(a) Is the Employer a 13. Type of Entity:
member of:
[x] Corporation [_] Partnership
(i)an Affiliated
Service Group? [_] "Sub S" Corporation [_] Other (Specify):
[_]Yes
[x]No [_] Sole Proprietor --------------------
(ii) a Control --------------------
Group?
[x]Yes
[_]No
(b) If the Employer is
part of an Affiliated
Service or Control
Group, have all
affiliated or
controlled
employers adopted
the Plan?
[x]Yes [_]No
- --------------------------------------------------------------------------------
14. Nature of Employer's 15. Employer Identification Number
Business and Standard (Tax I.D. Number): 75-2216818
Industrial
Classification No. of
Employer: HiTech 3698
- --------------------------------------------------------------------------------
16. Predecessor Employers (Service with Employers named below shall be treated
as Service with the Employer - see Section 2.40 of the Plan):
Cardkey Systems, Inc., an Oregon corporation
- --------------------------------------------------------------------------------
17. Employer's Fiscal Year for Federal Income Tax Purposes:
[x] Calendar Year [_] Year beginning first day of _________ (month)
- --------------------------------------------------------------------------------
18. Plan Anniversary: January 1
-------------------------------------------------------
(The first day of each Plan Year that begins after the Plan Effective Date)
================================================================================
DESIGNATED PLAN PROVISIONS
================================================================================
Section 2.06 For any Self-Employed Individual covered under the Plan,
DEFINITION OF Compensation means Earned Income. For any other Participant,
COMPENSATION Compensation means (Check and complete whichever of the following
is applicable):
[_] (a) his Section 3401 wages (as defined in Section 2.06 of the
Plan -generally wages for federal income tax withholding
purposes) actually paid to the Participant during the
applicable period.
[_] (b) his compensation reported as "Wages, Tips and Other
Compensation" on his Form W-2 actually paid to the
Participant during the applicable period.
[x] (c) his Section 415 safe-harbor compensation (as defined in
Section 2.06 of the Plan) actually paid to the
Participant during the applicable period. Please see Foot
Note #2 on Page 19.
[x] (d) Compensation or Earned Income [x] shall include [_] shall
not include Employer contributions made pursuant to a
salary reduction agreement which are not includible in
the gross income of the Participant under Sections 125,
402(e)(3), 402(h) or 403(b) of the Code.
-2-
<PAGE>
* [_] (e) For purposes of making 401(a) Employer Contributions that
are not integrated with Social Security, the following
items shall be excluded in determining a Participant's
Compensation:
[_] (i) overtime pay
[_] (ii) commissions
[_] (iii) bonuses
** [_] (f) For the first year of Plan participation, Compensation
shall exclude Compensation paid prior to the date the
Employee becomes a Plan Participant.
[_] (g) Maximum Compensation for Plan purposes:
$______________________
[x] (h) Compensation shall be determined over the following
applicable period (Check one):
[x] (i) the Plan Year
[_] (ii) the calendar year ending within the Plan Year.
For employees whose dates of hire is less than 12 months
before the end of the 12-month period designated,
compensation will be determined over the Plan Year.
*NOTE: Choice (e) may not be elected if the Plan is a Top Heavy
Plan, if the Plan is intended to benefit a Self-Employed
Individual or if the Employer chooses an Integrated
Allocation Formula (i.e., elects Section 5.02(b) below).
**NOTE: Choice (f) may not be elected if the Plan is intended to
benefit a Self-Employed Individual.
NOTE: For Plan Years beginning in 1989 and thereafter, the
maximum compensation for plan purposes cannot exceed
$150,000 (as adjusted from time to time by the Secretary
of the Treasury) -See Section 2.06 of the Plan.
- --------------------------------------------------------------------------------
Section 2.18 For Employers that maintain significant business activities
SIMPLIFIED (and employ Employees) in at least two significantly separate
DEFINITION geographic areas, the simplified definition of Highly
OF HIGHLY Compensated Employee set forth in Section 2.18 of the Plan [_]
COMPENSATED shall [x] shall not apply.
EMPLOYEE
- --------------------------------------------------------------------------------
Section 2.19 Hours of Service shall be determined on the basis of the method
HOURS OF selected below. The method selected shall be applied to all
SERVICE Employees covered under the Plan. (Check one of the following):
[_] (a) On the basis of actual hours for which an Employee is
paid or entitled to payment.
[_] (b) On the basis of days worked.
An Employee shall be credited with 10 Hours of Service
if under Section 2.19 of the Plan such Employee would
be credited with at least one Hour of Service during
the day.
[_] (c) On the basis of weeks worked.
An Employee shall be credited with 45 Hours of Service
if under Section 2.19 of the Plan such Employee would
be credited with at least one Hour of Service during
the week.
[x] (d) On the basis of months worked. Please see Foot Note #3
on Page 19.
-3-
<PAGE>
An Employee shall be credited with 190 Hours of Service if
under Section 2.19 of the Plan such Employee would be credited
with at least one Hour of Service during the month.
- --------------------------------------------------------------------------------
Section 2.24 The Limitation Year of the Plan shall be (Check or complete
LIMITATION one of the following):
YEAR
[x] (a) calendar year.
[_] (b) Plan Year.
[_] (c) other 12 consecutive month period (specify):
---------
-----------------------------------------------------
NOTE: All qualified plans of the Employer must use the same
Limitation Year.
- --------------------------------------------------------------------------------
Section 2.27 The Normal Retirement Age of a Participant shall be (Check and
NORMAL complete one of the following):
RETIREMENT
AGE
[_] (a) the date the Participant attains Age ______ (up to Age
65).
[x] (b) the 5th (up to 5th) anniversary of the date the
---
Participant commenced participation in the Plan or the
date he attains Age 65, whichever is later.
[_] (c) the _______ (up to 5th) anniversary of the date the
Participant commenced participation in the Plan or the
date he attains Age 65, whichever is later, but in no
event later than Age 70.
For purposes of (b) and (c) the participation commencement date
is the first day of the Plan Year in which the Participant
commenced participation in the Plan.
- --------------------------------------------------------------------------------
Section 3.02(1) The following Employees are eligible to become Participants
PARTICIPATION (Check or complete one of the following:)
REQUIREMENTS
(Classification)
[_] (a) All Employees of the Employer maintaining the Plan.
[_] (b) All Employees of the Employer maintaining the Plan or
of any other employer required to be aggregated under
Section 414(b), (c), (m) or (o) of the Internal Revenue
Code. Any individual deemed under Section 414(n) of the
Code to be an employee of any employer described in the
previous sentence shall also be considered an Employee.
[_] (c) All Employees of the Employer maintaining the Plan
compensated on an hourly basis.
[_] (d) All Employees of the Employer maintaining the Plan
compensated on a salaried basis.
[_] (e) All Employees of the Employer maintaining the Plan not
eligible to participate in another qualified pension or
profit sharing plan to which the Employer is making
contributions.
[_] (f) All Employees of the Employer maintaining the Plan
except Employees included in a unit of Employees
covered by a collective bargaining agreement between
the Employer and Employee representatives, if
retirement benefits were the subject of good faith
bargaining and if less than two percent of the
Employees of the Employer who are covered pursuant to
that agreement are professionals as defined in Section
1.410(b)-9(g) of the proposed Regulations. For this
purpose, the term "employee representative" does not
include any organization more than half of whose
members are Employees who are owners, officers or
executives of the Employer.
[_] (g) All Employees of the Employer maintaining the Plan
covered by a collective bargaining agreement between
the Employer and Employee representatives (as described
above).
[_] (h) All Employees of the Employer maintaining the Plan
except Employees who are nonresident aliens (within the
meaning of Code Section 7701(b)(1)(B)) and who receive
no earned income (within the
-4-
<PAGE>
meaning of Code Section 911(d)(2)) from the Employer which
constitutes income from sources within the United States
(within the meaning of Code Section 861(a)(3)).
[x] (i) Other Employee classification (specify): Please see Foot
-----------------
Note #4 on Page 19.
-----------------------------------------------------------
- --------------------------------------------------------------------------------
Section 3.02(2) (a) Age and Service Requirements. To become a Participant in
PARTICIPATION ----------------------------
REQUIREMENTS the Plan, an eligible Employee must satisfy the following
(Age and Age and Service Requirements:
Service) (i) Age Requirement.
---------------
[_] (A) No Age Requirement.
[x] (B) The Employee has attained Age 21 (not more than
--
21 unless (b)(i) below has been elected and then
not more than 20 1/2).
(ii) Service Requirement.
-------------------
[x] (A) No Service Requirement. Please see Foot Note #5
on Page 19.
[_] (B) The Employee has completed 1/4 of Service (not
---
more than 1 unless (b)(i) below has been
elected and then not more than 1/2).
(iii) Special Age and Service Requirements for Participating
------------------------------------------------------
in 401(a) Employer and/or 401(k) Employer Contribution
------------------------------------------------------
Allocations, Match Contributions and Forfeitures.
------------------------------------------------
[_] (A) The requirements of this Subsection (iii) are
not applicable, as the Plan only permits
Salary Savings Contributions.
[x] (B) The requirements of this Subsection (iii) apply
to participation in (Check all the applicable
boxes below):
[x] (1) The allocation of 401(a) Employer
Contributions and forfeitures.
[x] (2) The allocation of 401(a) Employer Match
Contributions (including forfeitures
allocated as matching contributions).
[_] (3) The allocation of 401(k) Employer Match
Contributions (including forfeitures
allocated as matching contributions).
[_] (4) The allocation of 401(k) Employer
Contributions.
(C) For participation in the allocations described
in (B), the Age and Service Requirements are
(Check (1) or check and complete (2) and (3)):
[x] (1) The same Age and Service Requirements
elected in (i) and (ii) above (i.e.,
the same Age and Service Requirements
applicable to the Salary Savings Plan).
[_] (2) Age Requirement. The Employee has
---------------
attained Age (not more than 21 unless
---
(b)(i) below has been elected and then
not more than 20 1/2).
[_] (3) Service Requirement. The Employee has
-------------------
completed Year(s) of Service (if
---
(b)(i) below is not elected: not more
than 1 unless Section 13.01(1)(a)(i)
(100% full and immediate vesting) has
been elected and then not more than 2;
if (b)(i) below is elected: not more
than 1/2 unless Section 13.01(1)(a)(i)
has been elected and then not more
than 1 1/2).
-5-
<PAGE>
(iv) Application of Age and Service Requirements.
-------------------------------------------
(A) The Age Requirements of Subsections (a)(i) and
(a)(iii)(C)(2) shall not apply to Employees
employed by the Employer:
[_] (1) on the Plan Effective Date specified in
Subsection 6(a) of the Adoption Agreement
[_] (2) on the Plan Restatement Date specified in
Subsection 6(b) of the Adoption Agreement
[x] (3) on May 31, 1989 (insert applicable
-------------------
date)
(B) The Service Requirements of Subsections (a)(ii) and
(a)(iii)(C)(3) shall not apply to Employees employed
by the Employer:
[_] (1) on the Plan Effective Date specified in
Subsection 6(a) of the Adoption Agreement
[_] (2) on the Plan Restatement Date specified in
Subsection 6(b) of the Adoption Agreement
[x] (3) on May 31, 1989 (insert applicable
--------------------
date)
NOTE: If the Year(s) of Service elected in (a)(ii) or
(iii)(C)(3) above is or includes a fractional year,
an Employee shall not be required to complete any
specified number of Hours of Service to receive
credit for such fractional Year.
(Date of
Participation) (b) Plan Entry Date. An eligible Employee who satisfies the
---------------
Plan Age and Service Requirements will become a Plan
Participant (and, if applicable, will participate in the
allocations described in Subsection (a)(iii)) on the Entry
Date elected below, if he is then employed:
[_] (i) Single Entry Date. The Plan Anniversary
-----------------
coincident with or next following the date the
Plan Age and Service Requirements have been met.
[_] (ii) Single Entry Date - Retroactive Participation.
---------------------------------------------
The Plan Anniversary coincident with or
immediately preceding the date the Plan Age and
Service Requirements have been met.
[_] (iii) Semi-annual Entry Dates. Whichever of the
-----------------------
following dates first occurs coincident with or
next following the date the Plan Age and Service
Requirements have been met:
(A) the following Plan Anniversary; or
(B) the date 6 months following the Effective
Date or thereafter the date six months
following each Plan Anniversary.
[x] (iv) Daily, Monthly or Quarterly Entry Dates.
---------------------------------------
[_] (A) the day on which
[_] (B) the first day of the month coincident
with or next following the date
[x] (C) the first day of the Please see Foot Note
#8 on Page 20.
[x]Plan Quarter [_] Calendar Quarter
[_] ___________________ (other quarterly
Entry Date)
-6-
<PAGE>
coincident with or next following the date
the Plan Age and Service Requirements have been met.
Notwithstanding (a) and (b) above, an eligible Employee who
satisfies the Plan Age and Service requirements on the
Effective Date and who complies with the requirements set forth
in the Plan and Trust will become a Participant on such date,
if he is then employed.
- --------------------------------------------------------------------------------
Section 3.02(3) In determining when an Employee is eligible to participate, the
PARTICIPATION following periods of Service shall be disregarded (Check (a),
REQUIREMENTS (b) or (c)):
(Service [x] (a) None - All prior Service counts. Please see Foot
Exclusions) Note #6 on Page 19.
[_] (b) In the case of a Participant who does not have any
nonforfeitable right to an Accrued Benefit derived
from Employer contributions, Years of Service before a
period of consecutive One Year Breaks in Service will
not be taken into account in computing eligibility
service if the number of consecutive One Year Breaks
in Service in such period equals or exceeds the
greater of five or the aggregate number of Years of
Service. Such aggregate number of Years of Service
will not include any Years of Service disregarded
under the preceding sentence by reason of prior Breaks
in Service.
If a Participant's Years of Service are disregarded
pursuant to the preceding paragraph, such Participant
will be treated as a new Employee for eligibility
purposes. If a Participant's Years of Service may not
be disregarded pursuant to the preceding paragraph,
such Participant shall continue to participate in the
Plan, or, if terminated, shall participate immediately
upon reemployment.
[_] (c) If an Employee had a One Year Break in Service before
he had become a Participant, Service before the Break
shall not be counted (applicable only if the Plan
provides full and immediate vesting, i.e., when
Section 13.01(1)(a)(i) of the Adoption Agreement is
checked).
- --------------------------------------------------------------------------------
Section 4.01 Complete (1), (2) and (3) below:
401(a)
EMPLOYER (1) 401(a) Employer Contributions (Check or complete (a), (b)
CONTRIBUTIONS, or (c) and, if applicable, (d) and (e) below):
401(k) [_] (a) The Employer does not intend to make 401(a) Employer
EMPLOYER Contributions.
CONTRIBUTIONS,
[x] (b) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine
the amount of 401(a) Employer Contributions.
401(a) and [_] (c) For each Plan Year the Board of Directors or other
401(k) EMPLOYER governing authority of the Employer shall determine
MATCH the amount of 401(a) Employer Contributions. However,
CONTRIBUTIONS if no resolve is made, the amount contributed shall be
_____% of each Participant's Plan Compensation for
such Plan Year.
* (d) (i) In order to share in 401(a) Employer
Contributions for a Plan Year, a Participant
must complete 1 (0-1,000) Hours of Service
-------
during such Plan Year.
(ii) A Participant whose employment is terminated
before the end of a Plan Year but after he has
completed the Hours of Service specified in (d)
(i) above (Check (A) or (B) below):
[_] (A) shall share in 401(a) Employer Contributions
for such Plan Year.
[x] (B) shall not share in 401(a) Employer
Contributions for such Plan Year unless
termination is due to (Check whichever of
the following is applicable):
[_] no exceptions [x] death
[x] disability [_] Early, Normal or Late
Retirement
-7-
<PAGE>
[x] (e) Profits [_]are [x]are not required for 401(a) Employer
Contributions.
(2) 401(k) Employer Contributions (Check or complete (a), (b) or
(c) and, if applicable, (d) and (e) below:
[x] (a) The Employer does not intend to make 401(k) Employer
Contributions.
[_] (b) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine the
amount of 401(k) Employer Contributions.
[_] (c) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine the
amount of 401(k) Employer Contributions. However, if no
resolve is made, the amount contributed shall be _____%
of each Participant's Plan Compensation for such Plan
Year.
* (d) (i) In order to share in 401(k) Employer Contributions
for a Plan Year, a Participant must complete
__________ (0-1,000) Hours of Service during such
Plan Year.
(ii) A Participant whose employment is terminated
before the end of a Plan Year but after he has
completed the Hours of Service specified in (d)(i)
above (Check (A) or (B) below):
[_] (A) shall share in 401(k) Employer Contributions
for such Plan Year.
[_] (B) shall not share in 401(k) Employer
Contributions for such Plan Year unless
termination is due to (Check whichever of the
following is applicable):
[_] no exceptions [_] death
[_] disability [_] Early, Normal
or Late Retirement
(e) Profits [_] are [_] are not required for 401(k)
Employer Contributions.
(3) Employer Match Contributions (Check or complete (a), (b) or
(c), and, if applicable, (d), (e) and (f) below):
[_] (a) The Employer does not intend to make Employer Match
Contributions.
[x] (b) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine a
percentage(s) to contribute of each eligible
Participant's Salary Savings Contributions.
[_] However, in no event shall Employer Match Contributions
exceed ______% of each eligible Participant's Salary
Savings Contributions.
[_](c) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine a
percentage(s) to contribute of each eligible
Participant's Salary Savings Contributions; however, if
no resolve is made, the amount contributed shall be
______% of each eligible Participant's Salary Savings
Contributions but not in excess of (Check and complete
(i), (ii) or (iii) or (i) or (ii) and (iii) below, if
--
applicable):
[_] (i) _____% of Compensation
[_] (ii) _____% of Salary Savings Contributions
[_] (iii) $_______________
* (d) (i) In order to share in Employer Match Contributions
for a Plan Year, a Participant must complete 1
-----
(0-1,000) Hours of Service during such Plan Year.
-8-
<PAGE>
(ii) A Participant whose employment is terminated before the
end of a Plan Year but after he has completed the Hours
of Service specified in (d)(i) above (Check (A) or (B)
below):
[_] (A) shall share in Employer Match Contributions for
such Plan Year.
[x] (B) shall not share in Employer Match Contributions for
such Plan Year unless termination is due to (Check
whichever of the following is applicable):
[x] no exceptions [_] death
[_] disability [_] Early, Normal or
Late Retirement
(e) Profits [_] are [x] are not required for Employer Match
Contributions.
(f) Employer Match Contributions shall be allocated by the
Trustee to a Participant's (Check (i) or (ii) below,
whichever is applicable):
[_] (i) 401(k) Employer Match Contributions Account, and
thus shall be 100% vested and nonforfeitable when
made.
[x] (ii) 401(a) Employer Match Contributions Account, and
thus shall be subject to the Match Contribution
vesting schedule elected by the Employer in Section
13.01(1).
*NOTE: When Contributions are allocated monthly, for
administrative convenience it is recommended that all
Options (d)(i) be completed with "0" and Options
(d)(ii)(A) be selected.
Note to Section 4.01: Employer Match and 401(k) Employer
--------------------
Contributions may be reduced to comply with the Average Deferral
and Average Contribution Percentage Tests of Code Sections 401(k)
and 401(m). (See Articles VII and IX of the Plan).
- --------------------------------------------------------------------------------
Section 4.02 If the Employer maintains one or more qualified retirement plans
TOP HEAVY in addition to this Plan and if this Plan is or becomes a Top
PLAN MINIMUM Heavy or Super Top Heavy Plan, the minimum allocation or
BENEFITS FOR benefit applicable to Non-Key Employees participating in this
EMPLOYERS Plan will be met (Check (a) or (b) below):
WITH MULTIPLE
PLANS
[_] (a) pursuant to the provisions of Subsection 4.02(e) of the
N/A Plan.
[_] (b) under the Employer's other plan or plans.
- --------------------------------------------------------------------------------
Section 4.03 For each Plan Year, Participants may direct the Employer to
SALARY reduce their Compensation in order that the Employer may make
SAVINGS Salary Savings Contributions, subject to the following (Complete
CONTRIBUTION (a), (b) and (c) below):
[x] (a) Minimum Salary Savings Contribution permitted:
[_] (i) no minimum
[x] (ii) other (specify amount or percentage and period):
2% of Compensation
-------------------------------------------
------------------------------------------------
[x] (b) Maximum Salary Savings Contribution permitted (if any):
15_____% of Compensation (not more than $7,000, or such
other amount as is designated by the Secretary of the
Treasury as the limit for the Participant's taxable year
under Code Section 402(g)).
-9-
<PAGE>
[x] (c) Changes in Savings Amount:
[_] (i) no limit on frequency
[x] (ii) limited to (specify): two times each calendar
-----------------------
year (at least once every calendar year)
----
NOTE: The Plan Administrator may limit Salary Savings
Contributions if required to comply with Code Section
401(k).
- --------------------------------------------------------------------------------
Section 4.04 Voluntary After-Tax Contributions (Check (a) or (b) and, if
VOLUNTARY applicable, (c) and (d)):
AFTER-TAX
CONTRIBUTIONS [x] (a) are not permitted.
[_] (b) are permitted.
[_] (c) minimum permitted (Check and complete, if applicable):
[_] (i) no minimum
[_] (ii) _____% of annual total Compensation
[_] (iii) $_____ per ___________ (week, month, year)
[_] (d) will be maintained and accounted for in
[_] (i) one After-Tax Contribution Account.
[_] (ii) two After-Tax Contribution Accounts, one for
Contributions made before 1987 and one for
Contributions made after 1986.
NOTE: The maximum a Participant may contribute to the Plan on a
voluntary basis is specified in Section 4.04 of the Plan,
and may be limited to comply with Code Section 401(m).
- --------------------------------------------------------------------------------
Section 5.02 Allocation formula (Choose (a) or (b) below):
METHOD OF
ALLOCATING [x] (a) Non-Integrated Allocation Formula:
401(a)
EMPLOYER
CONTRIBUTIONS After any minimum contributions have been allocated to
the Accounts of Non-Key Employees pursuant to Section
4.02 of the Plan, any additional 401(a) Employer
Contributions for each Plan Year shall be allocated among
the Accounts of eligible Participants in amounts
determined in accordance with the ratio which each
eligible Participant's Plan Compensation bears to the
total Plan Compensation of all Participants eligible to
share in 401(a) Employer Contributions for such Plan
Year.
[_] (b) Integrated Allocation Formulas:
For Plan Years beginning in 1989 and thereafter, 401(a)
Employer Contributions contributed to the Trust for each
Plan Year shall be allocated among the Accounts of
eligible Participants according to the formula elected
below:
[_] (i) Three-Tiered Integrated Allocation Formula
------------------------------------------
STEP ONE: First, for any Plan Year the Plan is a
Top Heavy Plan, 401(a) Employer Contributions
will be allocated among the Accounts of all
eligible Participants in the ratio that each
Participant's total Compensation bears to the
sum of all eligible Participants' total
Compensation, but not in excess of the top heavy
minimum contribution to be made to the Accounts
of Non-Key Employees pursuant to Section 4.02 of
the Plan.
-10-
<PAGE>
STEP TWO: Any such Contributions remaining after
any allocation in Step One will be allocated to
the Account of each eligible Participant in the
ratio that the sum of each eligible
Participant's total Compensation and
Compensation in excess of the Plan Integration
Level bears to the sum of all eligible
Participant's total Compensation and
Compensation in excess of the Plan Integration
Level, but not in excess of the Maximum
Disparity Rate. For purposes of this Step Two,
in the case of any Participant who has exceeded
the cumulative permitted disparity limit
described below, two times such Participant's
total Compensation for the Plan Year will be
taken into account.
STEP THREE: Any such remaining 401(a) Employer
Contributions will be allocated to the Account
of each eligible Participant in the ratio that
each eligible Participant's total Compensation
bears to the sum of all eligible Participants'
total Compensation for that Plan Year.
[_] (ii) Four-Tiered Integrated Allocation Formula
-----------------------------------------
STEP ONE: First, for any Plan Year in which the
Plan is a Top Heavy Plan to which a minimum
Employer contribution is to be made pursuant to
Section 4.02 of the Plan, that portion of the
401(a) Employer Contributions which does not
exceed 3% of the total Compensation of all
eligible Participants (including, solely for
purposes of this STEP ONE allocation, Non-Key
Employees entitled to a minimum contribution
pursuant to Subsection 4.02(d) of the Plan)
shall be allocated among the accounts of such
Participants and Non-Key Employees in the ratio
that each such Participant's and Non-Key
Employee's total Compensation bears to the total
Compensation of all such Participants and Non-
Key Employees.
STEP TWO: For any Plan Year in which this Plan
is a Top Heavy Plan to which a minimum Employer
Contribution is to be made pursuant to
Section 4.02 of the Plan, that portion of the
401(a) Employer Contributions which remains
after allocations have been made pursuant to
STEP ONE, if any, which does not exceed 3% of
the total Compensation of all eligible
Participants in excess of the Plan Integration
Level shall be allocated among the Accounts of
such Participants in the ratio that each
Participant's Compensation in excess of the Plan
Integration Level bears to the sum of all
eligible Participants' Compensation in excess of
the Plan Integration Level. For purposes of this
Step Two, in the case of any Participant who has
exceeded the cumulative permitted disparity
limit described below, such Participant's total
Compensation for the Plan Year will be taken
into account.
STEP THREE: That portion of the 401(a) Employer
Contributions which remains after allocations
have been made pursuant to STEP TWO, if any,
will be allocated to each eligible Participant's
Account in the ratio that the sum of each
Participant's total Compensation and
Compensation in excess of the Plan Integration
Level bears to the sum of all eligible
Participants' total Compensation and
Compensation in excess of the Plan Integration
Level, but not in excess of:
(a) in any Plan Year in which the Plan is a Top
Heavy Plan to which a minimum Employer
Contribution is to be made pursuant to
Section 4.02 of the Plan: The percentage
determined by subtracting from the Maximum
Disparity Rate the percentage contributed
pursuant to STEP ONE; or
(b) in any other Plan Year: the Maximum
Disparity Rate.
For purposes of this Step Three, in case of any
Participant who has exceeded the cumulative
permitted disparity limit described below, two
times such Participant's total Compensation for
the Plan Year will be taken into account.
STEP FOUR: Any remaining 401(a) Employer
Contributions will be allocated to the Account
of each eligible Participant in the ratio that
each eligible Participant's total Compensation
bears to the sum of all eligible Participants'
total Compensation for that Plan.
-11-
<PAGE>
Year.
Annual overall permitted disparity limit:
Notwithstanding the preceding paragraphs, for
any Plan Year this Plan benefits any Participant
who benefits under another qualified plan or
simplified employee pension, as defined in
section 408(k) of he Code, maintained by the
Employer that provides for permitted disparity
(or imputes disparity), employer contributions
and forfeitures will be allocated to the account
of each Participant who either completes more
than 500 hours of service during the Plan Year
or who is employed on the last day of the Plan
Year in the ratio that such Participant's total
Compensation bears to the total Compensation of
all Participants.
Cumulative permitted disparity limit: Effective
for Plan Years beginning on or after January 1,
1995, the cumulative permitted disparity limit
for a Participant is 35 total cumulative
permitted disparity years. Total cumulative
permitted years means the number of years
credited to the Participant for allocation or
accrual purposes under this Plan, any other
qualified plan or simplified employee pension
plan (whether or not terminated) ever maintained
by the Employer. For purposes of determining the
Participant's cumulative permitted disparity
limit, all years ending in the same calendar
year are treated as the same year. If the
Participant has not benefited under a defined
benefit or target benefit plan for any year
beginning on or after January 1, 1994, the
Participant has no cumulative disparity limit.
(iii) The Plan Integration Level is (Check and
complete one):
[_] (1) the Taxable Wage Base
[_] (2) $_________ (a dollar amount less than
the Taxable Wage Base)
[_] (3) __________% (not to exceed 100%)
of the Taxable Wage Base
The Plan Maximum Disparity Rate shall be
determined from the following Table.
The Plan Integration Level Plan Maximum Disparity Rate
-------------------------- ---------------------------
(1) The Taxable Wage Base (TWO) 5.7%
(2) More than 80% but less than 5.4%
100% of the TWO
(3) Not more than 80% of the TWO 4.3%
but greater than both 20% of
the TWO and $10,000
(4) Not more than the greater of 5.7%
20% of the TWO and $10,000
NOTE: All references to the Taxable Wage Base are to the Base
in effect at the beginning of the Plan Year.
NOTE: In no event will the amount allocated to a Participant's
Account exceed the maximum permitted under Article VII of
the Plan.
- --------------------------------------------------------------------------------
Section 5.03 Amounts forfeited for each Plan Year shall be applied as follows
METHOD OF (Check one):
ALLOCATING For 401(a) Employer Contributions
PLAN [x] (a) Forfeitures shall be allocated per the same method as
FORFEITURES Employer contributions are allocated for the
Plan Year in which the forfeiture occurs.
For Employer Matching Contributions
-12-
<PAGE>
[x](b) Forfeitures shall be applied to reduce Employer
contributions or to pay Plan administrative expenses for
the Plan Year following the Plan Year in which the
forfeiture occurs .
- --------------------------------------------------------------------------------
Section 6.01(b) Once a Plan becomes a Top Heavy Plan, the Top Heavy Plan
TOP HEAVY minimum contribution requirements set forth in Section 4.02
PLAN ELECTION of the Plan [_] shall [x] shall not be applicable in all
subsequent Plan Years, regardless of whether such years are
Top Heavy Plan Years.
- --------------------------------------------------------------------------------
Section 6.02(g) For purposes of computing the top heavy ratio described in
TOP HEAVY Section 6.02 of the Plan, the valuation shall be
VALUATION (Check or complete one of the following):
DATE
[x] (a) the last day of the Plan Year.
[_] (b) other (specify):___________________________________
- --------------------------------------------------------------------------------
Section 6.02(h) For purposes of establishing the present value to compute the
TOP HEAVY top heavy ratio described in Section 6.02 of the Plan,
PLAN PRESENT any benefit shall be discounted only for mortality and
VALUES interest based on the following (Check or complete one):
[_] (a) 1971 Group Annuity Mortality Table, unprojected for
post-retirement mortality, no pre-retirement withdrawal
and 5% annual interest rate.
[x] (b) other (specify):6% interest rate, mortality table UP84
--------------------------------------
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Article VII If the Employer maintains or ever maintained another qualified
LIMITATIONS plan other than a Master or Prototype Plan in which any
ON participant in this Plan is (or was) a Participant or could
ALLOCATIONS possibly become a Participant, the Employer must complete
paragraphs 2 and 3 below, as appropriate.The Employer must also
complete paragraph 2 below if it maintains a welfare benefit
fund, as defined in Section 419(e) of the Code, or an
individual medical account, as defined in Section 415(1)(2) of
the Code, under which amounts are treated as Annual Additions
with respect to any Participant in this Plan.
[x] 1. The Employer neither maintains nor ever maintained
another qualified plan other than a Master or Prototype
Plan in which any Participant in this Plan is (or was) a
Participant or could possibly become a Participant.
(Other Defined [_] 2. If the Participant is covered under another qualified
Contribution defined contribution plan maintained by the Employer,
Plans) other than a Master or Prototype Plan:
[_](i) The determination of the maximum permissible
contribution under the other defined contribution plan
shall be made only after crediting a Participant with
his Annual Addition for a Limitation Year under this
defined contribution plan.
[_](ii) The determination of the maximum permissible
contribution under this defined contribution plan shall
be made only after crediting a Participant with his
Annual Addition under the other defined contribution
plan.
[_] (iii) Other (specify):_________________________________
_________________________________________________
_________________________________________________
(Other Defined [_] 3. If the Participant is or has ever been a Participant
Benefit Plans) in a defined benefit plan maintained by the Employer,
the adopting Employer must provide language which
will satisfy the 1.0 limitation of Section 415(e) of
the Internal Revenue Code. Such language must
preclude employer discretion. (See Section 1.415-1 of
the Income Tax Regulations for guidance).
[_] (i) The determination of the maximum permissible
contribution under any defined contribution plan
shall be made only after crediting a Participant
with his earned benefit for a Limitation Year under
any defined benefit plan in which he is also
participating.
-13-
<PAGE>
[_] (ii) Other (specify):__________________________________
__________________________________________________
__________________________________________________
- --------------------------------------------------------------------------------
Section 10.01 In-service withdrawals by a Participant of amounts in his
IN-SERVICE Rollover Account (Check (a), (b) or (c)):
WITHDRAWAL
OF [_] (a) are not permitted.
ROLLOVER
CONTRIBUTIONS [x] (b) are permitted at any time.
[_] (c) are permitted at any time after the Participant
attains Age 59 1/2.
NOTE: Rollover Account in-service withdrawals are subject to
Sections 10.03 and 18.01 of the Plan.
- --------------------------------------------------------------------------------
Section 10.02 In-service withdrawals by the Participant of vested amounts
IN-SERVICE in his Accounts elected below are permitted for any reason
AND HARDSHIP after the Participant attains age 59 1/2 (Check all
WITHDRAWALS applicable boxes):
[_] (a) In-service withdrawals of Contributions described in
(b) through (f) below are not permitted.
[_] (b) 401(a) Employer Contribution Account
[_] (c) 401(a) Employer Match Contribution Account
[x] (d) Salary Savings Contribution Account
[_] (e) 401(k) Employer Contribution Account
[_] (f) 401(k) Employer Match Contribution Account
"Hardship withdrawals" (as described in Section 10.02 of the
Plan) of Salary Savings Contributions (and earnings thereon
accrued as of December 31, 1988) (Check one):
[x] (a) are not permitted.
[_] (b) are permitted.
NOTE: In-service withdrawals are subject to Section 10.03 of
the Plan.
- --------------------------------------------------------------------------------
Section 11.01 Participant Loans (Check whichever of the following is
PLAN applicable):
LOANS
[_] (a) are not permitted.
[x] (b) are permitted in accordance with Article XI, subject
to the following limitations:
[_] (i) no minimum
[_] (ii) each loan being in a minimum amount of
$__________ (cannot exceed $1,000)
[x](iii) each loan being in a minimum amount of
$1,000
[x] (iv) only one loan may be outstanding at any
time
[x] (v) only one loan may be made each Plan Year
- --------------------------------------------------------------------------------
Section 12.02 Check and complete one of the below, and any applicable
EARLY subparts:
RETIREMENT
[_] (a) There is no Early Retirement Age.
-14-
<PAGE>
AGE
(if any) [x] (b) The Early Retirement Age of a Participant shall be
the first day of any month selected by the
Participant coincident with or next following the
date he satisfies the following requirements (Check
and complete the applicable requirements set forth
below):
[x] attainment of Age 55
------
[x] completion of 7 Years of Service
----
[_] completion of ______ Years of Plan
participation
[_] termination of employment within ______ years
of Normal Retirement Age
- --------------------------------------------------------------------------------
Section 12.07 (a) For benefits not subject to Section 12.08 of the
BENEFIT Plan (Joint and Survivor Annuity requirements),
OPTIONS Participants shall have the right to receive their
vested Accrued Benefit in accordance with
Section 12.07 of the Plan (Check (i) or (ii)):
[_] (i) in one sum or installment or annuity
payments; or
*[x] (ii) in one sum only.
(b) If the Plan invests in Qualifying Employer
Securities, as that term is defined in ERISA
Section 407(d)(5), then the Plan may provide for
distributions in Employer stock pursuant to the
terms of the Addendum to this Section 12.07(b),
describing the procedures applicable to such
distributions, prepared by the Plan's legal counsel,
attached to this Adoption Agreement and incorporated
herein by reference (Check one):
[_] (i) Distributions may not be made in Employer
stock; or
[_] (ii) Distributions may be made in Employer
stock pursuant to the terms of the
Addendum to this Section 12.07(b) prepared
by the Plan's legal counsel, attached
hereto, and incorporated herein by
reference.
*NOTE: An election of (a)(ii) above will be given effect
only to the extent the requirements of Code
Sections 411(d)(6) and 401(a)(4) are met.
- --------------------------------------------------------------------------------
Section 13.01(1) (a) A Participant's 401(a) Employer Contributions, if
VESTING any, shall be vested to the extent designated below
SCHEDULES (Check or complete one of (i) through (v)):
[_] (i) 100% at all times.
[_] (ii) 100% after ______ (1 to 5) Years of
Service.
[_] (iii) A percentage determined in accordance
with the following schedule (3-7
Vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
-15-
<PAGE>
[_] (iv) A percentage determined in accordance with
the following schedule (Top Heavy Graded
Vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
[x] (v) Other less than 1 year of service 0%, 1
---------------------------------
year of service 20%, 2 years of service 40%,
------------------------------------------
3 years 60%, 4 years 80%[_]with full
--------------------------
vesting after completion of 5 Years
-----
of Service (not to exceed 5).
(b) A Participant's 401(a) Employer Match Contributions,
if any, shall be vested to the extent designated
below (Check or complete one of (i) through (v)):
[_] (i) 100% at all times
[_] (ii) 100% after ______ (1 to 5) Years of Service
[_] (iii) A percentage determined in accordance with
the following schedule (3-7 Vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
[_] (iv) A percentage determined in accordance with
the following schedule (Top Heavy Graded
Vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
[x] (v) Other less than 1 year of service 0%, 1
year of service 20%, 2 years of service
40%, 3 years 60%, 4 years 80% with full
vesting after completion of 5_____ Years
of Service (not to exceed 5).
NOTE: Notwithstanding the above, in any event a
Participant's vesting percentage shall be 100% on
the date he attains his Normal Retirement Age, or,
if earlier, on the date he attains his Early
Retirement Age.
- --------------------------------------------------------------------------------
Section 13.01(2) Notwithstanding anything in Section 13.01(1) of the Adoption
TOP HEAVY Agreement to the contrary, if the Plan is a Top Heavy Plan for
PLAN VESTING any Plan Year beginning after December 31, 1983, then the Plan
shall meet the following vesting requirements for such Plan
Year and for all subsequent Plan Years, even if the Plan is
not a Top Heavy Plan for such subsequent Plan Years. Provided,
however, if the vesting
-16-
<PAGE>
schedule elected in Section 13.01(1) of the Adoption Agreement
is more favorable to a Participant, such schedule shall be
applicable to such Participant for such Plan Years.
N/A
A Participant's 401(a) Employer and 401(a) Employer Match
Contributions shall be vested to the extent designated below
(Check or complete (a) or (b)):
[_] (a) 100% after ______ (1 to 3) Years of Service.
[_] (b) A percentage determined in accordance with the
following schedule:
Nonforfeitable
Years of Service Percentage
---------------- --------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
- --------------------------------------------------------------------------------
Section 13.01(3) In determining a Participant's Vesting Percentage, the
VESTING following periods of Service shall be disregarded (Check the
(Service first box if all Years of Service are to be counted.
Exclusions) Otherwise, check one or more of the other boxes):
[_] (a) All Years of Service are to be counted.
[_] (b) Years of Service before Age 18.
[_] (c) Period during which the Plan or a predecessor plan
was not maintained by the Employer.
[x] (d) If a Participant has a One Year Break in Service,
Service before the Break shall not be taken into
account until he has completed a Year of Service
after such Break in Service.
Please see Foot Note #7 on Page 20.
[_] (e) In the case of a Participant who has 5 or more
consecutive One Year Breaks in Service, the
Participant's pre-break service will count in vesting
of the Employer-derived Accrued Benefit only if
either:
(i) such Participant has any nonforfeitable interest
in the Accrued Benefit attributable to Employer
contributions at the time of separation from
service, or
(ii) upon returning to service the number of
consecutive One Year Breaks in Service is less
than the number of Years of Service.
[_] (f) Years of Service before January 1, 1971, unless the
Employee has had at least 3 Years of Service after
December 31, 1970.
[_] (g) Years of Service before the Plan Year in which
Internal Revenue Code Section 411 became applicable
to the Plan, if such Service would have been
disregarded under the rules of the Plan with regard
to Breaks in Service as in effect on the applicable
date. For this purpose, Break in Service rules are
rules which result in the loss of prior vesting or
benefit accruals, or which deny an employee
eligibility to participate, by reason of separation
or failure to complete a required period of service
within a specified period of time.
NOTE: In all events Years of Service during which the
Employee did not complete at least 1,000 Hours of
Service shall be disregarded.
- --------------------------------------------------------------------------------
-17-
<PAGE>
Section 13.02(1) Employees terminating Service and having a vested Accrued
PAYMENT Benefit of $3,500 or less shall (Check one):
OF ACCRUED
BENEFITS OF [x] (a) receive a lump sum distribution of such vested
$3,500 OR LESS portion.
[_] (b) have their vested benefit deferred in accordance
with Section 13.02(2) below.
- --------------------------------------------------------------------------------
Section 13.02(2) A terminated Participant (or his Beneficiary) may request that
DISTRIBUTION the Participant's deferred Normal Retirement Benefit be
OF distributed (Check one of the following):
DEFERRED
NORMAL [x] (a) at any time after the date the Participant
RETIREMENT terminates employment with the Employer.
BENEFIT
[_] (b) no earlier than the earliest of the terminated
Participant's death, Total and Permanent Disability
or attainment of Early Retirement or Normal
Retirement Age.
[_] (c) if earlier than (b) above, at any time after the end
of the Plan Year in which the Participant terminated
employment with the Employer.
[_] (d) if earlier than (b) above, at any time after the end
of the ___________ Plan Year following the Plan Year
in which the Participant terminated employment with
the Employer.
[_] (e) if earlier than (b) above, ________________________
___________________________________________________
___________________________________________________
(specify the time when or other objective criteria
under which a Participant may request a distribution
of his deferred Normal Retirement Benefit).
NOTE: Employers may not eliminate or restrict the
availability of distribution options except in
accordance with Code Sections 401(a)(4) and
411(d)(6) and Rules and Regulations promulgated
thereunder.
- --------------------------------------------------------------------------------
Sections 15.01 Investment Direction (Check one):
and 15.04
INVESTMENTS Except as provided below in Section 15.05,
DIRECTED BY
EMPLOYER OR [x] (a) the Employer; or
INVESTMENT
MANAGER [_] (b) an Investment Manager appointed by the Employer
shall direct the Trustee to make the investments
under the Plan.
- --------------------------------------------------------------------------------
Section 15.03 Pursuant to Section 15.03(u) of the Plan, the Plan may
INVESTMENTS IN invest in Qualifying Employer Securities, as that term is
QUALIFYING defined in ERISA Section 407(d)(5), pursuant to the applicable
EMPLOYER requirements of ERISA and the Code, as amended from time to
SECURITIES time, including the regulations promulgated thereunder.
The aggregate investments in Qualifying Employer Securities
may not exceed the following limits (Check one):
[_] (a) may not exceed 10% of the Plan's assets; or
[_] (b) may not exceed _____ % of the Plan's assets
(percentage may equal 100% of the Plan's assets).
- --------------------------------------------------------------------------------
Section 15.05 Participant Investment Direction (Check one):
PARTICIPANT
DIRECTED [_] (a) Participant investment direction is not permitted.
INVESTMENTS
[x] (b) Participants shall have the power, at their
discretion, to direct the Trustee to invest all or a
portion of their Accounts in any of the investment
options offered under the Plan and, in addition, if
life insurance is offered as a permissible
investment, under any investment fund option offered
under any Policy purchased for their Accounts.
-18-
<PAGE>
[_] Exception: Participants shall not have the power to
direct the investment of the portion of their
Accrued Benefit attributable to 401(a)
Employer Contributions and 401(a) Employer
Match Contributions.
-19-
<PAGE>
FOOT NOTES TO THE ADOPTION AGREEMENT FOR THE AMTECH CORPORATION RETIREMENT PLAN
1. Name, Address and EIN/Tax I.D. Numbers of Other Participating Employers
Adopting Plan -- Page 1:
Amtech Systems Corporation Amtech World Corporation
75-2199361 75-2199362
17304 Preston Road, Building E100 17304 Preston Road, Building E100
Dallas, Texas 75252 Dallas, Texas 75252
CardKey Systems, Inc. WaveLink Technologies, Inc.
77-0405047 75-2628579
1757 Tapo Canyon Road 17304 Preston Road, Building E100
Simi Valley, CA 93063 Dallas, Texas 75252
AMGT Corporation
75-2205460
17304 Preston Road, Building E100
Dallas, Texas 75252
2. Section 2.06(c), Definition of Compensation -- Page 2:
Compensation excludes relocation expenses and amounts realized from a
disqualifying disposition of stock acquired under a stock purchase plan
described in section 423 of the Internal Revenue Code.
3. Section 2.19(c). Hours of Service -- Page 3:
Prior to 10/1/95 Hours of Service were determined under the elapsed time
method of crediting service. Pursuant to Treas. Reg. (S) 1.410(a)-
7(f)(1)(ii), for eligibility and vesting purposes, an employee will be
credited with a Year of Service for each full one Year of Service
completed by the Employee since his Employment Commencement Date under the
elapsed time method of crediting service on or before October 1, 1995. An
Employee shall also receive credit for 190 Hours of Service for each month
of any portion of such Employee's period of service, as determined on
September 30, 1995, which is less than a full year. For example, if an
Employee's Years of Service equal 4 years and 2 weeks on September 30,
1995, such employee shall be credited with 4 Years of Service and such
Employee will have 190 Hours of Service credited towards the Plan Year
that includes October 1, 1995.
4. Section 3.02(1), Participation Requirements (Classification) -- Page 4:
(i) Other Employee classification (specify): All Employees of the
Employer maintaining the Plan other than those described in item (f)
above and leased employees, as defined in section 414(n) of the
Internal Revenue Code.
5. Section 3.02(2), Participation Requirements (Age and Service) -- Pages
4 and 5:
Prior to February 1, 1996, the Service Requirement is the completion of
570 Hours of Service.
6. Section 3.02(3), Participation Requirements (Service Exclusion) --
Page 6:
Prior to October 1, 1995, the Plan used the elapsed time method of
crediting service, including the rule of parity under the break in service
rules described in Treas. Reg. (S) 1.410(a)-7(c)(6).
-20-
<PAGE>
FOOT NOTES (continued)
7. Section 13.01(3), Vesting (Service Exclusions) -- Page 16:
Before October 1, 1995, the Plan used the elapsed time method of crediting
service, including the rule of parity under the break in service rules
described in Treas. Reg. (S) 1.410(a)-7(c)(6).
8. Section 3.02(2)(b), Date of Participation (Plan Entry Dates) -- Page 6:
Prior to February 1, 1996, Section 3.02(2)(b)(iii) applied.
-21-
<PAGE>
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
BANK ONE PROTOTYPE RETIREMENT PLAN NO. 1
The Employer, which hereby agrees that the Trustee shall not be responsible for
the tax and legal aspects of the Plan and Trust, and which assumes full
responsibility therefor, hereby accepts the provisions of Bank One Prototype
Retirement Plan No. 1, agrees to be bound by the provisions thereof, and adopts
such Plan and the Plan Adoption Agreement by causing its name to be signed
hereto by its duly authorized officer, all as of this 12th day of
------------
March , 1996.
- -------- --
The failure of the adopting Employer to properly fill out the Adoption Agreement
may result in disqualification of the Employer's Plan.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the Plan is qualified
under Section 401 of the Internal Revenue Code. In order to obtain reliance
with respect to Plan qualification, the Employer must apply to the appropriate
Key District office for a determination letter.
Bank One, the sponsor of this Prototype Plan, will inform each adopting Employer
which has registered with Bank One of any amendments it makes to the Plan or of
the discontinuance or abandonment of the Plan. Bank One's address and telephone
number are listed below:
Address: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0193
(614) 248-6420
The Adoption Agreement may be used only in conjunction with Basic Plan Document
No. 01.
This Adoption Agreement, Basic Plan Document No. 1 and any related documents
have important legal and tax implications. All legal questions, opinions and
tax consequences concerning these documents are the sole responsibility of the
adopting Employer and its legal counsel. Therefore, each adopting Employer is
strongly encouraged to consult with its legal counsel for advice.
Employer Amtech Corporation Employer Amtech Systems Corporation
-------------------------- -------------------------------
By /s/ Ronald A. Woessner By /s/ Ronald A. Woessner
------------------------------- --------------------------------
Title: V.P. Title: V.P.
- --------------------------------------------------------------------------------
The undersigned Trustee, or each undersigned Trustee, hereby accepts the
provisions of Bank One Prototype Retirement Plan No. 1 and the trusts provided
for therein, and hereby declares, and agrees with the aforesaid Employer to
receive, hold, invest, expend and distribute all funds deposited with,
contributed to, earned or otherwise received by, the Trustee or Trustees, all in
accordance with the terms and provisions of said Plan and Trust.
Bank One, Texas, N.A. Date_______________________
Name__________________________________
Title (if any)______________________
_______________________________________ Date_______________________
Name__________________________________
Title (if any)______________________
_______________________________________ Date_______________________
Name___________________________________
Title (if any)______________________
-22-
<PAGE>
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
BANK ONE PROTOTYPE RETIREMENT PLAN NO. 1
The Employer, which hereby agrees that the Trustee shall not be responsible for
the tax and legal aspects of the Plan and Trust, and which assumes full
responsibility therefor, hereby accepts the provisions of Bank One Prototype
Retirement Plan No. 1, agrees to be bound by the provisions thereof, and adopts
such Plan and the Plan Adoption Agreement by causing its name to be signed
hereto by its duly authorized officer, all as of this 12th day of
------------
March , 1996.
- ---------- --
The failure of the adopting Employer to properly fill out the Adoption Agreement
may result in disqualification of the Employer's Plan.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the Plan is qualified
under Section 401 of the Internal Revenue Code. In order to obtain reliance
with respect to Plan qualification, the Employer must apply to the appropriate
Key District office for a determination letter.
Bank One, the sponsor of this Prototype Plan, will inform each adopting Employer
which has registered with Bank One of any amendments it makes to the Plan or of
the discontinuance or abandonment of the Plan. Bank One's address and telephone
number are listed below:
Address: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0193
(614) 248-6420
The Adoption Agreement may be used only in conjunction with Basic Plan Document
No. 01.
This Adoption Agreement, Basic Plan Document No. 1 and any related documents
have important legal and tax implications. All legal questions, opinions and
tax consequences concerning these documents are the sole responsibility of the
adopting Employer and its legal counsel. Therefore, each adopting Employer is
strongly encouraged to consult with its legal counsel for advice.
Employer Amtech World Corporation Employer CardKey Systems, Inc.
-------------------------- -------------------------
By /s/ Ronald A. Woessner By /s/ Ronald A. Woessner
-------------------------------- -------------------------------
Title: V.P. Title: V.P.
- --------------------------------------------------------------------------------
The undersigned Trustee, or each undersigned Trustee, hereby accepts the
provisions of Bank One Prototype Retirement Plan No. 1 and the trusts provided
for therein, and hereby declares, and agrees with the aforesaid Employer to
receive, hold, invest, expend and distribute all funds deposited with,
contributed to, earned or otherwise received by, the Trustee or Trustees, all in
accordance with the terms and provisions of said Plan and Trust.
Bank One, Texas, N.A. Date_____________________________
- -------------------------------------
Name___________________________________
Title (if any)_____________________
_______________________________________ Date______________________________
Name___________________________________
Title (if any)_____________________
_______________________________________ Date______________________________
Name___________________________________
Title (if any)_____________________
-23-
<PAGE>
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
BANK ONE PROTOTYPE RETIREMENT PLAN NO. 1
The Employer, which hereby agrees that the Trustee shall not be responsible for
the tax and legal aspects of the Plan and Trust, and which assumes full
responsibility therefor, hereby accepts the provisions of Bank One Prototype
Retirement Plan No. 1, agrees to be bound by the provisions thereof, and adopts
such Plan and the Plan Adoption Agreement by causing its name to be signed
hereto by its duly authorized officer, all as of this 12th day of
------------
March , 1996.
- -------- --
The failure of the adopting Employer to properly fill out the Adoption Agreement
may result in disqualification of the Employer's Plan.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the Plan is qualified
under Section 401 of the Internal Revenue Code. In order to obtain reliance
with respect to Plan qualification, the Employer must apply to the appropriate
Key District office for a determination letter.
Bank One, the sponsor of this Prototype Plan, will inform each adopting Employer
which has registered with Bank One of any amendments it makes to the Plan or of
the discontinuance or abandonment of the Plan. Bank One's address and telephone
number are listed below:
Address: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0193
(614) 248-6420
The Adoption Agreement may be used only in conjunction with Basic Plan Document
No. 01.
This Adoption Agreement, Basic Plan Document No. 1 and any related documents
have important legal and tax implications. All legal questions, opinions and
tax consequences concerning these documents are the sole responsibility of the
adopting Employer and its legal counsel. Therefore, each adopting Employer is
strongly encouraged to consult with its legal counsel for advice.
Employer WaveLink Technologies, Inc. Employer AMGT Corporation
----------------------------- ------------------------
By /s/ Ronald A. Woessner By /s/ Ronald A. Woessner
---------------------------------- -----------------------------
Title: V.P. Title: V.P.
- --------------------------------------------------------------------------------
The undersigned Trustee, or each undersigned Trustee, hereby accepts the
provisions of Bank One Prototype Retirement Plan No. 1 and the trusts provided
for therein, and hereby declares, and agrees with the aforesaid Employer to
receive, hold, invest, expend and distribute all funds deposited with,
contributed to, earned or otherwise received by, the Trustee or Trustees, all in
accordance with the terms and provisions of said Plan and Trust.
Bank One, Texas, N.A. Date___________________________
- -----------------------------------
Name___________________________________
Title (if any)___________________
_______________________________________ Date____________________________
Name___________________________________
Title (if any)___________________
_______________________________________ Date____________________________
Name___________________________________
Title (if any)___________________
-24-
<PAGE>
EXHIBIT 10.19
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
Reference is made to that certain Employment Agreement, dated January 1,
1990, as amended (the "Employment Agreement"), entered into between Amtech
Corporation, a Texas corporation (the "Company"), and G. Russell Mortenson
("Employee").
Employee and Company desire to amend the Employment Agreement, as follows:
1. Paragraph 4 of the Employment Agreement is amended by substituting
"$300,000" for "$288,000" wherever it appears in such Paragraph.
2. Other than as set forth herein the Employment Agreement remains in full
force and effect as written.
The parties have executed this Fifth Amendment to be effective as of
January 1, 1996.
AMTECH CORPORATION
By: /s/ STEVE M. YORK
----------------------------
Steve M. York
Senior Vice President &
Chief Financial Officer
Date: 2-5-96
--------------------------
EMPLOYEE:
/s/ RUSSELL MORTENSON
-------------------------------
G. Russell Mortenson
Date: 1/31/96
--------------------------
<PAGE>
EXHIBIT 10.31
EXECUTION COPY
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into on
November 16, 1995, by and between Amtech Systems, Corporation, a Delaware
corporation with its principal executive offices in Dallas, Texas (the
"Company"), and Jeffrey S. Wetherell, an individual currently residing in
Minneapolis, Minnesota ("Employee").
Recitals
--------
A. The Company desires to provide for the employment of Employee in such a
manner as will reinforce and encourage the highest attention and dedication to
the Company of Employee as a member of the Company's management, in the best
interest of the Company and its shareholder.
B. Employee is willing to serve the Company on the terms and conditions
herein provided.
Terms and Conditions
--------------------
In consideration of the covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Employee, and Employee shall
----------
serve the Company, on the terms and conditions set forth herein.
2. Term. Subject to the terms and conditions herein, the employment of
----
Employee by the Company as provided
in Section 1 will be for a term commencing
on the date hereof and expiring on May 31, 1997.
3. Position and Duties. The Company shall engage Employee, and Employee
-------------------
shall serve, as President and Chief Operating Officer of the Company or in a
comparable position with the Company with such duties as may be assigned to
Employee from time to time by the Board of Directors (the "Board") of the
Company or an Affiliate. Employee shall devote substantially all Employee's
working time and efforts to the business and affairs of the Company. The
location of employment shall be as determined by the Company from time to time.
Should a relocation be necessary, the Company would provide reimbursement for
move related expenses in accordance with Company policy.
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4. Compensation. During the term of Employee's employment hereunder, the
------------
Company shall pay Employee for Employee's services an annual base salary of not
less than $175,000 per annum, payable in equal bi-weekly installments on normal
payroll dates. The Company shall review the base salary of Employee at least
once a year and if the Company, in its sole and absolute discretion, deems an
adjustment in the base salary is appropriate for any reason whatsoever
(including, but not limited to, a change of Employee's duties), the adjustment
will be effective on the date designated by the Company and be evidenced by
appropriate entries on the payroll records of the Company. All applicable taxes
on total compensation shall be withheld in accordance with applicable taxation
guidelines.
The Company shall evaluate Employee's contribution to the overall
performance of the Company and shall pay such bonus to Employee as the Company,
in its sole and absolute discretion, shall deem appropriate in light of such
evaluation. For the calendar year 1996, Employee is eligible to receive a
discretionary bonus of up to $52,500 based upon the achievement of various pre-
determined performance goals.
5. Expenses and Services. During the term of Employee's employment
---------------------
hereunder, Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by Employee by reason of Employee's employment,
provided that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company and in effect when the
expenses are incurred. The Company shall furnish Employee with office space,
secretarial assistance, office supplies, office equipment and such other
facilities and services as are suitable to Employee's position and adequate for
the performance of his duties. Employee shall be entitled to up to four (4)
weeks of vacation per calendar year during the term hereof.
6. Confidential Information. Employee recognizes and acknowledges that
------------------------
Employee will have access to confidential information of the Company, and its
Affiliates, including, without limitation, customer information, lists of
suppliers and costs, information concerning the business and operations of the
Company and its Affiliates, and proprietary data, information, concepts and
ideas (whether or not patentable or copyrightable) relating to the business of
the Company and its Affiliates, as applicable. Employee agrees not to disclose
such confidential information, except as may be necessary in the performance of
Employee's duties, to any person, nor use such confidential information in any
way, either during the term of Employee's employment or thereafter unless
Employee has received the written consent of the Company, or its Affiliates, as
applicable, or unless such confidential information becomes public knowledge
through no wrongful act of Employee. Upon termination of Employee's employment
for any reason, Employee shall promptly deliver to the Company all drawings,
manuals, letters, notebooks, customer lists, documents, records, equipment,
files, computer disks or tapes, reports or any other materials relating to the
business of the Company or its Affiliates (and all copies) that are in
Employee's possession or under Employee's control. Additionally, the parties
hereby acknowledge that Employee has
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executed a Confidentiality and Invention Agreement dated on or about November
16, 1995 (the "Assignment of Inventions Agreement").
7. Rights under Certain Plans. During the term of Employee's employment
--------------------------
hereunder, Employee will be entitled to participate in the insurance and
employee benefit plans and programs maintained by the Company or its Affiliates
applicable to similarly situated officer employees on the same basis as such
other officer employees of the Company, subject only to the possible
substitution by or on behalf of the Company or its Affiliates of other plans or
programs providing substantially similar or increased benefits for Employee.
Employee will also be entitled to reasonable vacation time, with no reduction in
compensation, in keeping with Employee's duties and responsibilities to the
Company.
8. Early Termination. Employee's employment hereunder may be terminated
-----------------
without any breach of this Agreement only under the following circumstances:
(A) Employee's employment hereunder will terminate upon Employee's
death;
(B) The Company may terminate Employee's employment hereunder for
Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate Employee's employment hereunder upon (1) the willful and
continued failure by Employee to substantially perform his duties hereunder
(other than any such failure resulting from Employee's incapacity due to
physical or mental illness), after written demand for substantial
performance is delivered by the Company that specifically identifies the
manner in which the Company believes Employee has not substantially
performed his duties; or (2) the willful engaging by Employee in misconduct
that is materially injurious to the Company or its Affiliates; or (3) the
conviction of Employee of any felony or crime of moral turpitude. For
purposes of this subsection (B), no act, or failure to act, on Employee's
part shall be considered "willful" unless done, or omitted to be done, by
him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for Cause
without (a) reasonable written notice to Employee, setting forth the
reasons for the Company's intention to terminate for Cause; (b) an
opportunity for Employee, together with his counsel, to be heard before the
Board (or an authorized representative thereof); and (c) delivery to
Employee of a written Notice of Termination as defined in subsection (D)
hereof from the Board finding that, in the good faith opinion of the Board,
Employee was guilty of conduct set forth above in clause (1), (2) or (3) of
this subsection (B), and specifying the particulars thereof in detail.
(C) Employee may terminate Employee's employment hereunder (1) for
Good Reason or (2) if Employee's health should become impaired to an extent
that makes Employee's continued performance of Employee's duties hereunder
hazardous to
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Employee's physical or mental health or Employee's life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the
Company's request, Employee shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred with the
conclusion of Employee's doctor.
For purposes of this Agreement, "Good Reason" shall mean (a) a failure
by the Company to comply with any material provision of this Agreement that
has not been cured within twenty days after notice of such noncompliance
has been given by Employee to the Company; or (b) any purported termination
of Employee's employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of subsection (D) hereof (and for
purposes of this Agreement no such purported termination shall be
effective).
(D) Any termination of Employee's employment by the Company or by
Employee (other than termination pursuant to subsection (A) above) shall be
communicated by written Notice of Termination to the other party hereto.
For purposes of this Agreement, a "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated.
(E) "Date of Termination" shall mean (1) if Employee's employment is
terminated by Employee's death, the date of Employee's death; and (2) if
Employee's employment is terminated for any other reason, the date
specified in the Notice of Termination.
9. Compensation upon Termination. Upon termination of Employee's
-----------------------------
employment hereunder, Employee shall be paid as follows:
(A) If Employee's employment is terminated by Employee's death, the
Company shall continue to pay Employee's semi-monthly base salary to
Employee's designated beneficiaries, or if Employee leaves no designated
beneficiaries, to Employee's estate for a period of one year from the date
of termination.
(B) If Employee's employment shall be terminated for Cause, the
Company shall pay Employee Employee's bi-weekly base salary earned through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Employee under this Agreement.
(C) If (1) in breach of this Agreement, the Company shall terminate
Employee's employment other than pursuant to Section 8(B) hereof (it being
understood that a purported termination pursuant to Section 8(B) hereof
that is
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disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement); or (2) Employee
shall terminate Employee's employment for Good Reason, then the Company
shall continue to pay Employee Employee's bi-weekly salary through May 31,
1997.
(D) If Employee shall terminate Employee's employment under clause (2)
of Section 8(C) or by resignation in breach of this Agreement, the Company
shall pay Employee Employee's full base salary through the Date of
Termination at the rate in effect on the date that Notice of Termination is
received by the Company.
Employee shall not be required to mitigate the amount of any payment
provided for in Section 9(C) by seeking other employment or otherwise. If
however, Employee commences new employment while Employee is being paid by the
Company, the obligation to make the payments described in Section 9(C) shall be
subject to offset, in whole or in part, of an amount equal to the compensation
paid to or earned by Employee from any new employment undertaken by Employee
following Employee's termination of employment with the Company through May 31,
1997.
Should Employee violate any provision of Section 10 hereof or violate any
provision of, or any agreement referred to in, Section 6 of this Agreement, then
the Company's obligation to make payments to Employee pursuant to Section 9 and
provide the benefits described in the following paragraph shall terminate
effective as of the date of commencement of such violation.
At any such time when Employee shall no longer be in the employ of the
Company, any successor in interest to the Company or any of their respective
Affiliates, Employee shall be entitled to receive as of the date of such
termination, subject to the terms and conditions of any applicable insurance or
employee benefit plan, payments in satisfaction of any and all other wages,
benefits, or other remunerations which shall then be payable to, or vested on
behalf of, Employee.
During the term of this Agreement, Employee shall give the Company
immediate notice of any change of address.
10. Noncompetition. Employee agrees and covenants:
--------------
(A) That during Employee's employment with the Company Employee will
not directly or indirectly (I) engage in any employment, business, or
activity that is in any way competitive with the business or proposed
business of the Company or any Affiliate, or (ii) assist any other person
or organization in competing with the Company or any Affiliate or in
preparing to engage in competition with the business or proposed business
of the Company or any Affiliate. Direct competition shall include, but not
be
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limited to, the design, development, production, promotion or sale of
products, software or services competitive with those of the Company. The
provisions of this paragraph shall apply both during normal working hours
and at all other times including, but not limited to, nights, weekends and
vacation time, while Employee is employed by the Company.
(B) That, during the term provided for in Section 2 and for a period
of 18 months after Employee ceases to be employed by the Company, Employee
will not directly or indirectly solicit to conduct any competitive business
with, or conduct any competitive business with, any (I) then-current
customer of the Company or (ii) any person that has been a customer of the
Company within the 12 months prior to the time of Employee's separation
from employment. The phrase "competitive business" means the line(s) of
business(es) conducted by the Company or any Affiliate.
(C) That, during the term provided for in Section 2 and for a period
of 18 months after Employee ceases to be employed by the Company, Employee
shall not directly or indirectly solicit to hire any employee of the
Company or any Affiliate as an employee or agent of, or consultant to, any
business enterprise that Employee is associated with.
(D) Each non-competition covenant of Employee contained in the
preceding provisions of this Section 10 (the "non-competition covenant")
shall be construed as an agreement independent of any other provision of
this Agreement and the existence of any claim or cause of action of
Employee against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company
of such non-competition covenant.
(E) Although the Company and Employee have in good faith used their
best efforts to make each non-competition covenant reasonable in both scope
and in duration, and it is not anticipated, nor is it intended, by either
party to this Agreement that any court or other tribunal having
jurisdiction will find it necessary to reform any non-competition covenant
to make it reasonable in both scope and in duration, or otherwise, the
Company and Employee understand and agree that if a court or other tribunal
having jurisdiction determines it necessary to reform any non-competition
covenant in order to make it reasonable in either scope or duration, or
otherwise, damages, if any, for a breach of the non-competition covenant,
as so reformed, will be deemed to accrue to the Company or an Affiliate, as
applicable, as and from the date of such a breach only and so far as the
damages for such breach related to an action which accrued within the scope
and duration as so reformed.
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11. Affiliate Defined. The term "Affiliate" as used in this Agreement
-----------------
means any individual, corporation, unincorporated organization, trust or other
form of entity controlling, controlled by or under common control with the
Company. For purposes of this definition, "control" (including "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such individual, corporation, unincorporated organization, trust or other form
of entity, whether through the ownership of voting securities or otherwise.
12. Waiver. No waiver of any provision of this Agreement shall be
------
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right under this Agreement. No waiver shall be binding unless
executed in writing by the party making the waiver.
13. Limitation of Rights. Nothing in this Agreement, except as
--------------------
specifically stated herein, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective permitted successors and assigns and other legal
representatives, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
14. Remedies. Employee hereby agrees that a violation of any provision
--------
of Section 6 or 10 or any agreement referred to in Section 6 would cause
irreparable injury to the Company or its Affiliates for which it would have no
adequate remedy at law. Accordingly, in the event of any such violation, the
Company shall be entitled to preliminary and other injunctive relief. Any such
injunctive relief shall be in addition to any other remedies to which the
Company or its Affiliates may be entitled at law or in equity, or otherwise.
15. Notice. Any consent, notice, demand or other communication required
------
or permitted hereby must be in writing to be effective and shall be deemed to
have been received on the date delivered, if personally delivered, or five days
following the date the same is deposited in the United States mail, postage
prepaid, certified return receipt requested, addressed to the applicable party
at the address for such party set forth below or at such other address as such
party may designate by like notice:
Amtech Systems Corporation
Dominion Plaza
17304 Preston Road, E-100
Dallas, Texas 75252
Attn: General Counsel
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Employee:
Jeffrey S. Wetherell
17304 Preston Road, E-100
Dallas, Texas 75252
16. Inconsistent Obligations. Employee represents and warrants that
------------------------
Employee has not previously assumed any obligations inconsistent with those of
this Agreement.
17. Entirety and Amendments. This instrument and the instruments referred
-----------------------
to herein embody the entire agreement between the parties relating to the
subject matter hereof, supersede all prior agreements and understandings
relating to the subject matter hereof, and may be amended only by an instrument
in writing executed by all parties, and supplemented only by documents delivered
or to be delivered in accordance with the express terms hereof. This Agreement
expires at the end of its term per Section 2 and provides for no automatic
extension or renewal unless separately agreed to in writing by the parties. In
the event of a conflict or inconsistency between any provision of this Agreement
and any provision of the Assignment of Inventions Agreement, whichever provision
is most favorable to the Company shall govern.
18. Successors and Assigns. This Agreement will be binding upon and
----------------------
inure to the benefit of the parties hereto and any successors in interest to the
Company, but neither this Agreement nor any rights hereunder may be assigned by
Employee except in the case of the death of Employee. However, this Agreement
may be assigned by the Company, in whole or part, to an Affiliate of the
Company.
19. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Texas (excluding its
conflict of laws rules).
20. Cumulative Remedies. Except as provided in Exhibit A attached hereto,
------------------- ---------
no remedy herein conferred upon any party is intended to be exclusive of any
other benefits or remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other benefit or remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. No single or
partial exercise by any party of any right, power or remedy hereunder shall
preclude any other exercise or further exercise thereof.
21. Alternate Dispute Resolution. Employee and the Company agree to the
----------------------------
alternative dispute resolution provisions contained in Exhibit A attached
---------
hereto. The provisions of this Section 21 shall survive the termination or
expiration of this Agreement.
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22. Multiple Counterparts. This Agreement may be executed in a number of
---------------------
identical counterparts, each of which constitute collectively, one agreement;
but, in making proof of this Agreement, it shall not be necessary to produce or
account for more than one counterpart.
23. Descriptive Headings. The headings, captions and arrangements used in
--------------------
this Agreement are for convenience only and shall not be deemed to limit,
amplify, or modify the terms of this Agreement, nor affect the meaning hereof.
Signatures
----------
To evidence the binding effect of the covenants and agreements described
above, the parties hereto have executed this Agreement effective as of the date
first above written.
THE COMPANY:
By: /s/ G. RUSSELL MORTENSON
-------------------------------------
G. Russell Mortenson
Chairman of the Board
Employee:
/s/ JEFFREY S. WETHERELL
----------------------------------------
Jeffrey S. Wetherell
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EXHIBIT A
DISPUTE RESOLUTION AGREEMENT
----------------------------
The undersigned Prospective Employee understands and acknowledges that
neither Amtech Corporation nor its subsidiaries, as applicable ("Amtech"), would
employ the Prospective Employee without the Prospective Employee's execution of
this Agreement.
A. Except as otherwise provided in this Agreement, Amtech and the
Prospective Employee consent and agree to the resolution, in the manner provided
for in this Agreement, of all claims or controversies brought by the Prospective
Employee ("Claims") for which a court otherwise would be authorized by law to
grant relief, in any way arising out of, relating to, or associated with (1) the
Prospective Employee's employment or termination from employment with Amtech or
any adverse employment action by Amtech, or (2) any other claims the Prospective
Employee may have against Amtech, any benefit plans of Amtech or any
fiduciaries, administrators, and affiliates of any benefit plan, or any of
Amtech's officers, directors, employees, or agents in their capacity as such, or
(3) any issue concerning the formation, applicability, interpretation, or
enforceability of this Agreement.
The Prospective Employee acknowledges that the Claims intended to be
covered by this Agreement include (but are not limited to) claims or
controversies under or relating to any federal, state, or local constitution,
law, or regulation prohibiting discrimination, harassment, or discharge; an
alleged or actual contract; any Company policy or benefit; entitlement to wages
or other compensation; and, any claim for personal, emotional, physical,
economic, or other injury.
B. The only Claims otherwise within the definition of Claims that are not
covered by this Agreement are: (1) any administrative actions that the
Prospective Employee is permitted to pursue under applicable law that are not
precluded by virtue of the Prospective Employee having entered into this
Agreement; (2) any Claim by the Prospective Employee for workers' compensation
benefits or unemployment compensation benefits; or (3) any Claim by the
Prospective Employee for benefits under a Company pension or benefit plan that
provides its own non-judicial dispute resolution procedure.
C. The Prospective Employee waives any right to assert a Claim, unless he
or she gives written notice of any Claim to Amtech by the earlier of (1) the
date that is one year after the day the Prospective Employee first has knowledge
of the event giving rise to the Claim or (2) the date upon which the applicable
statute of limitations expires.
D. Within 20 days of receipt of the notice of a Claim, AMTECH, IN ITS
SOLE DISCRETION, MAY ELECT TO SUBMIT ANY CLAIMS TO BINDING ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT. If Amtech elects not to
submit a Claim to binding arbitration, then the Prospective Employee may
initiate or otherwise pursue the Claim by legal proceedings other than binding
arbitration (e.g., a lawsuit), except that IF THE PROSPECTIVE EMPLOYEE INITIATES
A LAWSUIT, HE OR SHE HEREBY WAIVES THE RIGHT TO REQUEST OR OBTAIN A JURY TRIAL
WITH RESPECT TO ANY SUCH CLAIMS. The Prospective Employee agrees that if he or
she initiates litigation in violation of this Agreement, he or she will incur
liability to the person(s) sued, including the obligation to pay their legal
fees and expenses.
TSG Dispute Resolution Agreement
Revised Spring 1995
Page 1
<PAGE>
E. The arbitration will be conducted in accordance with the provisions
of this Agreement and the Employment Dispute Resolution Rules of the American
Arbitration Association ("AAA") in effect at the time the written notice of the
Claim is received. An arbitrator shall be selected in the manner provided for in
the Employment Dispute Resolution Rules of the AAA, except that the parties
agree that the arbitrator shall (1) be an attorney licensed in the state where
the arbitration is being conducted and (2) have expertise in the area of
employment law. The arbitration will be held in Dallas County, Texas [Bernalillo
County, New Mexico].
F. Each party shall have the right to take one deposition of the other
party and any expert witness or other witness designated by the other party.
Additional deposition discovery may be taken only if the arbitrator so orders,
upon a showing of substantial need. The Prospective Employee understands that
by agreeing to submit Claims to arbitration he or she gives up the right to seek
a trial by court or jury and the right to an appeal from any errors of the court
and forgoes any and all related rights he or she may otherwise have under
federal and state laws.
G. In the event any provision of this Agreement is found by an arbitrator
or court to be unenforceable, in whole or in part, the remaining provisions of
this Agreement shall nevertheless remain enforceable and the unenforceable
provisions shall, to the extent permitted under applicable law, be modified so
as to be enforceable to the maximum extent possible under applicable law.
H. This Agreement is not, and shall not be construed to create, any offer
or contract of employment, express or implied. This Agreement does not in any
way alter the "at-will" nature of the employer-employee relationship that will
be created between Amtech and the Prospective Employee, if hired.
I. PROSPECTIVE EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS CAREFULLY READ
THIS AGREEMENT; THAT HE OR SHE UNDERSTANDS ITS TERMS; THAT ALL UNDERSTANDINGS
BETWEEN THE PROSPECTIVE EMPLOYEE AND AMTECH RELATING TO THE SUBJECTS COVERED IN
THIS AGREEMENT ARE CONTAINED IN THIS AGREEMENT; AND, THAT HE OR SHE HAS ENTERED
INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR
REPRESENTATIONS BY AMTECH OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.
AMTECH SYSTEMS CORPORATION
/s/ JEFFREY S. WETHERELL By: /s/ G.R. MORTENSON
- -------------------------------- ---------------------------------
Prospective Employee's Signature
Title: President
------------------------------
Date: November 10, 1995 Date: November 13, 1995
--------------------------- -------------------------------
<PAGE>
EXHIBIT 10.32
CONFIDENTIAL
------------
EXECUTION COPY
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into on
August 1, 1995, by and between Cardkey Systems, Inc., a Delaware corporation
with its principal executive offices in Simi Valley, California (the "Company"),
and Michael H. Wolpert, an individual currently residing in Los Angeles,
California ("Employee").
Recitals
--------
A. Employee was previously employed as Vice President-Systems Product
Group of a company, most of whose business was acquired by the Company.
Employee has accumulated experience and knowledge of value to the Company.
B. The Company desires to provide for the employment of Employee in such a
manner as will reinforce and encourage the highest attention and dedication to
the Company of Employee as a member of the Company's management, in the best
interest of the Company and its shareholder.
C. Employee is willing to serve the Company on the terms and conditions
herein provided.
Terms and Conditions
--------------------
In consideration of the covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment.
The Company shall employ Employee, and Employee shall
----------
serve the Company, on the terms and conditions set forth herein.
2. Term. Subject to the terms and conditions herein, the employment of
----
Employee by the Company as provided in Section 1 will be for a term commencing
on the date hereof and expiring on July 31, 1997.
3. Position and Duties. The Company shall engage Employee, and Employee
-------------------
shall serve, as President and Chief Operating Officer of the Company or in a
comparable position with the Company with such duties as may be assigned to
Employee from time to time by the Board of Directors (the "Board") of the
Company. Employee shall devote substantially all Employee's
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working time and efforts to the business and affairs of the Company. The
location of employment shall be as determined by the Company from time to time.
Should a relocation be necessary, the Company would provide reimbursement for
move related expenses in accordance with Company policy.
4. Compensation. During the term of Employee's employment hereunder, the
------------
Company shall pay Employee for Employee's services an annual base salary of not
less than $155,000 per annum, payable in equal bi-weekly installments on normal
payroll dates. Additionally, Employee shall be provided with a $1,000 per month
car allowance. The Company shall review the base salary of Employee at least
once a year and if the Company, in its sole and absolute discretion, deems an
adjustment in the base salary is appropriate for any reason whatsoever
(including, but not limited to, a change of Employee's duties), the adjustment
will be effective on the date designated by the Company and be evidenced by
appropriate entries on the payroll records of the Company. All applicable taxes
on total compensation shall be withheld in accordance with applicable taxation
guidelines.
The Company shall evaluate Employee's contribution to the overall
performance of the Company and shall pay such bonus to Employee as the Company,
in its sole and absolute discretion, shall deem appropriate in light of such
evaluation. For the period August 1, 1995, to December 31, 1995, Employee is
eligible to receive a discretionary bonus of up to $23,250 based upon the
achievement of various pre-determined performance goals.
5. Expenses and Services. During the term of Employee's employment
---------------------
hereunder, Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by Employee by reason of Employee's employment,
provided that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company and in effect when the
expenses are incurred. The Company shall furnish Employee with office space,
secretarial assistance, office supplies, office equipment and such other
facilities and services as are suitable to Employee's position and adequate for
the performance of his duties.
6. Confidential Information. Employee recognizes and acknowledges that
------------------------
Employee will have access to confidential information of the Company, and its
Affiliates, including, without limitation, customer information, lists of
suppliers and costs, information concerning the business and operations of the
Company and its Affiliates, and proprietary data, information, concepts and
ideas (whether or not patentable or copyrightable) relating to the business of
the Company and its Affiliates, as applicable. Employee agrees not to disclose
such confidential information, except as may be necessary in the performance of
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Employee's duties, to any person, nor use such confidential information in any
way, either during the term of Employee's employment or thereafter unless
Employee has received the written consent of the Company, or its Affiliates, as
applicable, or unless such confidential information becomes public knowledge
through no wrongful act of Employee. Upon termination of Employee's employment
for any reason, Employee shall promptly deliver to the Company all drawings,
manuals, letters, notebooks, customer lists, documents, records, equipment,
files, computer disks or tapes, reports or any other materials relating to the
business of the Company or its Affiliates (and all copies) that are in
Employee's possession or under Employee's control. Additionally, the parties
hereby acknowledge that Employee has executed a Confidentiality and Invention
Agreement dated on or about August 1, 1995 (the "Assignment of Inventions
Agreement").
7. Rights under Certain Plans. During the term of Employee's employment
--------------------------
hereunder, Employee will be entitled to participate in the insurance and
employee benefit plans and programs maintained by the Company or its Affiliates
applicable to similarly situated officer employees on the same basis as such
other officer employees of the Company, subject only to the possible
substitution by or on behalf of the Company or its Affiliates of other plans or
programs providing substantially similar or increased benefits for Employee.
Employee will also be entitled to reasonable vacation time, with no reduction in
compensation, in keeping with Employee's duties and responsibilities to the
Company.
8. Early Termination. Employee's employment hereunder may be terminated
-----------------
without any breach of this Agreement only under the following circumstances:
(A) Employee's employment hereunder will terminate upon Employee's
death;
(B) The Company may terminate Employee's employment hereunder for
Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate Employee's employment hereunder upon (1) the willful and
continued failure by Employee to substantially perform his duties hereunder
(other than any such failure resulting from Employee's incapacity due to
physical or mental illness), after written demand for substantial
performance is delivered by the Company that specifically identifies the
manner in which the Company believes Employee has not substantially
performed his duties; or (2) the willful engaging by Employee in misconduct
that is materially injurious to the Company or its Affiliates; or (3) the
conviction of Employee of any felony or crime of moral turpitude. For
purposes of this subsection (B), no act, or
3
<PAGE>
failure to act, on Employee's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, Employee shall not be deemed
to have been terminated for Cause without (a) reasonable written notice to
Employee, setting forth the reasons for the Company's intention to
terminate for Cause; (b) an opportunity for Employee, together with his
counsel, to be heard before the Board (or an authorized representative
thereof); and (c) delivery to Employee of a written Notice of Termination
as defined in subsection (D) hereof from the Board finding that, in the
good faith opinion of the Board, Employee was guilty of conduct set forth
above in clause (1), (2) or (3) of this subsection (B), and specifying the
particulars thereof in detail.
(C) Employee may terminate Employee's employment hereunder (1) for
Good Reason or (2) if Employee's health should become impaired to an extent
that makes Employee's continued performance of Employee's duties hereunder
hazardous to Employee's physical or mental health or Employee's life,
provided that Employee shall have furnished the Company with a written
statement from a qualified doctor to such effect and provided, further,
that, at the Company's request, Employee shall submit to an examination by
a doctor selected by the Company and such doctor shall have concurred with
the conclusion of Employee's doctor.
For purposes of this Agreement, "Good Reason" shall mean (a) a failure
by the Company to comply with any material provision of this Agreement that
has not been cured within twenty days after notice of such noncompliance
has been given by Employee to the Company; or (b) any purported termination
of Employee's employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of subsection (D) hereof (and for
purposes of this Agreement no such purported termination shall be
effective).
(D) Any termination of Employee's employment by the Company or by
Employee (other than termination pursuant to subsection (A) above) shall be
communicated by written Notice of Termination to the other party hereto.
For purposes of this Agreement, a "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated.
4
<PAGE>
(E) "Date of Termination" shall mean (1) if Employee's employment is
terminated by Employee's death, the date of Employee's death; and (2) if
Employee's employment is terminated for any other reason, the date
specified in the Notice of Termination.
9. Compensation upon Termination. Upon termination of Employee's
-----------------------------
employment hereunder, Employee shall be paid as follows:
(A) If Employee's employment is terminated by Employee's death, the
Company shall continue to pay Employee's semi-monthly base salary to
Employee's designated beneficiaries, or if Employee leaves no designated
beneficiaries, to Employee's estate for a period of one year from the date
of termination.
(B) If Employee's employment shall be terminated for Cause, the
Company shall pay Employee Employee's bi-weekly base salary earned through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Employee under this Agreement.
(C) If (1) in breach of this Agreement, the Company shall terminate
Employee's employment other than pursuant to Section 8(B) hereof (it being
understood that a purported termination pursuant to Section 8(B) hereof
that is disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement); or (2) Employee
shall terminate Employee's employment for Good Reason, then the Company
shall continue to pay Employee Employee's bi-weekly salary through July 31,
1997.
(D) If Employee shall terminate Employee's employment under clause (2)
of Section 8(C) or by resignation in breach of this Agreement, the Company
shall pay Employee Employee's full base salary through the Date of
Termination at the rate in effect on the date that Notice of Termination is
received by the Company.
Employee shall not be required to mitigate the amount of any payment
provided for in Section 9(C) by seeking other employment or otherwise. If
however, Employee commences new employment while Employee is being paid by the
Company, the obligation to make the payments described in Section 9(C) shall be
subject to offset, in whole or in part, of an amount equal to the compensation
paid to or earned by Employee from any new employment undertaken by Employee
following Employee's termination of employment with the Company through July 31,
1997.
5
<PAGE>
Should Employee violate any provision of Section 10 hereof or violate any
provision of, or any agreement referred to in, Section 6 of this Agreement, then
the Company's obligation to make payments to Employee pursuant to Section 9 and
provide the benefits described in the following paragraph shall terminate
effective as of the date of commencement of such violation. At any such time
when Employee shall no longer be in the employ of the Company, any successor in
interest to the Company or any of their respective Affiliates, Employee shall be
entitled to receive as of the date of such termination, subject to the terms and
conditions of any applicable insurance or employee benefit plan, payments in
satisfaction of any and all other wages, benefits, or other remunerations which
shall then be payable to, or vested on behalf of, Employee.
During the term of this Agreement, Employee shall give the Company
immediate notice of any change of address.
10. Noncompetition. Employee agrees and covenants:
--------------
(A) That during Employee's employment with the Company Employee will
not directly or indirectly (i) engage in any employment, business, or
activity that is in any way competitive with the business or proposed
business of the Company or any Affiliate, or (ii) assist any other person
or organization in competing with the Company or any Affiliate or in
preparing to engage in competition with the business or proposed business
of the Company or any Affiliate. Direct competition shall include, but not
be limited to, the design, development, production, promotion or sale of
products, software or services competitive with those of the Company. The
provisions of this paragraph shall apply both during normal working hours
and at all other times including, but not limited to, nights, weekends and
vacation time, while Employee is employed by the Company.
(B) That, during the term provided for in Section 2 and for a period
of 18 months after Employee ceases to be employed by the Company, Employee
will not directly or indirectly solicit to conduct any competitive business
with, or conduct any competitive business with, any (i) then-current
customer of the Company or (ii) any person that has been a customer of the
Company within the 12 months prior to the time of Employee's separation
from employment. The phrase "competitive business" means the line(s) of
business(es) conducted by the Company or any Affiliate.
6
<PAGE>
(C) That, during the term provided for in Section 2 and for a period
of 18 months after Employee ceases to be employed by the Company, Employee
shall not directly or indirectly solicit to hire any employee of the
Company or any Affiliate as an employee or agent of, or consultant to, any
business enterprise that Employee is associated with.
(D) Each non-competition covenant of Employee contained in the
preceding provisions of this Section 10 (the "non-competition covenant")
shall be construed as an agreement independent of any other provision of
this Agreement and the existence of any claim or cause of action of
Employee against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company
of such non-competition covenant.
(E) Although the Company and Employee have in good faith used their
best efforts to make each non-competition covenant reasonable in both scope
and in duration, and it is not anticipated, nor is it intended, by either
party to this Agreement that any court or other tribunal having
jurisdiction will find it necessary to reform any non-competition covenant
to make it reasonable in both scope and in duration, or otherwise, the
Company and Employee understand and agree that if a court or other tribunal
having jurisdiction determines it necessary to reform any non-competition
covenant in order to make it reasonable in either scope or duration, or
otherwise, damages, if any, for a breach of the non-competition covenant,
as so reformed, will be deemed to accrue to the Company or an Affiliate, as
applicable, as and from the date of such a breach only and so far as the
damages for such breach related to an action which accrued within the scope
and duration as so reformed.
11. Affiliate Defined. The term "Affiliate" as used in this Agreement
-----------------
means any individual, corporation, unincorporated organization, trust or other
form of entity controlling, controlled by or under common control with the
Company. For purposes of this definition, "control" (including "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such individual, corporation, unincorporated organization, trust or other form
of entity, whether through the ownership of voting securities or otherwise.
12. Waiver. No waiver of any provision of this Agreement shall be
------
deemed, or shall constitute, a waiver of any other
7
<PAGE>
provision, whether or not similar, nor shall any waiver constitute a waiver of
any continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right under this Agreement. No waiver shall be
binding unless executed in writing by the party making the waiver.
13. Limitation of Rights. Nothing in this Agreement, except as
--------------------
specifically stated herein, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective permitted successors and assigns and other legal
representatives, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
14. Remedies. Employee hereby agrees that a violation of any provision
--------
of Section 6 or 10 or any agreement referred to in Section 6 would cause
irreparable injury to the Company or its Affiliates for which it would have no
adequate remedy at law. Accordingly, in the event of any such violation, the
Company shall be entitled to preliminary and other injunctive relief. Any such
injunctive relief shall be in addition to any other remedies to which the
Company or its Affiliates may be entitled at law or in equity, or otherwise.
15. Notice. Any consent, notice, demand or other communication required
------
or permitted hereby must be in writing to be effective and shall be deemed to
have been received on the date delivered, if personally delivered, or five days
following the date the same is deposited in the United States mail, postage
prepaid, certified return receipt requested, addressed to the applicable party
at the address for such party set forth below or at such other address as such
party may designate by like notice:
Cardkey Systems, Inc.
c/o Amtech Corporation
Dominion Plaza
17304 Preston Road, E-100
Dallas, Texas 75252
Attn: General Counsel
Employee:
Michael H. Wolpert
1830 Kelton Avenue
Los Angeles, CA 90025
8
<PAGE>
16. Inconsistent Obligations. Employee represents and warrants that
------------------------
Employee has not previously assumed any obligations inconsistent with those of
this Agreement.
17. Entirety and Amendments. This instrument and the instruments referred
-----------------------
to herein embody the entire agreement between the parties relating to the
subject matter hereof, supersede all prior agreements and understandings
relating to the subject matter hereof, and may be amended only by an instrument
in writing executed by all parties, and supplemented only by documents delivered
or to be delivered in accordance with the express terms hereof. This Agreement
expires at the end of its term per Section 2 and provides for no automatic
extension or renewal unless separately agreed to in writing by the parties. In
the event of a conflict or inconsistency between any provision of this Agreement
and any provision of the Assignment of Inventions Agreement, whichever provision
is most favorable to the Company shall govern.
18. Successors and Assigns. This Agreement will be binding upon and
----------------------
inure to the benefit of the parties hereto and any successors in interest to the
Company, but neither this Agreement nor any rights hereunder may be assigned by
Employee except in the case of the death of Employee. However, this Agreement
may be assigned by the Company, in whole or part, to an Affiliate of the
Company.
19. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Texas (excluding its
conflict of laws rules).
20. Cumulative Remedies. Except as provided in Exhibit A attached hereto,
------------------- ---------
no remedy herein conferred upon any party is intended to be exclusive of any
other benefits or remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other benefit or remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. No single or
partial exercise by any party of any right, power or remedy hereunder shall
preclude any other exercise or further exercise thereof.
21. Alternate Dispute Resolution. Employee and the Company agree to the
----------------------------
alternative dispute resolution provisions contained in Exhibit A attached
---------
hereto. The provisions of this Section 21 shall survive the termination or
expiration of this Agreement.
22. Multiple Counterparts. This Agreement may be executed in a number of
---------------------
identical counterparts, each of which constitute collectively, one agreement;
but, in making proof of this Agreement, it shall not be necessary to produce or
account for more than one counterpart.
9
<PAGE>
23. Descriptive Headings. The headings, captions and arrangements used in
--------------------
this Agreement are for convenience only and shall not be deemed to limit,
amplify, or modify the terms of this Agreement, nor affect the meaning hereof.
10
<PAGE>
Signatures
----------
To evidence the binding effect of the covenants and agreements described
above, the parties hereto have executed this Agreement effective as of the date
first above written.
THE COMPANY:
By: /s/ STUART M. EVANS
------------------------------
Stuart M. Evans
Chief Executive Officer
EMPLOYEE:
/s/ MICHAEL H. WOLPERT
-------------------------------------
11
<PAGE>
EXHIBIT A
---------
ALTERNATIVE DISPUTE RESOLUTION
------------------------------
A. Except as otherwise provided in this Exhibit A, Cardkey Systems, Inc.,
---------
a Delaware corporation ("Cardkey" or the "Company"), and the Employee consent
and agree to the resolution, in the manner provided for in this Exhibit A, of
---------
all claims or controversies brought by the Employee ("Claims") for which a court
otherwise would be authorized by law to grant relief, in any way arising out of,
relating to, or associated with (1) the Employee's employment or termination
from employment with Cardkey or any adverse employment action by Cardkey, or (2)
any other claims the Employee may have against Cardkey, any benefit plans of
Cardkey or any Affiliate or any fiduciaries, administrators, and affiliates of
any such benefit plan, or any of Cardkey's officers, directors, employees, or
agents in their capacity as such, or (3) any issue concerning the formation,
applicability, interpretation, or enforceability of this Exhibit A.
---------
The Employee acknowledges that the Claims intended to be covered by this
Exhibit A include (but are not limited to) claims or controversies under or
- ---------
relating to the Employee's employment agreement (of which this Exhibit A is a
---------
part); any federal, state, or local constitution, law, or regulation prohibiting
discrimination, harassment, or discharge; an alleged or actual contract; any
Company policy or benefit; entitlement to wages or other compensation; and, any
claim for personal, emotional, physical, economic, or other injury.
B. The only Claims otherwise within the definition of Claims that are not
covered by this Exhibit A are: (1) any administrative actions that the Employee
---------
is permitted to pursue under applicable law that are not precluded by virtue of
the Employee having entered into this Exhibit A; (2) any Claim by the Employee
---------
for workers' compensation benefits or unemployment compensation benefits; or (3)
any Claim by the Employee for benefits under a Company pension or benefit plan
that provides its own non-judicial dispute resolution procedure.
C. The Employee waives any right to assert a Claim, unless he or she
gives written notice of any Claim to Cardkey by the earlier of (1) the date that
is one year after the day the Employee first has knowledge of the event giving
rise to the Claim or (2) the date upon which the applicable statute of
limitations expires.
D. Within 20 days of receipt of the notice of a Claim, CARDKEY, IN ITS
SOLE DISCRETION, MAY ELECT TO SUBMIT ANY CLAIMS TO BINDING ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS OF THIS
<PAGE>
EXHIBIT A. If Cardkey elects not to submit a Claim to binding arbitration, then
- ---------
the Employee may initiate or otherwise pursue the Claim by legal proceedings
other than binding arbitration (e.g., a lawsuit). The Employee agrees that if he
or she initiates litigation in violation of this Exhibit A, he or she will incur
---------
liability to the person(s) sued. The sole and exclusive venue of any lawsuit
initiated by the Employee relating to any Claims shall be Los Angeles County,
California.
E. The arbitration will be conducted in accordance with the provisions of
this Exhibit A and the Employment Dispute Resolution Rules of the American
---------
Arbitration Association ("AAA") in effect at the time the written notice of the
Claim is received. An arbitrator shall be selected in the manner provided for
in the Employment Dispute Resolution Rules of the AAA, except that the parties
agree that the arbitrator shall (1) be an attorney licensed in California and
(2) have expertise in the area of employment law. The arbitration will be held
in Los Angeles County, California.
F. Deposition discovery may be taken to the extent permitted by
applicable law. The Employee understands that by agreeing to submit Claims to
arbitration he or she gives up the right to seek a trial by court or jury and
the right to an appeal from any errors of the court and forgoes any and all
related rights he or she may otherwise have under federal and state laws.
G. In the event any provision of this Exhibit A is found by an arbitrator
---------
or court to be unenforceable, in whole or in part, the remaining provisions of
this Exhibit A shall nevertheless remain enforceable and the unenforceable
---------
provisions shall, to the extent permitted under applicable law, be modified so
as to be enforceable to the maximum extent possible under applicable law.
H. EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS CAREFULLY READ THIS EXHIBIT
-------
A; THAT HE OR SHE UNDERSTANDS ITS TERMS; THAT ALL UNDERSTANDINGS BETWEEN THE
- -
EMPLOYEE AND CARDKEY RELATING TO THE SUBJECTS COVERED IN THIS EXHIBIT A ARE
---------
CONTAINED IN THIS EXHIBIT A; AND, THAT HE OR SHE HAS ENTERED INTO THIS EXHIBIT A
--------- ---------
VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY CARDKEY
OTHER THAN THOSE CONTAINED IN THIS EXHIBIT A ITSELF OR THE EMPLOYMENT AGREEMENT
---------
(TO WHICH THIS EXHIBIT A IS A PART).
---------
2
<PAGE>
EXHIBIT 10.33
Execution Version
FOUNDER'S EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 29th day of December, 1994, between Wavelink
Technologies Inc., a body corporate duly incorporated under the laws of the
Province of Ontario and having an office at 5825 Kennedy Road in the City of
Mississauga, in the Province of Ontario (hereinafter referred to as "the
Company") and NINO ZAINO currently residing in the City of Mississauga or a
surrounding community, in the Province of Ontario (hereinafter referred to as
"the Founder").
WHEREAS the undersigned Founder is one of the founders of the Company and the
Founder and the Company are desirous of entering into this Founder's Employment
Agreement ("Agreement") setting out the terms and conditions of the Founder's
employment with the Company; and
NOW THEREFORE in consideration of the mutual covenants and agreements
contained hereinafter, it is agreed as follows.
1. POSITION OF EMPLOYMENT. The Company and the Founder agree that,
----------------------
unless otherwise agreed in writing by the parties, during the term of this
Agreement the Founder will be employed by the Company as President and Chief
Executive Officer or a comparable position, with such duties as may be assigned
from time-to-time by the Board of Directors of the Company or the Company's
chief executive officer; provided however, the Founder shall not be assigned any
----------------
duty or position that will necessitate a change in the location of his home
(presently in the Mississauga, Ontario area), unless the Founder consents in
writing to such assignment.
2. SALARY AND BENEFITS.
-------------------
2.01 During the term of the Founder's employment hereunder, the Company
shall pay or cause to be paid to the Founder for his services an annual base
salary of not less than $125,000 payable in equal semi-monthly instalments on
normal payroll dates. The Company and the Founder agree that the amount of the
Founder's salary shall be reviewed at least annually by the Board of Directors,
who may in its sole and complete discretion make appropriate increases thereto
after giving due consideration to the Founder's achievements during the past
year, having regard to the financial well-being of the Company and the market
rates of remuneration paid in Ontario for persons performing duties and
responsibilities similar to those being performed by the Founder. When any such
adjustment is made, the parties will execute a supplement to this Agreement.
2.02 In addition to the Founder's base salary as noted above, the Founder
will be entitled to participate in a bonus program upon terms and conditions
approved by the Company's Board of Directors, which will provide the Founder a
calendar year-end bonus opportunity of between 15% to 35% of base salary based
on the financial performance of the Company and individual performance.
<PAGE>
2.03 During the term of the Founder's employment hereunder, the Founder will
be entitled to participate in the insurance and employee benefit plans and
programs maintained by the Company applicable to similarly situated employees on
the same basis as such other employees, subject only to the possible
substitution by or on behalf of the Company of other plans or programs providing
substantially similar or increased benefits for the Founder. Any substitution
by the Company of such employment benefits will in no way affect any of the
other terms and conditions of this Agreement and they will continue in full
force and effect.
2.04 The Founder will be entitled to reimbursement of any reasonable
expenses incurred by the Founder pursuant to or in the course of the Founder's
discharge of his employment duties hereunder in accordance with the policies
respecting business expenses established or to be established by the Company
from time-to-time.
2.05 During each calendar year of this Agreement, the Founder will be
entitled to 4 weeks vacation with pay or such greater reasonable vacation with
pay as may be specified in Company policies governing the matter that are
adopted from time-to-time.
3. GENERAL OBLIGATIONS OF THE FOUNDER TO THE COMPANY.
-------------------------------------------------
The Founder shall serve the Company faithfully and to the best of the
Founder's ability. Throughout the term of the Founder's employment with the
Company, the Founder shall devote his full working time and attention to the
business and affairs of the Company.
4. TERM OF EMPLOYMENT AGREEMENT.
----------------------------
4.01 Subject to the termination of the Founder's employment with the
Company as provided for under paragraphs 4.02, 4.05 and 4.06 hereof, the initial
term of the Founder's employment with the Company will be from the date hereof
to and including December 31, 1996. During the initial term, the Company shall
only be permitted to terminate the employment of the Founder in accordance with
sections 4.02, 4.05 or 4.06 or upon payment to the Founder of a lump sum
severance amount equal to the greater of:
(i) an amount equal to the Founder's base salary for six months; and
(ii) an amount equal to the Founder's base salary for the balance of
the initial term.
Unless either party provides the other party written notice that it is such
party's intent not to renew this Agreement more than 60 days prior to the
expiration of the then current term, the term of this Agreement shall
automatically renew for one additional year and so on from time-to-time. The
giving by either party of a notice of an intent not to renew in accordance with
this paragraph shall not, in and of itself, constitute a termination of the
Founder's employment with the Company.
4.02 The Founder may, by providing written notice of three months,
terminate the Founder's employment with the Company. Upon receipt of such
notice, the Company, in its sole
-2-
<PAGE>
discretion, may, by notice in writing, specify an earlier termination date. In
the event of such notice by the Company, the Company will pay the Founder all
amounts due and owing through the date of termination specified in the
Company's notice plus a lump sum allowance in an amount that when added to the
amounts to be received by the Founder through the date of termination specified
in the Company's notice is equivalent to three months' base salary.
4.03 If the Company terminates the Founder's employment with the
Company other than as permitted under paragraphs 4.02, 4.05, and 4.06 at any
time after the expiry of the initial term, then the Company shall pay to the
Founder, in a lump sum, as severance, an amount equal to the Founder's base
salary for six months.
4.04 The Founder acknowledges and agrees that payment by the Company
as provided in paragraphs 4.01, 4.02 and 4.03 shall be in full and final
settlement of any and all claims, demands, actions and suits whatsoever which
the Founder has or may have against the Company, Amtech Corporation, their
affiliates and any of their directors, officers, employees and their successors
and assigns. In the event that the government of Ontario, by legislation,
requires the payment of severance in an amount greater than set forth in
paragraphs 4.02 or 4.03, as applicable, the Founder shall be entitled to such
statutory severance in lieu of, but not in addition to, the severance set out in
paragraphs 4.02 or 4.03, as applicable.
4.05 Notwithstanding anything contained in this Agreement, the
employment of the Founder with the Company may be terminated for just cause
without notice of termination or payment in lieu of notice, and without
liability to the Company beyond any amounts due and owing to the date of
termination by the Company. For the purposes of the foregoing "just cause"
means:
(i) any theft, fraud or dishonesty by the Employee involving the
property or affairs of the Company; or
(ii) any act or omission by the Employee that is deemed to be just
cause for dismissal under the common law in the Province of Ontario.
4.06 The employment of the Founder with the Company shall terminate,
without liability to the Company beyond amounts due and owing through the date
of termination, upon the happening of any of the following:
(i) the death of the Founder;
(ii) the Founder reaching the retirement age as established by the
retirement policy of general application established or to be established
by the Company from time-to-time; or
(iii) the Founder is unable to perform the Founder's job
responsibilities because of incapacity due to physical or mental illness
for a consecutive period of six (6) months or a cumulative period of six
(6) months in any consecutive twelve (12) month period. The parties
understand that any wage replacement payments received by the
-3-
<PAGE>
Founder under any applicable disability insurance policies during the
period of disability shall be in lieu of (and not in addition to) a
corresponding amount of salary or other compensation.
5. CONFIDENTIALITY AND NON-COMPETITION.
-----------------------------------
5.01 The Founder acknowledges that the Founder holds a position of
trust with the Company and that he has been and will be entrusted with detailed
trade secrets and other confidential or proprietary information of the Company.
The Founder acknowledges that the Founder has previously executed a Confidential
Information, Invention Assignment and Non-Competition Agreement, dated September
30, 1994, relating to the treatment of confidential information, inventions,
non-competition and other matters, which agreement is incorporated herein by
reference and is deemed to be a part of this Agreement as if the provisions
thereof were fully set forth herein. Such agreement will, subject to the
provisions of paragraph 5.02, continue to apply in accordance with its terms
during the Founder's employment with the Company and thereafter, regardless of
the reason for the termination or expiration of the Founder's employment.
5.02 Notwithstanding the provisions of paragraph 4 of the above-
referenced Confidential Information, Invention Assignment and Non-Competition
Agreement, the Founder and the Company have agreed, with respect to the
application of the provisions of such paragraph 4 during the period following
the termination or expiration of the Founder's employment with the Company, as
follows:
(i) the Founder shall be bound by the provisions of such paragraph 4
for a minimum period of six (6) months following the date of the
termination or expiration of the Founder's employment with the Company.
(ii) The Company may, at its election, require the Founder to be
bound by the provisions of such paragraph 4 for each of the seventh through
twelfth months following the date of the termination or expiration of the
Founder's employment with the Company by paying to the Founder for one or
more of these seventh through twelfth months the monthly base salary being
paid to the Founder at the time of the termination or expiration of the
Founder's employment with the Company. If the Company so elects by making
the required payment, then the Founder shall abide by the provisions of
such paragraph for each of such seventh through twelfth months that the
Company actually makes the payment in question.
6. MISCELLANEOUS.
-------------
6.01 Except as otherwise expressly provided herein, all notices shall
be in writing and either delivered personally, or sent by registered or
certified mail, telex, telegram, cable or telecopier (receipt confirmation
requested) and addressed as follows:
The Founder: 1647 Wembury Road
Mississauga, Ontario
L5J 4G4
-4-
<PAGE>
The Company: Wavelink Technologies, Inc.
5825 Kennedy Road
Mississauga, Ontario
Canada
L4Z 2G3
Attention: Ivan Berka
copy to: Amtech Corporation
17304 Preston Road, E-100
Dallas, Texas 75252
Attn: General Counsel
Any address may be changed by notice given in accordance with the provisions of
this paragraph. Any notice which is delivered personally shall be effective
when delivered and any notice which is sent by telex, telecopier, cable or
telegram shall be effective on the business day following the day of sending.
Any notice given by telex, telecopier, cable or telegram shall immediately be
confirmed by registered or certified mail.
6.02 This Agreement and the Confidential Information, Invention
Assignment and Non-Competition Agreement referenced in paragraph 5 contains the
entire agreement between the Company and the Founder and supersedes all previous
negotiations, understandings and agreements whether verbal or written, with
respect to the terms and conditions of employment between the Company and the
Founder. The parties agree that this Agreement may only be modified in writing
and signed by both parties.
6.03 This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of Ontario. The Company and the
Founder agree that if there is any dispute between them with respect to the
rights of either party under this Agreement, such dispute will be submitted to
the Courts of the Province of Ontario, and the Company and the Founder attorn to
the jurisdiction of the Courts of the Province of Ontario.
6.04 This Agreement shall not be assignable by either party unless
the written consent of the other party has been obtained, provided, however,
that the Company may assign this Agreement to any person or entity acquiring all
or substantially all of the undertaking, property or assets of the Company
whether by way of merger, amalgamation, transfer, sale, lease or other
transaction and may assign it to any affiliate of the Company; provided, that,
an assignment to an affiliate shall not relieve the Company of its obligations
hereunder. As used herein, "affiliate" means with respect to any corporation or
other entity, a corporation or other entity directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the corporation
or other entity in question.
6.05 This Agreement shall enure to the benefit and be binding upon the
parties hereto, their respective heirs, executors, administrators, successors
and permitted assigns.
-5-
<PAGE>
6.06 The Company and Founder agree that they shall, from time-to-time
and at all times, do all such further acts and execute and deliver all such
further documents and assurances as shall be reasonably required in order to
fully perform and carry out the terms of this Agreement.
6.07 No failure by either the Company or the Founder to exercise any
of their respective rights, powers or privileges pursuant to this Agreement
shall operate as a waiver of such rights, powers or privileges, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
by either of them, preclude either of them from further exercising any right,
power or privilege pursuant to this Agreement.
6.08 In the event that any provision or any part of any provision
hereof is deemed to be invalid by reason of the operation of any law or by
reason of the interpretation placed thereon by a court, this Agreement shall be
construed as not containing such provision or part of such provision and the
invalidity of such provision or such part shall not affect the validity of any
other provision or the remainder of such provision hereof. All other provisions
hereof which are otherwise lawful and valid shall remain in full force and
effect.
6.09 The Founder understands that by executing this Agreement, the
Founder accepts and agrees to be bound by its terms and conditions. The
Founder acknowledges that the Founder is signing this Agreement freely and
voluntarily having had an opportunity to review, understand and seek advice as
to the meaning of the above provisions.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed as of the effective date first above written.
WAVELINK TECHNOLOGIES, INC.
By: Dan Berlin
------------------------------
Its: SECRETARY
------------------------------
/s/ S. SLIEDBOLT /s/ NINO ZAINO
- ------------------------- ----------------------------------
(Witness) NINO ZAINO
-6-
<PAGE>
EXHIBIT 13.1
CONSOLIDATED FINANCIAL REVIEW . FINANCIAL SUMMARY
<TABLE>
<CAPTION>
FIVE-YEAR FINANCIAL SUMMARY YEAR ENDED DECEMBER 31,
------------------------------------------------
1995(1) 1994 1993 1992 1991
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales $80,071 $61,457 $59,424 $39,856 $18,748
Operating costs and expenses:
Cost of sales 53,656 31,288 28,678 20,190 11,563
Research and development 9,334 6,222 4,407 2,562 1,963
Marketing, general and administrative 23,123 13,991 13,978 10,960 10,640
------- ------- ------- ------- -------
86,113 51,501 47,063 33,712 24,166
------- ------- ------- ------- -------
Operating income (loss) (6,042) 9,956 12,361 6,144 (5,418)
Investment income 2,308 2,104 1,735 1,261 433
Interest expense (181) -- -- -- --
------- ------- ------- ------- -------
Income (loss) before income taxes and
cumulative effect of change in accounting
for income taxes (3,915) 12,060 14,096 7,405 (4,985)
Provision for income taxes 172 4,398 3,729 132 --
------- ------- ------- ------- -------
Income (loss) before cumulative effect of change
in accounting for income taxes (4,087) 7,662 10,367 7,273 (4,985)
Cumulative effect of change in accounting for
income taxes -- -- 6,000 -- --
------- ------- ------- ------- -------
Net income (loss) $(4,087) $ 7,662 $16,367 $ 7,273 $(4,985)
======= ======= ======= ======= =======
Earnings (loss) per share(2) $ (0.28) $ 0.52 $ 1.10 $ 0.51 $ (0.40)
Shares used in computing earnings (loss) per share 14,655 14,800 14,855 14,199 12,409
Cash dividends declared per common share $ 0.02 $ 0.08 $ 0.06 $ -- $ --
BALANCE SHEET DATA:
Working capital $49,349 $63,558
$47,625 $38,030 $13,554
Total assets 93,379 80,622 76,720 57,445 22,991
Total stockholders' equity (3) 72,561 75,336 66,805 48,821 15,965
Stockholders' equity per share 4.97 5.16 4.59 3.40 1.26
</TABLE>
(1) In 1995, the Company acquired Cotag International Limited, Cardkey Systems,
Inc., Cardkey Systems Limited and WaveLink Technologies, Inc. See Note 2 to
Consolidated Financial Statements included herein.
(2) Amount for 1993 includes the cumulative effect of a change in accounting for
income taxes which increased earnings per share by $0.40.
(3) The Company completed a follow-on public offering in May 1992 of 1,562,500
common shares for net proceeds of $24,884,000.
This five-year financial summary should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes included
herein.
18
<PAGE>
CONSOLIDATED FINANCIAL REVIEW
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Amtech Systems Corporation and Amtech World Corporation develop and provide
high-frequency radio frequency identification (RFID) solutions to the
transportation markets which include vehicle-roadside communications, electronic
toll and traffic management (ETTM), rail, intermodal and motor freight. Products
and services for electronic access control applications are the focus of Cotag
International Limited ("Cotag") and Cardkey Systems, Inc. and Cardkey Systems
Limited (collectively "Cardkey"). Cotag and Cardkey were acquired by the Company
in January and August 1995, respectively. WaveLink Technologies, Inc.
("WaveLink") is developing a line of products targeting the interactive data
marketplace consisting of mobile radio frequency data communications terminals
using wireless local area networks for use in portable computing in logistics,
warehousing, transportation and medical applications.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 1995 to the Year Ended December 31,
1994
Sales - Sales increased by 30% from $61,457,000 in 1994 to $80,071,000 in
1995. Sales volumes for the ETTM sector of the transportation markets increased
$10,211,000, primarily as a result of revenues of approximately $16,942,000
from a single systems integration services contract. Shipments in the
transportation markets for the rail industry decreased from $30,506,000 to
$9,281,000 primarily as a result of the substantial completion in mid-1994 of
tag deliveries for the implementation of the Association of American Railroads'
mandatory standard for automatic equipment identification. Sales in the
electronic access control markets amounted to approximately $31,687,000 in 1995
as sales of Cotag were included in the Company's consolidated financial
statements beginning February 1, 1995, and sales of Cardkey were included
beginning August 1, 1995.
Cost of Sales and Gross Profit - Gross profit as a percentage of sales
decreased from 49% in 1994 to 33% in 1995. This decrease was primarily due to a
reduction in the percentage of sales attributable to the Company's manufactured
products for the transportation markets, and a larger percentage of sales being
attributable to lower margin systems integration project work in the ETTM
market. The gross profit margin on sales to the electronic access control
markets was 32%.
Research and Development - Research and development expenses increased by 50%
from $6,222,000 in 1994 to $9,334,000 in 1995, due in part to one-time charges
of $1,382,000 for purchased in-process research and development as a result of
the Cardkey and WaveLink acquisitions, expenditures of approximately $900,000 by
WaveLink for product development and the inclusion of expenses for Cotag and
Cardkey of $2,427,000 in 1995. These increases were partially offset by reduced
joint venture expense levels relating to product development for certain
transportation applications.
Marketing, General and Administrative - Marketing, general and administrative
expenses increased 65% from $13,991,000 in 1994 to $23,123,000 in 1995. The
increases are primarily attributable to the inclusion of expenses of Cotag and
Cardkey of $10,642,000 in 1995. These increases were partially offset by
decreases in outside consultant, advertising and travel costs incurred to pursue
and support new business opportunities for the transportation markets.
Investment Income - Investment income increased from $2,104,000 in 1994 to
$2,308,000 in 1995. The increase is primarily attributable to gains realized
from the sale of corporate equity securities of approximately $1,040,000
partially offset by the effect of a reduction in invested cash and marketable
securities resulting from the Company's 1995 business acquisitions.
Income Taxes - The provision for income taxes in 1995 of $172,000 is different
from the U.S. statutory rate of 34% primarily due to the effect of unbenefitted
foreign losses. The effective tax rate for 1994 was 36.5%.
Net Income (Loss) - As a result of the foregoing, the Company experienced a
net loss of $4,087,000 in 1995 as compared to net income of $7,662,000 in 1994.
Comparison of the Year Ended December 31, 1994 to the Year Ended December 31,
1993
Sales - Sales increased by 3% from $59,424,000 in 1993 to $61,457,000 in 1994,
primarily due to increased sales volumes of the Company's products and services
for the ETTM sector of its markets. Installation of new systems in New York and
Kansas coupled with the continued implementation or expansion of systems in
Oklahoma, Houston, Hong Kong and Atlanta contributed to the increase in sales to
ETTM customers in 1994. Shipments to the rail industry decreased from
$33,438,000 to $30,506,000 primarily as a result of the substantial completion
in mid-1994 of tag deliveries for the implementation of the
19
<PAGE>
CONSOLIDATED FINANCIAL REVIEW
Association of American Railroads' mandated standard for automatic equipment
identification.
Cost of Sales and Gross Profit - Gross profit as a percentage of sales
decreased from 52% in 1993 to 49% in 1994. This decrease was primarily due to a
reduction in the percentage of sales attributable to the Company's manufactured
products. The business mix for the last half of 1994 trended toward lower margin
systems integration project work in the ETTM market.
Research and Development - Research and development expenses increased by 41%
from $4,407,000 in 1993 to $6,222,000 in 1994, primarily due to funding the
Company's pro rata share of the net expense incurred by the technology joint
venture, Intellitag Products, which was formed by the Company and Motorola, Inc.
to develop a new generation of products for ETTM applications. The Company's
total research and development expenditures increased by 47% from $6,204,000 in
1993 to $9,150,000 in 1994. Research and development expenditures of $1,797,000
in 1993 and $2,928,000 in 1994 were included in cost of sales relating to new
product research and development arrangements with customers and software
development costs associated with installation of customer projects.
Marketing, General and Administrative - Marketing, general and administrative
expenses were relatively unchanged from $13,978,000 in 1993 to $13,991,000 in
1994. Compensation costs increased for additional marketing and administrative
personnel to pursue and support new business opportunities. This increase was
offset by a decrease in legal expenses from $1,418,000 in 1993 to $642,000 in
1994 due to reduced litigation and regulatory matters.
Investment Income - Investment income increased from $1,735,000 in 1993 to
$2,104,000 in 1994, primarily attributable to the overall increase in interest
rates between periods.
Income Taxes - The provision for income taxes as a percentage of income before
taxes was 36.5% for 1994. The primary difference between the statutory and
effective tax rates is the provision for state taxes. The Company changed its
method of accounting for income taxes effective January 1, 1993, pursuant to
FASB Statement No. 109, "Accounting for Income Taxes." As permitted, the Company
elected to not restate the financial statements of any prior periods and
recorded the cumulative effect of the accounting change as of January 1, 1993.
This change resulted in a one-time increase in earnings of $6,000,000 for the
year ended December 31, 1993. The provision for income taxes as a percentage of
income before taxes and cumulative effect of change in accounting for income
taxes was 26% for 1993. The primary difference between the statutory and
effective tax rates is the utilization of net operating loss carryforwards of
$1,364,000.
Net Income - As a result of the foregoing, the Company achieved net income of
$7,662,000 in 1994 as compared to net income of $16,367,000 in 1993.
OUTLOOK FOR 1996
The 1995 acquisitions of Cotag, Cardkey and WaveLink have significantly
expanded the Company's worldwide product and service offerings of systems and
solutions utilizing wireless data technologies. As a result of these
acquisitions, the Company's revenue and employee base each have more than
doubled and worldwide locations now total approximately 40. The Company has
taken strategic steps to diversify into businesses complementary to its original
business and now must focus on expanding revenues with the development of
existing markets as well as new leading-edge technology, returning to
profitability and realizing the potential synergies between its market-oriented
groups. Cardkey was experiencing significant operating losses prior to its
acquisition by the Company. The level of Cardkey losses since the acquisition by
the Company has been substantially reduced primarily as a result of changes in
certain key management personnel, a reorganization of the operating structure of
Cardkey, overall expense reductions, product improvements, and the early
benefits of vertically integrated manufacturing efforts. Cardkey's improving
financial performance is expected to continue in 1996. Significant research and
development expenditures are expected to be incurred by WaveLink as work efforts
continue on the product line being developed by this technology start-up
company. Significant additional expenditures will be incurred by WaveLink to
build a U.S. sales, marketing and support organization designed to bring about
meaningful product sales in the latter half of 1996. Within the transportation
markets, sales of Company manufactured hardware products that yield higher gross
profit margins are expected to increase as a percentage of sales, while sales of
lower gross profit margin products and services, such as systems integration
project work in the ETTM sector, are expected to decrease. The Company expects
to continue to provide its share of cash required by Alcatel Amtech S.A., the
Company's European joint venture. If current trends hold in the Company's
established market-oriented groups and if the new WaveLink product line lives up
to expectations, the Company expects its pre-tax
20
<PAGE>
CONSOLIDATED FINANCIAL REVIEW
operating results for 1996 to approximately break even on targeted sales of $115
million to $130 million. These forward-looking statements are subject to the
"SAFE HARBOR" STATEMENT on the inside back cover of this Annual Report.
[See "SAFE HARBOR" STATEMENT, which appears
immediately following page 31].
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995 the Company's principal source of liquidity is its net
working capital position of $49,349,000, including cash and cash equivalents of
$17,669,000, marketable securities of $10,168,000 and accounts receivable of
$24,559,000. The Company's near-term liquidity will be impacted by a long-term
note payment of $2,594,000 in March 1997 associated with the acquisition of
Cardkey. Additionally, the Company expects to invest up to $4,000,000 in 1996
for property and equipment, primarily associated with businesses acquired by the
Company in 1995.
In August 1994, the Company's Board of Directors approved a program to
repurchase up to $5,000,000 of the Company's common stock from time-to-time in
the open market or in privately negotiated transactions. No limit has been
placed on the duration of the repurchase program. The Company repurchased 80,000
of its shares for $393,000 in 1995.
The Company believes that cash flows from operations and its existing net
working capital position will be sufficient to meet the capital requirements for
the current businesses for at least the next two years. Additional acquisitions,
if any, would be financed by the most attractive alternative available which
could be the utilization of cash reserves or the issuance of debt or equity
securities.
OTHER MATTERS
In October of 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," effective in 1996. Under SFAS No. 123, companies may elect to
record compensation expense for certain stock-based employee compensation
arrangements or disclose the omitted information in the notes to its financial
statements. The Company has elected to disclose such information and to continue
accounting for stock-based compensation plans utilizing the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."
COMMON STOCK INFORMATION
The Company's common stock trades on The NASDAQ Stock Market under the symbol
AMTC. The following table shows the high and low sales prices and cash dividends
declared, by quarter, for 1995 and 1994. These prices do not include adjustments
for retail mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------------------
CASH CASH
DIVIDENDS DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
<S> <C> <C> <C> <C> <C> <C>
QUARTER ENDED
March 31 $10.63 $7.25 $0.02 $33.75 $16.50 $0.02
June 30 $ 8.50 $5.25 $ -- $20.75 $11.00 $0.02
September 30 $ 7.63 $5.88 $ -- $14.00 $ 8.25 $0.02
December 31 $ 6.88 $4.63 $ -- $12.75 $ 7.63 $0.02
</TABLE>
At February 15, 1996 there were 14,605,036 shares of common stock outstanding
held by 862 stockholders of record. On that date, the last reported sales price
of the common stock was $5.25.
The Company suspended its quarterly payment of dividends after the first
quarter of 1995. Future dividends, if any, are dependent on the Company's future
earnings, capital requirements and overall financial condition.
21
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Amtech Corporation
We have audited the accompanying consolidated balance sheets of Amtech
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Amtech
Corporation at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 7 to the accompanying financial statements, in 1993
the Company changed its method of accounting for income taxes.
[SIGNATURE OF ERNST & YOUNG LLP
APPEARS HERE]
Dallas, Texas
February 15, 1996
22
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Sales................................. $80,071,000 $61,457,000 $59,424,000
Operating costs and expenses:
Cost of sales....................... 53,656,000 31,288,000 28,678,000
Research and development............ 9,334,000 6,222,000 4,407,000
Marketing, general and
administrative..................... 23,123,000 13,991,000 13,978,000
----------- ----------- -----------
86,113,000 51,501,000 47,063,000
----------- ----------- -----------
Operating income (loss)............... (6,042,000) 9,956,000 12,361,000
Investment income..................... 2,308,000 2,104,000 1,735,000
Interest expense...................... (181,000) -- --
----------- ----------- -----------
Income (loss) before provision for
income taxes and cumulative effect
of change in accounting for income
taxes................................ (3,915,000) 12,060,000 14,096,000
Provision for income taxes............ 172,000 4,398,000 3,729,000
----------- ----------- -----------
Income (loss) before cumulative effect
of change in accounting for income
taxes................................ (4,087,000) 7,662,000 10,367,000
Cumulative effect of change in
accounting for income taxes.......... -- -- 6,000,000
----------- ----------- -----------
Net income (loss)..................... $(4,087,000) $ 7,662,000 $16,367,000
=========== =========== ===========
Earnings (loss) per share:
Income (loss) before cumulative
effect of change in accounting
for income taxes................... $ (0.28) $ 0.52 $ 0.70
Cumulative effect of change in
accounting for income taxes........ -- -- 0.40
----------- ----------- -----------
Net income (loss)................... $ (0.28) $ 0.52 $ 1.10
=========== =========== ===========
Shares used in computing earnings
(loss) per share..................... 14,654,681 14,799,782 14,855,323
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
ASSETS 1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $17,669,000 $14,217,000
Short-term marketable securities 10,168,000 35,695,000
Accounts receivable, net of allowance for
doubtful accounts of $831,000 in 1995 and
$210,000 in 1994 24,559,000 7,438,000
Inventories 13,415,000 8,199,000
Deferred income taxes 1,037,000 1,060,000
Prepaid expenses 725,000 425,000
----------- -----------
Total current assets 67,573,000 67,034,000
Property and equipment, at cost 23,221,000 16,166,000
Accumulated depreciation (9,138,000) (7,281,000)
----------- -----------
14,083,000 8,885,000
Intangible assets, net of amortization of
$529,000 in 1995 8,827,000 --
Deferred income taxes 1,544,000 1,810,000
Other assets 1,352,000 2,893,000
----------- -----------
$93,379,000 $80,622,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,628,000 $ 1,607,000
Note payable 1,887,000 --
Accrued expenses 7,201,000 1,789,000
Deferred income and license revenues 2,508,000 80,000
----------- -----------
Total current liabilities 18,224,000 3,476,000
Deferred license revenues -- 1,810,000
Note payable 2,594,000 --
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value, 10,000,000
shares authorized; none outstanding -- --
Common stock, $0.01 par value, 30,000,000
shares authorized; 14,685,036 issued,
14,605,036 outstanding in 1995 and 14,607,408
issued and outstanding in 1994 147,000 146,000
Additional paid-in capital 75,349,000 75,086,000
Unrealized gain (loss) on marketable securities,
net of tax effect 1,323,000 (411,000)
Treasury stock, at cost (393,000) --
Retained earnings (accumulated deficit) (3,865,000) 515,000
----------- -----------
Total stockholders' equity 72,561,000 75,336,000
----------- -----------
$93,379,000 $80,622,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,087,000) $ 7,662,000 $ 16,367,000
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization 3,614,000 2,980,000 2,138,000
Deferred income taxes (603,000) 3,164,000 2,032,000
Tax benefit from exercise of stock options 101,000 329,000 1,319,000
Purchased in-process research and development 1,382,000 -- --
Cumulative effect of change in accounting for income taxes -- -- (6,000,000)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (2,030,000) 1,113,000 (3,699,000)
(Increase) decrease in inventories 756,000 (1,326,000) (210,000)
(Increase) decrease in prepaid expenses 280,000 (307,000) (16,000)
(Increase) decrease in other assets 603,000 1,910,000 (563,000)
Increase (decrease) in accounts payable and accrued
expenses 1,629,000 (3,660,000) 2,395,000
Decrease in deferred income and license revenues (1,233,000) (969,000) (1,104,000)
------------ ------------ ------------
Total adjustments 4,499,000 3,234,000 (3,708,000)
------------ ------------ ------------
Net cash provided by operating activities 412,000 10,896,000 12,659,000
Cash flows from investing activities:
Purchases of property and equipment (3,315,000) (2,333,000) (7,296,000)
Purchase of Cotag International Limited (5,784,000) -- --
Purchase of Cardkey Systems, net of cash acquired (15,096,000) -- --
Purchase of WaveLink Technologies Inc., net of cash acquired (428,000) -- --
Recapitalization of Alcatel Amtech S.A. -- (2,231,000) --
Purchases of marketable securities (3,000,000) (35,350,000) (14,603,000)
Sales and maturities of marketable securities 31,153,000 22,756,000 17,996,000
Increase in other assets (79,000) (983,000) (476,000)
------------ ------------ ------------
Net cash provided (used) by investing activities 3,451,000 (18,141,000) (4,379,000)
Cash flows from financing activities:
Payment of cash dividends (293,000) (1,168,000) (812,000)
Proceeds from exercise of stock options 301,000 264,000 1,110,000
Purchase of treasury stock (393,000) -- --
------------ ------------ ------------
Net cash provided (used) by financing activities (385,000) (904,000) 298,000
Effect of exchange rate changes on cash and cash equivalents (26,000) -- --
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 3,452,000 (8,149,000) 8,578,000
Cash and cash equivalents, beginning of year 14,217,000 22,366,000 13,788,000
------------ ------------ ------------
Cash and cash equivalents, end of year $ 17,669,000 $ 14,217,000 $ 22,366,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNREALIZED RETAINED
COMMON STOCK ADDITIONAL GAIN (LOSS) EARNINGS TOTAL
-------------------------- PAID-IN ON MARKETABLE TREASURY (ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL SECURITIES STOCK DEFICIT) EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 14,375,394 $144,000 $70,211,000 $ -- $ -- $(21,534,000) $48,821,000
Exercise of stock options
for cash 182,995 2,000 1,108,000 -- -- -- 1,110,000
Payment of cash dividends
($0.06 per share) -- -- -- -- -- (812,000) (812,000)
Tax benefit from exercise of
stock options -- -- 1,319,000 -- -- -- 1,319,000
Net income -- -- -- -- -- 16,367,000 16,367,000
---------- -------- ----------- ---------- --------- ------------ -----------
BALANCE, DECEMBER 31, 1993 14,558,389 146,000 72,638,000 -- -- (5,979,000) 66,805,000
Exercise of stock options
for cash 49,019 -- 264,000 -- -- -- 264,000
Payment of cash dividends
($0.08 per share) -- -- -- -- -- (1,168,000) (1,168,000)
Tax benefit from exercise
of stock options -- -- 2,184,000 -- -- -- 2,184,000
Unrealized loss on marketable
securities (net of tax
effect of $211,000) -- -- -- (411,000) -- -- (411,000)
Net income -- -- -- -- -- 7,662,000 7,662,000
---------- -------- ----------- ---------- --------- ------------ -----------
BALANCE, DECEMBER 31, 1994 14,607,408 146,000 75,086,000 (411,000) -- 515,000 75,336,000
Exercise of stock options
for cash 77,628 1,000 300,000 -- -- -- 301,000
Payment of cash dividends
($0.02 per share) -- -- -- -- -- (293,000) (293,000)
Tax benefit from exercise
of stock options -- -- 101,000 -- -- -- 101,000
Unrealized gain on marketable
securities (net of tax effect
of $892,000) -- -- -- 1,734,000 -- -- 1,734,000
Purchase of treasury stock
(80,000 shares) -- -- -- -- (393,000) -- (393,000)
Other -- -- (138,000) -- -- -- (138,000)
Net loss -- -- -- -- -- (4,087,000) (4,087,000)
---------- -------- ----------- ---------- --------- ------------ -----------
BALANCE, DECEMBER 31, 1995 14,685,036 $147,000 $75,349,000 $1,323,000 $(393,000) $ (3,865,000) $72,561,000)
========== ======== =========== ========== ========= ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The accompanying consolidated financial statements include the
accounts of the Company and its majority owned subsidiaries. Intercompany
balances and transactions have been eliminated. Investees in which the Company
owns 50% or less of the outstanding securities are accounted for using the
equity method of accounting.
Cash investments and marketable securities - Cash investments with maturities
of three months or less when purchased are considered cash equivalents.
Marketable securities, which are available-for-sale and have stated maturities
within two years, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
<S> <C> <C>
U.S. Treasury securities $ 7,124,000 $ 6,078,000
Obligations of states and political
subdivisions -- 22,728,000
U.S. corporate debt securities -- 5,431,000
U.S. corporate equity securities 3,044,000 1,458,000
----------- -----------
$10,168,000 $35,695,000
=========== ===========
</TABLE>
Marketable securities are carried at cost, which approximates fair market
value except for U.S. corporate equity securities which at December 31, 1995
have an unrealized gain of $2,004,000 and at December 31, 1994 have an
unrealized loss of $622,000. For these securities, such gains and losses are
excluded from earnings and included in stockholders' equity, net of potential
tax effect, until realized.
Inventories - Inventories are stated at the lower of cost (first-in, first-
out) or market.
Depreciation and amortization - Depreciation of property and equipment is
provided using the straight-line method over estimated useful lives ranging from
three to twenty-five years. Amortization of intangible assets is provided using
the straight-line method over periods ranging from seven to fifteen years.
Revenue recognition - Generally, sales are recorded when products are shipped
or services are rendered. Sales under research and development and construction
type contracts are recorded as costs are incurred and include estimated profits
calculated on the basis of the relationship between costs incurred and total
estimated costs (cost-to-cost type of percentage-of-completion method of
accounting). In the period in which it is determined it is probable that a loss
will result from the performance of a contract, the entire amount of the
estimated loss is charged against income. Deferred license revenues associated
with the sale of manufacturing and marketing rights are being amortized over
five years on a straight-line basis.
Earnings per share - The computation of earnings per share is based on the
weighted average number of shares of common stock and dilutive common equivalent
shares outstanding. Common equivalent shares assume the exercise of all dilutive
outstanding stock options using the treasury stock method. Fully diluted
earnings per share is not materially different from primary earnings per share
as presented.
Concentration of credit risk - The Company purchases cash investments
and marketable securities that are of high credit quality and limits the amount
invested in any one institution. The Company sells products and services to
various governmental and commercial customers covering a wide range of
industries throughout the world. The Company continuously evaluates the
creditworthiness of its customers' financial condition and generally does not
require collateral. The Company's allowance for doubtful accounts is based on
current market conditions and losses on uncollectible accounts have consistently
been within management's expectations.
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. BUSINESS ACQUISITIONS
Cotag
In late January 1995, the Company purchased all of the stock of Cotag
International Limited ("Cotag") for approximately $5,800,000, including
acquisition expenses. Cotag is located in Cambridge, England and manufactures
radio frequency identification security systems for hands-free electronic access
control and other related applications. The results of operations for Cotag are
included in the consolidated financial statements of the Company beginning
February 1, 1995. The acquisition of Cotag resulted in goodwill of approximately
$4,100,000, which is being amortized over ten years.
27
<PAGE>
Cardkey
On August 1, 1995, the Company purchased substantially all of the assets and
assumed certain liabilities of Cardkey Systems, Inc. and Cardkey Systems Limited
(collectively, "Cardkey") and subsequently sold certain operations unrelated to
Cardkey's core business. The net purchase price for Cardkey including
acquisition expenses was $18,642,000, consisting of cash of $15,096,000, a non-
interest bearing promissory note which has been recorded at a present value of
$4,481,000 using an 8.75% imputed interest rate, and reduced by a receivable of
$935,000 from the seller for post-acquisition adjustments which was paid in
February 1996. The note is payable in two installments, March 1996 and 1997, and
is secured by $3,000,000 of the Company's short-term marketable securities. The
primary operating companies of Cardkey are headquartered in Simi Valley,
California and Reading, England. Cardkey sells, installs and services electronic
access control systems through an international network of direct sales offices
and resellers.
The results of operations for Cardkey are included in the consolidated
financial statements of the Company beginning August 1, 1995. Allocation of the
purchase price resulted in a one-time charge in the third quarter of 1995 in the
amount of $882,000 for purchased in-process research and development. The
acquisition of Cardkey resulted in goodwill and other intangible assets of
approximately $4,900,000 which are being amortized over periods ranging from
seven to fifteen years.
The following unaudited pro forma summary combines the consolidated results of
operations of the Company and Cardkey as if the acquisition had occurred on
January 1, 1994, after giving effect to certain adjustments, including
amortization of goodwill and intangible assets, decreased interest income on the
cash consideration paid for the purchase, decreased interest expense on
intercompany debt not assumed by the Company and related income tax effects. The
pro forma summary does not include the effect of the one-time charge for
purchased in-process research and development. This pro forma summary is not
necessarily indicative of the results of operations as they would have been if
the Company and Cardkey had constituted a single entity during such periods, nor
is it necessarily indicative of the future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994
(In thousands, except per share data)
(Unaudited)
<S> <C> <C>
Sales $118,852 $130,313
Net income (loss) (5,953) 1,233
Earnings (loss) per share (0.41) 0.08
</TABLE>
WaveLink
Since December 1994, the Company has provided approximately $1,850,000 of debt
and equity financing to WaveLink Technologies, Inc. ("WaveLink") as certain
product development milestones were achieved. Located adjacent to Toronto,
Canada, WaveLink is developing a product line for the radio frequency data
collection market. During 1995, the Company accounted for its investment in
WaveLink using the equity method of accounting and recognized approximately
$900,000 as research and development expense. During the fourth quarter of 1995,
the financing provided by the Company resulted in the Company owning a majority
of the outstanding equity securities of WaveLink. Accordingly, WaveLink's
accounts are consolidated with those of the Company at December 31, 1995. Upon
consolidation, allocation of the Company's net investment to the acquired net
assets of WaveLink resulted in goodwill of approximately $364,000 and a one-time
charge of approximately $500,000 in the fourth quarter of 1995 for purchased
in-process research and development.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1995 1994
<S> <C> <C>
Raw materials $ 4,900,000 $4,486,000
Work in process 3,976,000 2,168,000
Finished goods 4,539,000 1,545,000
----------- ----------
$13,415,000 $8,199,000
=========== ==========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1995 1994
<S> <C> <C>
Land $ 690,000 $ 690,000
Building 4,462,000 3,391,000
Manufacturing, test and other equipment 8,801,000 7,896,000
Computer equipment and software 6,337,000 2,811,000
Office equipment, furniture, and
fixtures 2,106,000 1,070,000
Leasehold improvements and other 825,000 308,000
----------- ----------
$23,221,000 $16,166,000
=========== ===========
</TABLE>
28
<PAGE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1994
<S> <C> <C>
Payroll and related benefits $2,186,000 $ 593,000
Warranty reserves 1,741,000 255,000
Other 3,274,000 941,000
---------- ----------
$7,201,000 $1,789,000
========== ==========
</TABLE>
6. STOCK OPTIONS
The Company has non-qualified stock options outstanding to employees and
directors under various shareholder approved Stock Option Plans and 115,000
shares outstanding to non-employee directors, subject to shareholder approval,
pursuant to a 1996 Directors' Stock Option Plan. Options granted under these
plans are not less than the fair market value at the date of grant, and subject
to termination of employment, generally expire ten years from date of grant.
Employee options are generally exercisable in annual installments over five
years or are exercisable at rates of 45% in three years and 55% in five and one-
half years, unless accelerated due to the Company's common stock trading at
appreciated price targets. Annual grants to certain directors are exercisable
within six months from the date of the grant. At December 31, 1995, 191,903
shares were available for future grants under the Company's approved Stock
Option Plans excluding 58,200 shares reserved for possible issuance as
restricted stock in tandem with the exercise of certain stock options
outstanding.
The following is a summary of transactions in these plans for the years ended
December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
OPTION PRICE
-----------------------------
SHARES PER SHARE TOTAL
<S> <C> <C> <C>
Outstanding at
December 31, 1992 893,286 $ 0.05 - $22.40 $ 10,431,000
Granted 140,750 $22.75 - $29.25 3,471,000
Cancelled (39,058) $ 5.34 - $22.00 (411,000)
Exercised (182,995) $ 0.05 - $22.00 (1,110,000)
--------- ------------
Outstanding at
December 31, 1993 811,983 $ 0.05 - $29.25 12,381,000
Granted 642,475 $10.00 - $29.25 7,260,000
Cancelled (538,251) $ 5.34 - $29.25 (11,397,000)
Exercised (49,019) $ 0.05 - $20.50 (264,000)
--------- ------------
Outstanding at
December 31, 1994 867,188 $ 0.05 - $25.40 7,980,000
Granted 765,500 $ 5.00 - $ 9.63 4,692,000
Cancelled (277,712) $ 5.00 - $10.75 (2,543,000)
Exercised (77,628) $ 0.05 - $10.00 (301,000)
--------- ------------
Outstanding at
December 31, 1995 1,277,348 $ 0.05 - $25.40 $ 9,828,000
========= ============
Exercisable at
December 31, 1995 250,545 $ 0.05 - $25.40 $ 2,390,000
========= ============
</TABLE>
During the year ending December 31, 1994, certain stock options were cancelled
and regranted pursuant to a program whereby employees could voluntarily elect to
exchange any outstanding stock options for replacement options at the current
market price of the Company's common stock, provided that replacement options
would only be for one-half as many shares. As a result, 520,438 options were
cancelled and 260,225 options regranted for which the exercise price per share
was reduced from a range of $13.34 - $29.25 to $10.00 - $10.75.
7. INCOME TAXES
As required, effective January 1, 1993 the Company adopted FASB Statement No.
109, "Accounting for Income Taxes.'' As permitted, the Company elected to not
restate the financial statements of any prior periods. The cumulative effect of
the accounting change increased net income for the year ended December 31, 1993
by $6,000,000 or $0.40 per share.
Components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
<S> <C> <C> <C>
Current $ 775,000 $1,234,000 $1,697,000
Deferred (603,000) 3,164,000 2,032,000
--------- ---------- ----------
$ 172,000 $4,398,000 $3,729,000
========= ========== ==========
</TABLE>
Approximately $101,000, $2,184,000 and $1,319,000 in 1995, 1994 and 1993,
respectively, represent the tax benefit from the Company's stock option
exercises which directly increased paid-in capital and did not reduce the
provision for income taxes.
A reconciliation of the expected U.S. tax provision (benefit) to the actual
consolidated tax provision is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
<S> <C> <C> <C>
Expected tax provision (benefit)
at U.S. statutory rate $(1,331,000) $4,121,000 $ 4,838,000
State taxes 15,000 277,000 100,000
Foreign taxes 75,000 -- --
Interest on tax-exempt securities (15,000) (218,000) --
Utilization of net operating loss
carryforwards -- -- (1,364,000)
Unbenefitted foreign losses 1,171,000 -- --
Non-deductible goodwill 130,000 -- --
Other, net 127,000 218,000 155,000
----------- ---------- -----------
$ 172,000 $4,398,000 $ 3,729,000
=========== ========== ===========
</TABLE>
29
<PAGE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Components of the
Company's deferred tax assets and liabilities as of December 31, 1995 and 1994
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
<S> <C> <C>
Deferred tax assets:
Amortization of deferred license revenues $ 294,000 $ 646,000
Non-deductible reserves 1,301,000 699,000
Losses of foreign subsidiaries
and joint ventures 3,398,000 559,000
Tax credit carryforwards 478,000 798,000
Unrealized loss on marketable securities -- 211,000
Amortization of intangibles 247,000 --
Other, net 410,000 39,000
----------- ----------
Total deferred tax assets 6,128,000 2,952,000
Valuation allowance for deferred tax assets (2,866,000) --
----------- ----------
3,262,000 2,952,000
Deferred tax liabilities:
Unrealized gain on marketable securities 681,000 --
Depreciation -- 82,000
----------- ----------
Total deferred tax liabilities 681,000 82,000
----------- ----------
Net deferred tax assets $ 2,581,000 $2,870,000
=========== ==========
</TABLE>
The valuation allowance of $2,866,000 primarily represents losses of foreign
subsidiaries for which realization is uncertain. These foreign subsidiaries have
net operating loss carryforwards which begin to expire in the year 2002. Tax
credit carryforwards in the U.S. include research tax credits which are
available through 2009 and alternative minimum tax credits that do not expire.
Although realization is not assured, management believes it is more likely than
not that the net deferred tax assets will be realized. The amount of the
deferred tax assets considered realizable, however, could be reduced in the near
term if estimates of future taxable income are reduced.
8. COMMITMENTS AND CONTINGENCIES
Leases - The Company leases various automobiles and certain of its office
facilities. Rental expense for 1995, 1994 and 1993 was $1,521,000, $703,000
and $869,000 respectively. Certain facility leases have renewal options from
three to five years. Future minimum lease payments under noncancelable operating
leases are as follows:
<TABLE>
<S> <C> <C> <C>
1996 $2,524,000 1999 1,129,000
1997 2,128,000 2000 1,039,000
1998 1,296,000 Thereafter 4,930,000
</TABLE>
Contingencies - WaveLink and certain of its employees are the subject of a
$7,800,000 suit brought by Teklogix, Inc., their former employer. The suit
alleges improper use of confidential information, theft of technology,
misappropriation of business opportunities and similar improprieties. In
addition to the damages requested, the suit seeks to enjoin the defendants from
soliciting customers of Teklogix and from disclosing alleged confidential
information of Teklogix. WaveLink has denied any wrongdoing by it or its
employees and intends to vigorously defend the litigation. While the final
outcome of this matter cannot be predicted with certainty, the Company believes
that the final resolution of this matter will not have a material adverse effect
on the consolidated financial position of the Company.
9. RELATED PARTY TRANSACTIONS
Sales to affiliates accounted for 5%, 11% and 15% of sales for 1995, 1994 and
1993, respectively.
In December 1995, Mr. David P. Cook was appointed a director of the Company.
In April 1994 the Company invested $5,000,000 of cash and cash equivalents in a
Limited Partnership investment fund managed by Mr. Cook. The fund invests in
U.S. Treasury securities, financial futures contracts and index options. The
Company's investment is valued at $5,299,000 and $5,559,000 at December 31, 1995
and 1994, respectively. Mr. Cook personally guarantees the Company's $5,000,000
investment. The Company plans to liquidate its investment in the fund on March
31, 1996 to avoid any potential conflict of interest or the appearance of a
conflict of interest.
10. GEOGRAPHIC OPERATIONS AND SIGNIFICANT CUSTOMERS
The Company operates in one industry segment, the provision of systems and
solutions for the intelligent transportation, electronic security and logistics
markets through the design, manufacturing and marketing of hardware and software
products and services utilizing the Company's wireless data technologies.
30
<PAGE>
The following presents information about the Company's operations in different
geographic areas as a result of the 1995 business acquisitions:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------
(IN THOUSANDS)
CANADA
U.S. EUROPE AND OTHER ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Sales:
Unaffiliated customers $64,916 $14,763 $ 392 $ -- $80,071
Inter-area transfers 586 230 208 (1,024) --
------- ------- ------- ------- -------
$65,502 $14,993 $ 600 $(1,024) $80,071
======= ======= ======= ======= =======
Operating loss $(2,488) $(2,182) $(1,372) $ -- $(6,042)
======= ======= ======= ======= =======
Identifiable assets $78,863 $12,803 $ 1,713 $ -- $93,379
======= ======= ======= ======= =======
</TABLE>
Sales and transfers between geographic areas were generally priced to recover
cost plus an appropriate mark-up for profit. These inter-areas transfers were
eliminated from consolidated sales.
U.S. export sales, summarized by geographic area, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
<S> <C> <C> <C>
The Americas (excluding the U.S.) $ 6,593,000 $ 8,805,000 $ 9,362,000
Far East 3,938,000 1,577,000 2,011,000
Europe 2,867,000 1,557,000 2,593,000
----------- ----------- -----------
$13,398,000 $11,939,000 $13,966,000
=========== =========== ===========
</TABLE>
In 1995, the Company had one customer, a state government transportation
agency, which accounted for 21% of sales and 22% of year-end accounts
receivable. In 1994, the Company had two customers which accounted for 21% and
13% of sales. In 1993, the Company had two customers which accounted for 25%
and 14% of sales.
11. JOINT VENTURE
In September 1994, the Company and Alcatel AVI S.A. effected a
recapitalization of their European joint venture, Alcatel Amtech S.A. ("AASA"),
which is owned 51% by Alcatel AVI S.A. and 49% by the Company. As part of the
agreement, Alcatel AVI S.A. converted its loan to AASA of approximately
$5,700,000 into equity and the Company agreed to waive its right to receive the
next $2,000,000 of $4,700,000 that it was otherwise entitled to receive based on
AASA's future use of integrated circuit chips incorporating the Company's
proprietary technology. In addition the companies provided new equity capital to
AASA of approximately $3,700,000, including $2,231,000 by the Company. The
recapitalization eliminated AASA's losses accumulated since its inception.
12. EMPLOYEE BENEFIT PLAN
The Company has a retirement savings plan structured under Section 401(k) of
the Internal Revenue Code. The plan covers substantially all U.S. employees
meeting minimum service requirements. Under the Plan, contributions are
voluntarily made by employees and the Company may provide matching contributions
based on the employees' contributions. The Company incurred $79,000, $96,000 and
$83,000 in 1995, 1994 and 1993, respectively, for matching contributions to this
plan.
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------
1995 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Sales $13,935,000 $13,001,000 $24,526,000 $28,609,000
Cost of sales 9,373,000 8,434,000 15,775,000 20,074,000
Net loss (280,000) (1,257,000) (422,000) (2,128,000)
Net loss per share (0.02) (0.09) (0.03) (0.15)
1994
Sales $18,959,000 $18,513,000 $12,213,000 $11,772,000
Cost of sales 8,328,000 8,357,000 7,046,000 7,557,000
Net income 3,680,000 3,403,000 503,000 76,000
Net income per share 0.25 0.23 0.03 0.01
</TABLE>
31
<PAGE>
"Safe Harbor" Statement
Certain information in this Annual Report, including but not limited to, the
section entitled "Outlook for 1996" on page 20 are forward-looking statements.
These statements involve management assumptions and risks and uncertainties,
including but not limited to, the Interactive Data Group's ability to develop
successfully, timely release to manufacturing, and establish market channels for
the WaveLink product line, and customers' acceptance of such products; the
Transportation Systems Group's and Electronic Security Group's increasing the
sales of their manufactured products; the availability of components from
suppliers; the regulatory and trade environment; general domestic and
international economic conditions; the impact of competitive products and
pricing; the Company's ability to attract and retain key employees; and other
risks detailed from time to time in the Company's SEC public filings.
Consequently, if such management assumptions prove to be incorrect or such risks
or uncertainties materialize, the Company's actual results could differ
materially from the results forecast in the forward-looking statements.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
---------------------------
AMGT Corporation
(Delaware corporation)
Amtech B.V.
(Netherlands corporation)
Amtech Europe Limited
(United Kingdom corporation)
Amtech IVHS, Inc.
(Delaware corporation)
Amtech SARL
(French corporation)
Amtech Systems Corporation
(Delaware corporation)
Amtech Systems (Hong Kong) Limited
(Hong Kong corporation)
Amtech World Corporation
(Delaware corporation)
Cardkey Systems Pacific Pty. Limited
(Australian corporation)
Cardkey Sicherheitssysteme GmbH
(German corporation)
Cardkey Systems, Inc.
(Delaware corporation)
Cardkey Systems Limited
(United Kingdom corporation)
Cotag International Inc.
(Delaware corporation)
Cotag International Limited
(United Kingdom corporation)
WaveLink Technologies, Inc.
(Canadian corporation)
WaveLink Technologies, Inc.
(Delaware corporation)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-34451) pertaining to the 1988 Stock Option Plan, 1989 Stock Option
Plan, 1990 Stock Option Plan, and the Original Stock Plan of Amtech Corporation,
and in the Registration Statement (Form S-8 No. 33-53010) pertaining to the
Amtech Corporation 1992 Stock Option Plan, and in the Registration Statement
(Form S-8 No. 33-65061) pertaining to the Amtech Corporation 1995 Long-Term
Incentive Plan, of our report dated February 15, 1996, with respect to the
consolidated financial statements of Amtech Corporation incorporated by
reference in this Annual Report (Form 10-K) for the year ended December 31,
1995.
/s/ Ernst & Young LLP
Dallas, Texas
March 18, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,669
<SECURITIES> 10,168
<RECEIVABLES> 25,390
<ALLOWANCES> 831
<INVENTORY> 13,415
<CURRENT-ASSETS> 67,573
<PP&E> 23,221
<DEPRECIATION> 9,138
<TOTAL-ASSETS> 93,379
<CURRENT-LIABILITIES> 18,224
<BONDS> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 147
<OTHER-SE> 72,414
<TOTAL-LIABILITY-AND-EQUITY> 93,379
<SALES> 18,513
<TOTAL-REVENUES> 28,609
<CGS> 10,383
<TOTAL-COSTS> 20,074
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 407
<INTEREST-EXPENSE> 115
<INCOME-PRETAX> (1,722)
<INCOME-TAX> 406
<INCOME-CONTINUING> (2,128)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,128)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
