<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997.
OR
__ 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 1-7928
BIO-RAD LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
A Delaware Corporation 94-1381833
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1000 Alfred Nobel Drive, Hercules, California 94547
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 724-7000
Indicate by check 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 month (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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date--
<TABLE>
<CAPTION>
Shares Outstanding
Title of each Class at October 31, 1997
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 9,816,971
Class B Common Stock,
Par Value $1.00 per share 2,601,595
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $ 99,491 $ 96,559 $311,097 $304,812
Cost of goods sold . . . . . . . . . . . . . 44,656 40,712 135,400 129,256
GROSS PROFIT . . . . . . . . . . . . . . . . 54,835 55,847 175,697 175,556
Selling, general and administrative expense . 39,935 37,287 121,202 113,780
Product research and development expense . . 10,991 9,745 33,004 28,957
INCOME FROM OPERATIONS . . . . . . . . . . . 3,909 8,815 21,491 32,819
Interest expense . . . . . . . . . . . . . . (219) (779) (779) (2,362)
Investment income, net. . . . . . . . . . . . 420 481 1,318 1,781
Other, net . . . . . . . . . . . . . . . . . (480) 415 (1,187) (677)
INCOME BEFORE TAXES . . . . . . . . . . . . . 3,630 8,932 20,843 31,561
Provision for income taxes . . . . . . . . . 1,016 2,233 5,836 7,890
NET INCOME . . . . . . . . . . . . . . . . . $ 2,614 $ 6,699 $ 15,007 $ 23,671
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . $0.21 $0.55 $1.22 $1.93
======== ======== ======== ========
Weighted average common shares . . . . . . . 12,264 12,289 12,278 12,276
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 4,672 $ 9,390
Accounts receivable . . . . . . . . . . . . . . . . . . . 89,319 97,795
Inventories . . . . . . . . . . . . . . . . . . . . . . . 82,411 69,738
Prepaid expenses, taxes and other current assets. . . . . 25,737 21,612
Total current assets . . . . . . . . . . . . . . . . . 202,139 198,535
Net property, plant and equipment . . . . . . . . . . . . 74,783 71,862
Marketable securities . . . . . . . . . . . . . . . . . . 15,185 7,432
Other assets . . . . . . . . . . . . . . . . . . . . . . 7,790 7,096
Total assets . . . . . . . . . . . . . . . . . . . . $299,897 $284,925
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt. . $ 4,516 5,542
Accounts payable . . . . . . . . . . . . . . . . . . . . 27,846 21,262
Accrued payroll and employee benefits . . . . . . . . . . 22,976 23,717
Sales, income and other taxes payable . . . . . . . . . . 4,361 3,988
Other current liabilities . . . . . . . . . . . . . . . . 24,653 24,630
Total current liabilities . . . . . . . . . . . . . . 84,352 79,139
Long-term debt, net of current maturities . . . . . . . . 4,718 6,721
Deferred tax liabilities . . . . . . . . . . . . . . . . 15,998 15,557
Total liabilities . . . . . . . . . . . . . . . . . . 105,068 101,417
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 2,300,000 shares
authorized; none outstanding . . . . . . . . . . . . . -- --
Class A common stock, $1.00 par value, 15,000,000 shares
authorized; outstanding - 9,814,441 at September 30, 1997
and 9,740,922 at December 31, 1996 . . . . . . . . . . 9,814 9,741
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 2,601,595 at September 30, 1997
and 2,579,803 at December 31, 1996 . . . . . . . . . . 2,602 2,580
Additional paid-in capital . . . . . . . . . . . . . . . 18,230 17,067
Class A treasury stock, 163,975 shares at September 30, 1997
and 31,216 shares at December 31, 1996 at cost. . . . . (4,473) (839)
Class B treasury stock, 30,000 shares at September 30, 1997
and 30,000 shares at December 31, 1996 at cost. . . . . (800) (800)
Retained earnings . . . . . . . . . . . . . . . . . . . . 165,880 151,003
Currency translation . . . . . . . . . . . . . . . . . . (658) 3,570
Net unrealized holding gain on marketable securities. . . 4,234 1,186
Total stockholders' equity . . . . . . . . . . . . . . 194,829 183,508
Total liabilities and stockholders' equity . . . . $299,897 $284,925
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION> Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . $310,386 $306,034
Cash paid to suppliers and employees . . . . . . . . (283,612) (266,093)
Interest paid. . . . . . . . . . . . . . . . . . . . (804) (2,998)
Income tax payments . . . . . . . . . . . . . . . . (9,539) (12,824)
Miscellaneous receipts . . . . . . . . . . . . . . . 80 551
Net cash provided by operating activities. . . . . . 16,511 24,670
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . (16,092) (10,317)
Payments for acquisitions . . . . . . . . . . . . . (787) --
Marketable securities investment activity, net . . . (3,797) 736
Foreign currency hedges, net . . . . . . . . . . . . 2,734 1,075
Net cash used in investing activities. . . . . . . . (17,942) (8,506)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements . . (599) (6,116)
Long-term borrowings . . . . . . . . . . . . . . . . 31,375 --
Payments on long-term debt . . . . . . . . . . . . . (33,563) (657)
Proceeds from issuance of common stock . . . . . . . 1,258 1,145
Treasury stock activity, net . . . . . . . . . . . . (3,764) (652)
Net cash used in financing activities . . . . . . . (5,293) (6,280)
Effect of exchange rate changes on cash . . . . . . . . . 2,006 647
Net increase (decrease) in cash and cash equivalents. . . (4,718) 10,531
Cash and cash equivalents at beginning of period. . . . . 9,390 14,774
Cash and cash equivalents at end of period. . . . . . . . $ 4,672 $ 25,305
======== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 15,007 $ 23,671
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . 13,147 12,201
Foreign currency hedge transactions, net . . . . . (2,918) (1,503)
Gains on disposition of marketable securities. . . (927) (843)
Decrease in accounts receivable. . . . . . . . . . 2,993 2,809
(Increase) decrease in inventories . . . . . . . . (14,302) 447
(Increase) decrease in other current assets . . . (4,381) 450
Increase (decrease) in accounts payable and other
current liabilities. . . . . . . . . . . . . . . 8,941 (6,731)
Increase (decrease) in income taxes payable . . . 598 (4,404)
Other. . . . . . . . . . . . . . . . . . . . . . . (1,647) (1,427)
Net cash provided by operating activities . . . . . . . . $ 16,511 $ 24,670
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
BIO-RAD LABORATORIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of Bio-Rad Laboratories, Inc. ("Bio-Rad" or the
"Company"), reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of the
interim periods presented. All such adjustments are of a normal
recurring nature. The condensed consolidated financial
statements should be read in conjunction with the notes to
consolidated financial statements contained in the Company's
Annual Report for the year ended December 31, 1996 (the Company's
1996 Annual Report). Certain amounts in the financial statements
of the prior year have been reclassified to be consistent with
the 1997 presentation.
2. INVENTORIES
<TABLE>
The principal components of inventories are as follows:
<CAPTION>
September 30, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Raw materials $ 32,638 $ 26,920
Work in process 20,947 19,866
Finished goods 28,826 22,952
$ 82,411 $ 69,738
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
September 30, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 52,278 52,050
Equipment 114,871 107,847
-------- --------
175,206 167,954
Less accumulated depreciation 100,423 96,092
Net property, plant and equipment $ 74,783 $ 71,862
======== ========
</TABLE>
4
<PAGE>
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share", effective for financial
statements issued for periods ending after December 15, 1997.
Under SFAS 128, Bio-Rad will be required to disclose basic
earning per share and diluted earnings per share. Earnings per
share as currently reported by Bio-Rad are equal to basic
earnings per share as defined in SFAS 128. Historically, Bio-Rad
has not been subject to certain provisions of the Accounting
Principles Board Opinion No. 15 because common stock equivalents
as defined within that statement resulted in dilution of less
than 3%.
5
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
This discussion should be read in conjunction with the
information contained both in this report and in the Company's
Consolidated Financial Statements for the year ended December 31,
1996.
<TABLE>
The following table shows operating income and expense items as a
percentage of net sales:
<CAPTION>
Three Months Ended Nine Months Ended Year Ended
September 30, September 30, December 31,
1997 1996 1997 1996 1996
<S> <C> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 44.9 42.2 43.5 42.4 43.5
Gross profit 55.1 57.8 56.5 57.6 56.5
Selling, general and
administrative 40.2 38.6 39.0 37.3 37.1
Product research and
development 11.0 10.1 10.6 9.5 9.5
Restructuring costs - - - - 0.6
Income from operations 3.9 9.1 6.9 10.8 9.3
===== ===== ===== ===== =====
</TABLE>
Three Months Ended September 30, 1997 Compared to
Three Months Ended September 30, 1996
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales (sales) in the third quarter of 1997
increased 3% to $99.5 million from $96.6 million reported in the
third quarter of 1996. The effects of a strengthened U.S. dollar
reduced the increase in consolidated sales compared to sales
based on 1996 exchange rates by approximately $5 million or 5%.
Compared to the third quarter of 1996, sales increased 11% in
Analytical Instruments, 4% in Clinical Diagnostics and were
unchanged in Life Science. During the third quarter of 1997, the
increased Analytical Instruments sales were principally to U.S.
semiconductor customers. The growth in Clinical Diagnostics is
attributable to both the segment's control business and clinical
chromatography business. The effects of differences in foreign
exchange rates in 1997 compared to 1996 negatively impacted
Analytical Instruments by 4.4%, Clinical Diagnostics by 6.1% and
Life Science by 4.7%. Competition remains fierce across all
segments and globally governments continue to try to limit the
growth in healthcare related spending.
6
<PAGE>
Consolidated gross margin decreased to 55.1% for the third
quarter of 1997 from 57.8% for the third quarter of 1996. The
decrease occurred in both the Life Science and Clinical
Diagnostics segments of the Company's business. The impact of a
strengthened U.S. dollar results in lower margins because a
disproportionate share of the Company's products are manufactured
in the U.S.. A strengthened U.S. dollar has the effect of
lowering international sales revenue and related gross margin.
Competition from local manufacturers often limit Bio-Rad's
ability to raise prices. Additional contributing factors to the
lower margin were selective discounting and higher than expected
post sales support costs.
Selling, general and administrative expense (SG&A) rose to 40.2%
of sales in the third quarter of 1997 from 38.6% of sales in the
third quarter of 1996. Since the first quarter of 1997 absolute
dollar expenditures have remained flat. Reduced expenses outside
the U.S., caused by the impact of the strengthening U.S. dollar,
were offset by growth in the U.S. as the Company maintained its
investment in direct sales, sales support, service and improved
automated systems to meet customer requirements.
Product research and development expense (R&D) increased from the
third quarter of 1996, both in absolute dollars and as a percent
of sales. As part of Bio-Rad's ongoing commitment to long-term
growth, R&D spending increased significantly in the Life Science
and Analytical Instruments segments of the Company's business,
while spending in the Clinical Diagnostics segment remained
essentially flat.
Corporate Results - Non-Operating Items
Interest expense was $0.6 million less in the third quarter of
1997 than the comparable period of 1996 principally as a result
of lower average borrowings. Average borrowings in the third
quarter of 1997 were 68% less than average borrowings in the same
period of 1996 as a result of the early extinguishment of $20.0
million of subordinated notes in December 1996.
Investment income in both years includes gains on sales of
marketable securities and interest income from short-term
investments. No significant items were included in other income
and expense for the third quarter of 1997 or the third quarter of
1996.
The Company's effective tax rate for the third quarter of 1997
was 28% compared to 25% for all of 1996. The tax rate for both
years reflects the utilization of foreign loss carryforwards,
foreign sales corporation benefits and foreign tax credits. The
benefits available in 1997 will not be available at the same
level as 1996 and should continue to decline over the next
several years.
7
<PAGE>
Nine Months Ended September 30, 1997 Compared to
Nine Months Ended September 30, 1996
Corporate Results - Sales, Margins and Expenses
Bio-Rad's sales for the nine month period ended September 30,
1997 were $311.1 million, 2% greater than sales for the period
ended September 30, 1996. On a year-to-date basis, the effects
of a strengthened U.S. dollar decreased consolidated sales
compared to sales based on 1996 exchange rates by approximately
$13 million. Sales increased 3% in Life Science, 1% in Clinical
Diagnostics and 1% in Analytical Instruments. Sales growth in
the Life Science segment is attributed to new product
introductions in the latter part of 1996 and early 1997; the
impact of foreign exchange reduced overall growth by
approximately 5%. Excluding the effects of the strengthened U.S.
dollar, sales increased 8% in Life Science, 6% in Clinical
Diagnostics and 4% in Analytical Instruments. During the first
quarter of 1996 both Analytical Instruments and Life Science
benefited from the Japanese government financially stimulating
the local economy with funds for capital expenditures; this was
not repeated in 1997.
1997 year-to-date consolidated gross margins are down 1% from the
comparable period of 1996. Gross margins in each segment have
been adversely affected by the impact of a strengthened U.S.
dollar. Additionally, Life Science has experienced increased
warranty and service expenses and Analytical Instruments absorbed
an unfavorable impact from excess manufacturing overhead in the
United States.
SG&A increased to 39.0% of sales for the nine months ended
September 30, 1997 from 37.3% in the same period of 1996. SG&A
spending has remained constant throughout 1997, it has increased
in absolute dollars in all segments compared to 1996. The
majority of the increased spending has been in personnel,
advertising and travel expenses. Management continues to review
SG&A spending in an effort to make only the necessary
improvements to the Company's selling infrastructure to allow for
improved customer service levels.
R&D spending increased in the nine months ended September 30,
1997, both in absolute dollars and as a percent of sales. As
part of Bio-Rad's continuing commitment to long-term growth, the
Company continues to expand R&D. Compared to the nine months
ended September 30, 1996, spending increased in both the Life
Science and Analytical Instruments segments by over 20%. R&D
spending was relatively unchanged in Clinical Diagnostics.
8
<PAGE>
Corporate Results - Non-Operating Items
Interest expense was $1.6 million less for the period ended
September 30, 1997 than the comparable period of 1996 principally
as a result of lower average borrowings. The Company has a debt
to equity ratio of less than 5% which is at a 20-year historical
low.
Investment income in both years includes gains on sales of
marketable securities and interest income from short-term
investments.
Net other income and expense in the period ended September 30,
1997 includes net exchange losses, goodwill amortization and non-
operating legal costs. Bio-Rad regularly enters into forward
foreign exchange contracts as a hedge against revaluation of
foreign currency denominated intercompany receivables and
payables. Net other income and expense in the nine months period
ended September 30, 1996 was primarily non-operating legal costs
partially offset by net exchange gains.
As expected, the Company's effective tax rate increased from 25%
to 28% for the September 30, 1997 year-to-date period. The tax
rate for both years reflects the utilization of foreign loss
carryforwards, foreign sales corporation benefits and foreign tax
credits. However, the benefits realized in 1997 will not be at
the same level as 1996 and should continue to decline over the
next several years.
Financial Condition
At September 30, 1997, the Company had available $4.7 million in
cash and cash equivalents, $56.7 million under its principal
revolving credit agreement and $15.2 million of marketable
securities at market value, most of which could be readily
converted to cash.
Net cash provided by operations was $16.5 million for the year-
to-date September 30, 1997 compared to $24.7 million for the
comparable period of 1996. During the third quarter of 1997, the
Company continued to repurchase common stock, an action begun in
July 1996 when the Board of Directors authorized the spending of
up to $4 million. In early July 1997, the Board of Directors
authorized the Company to repurchase up to an additional $4
million of common stock over an indefinite period of time. To
date, the Company has repurchased $6.7 million of common stock,
which will be used to satisfy the Company's obligations under the
employee stock purchase and stock option plans. Management
continues to believe shareholder value can be improved through
the selective repurchase of the Company's stock.
9
<PAGE>
Available funds and cash flow from operations are adequate to
meet the Company's objectives for operations, research and
development and modest external growth. Bio-Rad remains well
positioned to make a substantial strategic acquisition should the
opportunity arise. Bio-Rad has announced that they have signed a
letter of intent for Bio-Rad to purchase certain assets that
comprise the quality controls business of Chiron Diagnostics
Corporation (exclusive of blood gas controls). The completion of
the transaction is subject to government approval and the
execution of a final purchase and sale agreement. Should Bio-Rad
choose to fund the entire purchase from its revolving credit
agreement, the transaction is estimated to utilize approximately
one-half of the capacity. Beyond this opportunity, no material
acquisitions appear to have reached a stage beyond exploratory
discussions.
At September 30, 1997, consolidated accounts receivable decreased
by $8.5 million from December 31, 1996. Excluding the effects of
the strengthened U.S. dollar, accounts receivable decreased by
$3.0 million. The decrease is temporary in nature and will most
likely increase during the fourth quarter which historically has
much higher sales volumes and a larger mix of instrument sales
which involve a more intensive sales and collection effort.
Management regularly reviews receivables and takes selective
steps where advantageous to accelerate customer payments.
At September 30, 1997, consolidated net inventories were $12.7
million higher than at December 31, 1996. The increase in
inventory occurred principally in the Life Science segment as a
result of some sourcing difficulties related to new product
introductions and planned increases in anticipation of demand in
the fourth quarter. Additionally, some increase has occurred due
to temporary shipping difficulties. These challenges should be
remediated by year end. Management continues to monitor
inventory levels and regularly reviews the impact of obsolescence
in current inventory caused by the introduction of new products.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as part of this report:
Exhibit No.
10.6 Employees' Deferred Profit Sharing Retirement Plan
(Amended and Restated Effective as of January 1, 1997).
10.9.4 Amendment dated as of June 30, 1997 to the Credit
Agreement as of February 18, 1994, by and among the
Registrant, the Lenders and the First National Bank of
Chicago, as agent.
11.1 Computation of Earnings Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended September 30,
1997.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.
BIO-RAD LABORATORIES, INC.
(Registrant)
Date: November 13, 1997 /s/ Sanford S. Wadler
Sanford S. Wadler, Vice President,
General Counsel and Secretary
Date: November 13, 1997 /s/ James R. Stark
James R. Stark,
Corporate Controller
12
<PAGE>
EXHIBIT 10.6
BIO-RAD LABORATORIES, INC.
EMPLOYEES' DEFERRED PROFIT SHARING RETIREMENT PLAN
(Amended and Restated Effective As of January 1, 1997)
<PAGE>
BIO-RAD LABORATORIES, INC.
EMPLOYEES' DEFERRED PROFIT SHARING RETIREMENT PLAN
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
SECTION 2. DEFINITIONS 2
2.01 Account 2
2.02 Affiliated Employer 2
2.03 Beneficiary 2
2.04 Board of Directors 2
2.05 Break in Service 2
2.06 Code 2
2.07 Committee 2
2.08 Company 3
2.09 Compensation 3
2.10 Disability 3
2.11 Eligible Employee 3
2.12 Eligibility Computation Period 3
2.13 Employee 4
2.14 Employment Commencement Date 4
2.15 Entry Date 4
2.16 ERISA 4
2.17 Hour of Service 4
2.18 Investment Manager 5
2.19 Leased Employee 5
2.20 Leave of Absence 5
2.21 Participant 5
2.22 Participating Employer 5
2.23 Plan 5
2.24 Plan Year 5
2.25 Profit Sharing Contribution 5
2.26 Remuneration 6
2.27 Severance Date 6
2.28 Spousal Consent 6
2.29 Trustee 7
2.30 Valuation Date 7
2.31 Year of Eligibility Service 7
2.32 Year of Service 7
SECTION 3. ELIGIBILITY AND PARTICIPATION 9
3.01 Eligibility and Commencement of Participation 9
3.02 Reemployment of Former Employees and Former Participants 9
3.03 Cessation of Status of Eligible Employee 9
3.04 Termination of Participation 9
<PAGE>
SECTION 4. CONTRIBUTIONS 10
4.01 Employer Contributions 10
4.02 Maximum Annual Additions 10
4.03 Return of Contributions 12
4.04 Restoration Procedures 13
4.05 Contributions Not Contingent Upon Profits 13
SECTION 5. VALUATION OF ACCOUNTS 14
5.01 Valuation of the Investment Funds 14
5.02 Discretionary Power of the Committee 14
5.03 Annual Statements 14
SECTION 6. VESTED PORTION OF ACCOUNTS 15
6.01 General Rules 15
6.02 Changes in Vesting Schedule 15
6.03 Disposition of Forfeitures 15
6.04 Restoration upon Reemployment 15
SECTION 7. DISTRIBUTION OF ACCOUNTS 17
7.01 Eligibility 17
7.02 Amount of Distribution 17
7.03 Form of Distribution 17
7.04 Timing of Distribution 17
7.05 Vested Account Balance Greater Than $3,500 and Distribution
of Small Benefits 19
7.06 Status of Accounts Pending Distribution 19
7.07 Proof of Death and Right of Beneficiary or Other Person 19
7.08 Inability to Locate Participant or Beneficiary 19
7.09 Distribution to Minors or Incompetents 20
7.10 Minimum Required Distributions; Incorporation of Regulations 20
7.11 Direct Rollover of Certain Distributions 20
SECTION 8. ADMINISTRATION OF PLAN AND FIDUCIARY RESPONSIBILITY 22
8.01 Plan Sponsor 22
8.02 Appointment of Committee 22
8.03 Duties of Committee 22
8.04 Meetings 22
8.05 Action of Majority 22
8.06 Compensation and Bonding 22
8.07 Service in More Than One Fiduciary Capacity 23
8.08 Establishment of Rules 23
<PAGE>
8.09 Prudent Conduct 23
8.10 Maintenance of Accounts 23
8.11 Limitation of Liability 23
8.12 Indemnification 23
8.13 Expenses of Administration 24
8.14 Claims and Review Procedures 24
8.15 Independent Qualified Public Accountant 25
SECTION 9. MANAGEMENT OF FUNDS 26
9.01 Control and Management of Plan Assets 26
9.02 Investment Authority 26
9.03 Exclusive Benefit Rule 26
9.04 Benefit Payments 26
SECTION 10. GENERAL PROVISIONS 27
10.01 Nonalienation 27
10.02 Conditions of Employment Not Affected by Plan 27
10.03 Information 27
10.04 Top-Heavy Provisions 27
10.05 Construction 30
SECTION 11. AMENDMENT, MERGER AND TERMINATION 31
11.01 Amendment of Plan 31
11.02 Merger or Consolidation 31
11.03 Additional Participating Employers 31
11.04 Termination of Plan 31
EXECUTION OF PLAN 32
<PAGE>
BIO-RAD LABORATORIES, INC
EMPLOYEES' DEFERRED PROFIT SHARING RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1997)
SECTION 1. INTRODUCTION
Bio-Rad Laboratories, Inc. (the "Company") originally adopted the Bio-Rad
Laboratories, Inc. Employees' Deferred Profit Sharing Retirement
Plan (the "Plan") effective as of January 1, 1973. The Plan has been
amended and restated from time to time since that date, and is again
amended and restated as set forth herein, effective as of January 1, 1997.
The purpose of the Plan is to enhance Participants' financial security at
retirement through allocations of the Profit Sharing Contributions made by
Participating Employers. The Plan is intended to qualify under section
401(a) and related provisions of the Code as a profit sharing plan, and the
trust maintained in connection with the Plan is intended to be exempt from
tax under section 501(a) of the Code.
Notwithstanding anything to the contrary contained herein, any person
who was a Participant in the Plan prior to the effective date of this
amendment and restatement and who is not both a Participant and an
Eligible Employee under the amended and restated Plan document, as it is
made effective, will have his rights and remedies, if any, determined by
the terms and conditions of the Plan in effect as of the date his
participation ceased or the date he ceased to be an Eligible Employee,
whichever occurred first.
Each capitalized term used in the Plan has the meaning set forth in Section
2, except where a different meaning is apparent from the context.
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SECTION 2. DEFINITIONS
2.01 "Account" means the account to which shall be credited Profit
Sharing Contributions made on a Participant's behalf pursuant to
Section 4.01, as adjusted to reflect any investment gains or losses
thereon.
2.02 "Affiliated Employer" means the Company and any entity, whether
or not a Participating Employer, that is a member of a controlled
group of corporations (determined under section 1563(a) of the
Code without regard to section 1563(a)(4) and (e)(3)(C)) that also
includes as a member any trade or business under common control
(as defined in section 414(c) of the Code) with the Company, or a
member of an affiliated service group (as defined in section 414(m)
of the Code) that includes the Company; and any other entity
required to be aggregated with the Company pursuant to
regulations under section 414(o) of the Code. Notwithstanding the
foregoing sentence, for purposes of Section 4.02, the definitions in
section 414(b) and (c) of the Code shall be modified as provided in
section 415(h) of the Code.
2.03 "Beneficiary" means any person, persons or entity named by a
Participant by written designation filed with the Committee to
receive benefits payable in the event of the Participant's death.
However, if the Participant is married, his spouse shall be deemed
to be the designated Beneficiary, unless the Participant elects
another Beneficiary. Any such designation shall not be effective
unless it is in writing and any required Spousal Consent has been
obtained. If no Beneficiary designation is in effect at the time of the
Participant's death, or if no person, persons or entity so designated
survive the Participant, the Participant's estate shall be deemed to
be the Beneficiary.
2.04 "Board of Directors" means the Board of Directors of the Company.
2.05 "Break in Service" means a Plan Year during which an Employee
has been credited with 500 or fewer Hours of Service. However, if
an Employee is absent from work immediately following active
employment because of the Employee's pregnancy, the birth of the
Employee's child, the placement of a child with the Employee in
connection with the adoption of that child by the Employee or for
purposes of caring for that child for a period beginning
immediately following that birth or placement, the Employee shall
not be treated as having incurred a Break in Service in the Plan
Year in which the absence begins or, if the individual would not
otherwise have suffered a Break in Service during such Plan Year,
in the next following applicable Plan Year. A Break in Service
shall not occur during an approved Leave of Absence or during a
period of military service that is included in his Years of Service
pursuant to Section 2.31.
2.06 "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.07 "Committee" means the administrative committee appointed by the
Board of Directors pursuant to Section 8.
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2.08 "Company" means Bio-Rad Laboratories, Inc. and any successor
thereto that agrees to continue the Plan.
2.09 "Compensation" means all amounts paid by the Participating
Employer to an Eligible Employee while he is a Participant during
a Plan Year for services rendered to the Participating Employer,
excluding special payments such as moving expenses and other
reimbursements, but including all amounts that the Eligible
Employee elected to have the contributed on his behalf for the Plan
Year as salary deferral or salary reduction contributions under a
plan described in section 401(k) or 125 of the Code; provided,
however, that the Compensation taken into account for an Eligible
Employee for a Plan Year shall not exceed $150,000, as adjusted
for cost-of-living increases in accordance with section 401(a)(17) of
the Code.
2.10 "Disability" means the permanent incapacity of a Participant, by
reason of physical or mental illness, to perform his usual duties for
the Affiliated Employer, resulting in termination of the
Participant's employment. Disability shall be determined by the
Committee in a uniform and nondiscriminatory manner after
consideration of such evidence as it may require, which shall
include a report of such physician or physicians as it may
designate.
2.11 "Eligible Employee" means each Employee of a Participating
Employer, excluding:
(a) Any person who is included in a unit of employees covered
by a collective bargaining agreement between employee
representatives and a Participating Employer if there is
evidence that retirement benefits were the subject of good
faith bargaining, and the agreement does not provide for
such individual's participation in the Plan;
(b) Any Leased Employee;
(c) Any Employee who is a nonresident alien and who receives
no earned income (within the meaning of section 911(b) of
the Code) from a Participating Employer constituting
income from sources within the United States (within the
meaning of section 861(a)(3) of the Code); or
(d) Any Employee who is classified by a Participating
Employer as a "casual" Employee and who has signed an
employment agreement with the Participating Employer,
the terms of which specifically exclude retirement benefits
as part of such Employee's compensation; provided,
however, that any casual Employee who actually completes
a Year of Eligibility Service shall be deemed to have
become an Eligible Employee on the first day of the
Eligibility Computation Period during which he completes
such Year of Eligibility Service.
2.12 "Eligibility Computation Period" means the 12-consecutive month period
beginning with the Employee's Employment Commencement Date and each
anniversary thereof.
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2.13 "Employee" means any person employed by the Affiliated
Employer who receives compensation for services rendered to the
Affiliated Employer, which compensation is subject to withholding
of income tax, and/or for whom Social Security contributions are
made by the Affiliated Employer. "Employee" shall include any
Leased Employee but shall exclude any person who serves solely
as a director or independent contractor. Notwithstanding the
foregoing, "Employee" shall also exclude any individual whom the
Affiliated Employer has classified as other than an "Employee"
even if state or Federal governmental authorities later determine
that such classification was erroneous and that such individual was
in fact a common law employee of the Affiliated Employer.
2.14 "Employment Commencement Date" means the first day on which
an individual qualifies as an Employee. "Reemployment
Commencement Date" means the date on which an Employee first
is credited with an Hour of Service following a prior termination of
employment with an Affiliated Employer.
2.15 "Entry Date" means the first day of the month coincident with or
next following the date on which the Eligible Employee has
satisfied the age and service requirements set forth in Section 3.01(b).
2.16 "ERISA"means the Employee Retirement Income Security Act of
1974, as amended from time to time.
2.17 "Hour of Service" means:
(a) Each hour for which an Employee is paid or entitled to
payment for the performance of duties for an Affiliated Employer;
(b) Each hour for which an Employee is paid or entitled to
payment by an Affiliated Employer on account of a period
during which no duties are performed, whether or not the
employment relationship has terminated, due to vacation,
holiday, illness, incapacity, layoff, jury duty, military duty
or Leave of Absence, but not more than 501 hours for any
single continuous period; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Affiliated
Employer, excluding any hour credited under (a) or (b),
which shall be credited to the computation period or periods
to which the award, agreement or payment pertains rather
than to the computation period in which the award,
agreement or payment is made.
No hours shall be credited on account of any period during which
the Employee performs no duties and receives payment solely for
the reimbursement of medical expenses or for the purpose of
complying with unemployment compensation, workers'
compensation or disability insurance laws. The Hours of Service
credited shall be determined as required by Title 29 of the Code of
Federal Regulations, section 2530.200b-2(b) and (c). In the case of
Employees who are paid on a salaried basis and for whom a record
of actual hours worked is not maintained, Hours of Service shall be
4
<PAGE>
determined by crediting each such Employee with 190 Hours of
Service for each month in which the Employee would have been
credited with at least one Hour of Service. For classes of
Employees who are paid on an hourly basis and for other
Employees for whom records of hours are maintained, Hours of
Service shall be determined on the basis of hours for which
Compensation is paid or due.
2.18 "Investment Manager" means any person who is:
(a) Registered as an investment adviser under the Investment
Advisers Act of 1940;
(b) A "bank," as defined in such Act; or
(c) An insurance company qualified to perform investment
management services under the laws of more than one state.
2.19 "Leased Employee" means any individual who provides services to
an Affiliated Employer, in a capacity other than as an Employee, in
accordance with each of the following requirements:
(a) The services are provided pursuant to one or more
agreements between the Affiliated Employer and one or
more leasing organizations;
(b) The individual has performed such services for the
Affiliated Employer on a substantially full-time basis for a
period of at least one year; and
(c) Such services are of a type historically performed in the
business field of the Affiliated Employer by Employees.
2.20 "Leave of Absence" means an absence authorized by the Affiliated
Employer under its standard personnel practices, as applied in a
uniform and non-discriminatory manner to all persons similarly
situated.
2.21 "Participant" means any person who has commenced participation
in the Plan in accordance with Section 3.
2.22 "Participating Employer" means the Company and each other
Affiliated Employer the Employees of which are eligible to
participate in the Plan pursuant to Section 11.03.
2.23 "Plan" means the Bio-Rad Laboratories, Inc. Employees' Deferred
Profit Sharing Retirement Plan, as set forth in this document and as
it may be amended from time to time.
2.24 "Plan Year" means the 12 consecutive month period beginning on
each January 1.
2.25 "Profit Sharing Contributions" means contributions made by the
Participating Employer to the Plan on behalf of Participants,
pursuant to Section 4.01.
5
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2.26 "Remuneration" means the wages, salaries, and other amounts paid
in respect of an Employee for services actually rendered to an
Affiliated Employer during a Plan Year, including, by way of
example, overtime, bonuses and commissions, but excluding (i)
Participating Employer contributions to this Plan or to any other
plan of deferred compensation maintained by an Affiliated
Employer, (ii) amounts realized from the exercise of a non-
qualified stock option, (iii) amounts realized when restricted stock
is no longer subject to a substantial risk of forfeiture, (iv) amounts
realized from the disposition of a qualified stock option, and (v)
other amounts that receive special tax benefits. Remuneration shall
include any amounts contributed on a Participant's behalf on a
salary reduction basis to plan described in section 401(k) of the
Code or to a cafeteria plan described in section 125 of the Code.
The Remuneration of an Employee who begins, resumes or ceases
to be eligible for participation in the Plan shall include only
earnings for that portion of the Plan Year during which the
Employee was eligible for participation in accordance with Section
3.01. Remuneration shall not, for Plan purposes, exceed $150,000,
as adjusted for changes in the cost-of-living pursuant to section
401(a)(17) of the Code. For Plan Years commencing before 1998,
the term "Remuneration" with respect to any Participant shall not
include any amounts contributed on a Participant's behalf on a
salary reduction basis to a plan described in section 401(k) of the
Code or to a cafeteria plan described in section 125 of the Code.
2.27 "Severance Date" means the date on which an Employee's
employment relationship with the Affiliated Employer is
terminated.
2.28 "Spousal Consent" means the written consent given by a
Participant's spouse to a designation by the Participant of a primary
Beneficiary other than the surviving spouse. Such consent shall not
be valid unless the Participant's designation (i) includes the written
consent of the surviving spouse that acknowledges the effect of
such designation and is witnessed by a notary public or
representative of the Plan, and (ii) names a specific Beneficiary that
may not be changed without further Spousal Consent (unless the
consent or a prior consent expressly permits designations by the
Participant without any requirement of further consent by the
spouse). Such consent shall be effective only as to the spouse who
signs the consent and, once given, may not be revoked by such
spouse. Notwithstanding the foregoing, such Spousal Consent shall
not be required if it is established to the satisfaction of a Plan
representative that the required consent cannot be obtained because
there is no spouse, because the Participant is legally separated from
or has been abandoned by the spouse (and the Participant has a
court order to that effect), because the spouse cannot be located, or
because of other circumstances that are deemed acceptable under
applicable regulations. If a Participant's spouse is legally
incompetent to give consent, the spouse's legal guardian may do
so, even if such guardian is the Participant. A designation of a
Beneficiary made by a Participant and consented to by his spouse
may be revoked by the Participant in writing without the consent of
the spouse at any time prior to the commencement of benefit
payments under the Plan. Any new election must comply with the
requirements of this Section.
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2.29 "Trustee" means the trustee that holds the funds of the Plan, as
provided in Section 9.
2.30 "Valuation Date" means March 31, June 30, September 30 and
December 31 of each Plan Year and any other dates the Committee
may determine.
2.31 "Year of Eligibility Service" means the 12 consecutive month
period beginning on an Employee's Employment Commencement
Date or Reemployment Commencement Date or any Plan Year
beginning thereafter in which the Employee first is credited with at
least 1,000 Hours of Service. Years of Eligibility Service shall also
take into account any service credited to an Employee for service
with a predecessor employer under Section 2.32(e), if and to the
extent determined by the Company.
2.32 "Year of Service" means each Plan Year (or portion thereof)
following the Employee's Employment Commencement Date in
which an Employee is credited with 1,000 or more Hours of
Service, subject to the following:
(a) If the Employee has been absent from the service of an
Affiliated Employer because of service in the Armed Forces
of the United States and has returned to the service of an
Affiliated Employer having applied to return while his
reemployment rights were protected by law, that absence
shall be included in his Service;
(b) If the Employee is on a medical Leave of Absence or a
Leave of Absence under the Family and Medical Leave Act
("FMLA"), up to 501 Hours of Service shall be credited
during such leave for purposes of determining whether the
Employee has completed a Year of Service during the leave;
(c) If the Employee is on a personal Leave of Absence that is
not a military leave, a medical leave or a FMLA leave, the
period of leave shall not be counted in determining whether
the Employee has completed a Year of Service;
(d) If the Employee's employment is terminated before he has
become vested in any portion of his Account and he is later
reemployed after he has incurred a Break in Service, his
service after reemployment shall be aggregated with his
previous service, provided that his years of Break in
Service do not equal or exceed the greater of five or his
number of Years of Service before the Break in Service; and
(e) Pre-affiliation service with any other entity that becomes an
Affiliated Employer shall count only as required by law or
as may be determined by resolution of the Board of
Directors. As of January 1, 1997, an Employee's pre-
affiliation service shall be credited as follows:
(1) An Employee's service with SoftShell International,
LTD. shall be recognized to a maximum of five
years of such service, provided that he became an
Employee of an Affiliated Employer as the result of
the Company's acquisition of SoftShell International, LTD.;
(2) An Employee's service with Digilab shall be credited
from the later of January 1, 1978 or the Employee's actual
date of hire;
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(3) An Employee's service with Nanoquest, Inc. shall
be credited from the later of January 20, 1988 or the
Employee's actual date of hire; and
(4) An Employee's service with Occulab shall be
credited from the later of December 1, 1988 or the
Employee's actual date of hire.
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SECTION 3. ELIGIBILITY AND PARTICIPATION
3.01 Eligibility and Commencement of Participation
(a) Each individual who was a Participant on December 31,
1996 shall continue to be a Participant on January 1, 1997,
provided that he remains an Eligible Employee.
(b) Each other Eligible Employee shall become a Participant on
the Entry Date coinciding with or next following the later of:
(1) The last day of the first Eligibility Computation
Period in which he completes 1,000 Hours of Service; or
(2) His attainment of age 18.
3.02 Reemployment of Former Employees and Former Participants
Notwithstanding the provisions of Section 3.01, any person
reemployed by the Affiliated Employer as an Eligible Employee
who was previously a Participant shall immediately recommence
participation, effective as of his date of reemployment.
3.03 Cessation of Status of Eligible Employee
A Participant who remains in the employ of an Affiliated
Employer, but who ceases to be an Eligible Employee, shall
continue to be a Participant and shall continue to be credited with
Years of Service. However, during the period that he is not an
Eligible Employee, he shall not have Profit Sharing Contributions
allocated to his Account.
3.04 Termination of Participation
An Eligible Employee's participation in the Plan shall terminate on
the date on which his employment relationship with the Affiliated
Employer is terminated, unless he is entitled to benefits under the
Plan, in which event his participation shall terminate on the earlier
of (i) the date on which his entire Plan benefit has been distributed
or (ii) the date of his death.
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SECTION 4. CONTRIBUTIONS
4.01 Profit Sharing Contributions
(a) As of the last day of each Plan Year, the Participating
Employers may make a profit sharing contribution to the
Trust in such amount as is determined by the Company.
The Profit Sharing Contribution shall be reduced, if
necessary, by any amounts in limitation accounts under
Section 4.02(c) attributable to Profit Sharing Contributions.
(b) Profit Sharing Contributions for a Plan Year, along with
any forfeitures not used to restore the Accounts of
reemployed Participants, shall be allocated, as of the last
day of the Plan Year, to the Accounts of all Participants
who remained Eligible Employees as of the last day of such
Plan Year and who completed 1,000 Hours of Service
during such Plan Year. Each eligible Participant's
allocation shall be in the ratio that his Compensation bears
to the aggregate Compensation of all eligible Participants
for the Plan Year.
4.02 Maximum Annual Additions
(a) The Annual Addition to a Participant's Account for any
Plan Year, which shall be considered the "Limitation Year"
for purposes of section 415 of the Code, when added to the
Participant's Annual Addition for that Plan Year under any
other qualified plan of an Affiliated Employer, shall not
exceed an amount that is equal to the lesser of (i) 25 percent
of his aggregate Remuneration for that Plan Year or (ii) the
greater of $30,000 or one quarter of the dollar limitation in
effect under section 415(b)(1)(A) of the Code.
(b) For purposes of this Section, the "Annual Addition" to a
Participant's Account under this Plan or any other qualified
plan maintained by an Affiliated Employer for the Plan
Year shall not include rollover contributions and/or
transfers from any other qualified plan to a plan maintained
by an Affiliated Employer, but shall include:
(1) The total employer and employee contributions
made by the Participant or on the Participant's
behalf by all Affiliated Employers under this Plan or
any other qualified defined contribution plan;
(2) Forfeitures, if applicable, that have been allocated to
the Participant's Account under this Plan or his
accounts under any other qualified defined contribution plan;
(3) Voluntary or mandatory contributions made by the
Participant under any defined benefit plan maintained by
an Affiliated Employer;
(4) Contributions made on a Participant's behalf to an
"individual medical benefit account" under a
pension or annuity plan maintained by an Affiliated
Employer, as described and to the extent required
under section 415(l) of the Code; and
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(5) Amounts attributable to post-retirement medical
benefits allocated to the separate account of a "Key
Employee" (as defined in Section 10.04(c)(3) of the
Plan) who is a Participant in accordance with and to
the extent required under section 419A(d)(2) of the Code.
(c) If the Annual Addition to a Participant's Account for any
Plan Year are projected to exceed the limitation set forth in
Section 4.02(a) above, following the end of the Plan Year
the additions to such Participant's Account for such Plan
Year shall be reduced in the following order, to the extent
necessary to satisfy such limitation: (i) after-tax
contributions made by the Participant to any other defined
contribution plan that would be aggregated with the Annual
Additions to this Plan under (a) above, (ii) salary deferral
contributions made on behalf of the Participant under any
other defined contribution plan that would be aggregated
with the Annual Additions to this Plan under (a) above; (iii)
matching contributions made on behalf of the Participant
under any other defined contribution plan that would be
aggregated with the Annual Additions to this Plan under (a)
above; and (iv) Profit Sharing Contributions made to this
Plan. When the reduction is under (i) above, such amounts
shall be refunded to the Participant; and when the reduction
is under (ii) or (iii) above, such amounts shall be disposed
of in accordance with the terms of the other plan, and when
the reduction is under (iv) above, such amounts shall be
held in an unallocated suspense account to be allocated to
the Participant's Account in the succeeding Plan Years,
provided that in the event a Participant's employment
terminates, any amount remaining in the suspense account
for his benefit after all permitted allocations to his Account
have been made shall be applied to reduce Profit Sharing
Contributions in succeeding Plan Years.
(d) If a Participant has at any time participated in both a
qualified defined benefit plan and a qualified defined
contribution plan maintained by an Affiliated Employer for
a Plan Year, the sum of the Participant's Defined Benefit
Plan Fraction and Defined Contribution Plan Fraction for
such Plan Year shall not exceed 1.0.
The terms "Defined Benefit Plan Fraction" and "Defined
Contribution Plan Fraction" shall mean the following:
(1) "Defined Benefit Plan Fraction" for any calendar
year is a fraction --
(A) The numerator of which is the projected
annual benefit of the Participant (determined
as of the close of the calendar year) under all
qualified defined benefit plans maintained by
an Affiliated Employer; and
(B) The denominator of which is the lesser of (i)
or (ii) below:
(i) The product of 1.25, multiplied by
the defined benefit plan dollar
limitation under section 415(b)(1)(A)
of the Code (as adjusted for cost-of-
living increases at the time and in the
manner prescribed by section 415(d)
of the Code) in effect for such
calendar year; or
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(ii) The product of 1.4, multiplied by an
amount that is 100 percent of the
Participant's average Remuneration
for the three consecutive years in
which his Remuneration was the highest.
(2) "Defined Contribution Plan Fraction" for any
calendar year is a fraction --
(A) The numerator of which is the sum of the
Annual Additions on behalf of a Participant
for such calendar year; and
(B) The denominator of which is the sum of the
lesser of (i) or (ii) below determined for
such calendar year and for each prior Year
of Service with an Affiliated Employer.
(i) The product of 1.25, multiplied by
the defined contribution plan dollar
limitation under section 415(c)(1)(A)
of the Code (as adjusted for cost-of-
living increases at the same time and
in the same manner prescribed by
section 415(d) of the Code) in effect
for such calendar year; or
(ii) The product of 1.4 multiplied by an
amount equal to 25 percent of the
Participant's Remuneration for such year.
4.03 Return of Contributions
(a) If all or part of the Participating Employers' deductions for
contributions to the Plan are disallowed by the Internal
Revenue Service, the portion of the contributions to which
that disallowance applies shall be returned to the
Participating Employers without interest but reduced by any
investment loss attributable to those contributions, provided
that the contribution is returned within one year after the
disallowance of deduction. For this purpose, all contributions
made by the Participating Employers are expressly declared
to be conditioned upon their deductibility under Section 404
of the Code.
(b) The Participating Employers may recover, without interest,
the amount of its contributions to the Plan made on account
of a mistake of fact, reduced by any investment loss
attributable to those contributions, if recovery is made
within one year after the date of those contributions.
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4.04 Restoration Procedures
(a) In the event that a Participant's Account was improperly
excluded in any year from an allocation of Participating
Employer contributions and forfeitures pursuant to Section
4.01(b), such Participant's Account shall be restored to its
correct status by the addition of amounts that are
determined as follows:
(1) First, an amount will be computed on the same basis
as Participating Employer contributions and
forfeitures that were allocated to the Accounts of
other eligible Participants under Section 4.01(b) in
each year for which restoration is necessary; and
(2) Second, trust fund income, gain or loss attributable
to amounts that should have been allocated under (1)
above will be allocated on the same basis as trust
fund income, gain or loss was allocated to other
Participants' Accounts under Section 5.01 in each
year for which restoration is necessary.
(b) In the event that a Participant's Account was improperly
excluded in any year from an allocation of trust fund
income, gain or loss, such Participant's Account shall be
restored to its correct status by the addition or subtraction
of amounts that should have been allocated under Section
5.01 in each year for which restoration is necessary.
(c) Such amounts shall be restored first from forfeitures, if
any; and then, if necessary, the Participating Employer
shall contribute an amount that is necessary to fully restore
each improperly excluded Account. No Participating
Employer contributions or forfeitures shall be allocated
pursuant to Section 4.01(b) to the Account of any
Participant until each improperly excluded Account has
been fully restored.
4.05 Contributions Not Contingent Upon Profits
The Participating Employers may make contributions to the Plan
without regard to the existence or amount of current and
accumulated earnings and profits.
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SECTION 5. VALUATION OF ACCOUNTS
5.01 Valuation of the Investment Funds
The Trustee shall value the investments of the Plan quarterly. On
each Valuation Date there shall be allocated to the Account of each
Participant his proportionate share of the increase or decrease in
the fair market value of his Account, in a manner determined by
the Committee. When an event requires a determination of the
value of the Participant's Account, the value shall be computed as
of the Valuation Date coincident with or next following the date of
the relevant event, except as otherwise expressly provided in the Plan.
5.02 Discretionary Power of the Committee
The Committee reserves the right to change, from time to time, the
administrative procedures used in valuing the Accounts of
Participants and/or in allocating investment gains or losses thereto
if it determines that such changes are necessary or desirable. In the
event of a conflict between the provisions of this Section 5 and
such new administrative procedures, those new administrative
procedures shall prevail.
5.03 Annual Statements
At least once each Plan Year, each Participant shall be furnished
with a statement setting forth the value of his Account and his
vested interest therein.
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SECTION 6. VESTING OF ACCOUNTS
6.01 General Rules
A Participant shall become 100 percent vested in, and shall have a
nonforfeitable right to, his Account following the earliest of (i) his
completion of five Years of Service, (ii) his retirement at or after
attainment of age 65, (iii) his termination of employment due to
Disability, or (iv) his death.
6.02 Changes in Vesting Schedule
In the event that the vesting schedule is changed in the future, any
Participant who had completed at least three Years of Service as of
the effective date of the change shall continue to vest under the
vesting provisions in effect prior to such date, if the application of
the prior vesting provisions provides the Participant with a greater
vested percentage than that provided under the new vesting provisions.
6.03 Disposition of Forfeitures
(a) A Participant who terminates employment with the
Participating Employer prior to having any vested interest
in his Account shall be deemed to have received a total
distribution of his vested interest as of the last day of the
Plan Year in which he terminates. Any nonvested portion
of such a Participant's Account shall then be transferred to
a suspense account, pending reallocation pursuant to
Section 6.03(b). The nonvested portion of the Account of
a Participant who terminates employment with the
Participating Employer when he is partially vested in his
Account shall not be forfeited and transferred to the
suspense account until the earlier of the date on which he
receives a distribution of his vested Account or the date on
which he has incurred five consecutive Breaks in Service.
(b) Forfeitures for a Plan Year that are not used to restore
reemployed Participants' Accounts as of the last day of such
Plan Year shall be added to the Participating Employers'
Profit Sharing Contributions for such Plan Year and
allocated as of such date to the Accounts of Eligible
Participants as provided in Section 4. Any forfeitures held
in the suspense account pending reallocation shall not share
in the allocation of trust income or losses.
6.04 Restoration upon Reemployment
(a) If a terminated Participant becomes reemployed as an
Eligible Employee before incurring five consecutive
Breaks in Service, the following rules shall apply:
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(1) Restoration If No Distribution. In the event the
Participant did not receive a distribution of his
vested interest, his Account shall be fully restored
as provided in (3) below and shall be re-credited as
of his reemployment date.
(2) Special Account Required If Distribution Made. In
the event a distribution was made to the Participant,
the amount credited to his suspense account shall be
re-credited to his Account as of his reemployment
date and shall be maintained, together with any
undistributed vested interest in the event of a partial
distribution, as a separate Account. A Participant's
vested interest in such separate Account as of any
date of determination shall be determined by
applying the following formula:
Vested interest = P(AB) + (R x D)) minus (R x D)
For purposes of applying the formula, P is the
vested percentage at the date of determination; AB
is the Account balance at the date of determination;
D is the amount of the distribution previously made;
and R is the ratio of the account balance at the date
of determination to the Account balance
immediately following the preceding distribution.
(3) Source of Restored Amounts
(A) If the suspense account established for a
Participant has not yet been forfeited, such
suspense account shall be used to restore the
Participant's Account.
(B) Otherwise, amounts to be restored for any Plan
Year may come from forfeitures as of the last day of
the Plan Year, from additional Participating Employer
contributions for such Plan Year, or from a combination
of these methods, as determined by the Committee.
(e) No Restoration After Five Consecutive Breaks in Service
If a Participant is reemployed after incurring five
consecutive Breaks in Service, no portion of his non-vested
Account shall be restored, and any undistributed vested
interest shall be maintained as a separate fully vested Account.
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SECTION 7. DISTRIBUTION OF ACCOUNTS
7.01 Eligibility
Upon a Participant's termination of employment or death, the
vested portion of his Account shall be distributed as provided in
this Section 7. A Participant who terminates employment prior to
having any vested interest in his Account shall be deemed to have
had his entire Plan benefit paid to him as of the first day of the
calendar quarter coincident with or next following his Severance Date.
7.02 Amount of Distribution
Upon his termination of employment, a Participant shall be entitled
to the vested portion of his Account, determined as of the
Valuation Date coincident with or next following his Severance
Date. However, if distribution is deferred in accordance with
Section 7.04(b) or (c), the Participant shall receive the vested
portion of his Account determined as of the Valuation Date
coincident with or next following the effective date of his request
for distribution.
7.03 Form of Distribution
Distribution of the vested portion of a Participant's Account shall
be made:
(a) In a single lump sum of cash;
(b) In cash installments, payable at least annually, over a
period of years meeting the requirements of Section 7.10; or
(c) In any combination of the foregoing methods of distribution.
7.04 Timing of Distribution
(a) Except as otherwise provided in Section 7.04(d) or in
Section 7.05 or 7.10, distribution of the vested portion of a
Participant's Account shall be made as soon as
administratively practicable following the Valuation Date
next following the later of (i) the Participant's Severance
Date, or (ii) the earlier of (A) the date the Committee
receives a completed distribution election form from or on
behalf of the Participant or (B) the date on which he attains
age 65. Notwithstanding the foregoing, a Participant who is
not a five percent owner of the Company and who
continues as an Employee following his attainment of age
70-1/2 may elect to receive (or to commence receiving) his
benefit under the Plan as of the April 1 next following the
end of the calendar year in which he attained age 70-1/2.
(b) In lieu of a distribution as described in Section 7.04(a)
above, and subject to Section 7.05, a Participant may, in
accordance with such procedures as the Committee prescribes,
elect to have the distribution of the vested portion of his
Account made as of any Valuation Date following the date specified
in Section 7.04(a); provided, however, that if his Severance Date
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is after he has attained age 70-1/2, the Participant shall
automatically receive the vested portion of his Account as of the
Valuation Date coincident with or next following his Severance
Date; and further provided that if his Severance Date is before he
attains age 70-1/2, the Participant may elect to delay receiving
the vested portion of his Account until no later than April 1 of
the calendar year following the calendar year in which he attained
age 70-1/2.
(c) In the case of the death of a Participant before the distribution
of his Account has commenced, the vested portion of his Account
shall be distributed to his Beneficiary as soon as administratively
practicable after the Valuation Date following the Participant's
date of death, unless the Beneficiary elects to delay distribution
to a date no later than that allowed under Section 7.10(b). If
distribution to the Participant has commenced as periodic
payments, and the Participant dies before receiving his entire
vested interest, then the remaining undistributed vested
interest shall continue to be distributed at least as rapidly
as the schedule being used at the Participant's date of death.
(d) In no event shall the provisions of this Section operate so as
to allow the distribution of the Account of a Participant who
owns a five percent or greater interest in an Affiliated
Employer to begin later than the April 1 following the end
of the calendar year in which the Employee attains age 70-1/2.
Furthermore, in no event shall the provisions of this
Section operate so as to allow the distribution of the
Account of a Participant who is not a five percent owner
and who terminates employment prior to attaining age 70-1/2
to begin later than the April 1 following the end of the
calendar year in which he attains age 70-1/2.
(e) Unless otherwise elected by a Participant, and unless an
earlier distribution is required under Section 7.10 or under
Section 7.04(d) above, the payment of benefits under the
Plan shall be made no later than 60 days following the latest of:
(1) The Participant's 65th birthday;
(2) The tenth anniversary of the date the Participant
commenced participation in the Plan; or
(3) The date on which the Participant's employment
relationship with an Affiliated Employer is terminated.
Notwithstanding the foregoing, if the amount of the payment to
which a Participant is entitled cannot be determined by the date
specified in this Section 7.04(e), or if the Committee has been
unable to locate the Participant by such date after making
reasonable efforts to do so, a payment retroactive to such date may
be made no later than 60 days after the date on which the amount
has been determined or the Participant has been located, whichever
is applicable.
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7.05 Vested Account Balance Greater Than $3,500 and Distribution of
Small Benefits
If the value of a Participant's entire vested benefit exceeds $3,500,
no distribution to such Participant shall occur or commence before
the Participant has attained age 65, unless an earlier distribution is
elected, in writing, by the Participant. If the value of a Participant's
entire vested benefit is $3,500 or less, then the benefit shall be paid
to such Participant (or, in the case of his death, to his Beneficiary)
in a single lump sum of cash as soon as practicable following the
Participant's Severance Date (unless an earlier distribution is
required under section 7.04(d)). For the purpose of this Section
7.05, if the Participant's vested benefit at the time of any
distribution exceeded $3,500, the value of his vested benefit at all
times thereafter will be deemed to exceed $3,500.
7.06 Status of Account Pending Distribution
The Account of a Participant who delays distribution of his
Account pursuant to Section 7.04(b) shall continue to be invested
and reinvested by the Trustee in accordance with the terms of the Plan.
7.07 Proof of Death and Right of Beneficiary or Other Person
The Committee may require and rely upon such proof of death and
such evidence of the right of any Beneficiary or other person to
receive the value of the Account of the deceased Participant as the
Committee may deem proper, and its determination of death and of
the right of the Beneficiary or other person to receive payment
shall be conclusive.
7.08 Inability to Locate Participant or Beneficiary
If it is impossible for the Committee, as a practical matter, to
determine the address of a Participant or the Beneficiary of a
deceased Participant entitled to a benefit from this Plan within a
period of five years after such benefit first becomes subject to
distribution, the Committee shall, as a final effort to determine the
address of said Participant or Beneficiary, forward a notice to said
Participant or Beneficiary by registered mail at his last known
address and further contact the Social Security Administration. If
no response is obtained within 90 days following the later of the
mailing or the contact with the Social Security Administration, the
benefit shall be forfeited by the Participant or the Beneficiary. The
amount of such benefit shall be allocated with future Profit Sharing
Contributions under this Plan. However, if a claim is ever
subsequently made for such forfeited benefit by the Participant or
the Beneficiary, such forfeited benefit (without adjustment for gains
or losses) shall be reinstated by the Committee and shall be payable
in accordance with this Section 7.
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7.09 Distribution to Minors or Incompetents
If a minor or legally incompetent person is entitled to a
distribution, the Committee may instruct the Trustee to act in the
best interest of such person by making payment directly to him, his
legal representative or a near relative, or directly for his support,
maintenance or education. The Trustee shall not be required to see
to the application by any third party of any distribution.
7.10 Minimum Required Distributions; Incorporation of Regulations
(a) All distributions under the Plan shall comply with section
401(a)(9) of the Code and the regulations thereunder,
including section 1.401(a)(9)-2 of such regulations, and the
provisions of the Plan reflecting section 401(a)(9) of the
Code shall override any other provisions of the Plan that
are inconsistent therewith. In the case of a Participant who
is a five percent owner of the Company and who remains
employed beyond his attainment of age 70-1/2, his required
minimum distributions shall be recalculated annually, on
the basis of the regulations under section 401(a)(9), to take
into account his additional accruals under the Plan and the
increasing age of him and, if applicable, his spouse.
(b) If a Participant dies before distribution of his benefit has
commenced, the Participant's entire benefit shall be
distributed to his Beneficiary by December 31 of the
calendar year containing the fifth anniversary of the date of
his death. However, the preceding sentence shall not apply
with respect to such portion of the Participant's Account as
is payable to his designated Beneficiary over a period not
extending beyond the life or life expectancy of such
Beneficiary beginning not later than one year after the
Participant's death (or such later date as prescribed by
applicable regulations). In addition:
(1) If the Beneficiary is the deceased Participant's
surviving spouse, distributions may be deferred
until the date on which the Participant would have
attained age 70-1/2; and
(2) If such surviving spouse dies before receiving any
distributions, the provisions of this paragraph (b)
shall be applied as if such spouse were the Participant.
7.11 Direct Rollover of Certain Distributions
Notwithstanding any other provision of this Plan to the contrary,
with respect to any distribution from this Plan that is (i) payable to
a Participant, the Participant's surviving spouse or an alternate
payee (as defined in section 414(p)(8) of the Code) who is the
Participant's spouse or former spouse and (ii) determined by the
Committee to be an "eligible rollover distribution" under section
402(c)(4) of the Code and its applicable regulations, such
Participant, surviving spouse or alternate payee may elect, on a
form provided for that purpose, to have the Trustee make a direct
rollover of all or part of such distribution to an "eligible retirement
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plan," as defined under section 402(c)(8)(B) of the Code and its
applicable regulations, that accepts such rollover. Any distribution
that is not rolled over or transferred to an eligible retirement plan
shall be subject to applicable state and federal income tax withholding.
If a distribution is one to which sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30
days after the notice required under Treasury Regulation section
1.411(a)-11(c) is given, provided that:
(a) The Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option); and
(b) The Participant, after receiving the notice, affirmatively
elects a distribution.
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SECTION 8. ADMINISTRATION OF PLAN AND FIDUCIARY RESPONSIBILITY
8.01 Plan Sponsor
The Company is the "plan sponsor" of the Plan, as such terms are
used in ERISA and the Code.
8.02 Appointment of Committee
The general administration of the Plan and the responsibility for
carrying out the provisions of the Plan shall be placed in a
Committee of not less than three persons appointed from time to
time by the Board to serve at the pleasure of the Board. Any person
appointed a member of the Committee shall signify his acceptance
by filing written acceptance with the Board and the secretary of the
Committee. Any member of the Committee may resign by delivering his
written resignation to the Board and the Secretary of the Committee.
8.03 Duties of Committee
The members of the Committee shall elect a chairman from their
number and a secretary who may be but need not be one of the
members of the Committee; may appoint from their number such
subcommittees with such powers as they shall determine; may
authorize one or more of their number or any agent to execute or
deliver any instrument or make any payment on their behalf; may
retain counsel, employ agents and provide for such clerical,
accounting, actuarial and consulting services as they may require in
carrying out the provisions of the Plan; and may allocate among
themselves or delegate to other persons all or such portion of their
duties under the Plan, other than those granted to the Trustee under
the trust agreement adopted for use in implementing the Plan, as
they, in their sole discretion, shall decide.
8.04 Meetings
The Committee shall hold meetings upon such notice, at such place
or places, and at such time or times as it may from time to time determine.
8.05 Action of Majority
Any act that the Plan authorizes or requires the Committee to do
may be done by a majority of its members. The action of that
majority expressed from time to time by a vote at a meeting or in
writing without a meeting shall constitute the action of the
Committee and shall have the same effect for all purposes as if
assented to by all members of the Committee at the time in office.
8.06 Compensation and Bonding
No Employee shall receive any compensation from the Plan for his
services rendered to the Plan. The Company shall purchase such
bonds as may be required under ERISA.
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8.07 Service in More Than One Fiduciary Capacity
Any individual, entity or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and/or the funds of the Plan.
8.08 Establishment of Rules
Subject to the limitations of the Plan, the Committee from time to
time shall establish rules for the administration of the Plan and the
transaction of its business. The Committee shall have discretionary
authority to interpret the Plan and to make factual determinations
(including but not limited to, determination of an individual's
eligibility for Plan participation, the right and amount of any
benefit payable under the Plan and the date on which any individual
ceases to be a Participant). The determination of the Committee as
to the interpretation of the Plan or any disputed question shall be
conclusive and final to the extent permitted by applicable law.
8.09 Prudent Conduct
The members of the Committee shall use that degree of care, skill,
prudence and diligence that a prudent person acting in a like
capacity and familiar with such matters would use in a similar situation.
8.10 Maintenance of Accounts
The Committee shall maintain accounts showing the fiscal trans-
actions of the Plan and shall keep in convenient form such data as
may be necessary for valuations of the Plan. The Committee shall
also maintain, or cause to be maintained, records showing the
individual balances in each Participant's Account. However,
maintenance of those records and Accounts shall not require any
segregation of the funds of the Plan.
8.11 Limitation of Liability
The Company the other Participating Employers, the Directors of
the Company, the members of the Committee, and any officer,
employee or agent of any Participating Employer shall not incur
any liability individually or on behalf of any other individuals or on
behalf of the Company or other Participating Employer for any act,
or failure to act, made in good faith in relation to the Plan or the
funds of the Plan. However, this limitation shall not act to relieve
any such individual or the Participating Employers from a
responsibility or liability for any fiduciary responsibility, obligation
or duty under Part 4, Title I of ERISA.
8.12 Indemnification
The Board, the Committee, and the officers, employees and agents
of the Affiliated Employers shall be indemnified by the Company
against any and all liabilities arising by reason of any act, or failure
23
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to act, in relation to the Plan or the funds of the Plan, including,
without limitation, expenses reasonably incurred in the defense of
any claim relating to the Plan or the funds of the Plan, and
reasonable amounts paid in any compromise or settlement relating
to the Plan or the funds of the Plan, except for actions or failures to
act made in bad faith. The foregoing indemnification shall be from
the funds of the Plan to the extent of those funds and to the extent
permitted under applicable law; otherwise from the assets of the Company.
8.13 Expenses of Administration
All expenses that arise in connection with the administration of the
Plan, including but not limited to the compensation of the Trustee,
administrative expenses and proper charges and disbursements of
the Trustee and compensation and other expenses and charges of
any enrolled actuary, counsel, accountant, specialist, or other
person who has been retained by the Committee in connection with
the administration thereof, shall be paid from the assets of the Plan,
to the extent not paid by the Company.
8.14 Claims and Review Procedures
(a) Applications for benefits and inquiries concerning the Plan
(or concerning present or future rights to benefits under the
Plan) shall be submitted to the Committee in writing. An
application for benefits shall be submitted on the prescribed
form and shall be signed by the Participant or, in the case
of a benefit payable after his death, by his Beneficiary.
(b) In the event that an application for benefits is denied in
whole or in part, the Committee shall notify the applicant in
writing of the denial and of the right to review of the
denial. The written notice shall set forth, in a manner
calculated to be understood by the applicant, specific
reasons for the denial, specific references to the provisions
of the Plan on which the denial is based, a description of
any information or material necessary for the applicant to
perfect the application, an explanation of why the material
is necessary, and an explanation of the review procedure
under the Plan. The written notice shall be given to the
applicant within a reasonable period of time (not more than
90 days) after the Committee received the application,
unless special circumstances require further time for
processing and the applicant is advised of the extension. In
no event shall the notice be given more than 180 days after
the Committee received the application.
(c) The Committee shall from time to time appoint a committee
(the "Review Panel") that shall consist of three individuals
who may, but need not, be Employees. The Review Panel
shall be the named fiduciary that has the authority to act
with respect to any appeal from a denial of benefits or a
determination of benefit rights.
(d) An applicant whose application for benefits was denied in
whole or part, or the applicant's duly authorized
representative, may appeal the denial by submitting to the
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Review Panel a request for a review of the application
within 60 days after receiving written notice of the denial
from the Committee. The Committee shall give the
applicant or his representative an opportunity to review
pertinent materials, other than legally privileged
documents, in preparing the request for a review. The
request for a review shall be in writing and addressed to the
Review Panel. The request for a review shall set forth all of
the grounds on which it is based, all facts in support of the
request and any other matters that the applicant deems
pertinent. The Review Panel may require the applicant to
submit such additional facts, documents or other materials
as it may deem necessary or appropriate in making its review.
(e) The Review Panel shall act on each request for a review
within 60 days after receipt, unless special circumstances
require further time for processing and the applicant is
advised of the extension. In no event shall the decision on
review be rendered more than 120 days after the Review
Panel received the request for a review. The Review Panel
shall give prompt written notice of its decision to the
applicant and or the Committee. In the event that the
Review Panel confirms the denial of the application for
benefits in whole or in part, the notice shall set forth, in a
manner calculated to be understood by the applicant, the
specific reasons for the decision and specific references to
the provisions of the Plan on which the decision is based.
(f) The Review Panel shall adopt such rules, procedures and
interpretations of the Plan as it deems necessary or
appropriate in carrying out its responsibilities under this
Section 8.14.
(g) No legal action for benefits under the Plan shall be brought
unless and until the claimant (i) has submitted a written
application for benefits in accordance with Section 8.14(a),
(ii) has been notified by the Committee that the application
is denied, (iii) has filed a written request for a review of the
application in accordance with Section 8.14(d) and (iv) has
been notified in writing that the Review Panel has affirmed
the denial of the application; provided, however, that legal
action may be brought after the Committee or the Review
Panel has failed to take any action on the claim within the
time prescribed by Sections 8.14(b) and (e).
8.15 Independent Qualified Public Accountant
The Committee shall engage an independent qualified public
accountant to conduct such examinations and to express such
opinions as may be required by section 103(a)(3) of ERISA. The
Committee in its discretion may remove and discharge the person
so engaged, in which event it shall appoint a successor independent
qualified public accountant to perform such examinations and
express such opinions.
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SECTION 9. MANAGEMENT OF FUNDS
9.01 Control and Management of Plan Assets
The Company is a named fiduciary with respect to control over and
management of the assets of the Plan, but only to the extent of (i)
having the duty to appoint one or more Trustees to hold all assets
of the Plan in trust, (ii) having the authority to remove any Trustee
so appointed and to appoint one or more successor Trustees, (iii)
having the duty to enter into a trust agreement with each Trustee or
successor Trustee so appointed, (iv) having the authority to appoint
one or more Investment Managers for any Plan assets, to enter into
an investment management agreement with each Investment
Manager so appointed and to remove such Investment Manager and
(v) having the authority to direct the investment of any Plan assets
not assigned to an Investment Manager. Each Investment Manager
appointed by the Company shall acknowledge in writing that such
Investment Manager is a fiduciary with respect to the Plan.
9.02 Investment Authority
The Trustee shall have the exclusive authority and discretion to
invest, manage and control the assets of the Plan, except to the
extent that the Company has allocated the authority to manage such
assets to one or more Investment Managers or has retained such
authority. Any Investment Manager appointed under Section 9.01
shall have the exclusive authority to manage, including the power
to direct the acquisition and disposition of, the Plan assets assigned
to it by the Company.
9.03 Exclusive Benefit Rule
Except as otherwise provided in the Plan, no part of the corpus or
income of the funds of the Plan shall be used for or diverted to
purposes other than for the exclusive benefit of Participants and
other persons entitled to benefits under the Plan. No person shall
have any interest in or right to any part of the earnings of the funds
of the Plan, or any right in, or to, any part of the assets held under
the Plan, except as and to the extent expressly provided in the Plan.
9.04 Benefit Payments
All benefits payable pursuant to the Plan shall be paid by the
Trustee out of the trust fund pursuant to the directions of the
Committee and the terms of the Plan and trust agreement.
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SECTION 10. GENERAL PROVISIONS
10.01 Nonalienation
Except as required by applicable law, no benefit under the Plan
shall in any manner be anticipated, assigned or alienated, and any
attempt to do so shall be void. However, payment shall be made in
accordance with the provisions of any judgment, decree, or order that:
(a) Creates for, or assigns to, a spouse, former spouse, child or
other dependent of a Participant the right to receive all or a
portion of the Participant's benefits under the Plan for the
purpose of providing child support, alimony payments or
marital property rights to that spouse, child or dependent;
(b) Is made pursuant to a State domestic relations law;
(c) Does not require the Plan to provide any type of benefit, or
any option, not otherwise provided under the Plan; and
(d) Otherwise meets the requirements of section 206(d) of
ERISA or section 414(p) of the Code, as amended, as a
"qualified domestic relations order," as determined by the Committee.
10.02 Conditions of Employment Not Affected by Plan
The establishment of the Plan shall not confer any legal rights upon
any Employee or other person for a continuation of employment,
nor shall it interfere with the rights of any Affiliated Employer to
discharge any Employee (which right is hereby reserved, but,
where applicable, subject to any relevant terms of a collective
bargaining agreement) and to treat him without regard to the effect
which that treatment might have upon him as a Participant or
potential Participant of the Plan.
10.03 Information
Each Participant, Beneficiary or other person entitled to a benefit
shall file with the Committee any information that the Committee
requires to establish his rights and benefits under the Plan, before
any benefit shall be payable to him or on his account under the Plan.
10.04 Top-Heavy Provisions
(a) For purposes of this Section, the Plan shall be "Top-Heavy" with
respect to any Plan Year if, as of the Applicable Determination Date,
the Top-Heavy Ratio exceeds 60 percent. The Top-Heavy Ratio shall be
determined as of the Applicable Valuation Date in accordance with
section 416(g)(3) and (4) of the Code and Section 4 of this Plan and
shall take into account any contributions made after the Applicable
Valuation Date but that are deductible by the Company with respect to
the Plan Year in which the Applicable Valuation Date occurs. For
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purposes of determining whether the Plan is Top-Heavy, the account
balances under the Plan will be combined with the account balances or
the present value of accrued benefits under each other qualified plan
in the Required Aggregation Group, and, in the Committee's discretion,
may be combined with the account balances or the present value of
accrued benefits under any other qualified plan in the Permissive
Aggregation Group. Distributions made with respect to a Participant
under the Plan during the five-year period ending on the Applicable
Determination Date shall be taken into account for purposes of
determining the Top-Heavy Ratio; distributions under plans that
terminated within such five-year period shall also be taken into
account, if any such plan contained Key Employees and therefore
would have been part of the Required Aggregation Group.
(b) The following provisions shall be applicable to Participants
for any Plan Year with respect to which the Plan is Top-Heavy:
(1) An additional Participating Employer contribution
shall be allocated on behalf of each Participant (and
each Employee eligible to become a Participant)
who is a Non-Key Employee, to the extent that the
contributions made on his behalf under Section 4.01
for the Plan Year would otherwise be less than three
percent of his Remuneration. However, if the
greatest percentage of Remuneration contributed on
behalf of a Key Employee under Section 4.01 for
the Plan Year would be less than three percent, that
lesser percentage shall be substituted for three
percent in the preceding sentence. Notwithstanding
the foregoing provisions of this Subparagraph, no
minimum contribution shall be made under this Plan
with respect to a Participant (or an Employee
eligible to become a Participant) if the required
minimum benefit under section 416(c)(1) of the
Code is provided to him by any other qualified
pension plan of an Affiliated Employer.
(2) The multiplier "1.25" in subsections (e)(1)(B)(i) and
(e)(2)(B)(ii) of Section 4.02 shall be reduced to "1.0."
(3) For any Plan Year in which the Plan is Top-Heavy,
a Participant's Account shall be vested in
accordance with the following vesting schedule if
such schedule results in a greater vested percentage
than the percentage otherwise applicable under
Section 6.01 at the relevant time:
Years of Service Vested Percentage
Less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 but less than 6 years 80%
6 or more years 100%
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(4) If the Plan is Top-Heavy with respect to a Plan Year
and ceases to be top-heavy for a subsequent Plan
Year, the following provisions shall be applicable:
(i) If a Participant has completed at least three
years of Vesting Service on or before the last
day of the most recent Plan Year for which
the Plan was Top-Heavy, the vesting schedule
set forth in paragraph (b)(i) shall continue to
be applicable.
(ii) If a Participant has completed at least two,
but less than three, years of Vesting Service
on or before the last day of the most recent
Plan Year for which the Plan was Top-Heavy,
the vesting provisions of Section 6.01 shall
again be applicable; provided, however, that
in no event shall the vested percentage of a
Participant's Account be less than the
percentage determined under paragraph (b)(i)
above as of the last day of the most recent
Plan Year for which the Plan was Top-Heavy.
(c) The following definitions apply to the terms used in this Section:
(1) "Applicable Determination Date" means the last day of the
later of the first Plan Year or the preceding Plan Year;
(2) "Applicable Valuation Date" means the Valuation
Date coincident with the last day of the preceding
Plan Year (where two or more plans are aggregated
and they do not have the same Plan Year, the
Applicable Valuation Date for each plan shall be
such date for each plan which falls within the same
calendar year);
(3) "Key Employee" means an Employee, a former
Employee, or the Beneficiary of a former Employee
who, in the Plan Year containing the determination
date, or any of the four preceding Plan Years, is:
(A) An officer of the Affiliated Employer having
an annual Remuneration greater than 50
percent of the amount in effect under section
415(b)(1)(A) of the Code for any such Plan
Year; provided, however, that not more than
50 Employees or 10 percent of the
Employees shall be considered as officers
for purposes of this Subparagraph;
(B) One of the 10 Employees owning (or
considered as owning within the meaning of
section 318 of the Code) the largest interest
in the Affiliated Employer that is more than
a one-half percent ownership interest in
value, and whose Remuneration equals or
29
<PAGE>
exceeds the maximum dollar limitation under
section 415(c)(1)(A) of the Code as in effect for
the calendar year in which the determination
date falls;
(C) A five percent owner of the Affiliated Employer; or
(D) A one percent owner of the Affiliated
Employer having annual Remuneration from
the Affiliated Employer of more than $150,000.
(4) "Non-Key Employee" means any Employee who is not a Key Employee;
(5) "Permissive Aggregation Group" means each qualified plan in
the Required Aggregation Group and any other qualified plan(s)
of an Affiliated Employer in which all members are Non-Key
Employees, if the resulting aggregation group continues to
meet the requirements of section 401(a)(4) and 410 of the Code.
(6) "Required Aggregation Group" means each qualified plan of an
Affiliated Employer in which there are members who are Key
Employees, or which enable(s) the Plan or any other such plan to
meet the requirements of section 401(a)(4) or 410 of the Code; and
(7) "Top-Heavy Ratio" means the ratio of (i) the value of the aggregate
of the Accounts under the Plan or any other defined contribution
plan maintained by an Affiliated Employer for Key Employees to (ii)
the value of the aggregate of the Accounts under the Plan or any
other defined contribution plan maintained by an Affiliated
Employer for all Key Employees and Non-Key Employees (provided that
where the "Top Heavy Ratio" is being determined for a defined
benefit plan that is part of the Required or Permissive
Aggregation Group, "present value of accrued benefits" shall be
substituted for "Accounts" in this definition);
10.05 Construction
(a) The Plan shall be construed and administered in accordance
with ERISA, and, to the extent not preempted by ERISA,
with the laws of the State of California.
(b) The masculine pronoun shall include the feminine, and the
singular shall include the plural, wherever appropriate.
(c) The titles and headings of the Sections of this Plan are for
convenience only. In the case of ambiguity or inconsistency,
the text rather than the titles or headings shall control.
30
<PAGE>
SECTION 11. AMENDMENT, MERGER AND TERMINATION
11.01 Amendment of Plan
Subject to any relevant terms of an applicable collective bargaining
agreement, the Company, by action of its Board of Directors or the
individual or committee to which amendment authority has been
delegated by the Board of Directors, reserves the right at any time
and from time to time, and retroactively if deemed necessary or
appropriate, to amend in whole or in part any or all of the
provisions of the Plan, except as otherwise provided by law.
However, no amendment shall make it possible for any part of the
funds of the Plan to be used for, or diverted to, purposes other than
for the exclusive benefit of persons entitled to benefits under the
Plan, except as otherwise provided by law. No amendment shall be
made that has the effect of decreasing the balance of the Account of
any Participant or of reducing the nonforfeitable percentage of the
balance of the Account of a Participant below the nonforfeitable
percentage computed under the Plan as in effect on the date on
which the amendment is adopted or, if later, the date on which the
amendment becomes effective.
11.02 Merger or Consolidation
This Plan may be merged with another qualified plan at the
discretion of the Company and subject to any applicable legal
requirements. However, the Plan may not be merged or
consolidated with, and its assets or liabilities may not be
transferred to, any other plan unless each person entitled to benefits
under the Plan would, if the resulting plan were then terminated,
receive a benefit immediately after the merger, consolidation, or
transfer that is equal to or greater than the benefit he would have
been entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
11.03 Additional Participating Employers
If any employer is or becomes a subsidiary of or associated with
the Company, the Company may include the employees of that
subsidiary or associated employer as participants in the Plan upon
appropriate action by the Board of Directors and by that employer.
In that event, or if any persons become Employees of the
Participating Employer as the result of merger or consolidation or
as the result of acquisition of all or part of the assets or business of
another employer, the Company shall determine to what extent, if
any, previous service with the subsidiary or associated employer
shall be recognized under the Plan, but subject to the continued
qualification of the Plan and trust.
11.04 Termination of Plan
Subject to any relevant terms of an applicable collective bargaining
agreement, the Company, by action of its Board of Directors, may
terminate the Plan, in whole or in part, or completely discontinue
contributions under the Plan for any reason at any time. In case of
termination or partial termination of the Plan, or complete
discontinuance of Participating Employer contributions to the Plan,
the rights of affected Employees to their Accounts under the Plan
31
<PAGE>
as of the date of the termination or discontinuance shall be
nonforfeitable. The total amount in each Employee's Account shall
be distributed, as the Committee shall direct, to him or for his
benefit or continued in trust for his benefit.
EXECUTION OF PLAN
This Bio-Rad Laboratories, Inc. Employees' Deferred Profit Sharing
Retirement Plan, as amended and restated effective January 1, 1997, is
hereby executed this 18th day of July, 1997.
/s/ Sanford Wadler
(Signature)
Vice President
(Title)
32
<PAGE>
EXHIBIT 10.9.4
June 30, 1997
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attn: Mr. Ron Hutton
Re: Amendment No. 4 to Credit Agreement (this "Amendment")
Gentlemen/Ladies:
We make reference to that certain Credit Agreement, dated as of
February 18, 1994, as amended by Amendments dated September 30, 1994,
May 30, 1995 and July 10, 1996, among Bio-Rad Laboratories, Inc. (the
"Borrower"), the lenders party thereto (the "Lenders") and The First National
Bank of Chicago, as agent (the "Agent") (as further modified, amended,
extended or renewed from time to time, the "Agreement"). Capitalized terms
used herein and not otherwise defined shall have the meanings given thereto in
the Agreement.
The Borrower has requested certain amendments to the Agreement and
the Agent and the Lenders have agreed to such amendments on the terms and
conditions set forth herein. Therefore, the Borrower, the Lenders and the
Agent hereby amend the Agreement as follows:
1. The definition of "Facility Termination Date" set forth in Article
I is amended by deleting "April 30, 1999" and inserting "April 30,
2000" in lieu thereof.
2. Article I is further amended by deleting the definitions of
"Investments", "Senior Funded Debt" and "Subordinated Debt"
contained therein.
3. The second sentence of Section 5.12 is amended to read in its
entirety as follows:
"Neither the Borrower nor any Subsidiary is in default in
the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any
agreement to which it is a party, which default would have a
Material Adverse Effect."
4. Section 5.19 is deleted in its entirety.
<PAGE>
5. Section 6.1(iii) is amended to read in its entirety as follows:
"(iii) Together with the financial statements required
hereunder, a compliance certificate in substantially the form
of Exhibit "C" hereto signed by its chief financial officer or
treasurer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default
or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status
thereof."
6. Section 6.19 is deleted in its entirety and the following is inserted
in lieu thereof:
"6.19. [Intentionally Omitted.]"
7. Section 6.22 is deleted in its entirety and compliance with said
Section is waived for the period preceding the date of this
Amendment.
8. Schedule 1-B to the Agreement is deleted in its entirety.
Except for the amendments herein contained, the terms,
conditions and covenants of the Agreement remain in full force and effect and
are hereby ratified and confirmed.
In order to induce the Lenders to enter into this Amendment, the
Borrower represents and warrants to the Lenders that no Default or Unmatured
Default exists and the representations and warranties set forth in Article V
of the Agreement, as amended hereby, are true and correct on and as of the
date hereof as if made on the date hereof.
This Amendment shall be construed in accordance with the
internal laws (and not the law of conflicts) of the State of Illinois, but
giving effect to federal laws applicable to national banks.
This Amendment shall become effective as of the date first above
written upon the Agent's receipt of the following:
(i) counterparts of this Amendment duly executed by the
Borrower and each of the Lenders;
(ii) a copy, certified by the Secretary or an Assistant Secretary
of the Borrower, of the Borrower's Board of Director's
resolutions authorizing the execution of this Amendment; and
(iii) an incumbency certificate, executed by the Secretary or an
Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the officers of
the Borrower authorized to sign this Amendment and to
make borrowings thereunder, upon which certificate the
Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
<PAGE>
This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute an agreement, and any of the
parties hereto may execute this Amendment by signing any such counterpart.
BIO-RAD LABORATORIES, INC.
By: /s/ Ronald W. Hutton
Title: Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Mark A. Isley
Title: First Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ John C. Lee
Title: Assistant Vice President
BANQUE NATIONALE DE PARIS
By: /s/ Debra H. Wright
Title: Vice President
By: /s/ Stephane Ronze
Title: Assistant Vice President
ABN AMRO BANK N.V.
By: /s/ Gina M. Brusatori
Title: Vice President
By: /s/ Dianne D. Barkley
Title: Group Vice President
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
Bio-Rad Laboratories, Inc.
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
Computation for Consolidated Statements of Income:
<S> <C> <C> <C> <C>
Net income $ 2,614 $ 6,699 $15,007 $23,671
======= ======= ======= =======
Weighted average common shares 12,264 12,289 12,278 12,276
======= ======= ======= =======
Earnings per share $0.21 $0.55 $1.22 $1.93
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 12,264 12,289 12,278 12,276
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 148 219 147 217
Weighted average common shares, as adjusted 12,412 12,508 12,425 12,493
======= ======= ======= =======
Primary earnings per share $0.21 $0.54 $1.21 $1.89
======= ======= ======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 12,264 12,289 12,278 12,276
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 215 254 214 252
Weighted average common shares, as adjusted 12,479 12,543 12,492 12,528
======= ======= ======= =======
Fully diluted earnings per share $0.21 $0.53 $1.20 $1.89
======= ======= ======= =======
</TABLE>
[FN]
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from Bio-Rad Laboratories, Inc. Form 10-Q for the quarter ended
September 30, 1997 and is qualified in its entirety by reference
to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,672
<SECURITIES> 0
<RECEIVABLES> 89,319
<ALLOWANCES> 0
<INVENTORY> 82,411
<CURRENT-ASSETS> 202,139
<PP&E> 175,206
<DEPRECIATION> 100,423
<TOTAL-ASSETS> 299,897
<CURRENT-LIABILITIES> 84,352
<BONDS> 4,718
<COMMON> 12,416
0
0
<OTHER-SE> 182,413
<TOTAL-LIABILITY-AND-EQUITY> 299,897
<SALES> 311,097
<TOTAL-REVENUES> 311,097
<CGS> 135,400
<TOTAL-COSTS> 135,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 20,843
<INCOME-TAX> 5,836
<INCOME-CONTINUING> 15,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,007
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 0
</TABLE>
