SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
Commission file number 0-4217
ACETO CORPORATION
_______________________________________________________
(Exact name of registrant as specified in its charter)
New York 11-1720520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
One Hollow Lane, Suite 201 11042
Lake Success, New York
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:(516)627-6000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange
on which registered
None
_______________________________________________________
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01
_______________________________________________________
(Title of Class)
_______________________________________________________
(Title of Class)
[Cover page 1 of 2 pages]
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15
(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No_____
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the close of the
period covered by this report. 4,839,603
The aggregate market value of the voting stock of the
registrant held by non-affiliates of the registrant as of
September 1, 1995 was $70,321,986.
Documents incorporated by reference: Registrant's
Proxy Statement for the annual meeting of Registrant's
shareholders to be held on December 7, 1995. (See Part III
herein).
[Cover page 2 of 2 pages]
PART I
Item 1. Business
Registrant, which was incorporated in 1947, is
primarily engaged in the marketing of fine and industrial
chemicals used principally in the agricultural, color
producing, pharmaceutical and surface coating industries.
Registrant sells over 600 chemicals used in these and other
fields.
Registrant's manufacturing facility ceased operations
in the early part of fiscal 1994. Most of the chemicals
distributed by Registrant are purchased abroad mainly for
sale throughout the United States; to a minor extent, some
chemicals are sold abroad.
During the fiscal year ended June 30, 1995
approximately 50% of the Registrant's purchases of chemicals
came from Europe and approximately 35% came from Asia.
There were no significant changes in the kinds of
products sold by Registrant or in the markets served or
methods of distribution used by it, other than the
aforementioned closure of its manufacturing operation.
The chemical industry is highly competitive. Most of
the chemicals that Registrant sells are in competition with
the products of chemical manufacturers, including the
largest chemical companies, who have substantially greater
resources than Registrant. However, in the Registrant's
opinion, based on reports from its customers and suppliers,
its competitive position is enhanced by the following: the
chemical products that it offers are prime quality products,
many produced by major chemical companies, some of whom are
the largest chemical companies in Europe and Asia, which
products are offered by the Registrant at attractive and
competitive prices. For the most part the Registrant
warehouses the inventories of the chemicals which it sells
at public warehouses strategically located throughout the
United States, and can therefore fill orders rapidly from
inventory. The Registrant has developed ready access to key
purchasing, research and technical executives of both its
customers and suppliers, and therefore one of its salient
competitive strengths is its ability to obtain quick
decisions, when necessary, because of such access. The
technical support and services that the Registrant provides
to its customers is also a strength. The Registrant does
not consider itself to be a significant factor in the
chemical industry taken as a whole.
During the fiscal years ended June 30, 1995 and 1994,
one bulk pharmaceutical chemical product accounted for
approximately 10% and 11% of the Registrant's consolidated
revenues, respectively; and sales of said product to Baker
Norton Pharmaceuticals, Inc. accounted for approximately 10%
and 11% of the Registrant's sales for the same years. In
the prior fiscal year, ended June 30, 1993, no single
chemical product accounted for as much as 10% of the
Registrant's consolidated revenues; and no sales to any one
customer accounted for as much as 10% of the Registrant's
sales.
Certain of the chemicals purchased by the Registrant
are supplied to it on an exclusive basis, including the
aforementioned bulk pharmaceutical product. Based on its
relationships with its vendors, Registrant believes its
vendors will continue to supply such chemicals on an
exclusive basis.
The Registrant holds no patents, trademarks, licenses,
franchises or concessions which it considers to be material
to its operations.
Sales of certain of Registrant's chemicals are higher
in the last six months of the fiscal year than at other
times of the year. For the most part, Registrant warehouses
the products that it sells and fills orders from inventory.
It, therefore, does not consider information concerning
backlogs to be applicable.
A subsidiary of the Registrant markets certain
agricultural chemicals and contracts for the manufacture of
other agricultural chemicals which are subject to the
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).
FIFRA requires that test data be provided to the
Evironmental Protection Agency (EPA) to register, obtain and
maintain approved labels for pesticide products. The EPA
requires that follow-on registrants of these products
compensate the initial registrant for the cost of producing
the necessary test data on a basis prescribed in the FIFRA
regulations. Follow-on registrants do not themselves
generate or contract for the data. However, when FIFRA
requirements mandate the generation of new test data to
enable all registrants to continue marketing a pesticide
product, often both the initial and follow-on registants
establish a task force to jointly undertake the testing
effort. The Registrant is presently a member of two such
task force groups. The Registrant estimates the cost of
test data at the time it is first required, which estimates
are amortized over a period of up to five years, updated
annually; and are included in cost of sales.
Liability under FIFRA would arise if the Company failed
to compensate the initial registrant for the cost of
producing the necessary test data. Since the Registrant
markets no pesticide products which are not registered, and
compensates initial registrants for the cost of producing
test data, it believes it does not subject itself to
contingent liabilities in such regard.
Compliance with Federal, State and local provisions
which have been enacted or adopted regulating the discharge
of materials into the environment will have no material
effect on the capital expenditures and competitive position
of the Registrant. However, Registrant incurred a $1,500,000
charge to operations in fiscal 1993 to cover the estimated
costs of compliance with environmental regulations relating
to the shut-down of its manufacturing facility. Registrant
does not anticipate any further material effect on earnings.
At June 30, 1995, Registrant employed approximately 100
persons, none of whom were covered by a collective
bargaining agreement.
Item 2. Properties
Registrant's general headquarters and main sales office
occupy approximately 20,000 square feet of leased space in a
modern office building in Lake Success, New York. The
present lease expires in April 2001.
Registrant's former manufacturing facility is located
on an 11-acre parcel in Carlstadt, New Jersey, owned by the
Registrant. This parcel contains one building with
approximately 5,000 square feet of office space. The
property is held for sale.
Registrant owns three parcels in Long Island City, New
York totalling 15,000 square feet. Two parcels, totalling
7,500 square feet, are currently leased to tenants, and all
three parcels are held for sale.
Registrant owns a parcel in Waterbury, Connecticut
which contains a brick building of approximately 65,000
square feet on a six-acre site. It is principally used for
offices and warehousing of Registrant's research chemical
division, with approximately 25,000 square feet available
for lease. Another area of this site is leased to a
commercial tenant.
Item 3. Legal Proceedings.
(None)
Item 4. Submission of Matters to a Vote of Security Holders.
(None)
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Registrant's common stock is traded in the
National Market System of NASDAQ (Symbol: ACET) and was
quoted at prices* ranging as follows:
FISCAL 1995 HIGH LOW
First Quarter 16 13 3/4
Second Quarter 14 3/4 13 1/4
Third Quarter 15 3/4 13 1/2
Fourth Quarter 15 5/8 14 1/4
FISCAL 1994 HIGH LOW
First Quarter 14 1/2 12 3/4
Second Quarter 14 12 3/4
Third Quarter 17 1/2 13 1/4
Fourth Quarter 16 14
*The above prices represent high and low prices for actual
transactions.
Cash dividends of $0.18 per common share were paid in
January and June of the fiscal year ended June 30, 1995 and
$0.16 per common share in January and June of the fiscal
year ended June 30, 1994.
As of September 1, 1995, there were approximately 825
holders of record of the Registrant's Common Stock.
Item 6. Selected Financial Data
(In thousands, except per share amounts)
Years Ended
June 30 1995 1994 1993 1992 1991
Net sales $164,783 $149,847 $155,267 $146,654 $132,783
Net income 7,756 6,994 1,899(2) 5,870 5,288
Net income per
common and
common
equivalent
share (1) 1.52 1.36 0.36(2) 1.15 0.98
Total assets 86,116 81,798 76,352 77,256 71,355
Working
capital 48,289 43,606 41,998 38,270 33,575
Long-term debt 1,500 2,000 2,500 3,000 3,500
Redeemable
preferred stock 821 821 821 957 1,050
Shareholders'
equity 60,143 56,846 51,901 50,756 46,832
Number of
common
shares
outstanding at
year end (1) 4,840 5,005 5,023 4,941 5,004
Book value
per common
share (1) $ 12.43 $ 11.36 $ 10.33 $10.27 $ 9.36
Cash dividends
declared
per common
share $ 0.36 $ 0.32 $ 0.28 $ 0.28 $ 0.28
(1) Adjusted for all subsequent stock dividends.
(2) Includes an after-tax charge of $4.8 million or $0.94 per share to
cover plant shut-down costs.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES.
The Registrant's cash and short-term investments
totalled $11.3 million and $11.9 million and working capital
was $48.3 million and $43.6 million at June 30, 1995 and
1994, respectively. In addition, the Registrant's long-term
investments totalled $12.8 million and $14.6 million for the
same periods. These investments are highly liquid and can
be used for working capital if needed. The Registrant also
has lines of credit available from two banks of $6.5 million
each. These lines have only been used for letter of credit
issuance, steamship guarantees and foreign currency hedging
and such use has not exceeded $10.0 million at any one time
during the last two years. Liquidity has traditionally been
derived from cash generated from operations and use of bank
lines of credit. The Registrant's ability to generate cash
and the significant working capital position are considered
adequate to cover both short-term and long-term liquidity.
Additionally, while the Registrant has no current intention
to do so, it has been informed by investment bankers that,
because of its financial condition, it has access to other
funds available in the capital markets.
During fiscal 1995, the Registrant continued its stock
buyback program, whereby $3.1 million was expended to
repurchase 211,000 shares. These treasury stock purchases
were responsible for the decrease in the total of cash,
short-term and long-term investments to $24.1 million at
June 30, 1995 compared to $26.5 million at June 30, 1994.
The increase in trade receivables to $26.1 million at
June 30, 1995 from $23.6 million at June 30, 1994 can be
attributed to an increase in shipments to South America for
which extended payment terms were granted in addition to the
timing of sales and accounts receivable collections.
An increase of approximately $4.0 million in inventory
in transit was the predominant factor for the increase in
accrued merchandise purchases to $11.4 million at June 30,
1995 from $8.8 million at June 30, 1994.
The decrease of $700,000 in accrued plant shut-down
costs is attributable to payments for environmental
compliance, severance pay and property maintenance.
RESULTS OF OPERATIONS.
Net sales improved to $164.8 million in fiscal 1995 up
from $149.8 million in fiscal 1994 and $155.3 million in
fiscal 1993. Stronger sales of dye intermediate, industrial
chemical and agricultural products accounted for the
increase in fiscal 1995. In fiscal 1994, sales of a
marginally profitable agricultural herbicide were sharply
reduced from fiscal 1993 levels but increased moderately in
fiscal 1995. Sales of bulk pharmaceuticals and
pharmaceutical intermediates increased significantly in
fiscal 1994 compared to fiscal 1993. These higher levels
were sustained in fiscal 1995. Sales in fiscal 1993 to a
major beverage producer did not continue in fiscal 1994 and
1995 due to process changes which reduced the requirement
for our product. The Registrant expects sales of this
product to this customer to resume in fiscal 1996 as their
inventory levels diminish.
Gross profits as a percentage of sales were 15.1%,
15.2% and 14.4% in fiscal 1995, 1994 and 1993, respectively.
The improvements in fiscal 1995 and 1994 compared to fiscal
1993 can be attributed primarily to the reduction in sales
of the aforementioned agricultural herbicide which was sold
at only marginally profitable levels.
Selling, general and administrative expenses were $13.8
million in fiscal 1995 compared to $12.3 million in fiscal
1994. Several factors accounted for the 12% increase.
Compensation and related expenses were up $700,000 and costs
related to improvements in and the disposal of obsolete and
unwanted inventories from the Registrant's Pfaltz & Bauer
subsidiary in Waterbury, Connecticut amounted to $400,000.
In addition, fiscal 1994 expenses were reduced by a $600,000
insurance recovery for property claims incurred in fiscal
1992. The remaining selling, general and admistrative
expenses in total were virtually unchanged during the two
year period. Fiscal 1993 expenses amounted to $12.9 million
and included $1.2 million of expense related to the
operations of the Registrant's manufacturing facility, which
was shut down in the early part of fiscal 1994. Exclusive
of the manufacturing expenses, the increase from fiscal 1993
to fiscal 1994 can be attributed to $500,000 in compensation
and related costs and $100,000 in bad debts. Other expenses
increased by normal inflationary factors.
Interest expense, which primarily relates to long-term
debt, was $197,000, $245,000 and $274,000 in fiscal 1995,
1994 and 1993, respectively. The interest on long-term debt
continues to decline as scheduled payments reduce the
principal balance.
Other income increased to $1.8 million in fiscal 1995
from $1.1 million in fiscal 1994 and $1.7 million in fiscal
1993. Among the factors contributing to the lower level in
fiscal 1994 were losses on sales of real estate and
investments of $270,000. These losses compared to gains of
$232,000 in fiscal 1993. The increase in fiscal 1995
compared to fiscal 1994, in addition to the above, is
attributable to increases in commission income of $100,000
and interest income of $400,000. The higher levels of cash
available for investment for most of fiscal 1995, invested
at higher rates, resulted in the increase in interest
income.
The effective tax rates were 38.5%, 36.0% and 42.4% in
fiscal 1995, 1994 and 1993, respectively. The rate in
fiscal 1994 benefited from certain plant shut-down costs
which were not entirely deductible for state tax purposes in
fiscal 1993, but were available to offset fiscal 1994 state
taxes. Fiscal 1995 was not affected by any unusual tax
circumstances and represents the Registrant's traditional
effective tax rate.
Item 8. Financial Statements and Supplementary Data.
The financial statements required by this item 8 are set forth
at the end of this report. The following is the applicable
supplementary data:
QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands except per share amounts)
The following is a summary of the unaudited quarterly results of
operations for the years ended June 30, 1995 and 1994.
Year ended June 30, 1995
Quarter Ended
Sept.30,1994 Dec.31,1994 Mar.31,1995 June 30,1995
Net sales $36,043 $38,418 $46,509 $43,814
Gross profit 4,649 5,900 6,964 7,321
Net income 1,066 1,832 2,590 2,269
Net income per common and
common equivalent share 0.21 0.35 0.51 0.45
Year ended June 30, 1994
Quarter Ended
Sept.30,1993 Dec.31,1993 Mar.31,1994 June 30,1994
Net sales $31,590 $33,679 $44,272 $40,306
Gross profit 4,201 4,974 6,968 6,678
Net income 1,041 1,470 2,527 1,955
Net income per common and
common equivalent share 0.20 0.28 0.50 0.38
Cost of sales during interim periods is determined by gross profit
rates based upon the mix of products sold during each quarter.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant's proxy statement relating to the annual meeting
of the Registrant's shareholders to be held on December 7, 1995,
which will be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K (the
"Proxy Statement"), is hereby incorporated by reference.
Based solely on its review of the copies of such forms
received by it, the Registrant believes that during the fiscal
year covered by this Form 10-K all filing requirements applicable
to its officers, directors, and greater than ten-percent
beneficial owners were complied with.
Item 11. Executive Compensation.
Registrant's Proxy Statement is hereby incorporated by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Registrant's Proxy Statement is hereby incorporated by
reference.
Item 13. Certain Relationships and Related Transactions.
Registrant's Proxy Statement is hereby incorporated by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) See Index to Consolidated Financial Statements and
Schedules included elsewhere herein.
(b) No reports on Form 8-K were filed during the three
months ended June 30, 1995.
(c) Exhibits
3(I) Restated Certificate of Incorporation
(incorporated by reference to Exhibit 4(a)(iii) to
Registration Statement No. 2-70623 on Form S-8 ("S-8 2-
70623")).
3(ii) Certificate of Amendment dated November 21, 1985 to
Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(ii) to Registrant's Annual Report
on Form 10-K for the fiscal year ended June 30, 1986
(1986 10-K)).
3(iii) By-laws (incorporated by reference to Exhibit 3(ii) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1981).
3(iii)(a) By-laws as presently in effect (incorporated by
reference to Exhibit 1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31,
1991).
10(i) Note Agreement dated December 10, 1987 with the
Prudential Insurance Company of America (incorporated
by reference to Exhibit 10(i) to Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30, 1987).
10(ii) Profit Sharing Plan, as amended and restated
effective July 1, 1984 (incorporated by reference to
Exhibit 10(ii) to 1986 10-K).
10(ii)(a) Profit Sharing Plan, as amended and restated effective
July 1, 1989
10(iv) Excess Benefit Plan, effective June 30, 1985
(incorporated by reference to Exhibit 10(iv) to
Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1985).
10(iv)(a) Supplemental Executive Retirement Plan, effective
June 30, 1985, as amended and restated, effective
July 1, 1992 (incorporated by reference to Exhibit
10(iv)(a) to Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1993).
10(v) 1980 Stock Option Plan (incorporated by reference to
Item 4(a)(ii) of S-8 2-70623).
10(v)(a) 1980 Stock Option Plan (as amended and restated
effective as of September 19, 1990) (incorporated
by reference to exhibit 4(c) to Registration Statement
No. 33-38679 on Form S-8).
10(v)(b) Aceto Corporation Stock Option Plan (as Amended
and Restated effective as of September 19, 1990) (and
as further Amended effective June 9, 1992)
(incorporated by reference to Exhibit 10(v)(b) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992).
10(vi) Lease between Aceto Corporation and M. Parisi &
Son Construction Co., Inc. for office space at One
Hollow Lane, Lake Success, New York dated May 24, 1990
(incorporated by reference to Exhibit 10(vi) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990).
10(vii) Arsynco, Inc. Severance Plan for employees not
covered by the Collective Bargaining Agreement
dated January 1993 (incorporated by reference to
Exhibit 10(vii) to Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1993).
21 Subsidiaries of Registrant (incorporated by
reference to Exhibit 21 to Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1993).
24 Consent of KPMG Peat Marwick LLP.
Exhibit 10(ii)(a)
ACETO CORPORATION
PROFIT SHARING PLAN
table of contents
ARTICLE I - DEFINITIONS 1
ARTICLE II - TOP HEAVY AND ADMINISTRATION 8
2.1 TOP HEAVY PLAN REQUIREMENTS 8
2.2 DETERMINATION OF TOP HEAVY STATUS 8
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 11
2.4 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY 12
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 12
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 12
2.7 RECORDS AND REPORTS 13
2.8 APPOINTMENT OF ADVISERS 13
2.9 INFORMATION FROM EMPLOYER 13
2.10 PAYMENT OF EXPENSES 14
2.11 MAJORITY ACTIONS 14
2.12 CLAIMS PROCEDURE 14
2.13 CLAIMS REVIEW PROCEDURE 14
ARTICLE III - ELIGIBILITY 15
3.1 CONDITIONS OF ELIGIBILITY 15
3.2 DETERMINATION OF ELIGIBILITY 15
3.3 TERMINATION OF ELIGIBILITY 15
3.4 OMISSION OF ELIGIBLE EMPLOYEE 15
3.5 INCLUSION OF INELIGIBLE EMPLOYEE 16
ARTICLE IV - CONTRIBUTION AND ALLOCATION 16
4.1 DETERMINING EMPLOYER'S CONTRIBUTION 16
4.2 AMOUNT OF EMPLOYER'S CONTRIBUTION 16
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 16
4.4 ALLOCATION OF CONTRIBUTION, EARNINGS AND FORFEITURES 17
4.5 MAXIMUM ANNUAL ADDITIONS 20
4.6 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 24
ARTICLE V - VALUATIONS 25
5.1 VALUATION OF THE TRUST FUND 25
5.2 METHOD OF VALUATION 25
ARTICLE VI - DETERMINATION AND DISTRIBUTION OF BENEFITS 25
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 25
6.2 DETERMINATION OF BENEFITS UPON DEATH 26
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 27
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 27
6.5 DISTRIBUTION OF BENEFITS 30
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 33
6.7 TIME OF SEGREGATION OR DISTRIBUTION 35
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 35
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 36
6.10 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 36
6.11 LOANS TO PARTICIPANTS 36
6.12 DIRECT ROLLOVERS 37
ARTICLE VII - AMENDMENT, TERMINATION, AND MERGERS 38
7.1 AMENDMENT 38
7.2 TERMINATION 38
7.3 MERGER OR CONSOLIDATION 38
ARTICLE VIII - MISCELLANEOUS 39
8.1 PARTICIPANT'S RIGHTS 39
8.2 ALIENATION 39
8.3 CONSTRUCTION OF PLAN 40
8.4 GENDER AND NUMBER 40
8.5 LEGAL ACTION 40
8.6 PROHIBITION AGAINST DIVERSION OF FUNDS 40
8.7 BONDING 40
8.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 41
8.9 INSURER'S PROTECTIVE CLAUSE 41
8.10 RECEIPT AND RELEASE FOR PAYMENTS 41
8.11 ACTION BY THE EMPLOYER 41
8.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY 41
8.13 HEADINGS 42
8.14 APPROVAL BY INTERNAL REVENUE SERVICE 42
8.15 UNIFORMITY 43
ARTICLE IX - PARTICIPATING EMPLOYERS 43
9.1 ADOPTION BY OTHER EMPLOYERS 43
9.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS 43
9.3 DESIGNATION OF AGENT 44
9.4 EMPLOYEE TRANSFERS 44
9.5 PARTICIPATING EMPLOYERS CONTRIBUTION 44
9.6 AMENDMENT 44
9.7 DISCONTINUANCE OF PARTICIPATION 44
9.8 ADMINISTRATORS AUTHORITY 45
9.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE 45
ACETO CORPORATION
PROFIT SHARING PLAN
THIS PLAN, hereby amended and restated this 12th
day of June, 1995, by Aceto Corporation (herein referred to
as the "Employer").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a
Profit Sharing Plan effective November 30, 1967 (hereinafter
called the"Effective Date"), known as Aceto Corporation
Profit Sharing Plan (herein referred to as the "Plan") in
recognition of the contribution made to its successful
operation by its employees and for the exclusive benefit of
its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer
has the ability to amend the Plan, provided the Trustee
joins in such amendment if the provisions of the Plan
affecting the Trustee are amended; and
WHEREAS, the Plan has been amended several times;
and
WHEREAS, the Plan must be amended to continue to
qualify under the Internal Revenue Code of 1986;
NOW, THEREFORE, effective July 1, 1989, the
Employer in accordance with the provisions of the Plan
pertaining to amendments thereof, hereby amends the Plan in
its entirety and restates the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income
Security Act of 1974, as it may be amended from time to
time.
1.2 "Administrator" means the person designated by the
Employer pursuant to Section 2.4 to administer the Plan on
behalf of the Employer.
1.3 "Aggregate Account" means, with respect to each
Participant, the value of all accounts maintained on behalf
of a Participant, subject to the provisions of Section 2.2.
1.4 "Anniversary Date" means July 1st.
1.5 "Beneficiary" means the person to whom the share
of a deceased Participant's total account is payable,
subject to the restrictions of Sections 6.2 and 6.6.
1.6 "Code" means the Internal Revenue Code of 1986, as
amended, or replaced from time to time.
1.7 "Compensation Base" shall mean an amount equal to
$19,500 for the Plan Year ending June 30, 1984. The amount
specified in the preceding sentence increased by $1,500
each succeeding Plan Year until June 30, 1989 but in no
event did such amount exceed the Taxable Wage Base for such
year. Effective July 1, 1989 for Plan years ending June 30,
1990 through June 30, 1994, "Compensation Base" was
$37,800. Effective for Plan Years on or after July 1, 1994,
"Compensation Base" means $60,600.
1.8 "Compensation" with respect to any Participant
means compensation paid by the Employer for a Plan Year,
limited to regular salary and wages, overtime pay, bonuses
and commissions. Amounts contributed by the Employer under
the within Plan and any non-taxable fringe benefits shall
not be considered as Compensation.
Effective for Plan Years beginning after 1988 but
before January 1, 1994, an Employee's Compensation shall not
exceed $200,000 (or such higher amount as determined by the
Secretary of the Treasury in accordance with Section
401(a)(17) of the Code to reflect increases in the cost of
living).
Effective for Plan Years beginning on or after
January 1, 1994, an Employee's Compensation shall not exceed
$150,000 (or such higher amount as determined by the
Secretary of the Treasury in accordance with Section
401(a)(17) of the Code to reflect increases in the cost of
living).
Compensation shall be recognized as of the first
day of the Plan Year in which an Employee became a
Participant.
1.9 "Disability Retirement Date" means the first day
of the month following the date a Participant who has
incurred a Total and Permanent Disability becomes eligible
for disability benefits under the Federal Social Security
Acts.
1.10 "Early Retirement Date" means the first day of the
month (prior to the Normal Retirement Date) coinciding with
or following the date on which a Participant or Former
Employee attains his 55th birthday or any first of the month
thereafter until reaching Normal Retirement Date.
1.11 "Eligible Employee" means any Employee who has
satisfied the provisions of Section 3.1.
Employees whose employment is governed by the
terms of a collective bargaining agreement between Employee
representatives (within the meaning of Code Section 7701
(a)(46)) and the Employer under which retirement benefits
were the subject of good faith bargaining between the
parties, unless such agreement expressly provides for such
coverage in this Plan, will not be eligible to participate
in this Plan.
1.12 "Employee" shall mean any employee of the
Employer, or any other employer required to be aggregated
with the Employer under Section 414(b), (c), (m) or (o) of
the Code.
The term Employee shall also include any Leased
Employee deemed to be an employee of any Employer described
in the previous paragraph as provided in Sections 414(n) or
(o) of the Code.
1.13 "Employer" means: Aceto Corporation, a
corporation, with principal offices in the State of New
York, and any Participating Employer (as defined in Section
9.1) which shall adopt this Plan; any successor which shall
maintain this Plan; and any predecessor which has maintained
this Plan, and any Employer who is required to be aggregated
with Aceto Corporation under Sections 414(b), (c), (m) or
(o) of the Code.
1.14 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b)
renders investment advice for a fee or other compensation,
direct or indirect with respect to any monies or other
property of the Plan or has any authority or responsibility
to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the
Plan, including, but not limited to, the Trustee, the
Employer and its representative body, and the Administrator.
1.15 "Fiscal Year" means the Employer's accounting year
of 12 months commencing on July 1st of each year and ending
the following June 30th.
1.16 "Forfeiture" means that portion of a Participant's
Account that is not Vested, and occurs on the earlier of:
(a) when the entire Vested portion of a
Participant's Account, is eligible for distribution or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive 1-Year Breaks in
Service.
1.17 "Former Employee" means a person who has been an
Employee, but who has ceased to be an Employee for any
reason.
1.18 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any
reason.
1.19 "415 Compensation" means compensation as defined
in Section 4.5(d) of the Plan.
1.20 "Hour of Service" shall mean (1) each hour for
which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer for the performance
of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly
compensated or entitled to compensation by the Employer
(irrespective of whether the employment relationship has
terminated) for reasons other than performance of duties
(such as vacation, holidays, sickness, jury duty,
disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for
which back pay is awarded or agreed to by the Employer
without regard to mitigation of damages.
Notwithstanding the above, (i) no more than 501
Hours of Service are required to be credited to an Employee
on account of any single continuous period during which the
Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for
which an Employee is directly or indirectly paid, or
entitled to payments on account of a period during which no
duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan
maintained solely for the purpose of complying with
applicable worker's compensation or unemployment
compensation or disability insurance laws; and (iii) Hours
of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee.
For purposes of this Section, a payment shall be
deemed to be made by or due from the Employer regardless of
whether such payment is made by or due from the Employer
directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays
premiums and regardless of whether contributions made or due
to the trust fund, insurer, or other entity are for the
benefit of particular Employees or are on behalf of a group
of Employees in the aggregate.
An Hour of Service must be counted for the purpose
of determining a Year of Service, a year of participation
for purposes of accrued benefits, a 1-Year Break in Service,
and employment commencement date (or reemployment
commencement date). The provisions of Department of Labor
regulations 2530.200b-2(b) and (c) are incorporated herein
by reference.
1.21 "Investment Manager" means any person, firm or
corporation who is a registered investment adviser under the
Investment Advisers Act of 1940, a bank or an insurance
company, and (a) who has the power to manage, acquire, or
dispose of Plan assets, and (b) who acknowledges in writing
his fiduciary responsibility to the Plan.
1.22 "Key Employee" means those Employees defined in
Code Section 416(i) and the Treasury regulations thereunder.
Generally, they shall include any Employee or Former
Employee (and his Beneficiaries) who, at any time during the
Plan Year or any of the preceding four (4) Plan Years, is:
(a) an officer of the Employer (as that term is
defined within the meaning of the regulations under Code
Section 416) having annual "415 compensation" greater than
50 percent of the amount in effect under Code Section
415(c)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
compensation" from the Employer for a Plan Year greater than
the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer.
"Five percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the Employer
or, in the case of an unincorporated business, any person
who owns more than five percent (5%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), and (m) shall be
treated as separate employers.
(d) a "one percent owner" of the Employer having
an annual "4l5 compensation" from the Employer of more than
$150,000. "One percent owner" means any person who owns (or
is considered as owning within the meaning of Code Section
318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%)
of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any
person who owns more than one percent (1%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), and (m) shall be
treated as separate employers. However, in determining
whether an individual has "415 compensation" of more than
$150,000, "415 compensation" from each employer required to
be aggregated under Code Sections 414(b), (c), and (m) shall
be taken into account.
1.23 "Late Retirement Date" means the first day of the
month coinciding with or next following a Participant's
actual Retirement Date after having reached his Normal
Retirement Date.
1.24 "Leased Employee" means any person (other than an
Employee of the Employer) who pursuant to an agreement
between the Employer and any other person ("leasing
organization") has performed services for the Employer (or
for the Employer and related persons determined in
accordance with Section 414(n)(6) of the Code) on a
substantially full time basis for a period of at least one
year, and such services are of a type historically performed
by employees in the business field of the Employer.
Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services
performed for the Employer shall be treated as provided by
the Employer.
A Leased Employee shall not be considered an
employee of the Employer if: (i) such employee is covered
by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Section 415(c)(3) of
the Code, but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the
employee's gross income under Section 125, Section
402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the
Code, (2) immediate participation, and (3) full and
immediate vesting; and (ii) Leased Employees do not
constitute more than 20 percent of the Employer's nonhighly
compensated work force.
1.25 "Month of Service" shall mean a calendar month
during any part of which an Employee completed an Hour of
Service. Except, however, a Participant shall be credited
with a Month of Service for each month during the 12 month
computation period in which he has not incurred a 1-Year
Break in Service.
1.26 "Net Profit" means with respect to any Fiscal Year
the Employer's net income or profit for such Fiscal Year
determined upon the basis of the Employer's books of account
in accordance with generally accepted accounting principles
without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan.
1.27 "Non-Key Employee" means any Employee or Former
Employee (and his Beneficiaries) who is not a Key Employee.
1.28 "Normal Retirement Date" means the first day of
the month coinciding with or next following the
Participant's Normal Retirement Age (65th birthday).
1.29 "l-Year Break in Service" means a Plan Year during
which an Employee has not completed more than 500 Hours of
Service with the Employer. An Employee shall not incur a 1-
Year Break in Service for the Plan Year in which he becomes
a Participant, dies, retires or suffers Total and Permanent
Disability. Further, solely for the purpose of determining
whether a Participant has incurred a 1-Year Break in
Service, Hours of Service shall be recognized for
"authorized leaves of absence" and "maternity and paternity
leaves of absence."
"Authorized leave of absence" means an unpaid,
temporary cessation from active employment with the Employer
pursuant to an established nondiscriminatory policy, whether
occasioned by illness, military service, or any other
reason.
A "maternity or paternity leave of absence" shall
mean, for Plan Years beginning after December 31, 1984, an
absence from work for any period by reason of the Employee's
pregnancy, birth of the Employee's child, placement of a
child with the Employee in connection with the adoption of
such child, or any absence for the purpose of caring for
such child for a period immediately following such birth or
placement. For this purpose, Hours of Service shall be
credited for the computation period in which the absence
from work begins, only if credit therefor is necessary to
prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a
"maternity or paternity leave of absence" shall be those
which would normally have been credited but for such
absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8)
Hours of Service per day. The total Hours of Service
required to be credited for a "maternity or paternity leave
of absence" shall not exceed 501.
1.30 "Participant" shall mean any Eligible Employee or
a Former Employee who participates in the Plan as provided
in Sections 3.1, 3.2 and 3.3.
1.31 "Participant's Account" shall mean the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan
and Trust.
1.32 "Plan" shall mean this instrument, including all
amendments thereto.
1.33 "Plan Year" means the Plan's accounting year of
twelve (12) months commencing on July 1st of each year and
ending the following June 30th.
1.34 "Regulation" means the Income Tax Regulations as
promulgated by the Secretary of the Treasury or his
delegate, and as amended from time to time.
1.35 "Retired Participant" means a person who has been
a Participant, and who has become entitled to retirement
benefits under the Plan.
1.36 "Retirement Date" means the date as of which a
Participant retires for reasons other than Total and
Permanent Disability, whether such retirement occurs on a
Participant's Normal Retirement Date, Early or Late
Retirement Date (see Section 6.1).
1.37 "Super Top Heavy Plan" means a plan described in
Section 2.2(b).
1.38 "Taxable Wage Base" means, with respect to any
year, the maximum amount of earnings which may be considered
wages for such year under Code Section 3121(a)(1).
1.39 "Terminated Participant" means a person who has
been a Participant, but whose employment has been terminated
other than by death, Total and Permanent Disability or
retirement.
1.40 "Top Heavy Plan" means a plan described in Section
2.2(a).
1.41 "Top Heavy Plan Year" means that, for a particular
Plan Year commencing after December 31, 1983, the Plan is a
Top Heavy Plan.
1.42 "Total and Permanent Disability" means a physical
or mental condition of a Participant resulting from bodily
injury, disease, or mental disorder which renders him
incapable of continuing any gainful occupation and which
condition constitutes total disability under the federal
Social Security Acts.
1.43 "Trustee" means the entity, person or persons
named as trustee or trustees herein or in any separate trust
forming a part of this Plan, and any successors.
1.44 "Trust Fund" means the assets of the Plan and
Trust as the same shall exist from time to time.
1.45 "Valuation Date" means June 30th and December 31st
and such other date deemed necessary by the Administrator.
1.46 "Vested" means the portion of a Participant's
Account that is nonforfeitable.
1.47 "Year of Service" shall mean the computation
period of twelve (12) consecutive months, herein set forth,
during which an Employee has at least 1000 Hours of Service.
Except, however, the 1000 hour requirement set
forth above shall be disregarded for the Employee's
eligibility computation period.
For purposes of eligibility for participation, the
initial computation period shall begin with the date on
which the Employee first performs an Hour of Service. The
participation computation period beginning after a 1-Year
Break in Service shall be measured from the date on which an
Employee again performs an Hour of Service. The
participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the
Employee first performed an Hour of Service.
For vesting purposes a Year of Service shall be a
Plan Year in which an Employee completes 1000 Hours of
Service.
Years of Service with any corporation, trade or
business which is a member of a controlled group of
corporations or under common control (as defined by Code
Sections 414(b) and 414(c)) or is a member of an affiliated
service group (as defined by Code Section 414(m)) shall be
recognized.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
(a) For any Top Heavy Plan Year, the Plan shall
provide the following:
(1) special vesting provisions as set forth
in Section 6.4 of the Plan;
(2) special minimum allocation requirements
of Code Section 416(c) pursuant to Section 4.4 of the Plan;
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any
Plan Year commencing after December 31, 1983, in which, as
of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of
an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all
plans of an Aggregation Group.
If any Participant is a Non-Key Employee for
any Plan Year, but such Participant was a Key Employee for
any prior Plan Year, such Participant's Present Value of
Accrued Benefit and/or Aggregate Account balance shall not
be taken into account for purposes of determining whether
this Plan is a Top Heavy or Super Top Heavy Plan (or whether
any Aggregation Group which includes this Plan is a Top
Heavy Group). In addition, for Plan Years beginning after
December 31, 1984, if a Participant or Former Participant
has not received any 415 compensation, from any Employer
maintaining the Plan (other than benefits under the Plan) at
any time during the five year period ending on the
Determination Date, the Aggregate Account and/or Present
Value of Accrued Benefit for such Participant or Former
Participant shall not be taken into account for the purposes
of determining whether this Plan is a Top Heavy or Super Top
Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for
any Plan Year commencing after December 31, 1983 in which,
as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent (90%)
of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan
and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate
Account as of the Determination Date is the sum of:
(1) his Participant's Account balance as of
the most recent valuation occurring within a twelve (12)
month period ending on the Determination Date;
(2) an adjustment for any contributions due
as of the Determination Date. Such adjustment shall be the
amount of any contributions actually made after the
valuation date but on or before the Determination Date,
except for the first Plan Year when such adjustment shall
also reflect the amount of any contributions made after the
Determination Date that are allocated as of a date in that
first Plan Year.
(3) any Plan distributions made within the
Plan Year that includes the Determination Date or within the
four (4) preceding Plan Years. However, in the case of
distributions made after the valuation date and prior to the
Determination Date, such distributions are not included as
distributions for top heavy purposes to the extent that such
distributions are already included in the Participant's
Aggregate Account balance as of the valuation date.
Notwithstanding anything herein to the contrary all
distributions, including distributions made prior to January
l, 1984, and distributions under a terminated plan which if
it had not been terminated would have been required to be
included in an Aggregation Group, will be counted. Further
distributions from the Plan (including the cash value of
life insurance policies) of a Participant's account balance
because of death shall be treated as a distribution for the
purposes of this paragraph.
(4) any Employee contributions, whether
voluntary or mandatory. However, amounts attributable to
tax deductible qualified deductible employee contributions
shall not be considered to be a part of the Participant's
Aggregate Account balance.
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides the rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers it shall not consider such rollovers or plan-to-
plan transfers accepted after December 31, 1983 as part of
the Participant's Aggregate Account balance. However,
rollovers or plan-to-plan transfers accepted prior to
January l, 1984 shall be considered as part of the
Participant's Aggregate Account balance.
(6) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by the
Employee or made to a plan maintained by, the same
employer), if this Plan provides the rollover or plan-to-
plan transfer it shall not be counted as a distribution for
purposes of this Section. If this Plan is the plan
accepting such rollover or plan-to-plan transfer, it shall
consider such rollover or plan-to-plan transfer as part of
the Participant's Aggregate Account balances irrespective of
the date on which such rollover or plan-to-plan transfer is
accepted.
(7) For the purposes of determining whether
two employers are to be treated as the same employer in (5)
and (6) above, all employers aggregated under Code Section
414(b), (c) or (m) are treated as the same employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In
determining a Required Aggregation Group hereunder, each
plan of the Employer in which a Key Employee is a
participant in the Plan Year containing the Determination
Date or any of the four preceding Plan Years, and each other
plan of the Employer which enables any plan in which a Key
Employee anticipates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation
Group, each plan in the group will be considered a Top Heavy
Plan if the Required Aggregation Group is a Top Heavy Group.
No plan in the Required Aggregation Group will be considered
a Top Heavy Plan if the Required Aggregation Group is not a
Top Heavy Group.
(2) Permissive Aggregation Group: The
Employer may also include any other plan not required to be
included in the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to satisfy
the provisions of Code Sections 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation
Group, only a plan that is part of the Required Aggregation
Group will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is not a Top Heavy
Group.
(3) Only those plans of the Employer in
which the Determination Dates fall within the same calendar
year shall be aggregated in order to determine whether such
plans are Top Heavy Plans.
(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained within
the last five (5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day
of the preceding Plan Year, or (b) in the case of the first
Plan Year, the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case
of a defined benefit plan, a Participant's Present Value of
Accrued Benefit shall be as determined under the provisions
of the applicable defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group
in which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of
Key Employees under all defined benefit plans included in
the group, and
(2) the Aggregate Accounts of Key Employees
under all defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint
and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of
the Plan to assure that the Plan is being operated for the
exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the
Code, and the Act.
(b) The Employer shall establish a "funding
policy and method," i.e., it shall determine whether the
Plan has a short run need for liquidity (e.g., to pay
benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The
Employer or its delegate shall communicate such needs and
goals to the Trustee, who shall coordinate such Plan needs
with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a
directive to the Trustee as to investment of the Trust
Funds. Such "funding policy and method" shall be consistent
with the objectives of this Plan and with the requirements
of Title I of the Act.
(c) The Employer may in its discretion appoint an
Investment Manager to manage all or a designated portion of
the assets of the Plan. In such event, the Trustee shall
follow the directive of the Investment Manager in investing
the assets of the Plan managed by the Investment Manager.
(d) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties
have been delegated or allocated by it under the provisions
of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal
periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day
conduct and evaluation or through other appropriate ways.
2.4 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE
AUTHORITY
The Employer shall appoint one or more
Administrators. Any persons including but not limited to
the Employees of the Employer, shall be eligible to serve as
an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer.
An Administrator may resign by delivering his written
resignation to the Employer or be removed by the Employer by
delivery of written notice of removal, to take effect at a
date specified therein, or upon delivery to the
Administrator if no date is specified. The Employer, upon
the resignation or removal of an Administrator, shall
promptly designate in writing a successor to this position.
If the Employer does not appoint an Administrator, the
Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as
Administrator, the responsibilities of each Administrator
may be specified by the Employer and accepted in writing by
each Administrator. In the event that no such delegation is
made by the Employer, the Administrators may allocate the
responsibilities among themselves, in which event the
Administrators shall notify the Employer and the Trustee in
writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and
rely upon any documents executed by the appropriate
Administrator until such time as the Employer or the
Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is
to administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the
specific terms of the Plan. The Administrator shall
administer the Plan in accordance with its terms and shall
have the power, in the absolute discretion of the
Administrator, to determine all questions arising in
connection with the administration, interpretation, and
application of the Plan. Any such determination and
application of discretion by the Administrator shall be
conclusive and binding upon all persons. The Administrator
may establish procedures, correct any defect, supply any
information, or reconcile any inconsistency in such manner
and to such extent as shall be deemed necessary or advisable
to carry out the purpose of the Plan; provided however, that
any procedure, discretionary act, interpretation or
construction shall, in the opinion of the Administrator, be
consistent with the intent that the Plan shall continue to
be deemed a qualified plan under the terms of Code Section
401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator
shall have all powers necessary or appropriate to accomplish
his duties under this Plan.
The Administrator shall be charged with the duties
of the general administration of the Plan, including, but
not limited to, the following:
(a) to determine all questions relating to the
eligibility of Employees to participate or remain a
Participant hereunder;
(b) to compute, certify, and direct the Trustee
with respect to the amount and the kind of benefits to which
any Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with
respect to all nondiscretionary or otherwise directed
disbursements from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and
to make and publish such rules for regulation of the Plan as
are consistent with the terms hereof;
(f) to determine the size and type of any
Contract to be purchased from any insurer, and to designate
the insurer from which such Contract shall be purchased;
(g) to compute and certify to the Employer and to
the Trustee from time to time the sums of money necessary or
desirable to be contributed to the Trust Fund;
(h) to consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the
Plan in order that the Trustee can exercise any investment
discretion in a manner designed to accomplish specific
objectives;
(i) to assist any Participant regarding his
rights, benefits or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all
actions taken and shall keep all other books of account,
records, and other data that may be necessary for proper
administration of the Plan and shall be responsible for
supplying all information and reports to the Internal
Revenue Service, Department of Labor, Participants,
Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent
of the Administrator, may appoint counsel, specialists,
advisers and other persons as the Administrator or the
Trustee deems necessary or desirable in connection with the
administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his
functions, the Employer shall supply full and timely
information to the Administrator on all matters relating to
the Compensation of all Participants, their Hours of
Service, their Years of Service, their retirement, death,
disability or termination of employment and such other
pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties
under the Plan. The Administrator may rely upon such
information as is supplied by the Employer and shall have no
duty or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of
the Trust Fund unless paid by the Employer. Such expenses
shall include any expenses incident to the functioning of
the Administrator, including, but not limited to, fees of
accountants counsel, and other specialists and their agents,
and other costs of administering the Plan. Until paid, the
expenses shall constitute a liability of the Trust Fund.
However, the Employer may reimburse the Trust Fund for any
administration expense incurred. Any administration expense
paid to the Trust Fund as a reimbursement shall not be
considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and
delegation of administrative authority pursuant to Section
2.5, if there shall be more than one Administrator, they
shall act by a majority of their numbers but may authorize
one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed
with the Administrator on forms supplied by the Employer.
Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the
application is filed. In the event the claim is denied, the
reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the
claimant, pertinent provisions of the Plan shall be cited,
and, where appropriate, an explanation as to how the
claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an
explanation of the Plan's claims review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, Former Employee, or Beneficiary of
either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.12 shall be entitled to
request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which
may be obtained from the Administrator) a request for a
hearing. Such requests together with a written statement of
the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than
60 days after receipt of the written notification provided
for in Section 2.12. The Administrator shall then conduct a
hearing within the next 60 days, at which the claimant may
be represented by an attorney or any other representative of
his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior
thereto upon 5 business days written notice to the
Administrator) the claimant or his representative shall have
an opportunity to review all documents in the possession of
the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the
Administrator may cause a court reporter to attend the
hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be
furnished to both parties by the court reporter. The full
expense of any such court reporter and such transcripts
shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of
the claim shall be made by the Administrator within 60 days
of receipt of the appeal (unless there has been an extension
of 60 days due to special circumstances, provided the delay
and the special circumstances occasioning it are
communicated to the claimant within the 60 day period).
Such communication shall be written in a manner calculated
to be understood by the claimant and shall include specific
reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Employee who was a Participant in the Plan
prior to the Effective Date of this Amendment shall be
eligible to participate in the Plan. Thereafter, any
Employee who has an Hour of Service prior to January 1 shall
become a Participant on the June 30th immediately following,
provided they are still an Employee. Any Employee who does
not have an Hour of Service until after December 31 will
become a Participant on the July 1st immediately following,
provided he is an Employee at that time.
3.2 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility
of each Employee for participation in the Plan based upon
information furnished by the Employer. Such determination
shall be conclusive and binding upon all persons, as long as
the same is made in accordance with the Plan and the Act.
Such determination shall be subject to review per Section
2.13.
3.3 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a
classification of an Eligible Employee to a noneligible
Employee, such Participant shall continue to vest in his
interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed
pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings
of the Trust Fund.
3.4 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Fiscal Year, any Employee who should be
included as a Participant in the Plan is erroneously omitted
and discovery of such omission is not made until after a
contribution by his Employer for the year has been made, the
Employer shall make a subsequent contribution with respect
to the omitted Employee in the amount which the said
Employer would have contributed with respect to him had he
not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in
part in any taxable year under applicable provisions of the
Code.
3.5 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Fiscal Year, any person who should not
have been included as a Participant in the Plan is, by good
faith mistake of fact, included and discovery of such
incorrect inclusion is not made until after a contribution
for the year has been made, the Employer shall be entitled
to recover the contribution made with respect to the
ineligible person, provided the amount is returned within
one year of its being contributed to the Plan, regardless of
whether or not a deduction is allowable with respect to such
contribution. In the event the amount is not returned to
the Employer, it shall constitute a Forfeiture for the
Fiscal Year in which the discovery is made.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 DETERMINING EMPLOYER'S CONTRIBUTION
(a) For the Fiscal Year during which the Plan is
adopted and each Fiscal Year thereafter the Employer shall
contribute to the Plan out of its current or accumulated Net
Profit such amount as shall be determined by the Employer.
(b) Notwithstanding the foregoing, however, the
Employer's contribution for any Fiscal Year shall not exceed
the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404. All contributions
by the Employer shall be made in cash or in such property as
is acceptable to the Trustee.
(c) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer
shall not be required to make a contribution if it exceeds
current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
4.2 AMOUNT OF EMPLOYER'S CONTRIBUTION
The Employer shall determine the amount of any
profit sharing contribution to be made to the Plan. In
determining such contribution, the Employer shall be
entitled to rely upon an estimate of its Net Profit, of the
total Compensation for all Participants, and of the amounts
contributable by it. The Employer's determination of such
contribution shall be binding on all Participants, the
Employer, and the Trustee. Such determination shall be
final and conclusive and shall not be subject to change as a
result of a subsequent audit by the Internal Revenue Service
or as a result of any subsequent adjustment of the
Employer's records. The Trustee shall have no right or duty
to inquire into the amount of the Employer's contribution or
the method used in determining the amount of the Employer's
contribution, but shall be accountable only for funds
actually received by the Trustee.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall pay to the Trustee its
contribution to the Plan for each Fiscal Year within the
time prescribed by law, including extensions of time, for
the filing of the Employer's federal income tax return for
the Fiscal Year.
4.4 ALLOCATION OF CONTRIBUTION, EARNINGS AND
FORFEITURES
(a) The Administrator shall establish and
maintain an account in the name of each Participant to which
the Administrator shall credit as of each Anniversary Date
all amounts allocated to each such Participant as hereafter
set forth. However, the Administrator may separately
account for that portion of each Participant's Account
attributable to Top Heavy Plan Years and Non-Top Heavy Plan
Years.
(b) The Employer shall provide the Administrator
with all information required by the Administrator to make a
proper allocation of the Employer's contribution for each
Fiscal Year. Within 45 days after the date of receipt by
the Administrator of such information, the Administrator
shall allocate such contribution as follows:
i. For Plan Years ending on or before June
30, 1989:
(1) A dollar amount, equal to the
Employer's Old Age Survivors and Disability Income tax rate
in effect at the beginning of the Plan Year (as provided in
Code Section 3111(a)) multiplied by a Participant's
Compensation for the Plan Year in excess of the Compensation
Base for that year (herein referred to as "Excess
Compensation"), shall be allocated to each Participant's
Account.
(2) If the Employer does not contribute
an amount equal to the above stated percentage of "Excess
Compensation" for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that his "Excess Compensation" bears to the total "Excess
Compensation" of all Participants for that year.
(3) The balance of the Employer's
contribution over the amount allocated under subparagraph
(1) hereof shall be allocated to each Participant's Account
in the same proportion that his total Compensation for the
Year bears to the total Compensation of all Participants for
such year.
ii. Effective for Plan Years beginning after
June 30, 1989 and ending on or before June 30, 1994:
(1) A dollar amount, equal to 5.7%
multiplied by a Participant's Compensation for the Plan Year
up to the Compensation Base for that year shall be allocated
to each Participant's account.
(2) If the Employer does not contribute
an amount equal to the above stated percentage of
Compensation up to the Compensation Base for all
Participants, each Participant will be allocated a share of
the contribution in the same proportion that his
Compensation, up to the Compensation Base, bears to the
total Compensation up to the Compensation Base, of all
Participants for that year.
(3) The balance of the Employer's
contribution over the amount allocated under subparagraph
(1) hereof shall be allocated to each Participant's account
in a dollar amount equal to 10.0% multiplied by a
Participant's Compensation for the Plan Year in excess of
the Compensation Base for the year (herein referred to as
"Excess Compensation"). If the Employer does not contribute
an amount equal to the above stated percentage of "Excess
Compensation" for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that his "Excess Compensation" bears to the total "Excess
Compensation" of all Participants for that year.
iii. Effective for Plan Years beginning after
June 30, 1994:
(1) A dollar amount, equal to 7.6%
multiplied by a Participant's Compensation for the Plan Year
up to the Compensation Base for that year shall be allocated
to each Participant's account.
(2) If the Employer does not contribute
an amount equal to the above stated percentage of
Compensation up to the Compensation Base for all
Participants, each Participant will be allocated a share of
the contribution in the same proportion that his
Compensation, up to the Compensation Base, bears to the
total Compensation up to the Compensation Base, of all
Participants for that year.
(3) The balance of the Employer's
contribution over the amount allocated under subparagraph
(1) hereof shall be allocated to each Participant's account
in a dollar amount equal to 13.0% multiplied by a
Participant's Compensation for the Plan Year in excess of
the Compensation Base for the year (herein referred to as
"Excess Compensation"). If the Employer does not contribute
an amount equal to the above stated percentage of "Excess
Compensation" for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that his "Excess Compensation" bears to the total "Excess
Compensation" of all Participants for that year.
iv. The minimum allocation to any
Participant shall be the sum of $10; however, if the
Employer's contribution for any Fiscal Year shall be
insufficient to permit such minimum allocation to each
Participant, the Employer's contribution shall be allocated
equally among the Participants. For this purpose, Employees
becoming Participants for the first time as of such date,
shall be treated in the same manner as all other
Participants hereunder.
Notwithstanding anything to the contrary
above, a Participant who performs less than a Year of
Service during any Plan Year shall not share in the
Employer's contribution for that year, unless required
pursuant to Section 4.4(h); except, however, a Participant
who is eligible for Early, Normal, Late or Disability
retirement and who elects to retire at any date other than
June 30 shall receive a pro-rata share of the Employer's
contribution for that plan year, as determined in this
Section 4.4. The Participant's account shall be credited
with this partial year of contribution on the next June 30
following the Participant's Retirement Date, and shall be
determined and distributed in accordance with Article VI of
this Plan.
(c) As of each Valuation Date, before allocation
of Forfeitures and Employer contributions, any earnings or
losses (net appreciation or net depreciation) of the Trust
Fund shall be allocated in the same proportion that each
Participant's and Former Participant's nonsegregated
accounts (as adjusted for outstanding loans) bear to the
total of all Participant's and Former Participant's
nonsegregated accounts (as adjusted for outstanding loans)
as of the preceding Valuation Date.
(d) As of each Anniversary Date any amounts which
become Forfeitures since the last Anniversary Date shall
first be made available to reinstate previously forfeited
account balances of Former Participants, if any, in
accordance with Section 6.4(f). The remaining Forfeitures,
if any, shall be allocated among the Participants' Accounts
in the same proportion that each such Participant's
allocation under subparagraph (b) above for the year bears
to the total allocation under subparagraph (b) above of all
Participants for the year. Provided, however, that in the
event the allocation of Forfeitures provided herein shall
cause the "annual addition" (as defined in Section 4.5) to
any Participant's Account to exceed the amount allowable by
the Code, the excess shall be reallocated in accordance with
Section 4.6. Except, however, a Participant who performs
less than a Year of Service during any Plan Year shall not
share in the Plan Forfeitures for that year, unless required
pursuant to Section 4.4(h).
(e) Minimum Allocations Required for Top Heavy
Plan Years: Notwithstanding the foregoing, for any Top
Heavy Plan Year, the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Account of each
Non-Key Employee shall be equal to at least three percent
(3%) of such Non-Key Employee's "415 compensation."
However, if (i) the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Account of each
Key Employee for such Top Heavy Plan Year is less than three
percent (3%) of each Key Employee's "415 compensation" and
(ii) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet
the requirements of Code Section 401(a)(4) or 410, the sum
of the Employer's contributions and Forfeitures allocated to
the Participant's Account of each Non-Key Employee shall be
equal to the largest percentage allocated to the
Participant's Account of each Key Employee.
Except, however, no such minimum allocation
shall be required in this Plan for any Non-Key Employee who
participates in another defined contribution plan subject to
Code Section 412 providing such benefits included with this
Plan in a Required Aggregation Group.
(f) For any Plan Year when (1) the Plan is a Top
Heavy Plan but not a Super Top Heavy Plan and (2) a Key
Employee is a Participant in both this Plan and a defined
benefit plan included in a Required Aggregation Group which
is top heavy, the extra minimum allocation (required by
Sections 4.5(m)(5) and 4.5(n) to provide higher limitations)
shall be provided for each Non-Key Employee who is a
Participant only in this Plan by substituting four percent
(4%) for three percent (3%) in the paragraph above.
(g) For purposes of the minimum allocations set
forth above, the percentage allocated to the Participant's
Account of any Key Employee shall be equal to the ratio of
the sum of the Employer's contribution and Forfeitures
allocated on behalf of such Key Employee divided by the "415
compensation" for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the
Participant's Account of all Non-Key Employees who are
Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who
have (1) failed to complete a Year of Service; (2) declined
to make mandatory contributions (if required) to the Plan;
and (3) been excluded from participation because of their
level of Compensation.
(i) In lieu of the above, if a Non-Key Employee
participates in this Plan and a defined benefit pension plan
included in a Required Aggregation Group which is top heavy,
a minimum allocation of five percent (5%) of "415
compensation" shall be provided under this Plan.
However, for any Plan Year when (1) the Plan
is a Top Heavy Plan but not a Super Top Heavy Plan and (2) a
Key Employee is a Participant in both this Plan and a
defined benefit plan included in a Required Aggregation
Group which is top heavy, seven and one-half percent (7-
1/2%) shall be substituted for five percent (5%), and the
extra minimum allocation (required by Sections 4.5(m)(5) and
4.5(n) to provide higher limitations) shall be provided in
this Plan.
(j) For the purposes of this Section, "415
compensation" shall be as defined in Section 4.5(d), and
shall be limited to $200,000, as adjusted by the Secretary
of the Treasury in accordance with Section 401(a)(17) of the
Code in Top Heavy Plan Years beginning prior to December 31,
1993. For Plan Years beginning on or after January 1, 1994,
the limit will be $150,000, as adjusted by the Secretary of
the Treasury in accordance with Section 401(a)(17) of the
Code.
(k) Any Participant who terminated employment
during the Plan Year for reasons other than death, Total and
Permanent Disability or retirement shall share only in the
allocations of earnings or losses as provided in Section
4.4(c). However, if any nonsegregated account of a
Participant has been distributed prior to the subsequent
Anniversary Date or other valuation date, no earnings and
losses shall be credited.
(l) If a Former Participant is reemployed after
five (5) consecutive 1-Year Breaks in Service, then separate
accounts shall be maintained as follows:
(i) one account for nonforfeitable benefits
attributable to pre-break service; and
(ii) one account representing his status in
the Plan attributable to post-break service.
4.5 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum
"annual additions" credited to a Participant's accounts for
any "limitation year" shall equal the lesser of: (1)
$30,000, or such higher amount as may be permitted under
regulations promulgated by the Secretary of the Treasury in
accordance with Section 415(c) of the Code; or (2) twenty-
five percent (25%) of the Participant's "415 compensation"
for such "limitation year."
(b) For purposes of applying the limitations of
Code Section 415, "annual additions" means the sum credited
to a Participant's accounts for any "limitation year" of (1)
Employer contributions, (2) the lesser of employee
contributions in excess of six percent (6%) of "415
compensation" or one-half (1/2) of employee contributions,
(3) Forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code
Section 415(l)(1) which is part of a defined benefit plan
maintained by the Employer and (5) amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit plan (as defined
in Code Section 419(e)) maintained by the Employer.
(c) For purposes of applying the limitations of
Code Section 415, the following are not "annual additions":
(1) transfer of funds from one qualified plan to another;
(2) rollover contributions (as defined in Code Sections
402(a)(5), 403(a)(4), 408(d)(3) and 409(b)(3)(C)); (3)
repayments of loans made to a Participant from the Plan; (4)
repayments of distributions received by an Employee pursuant
to Code Section 411(a)(7)(B) (cash-outs); (5) repayments of
distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); (6) Employee
contributions to a simplified employee pension allowed as a
deduction under Code Section 219(a); and (7) deductible
Employee contributions to a qualified plan.
(d) For purposes of applying the limitations of
Code Section 415, "415 compensation" shall include the
Participant's wages, salaries, fees for professional service
and other amounts for personal services actually rendered in
the course of employment with an Employer maintaining the
Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips and bonuses and in the case of a Participant who is an
Employee within the meaning of Code Section 401(c)(1) and
the regulations thereunder, the Participant's earned income
(as described in Code Section 401(c)(2) and the regulations
thereunder), paid during the "limitation year." "415
compensation" shall exclude (1)(A) contributions made by the
Employer to a plan of deferred compensation to the extent
that, before the application of the Code Section 415
limitations to the Plan, the contributions are not
includable in the gross income of the Employee for the
taxable year in which contributed, (B) Employer
contributions made on behalf of an Employee to a simplified
employee pension plan described in Code Section 408(k) (a),
(C) any distributions from a plan of deferred compensation
regardless of whether such amounts are includable in the
gross income of the Employee when distributed, except that
any amounts received by an Employee pursuant to an unfunded
non-qualified plan to the extent such amounts are includable
in the gross income of the Employee; (2) amounts realized
from the exercise of a non-qualified stock option or when
restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; (3) amounts realized from
the sale, exchange or other disposition of stock acquired
under a qualified stock option; and (4) other amounts which
receive special tax benefits, such as premiums for group
term life insurance (but only to the extent that the
premiums are not includable in the gross income of the
Employee), or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the purchase
of any annuity contract described in Code Section 403(b)
(whether or not the contributions are excludable from the
gross income of the Employee).
(e) For purposes of applying the limitations of
Code Section 415, the "limitation year" shall be the Plan
Year.
(f) The limitation stated in paragraph (a)(1)
above shall be adjusted annually as provided in Code Section
415(d) pursuant to the regulations prescribed by the
Secretary of the Treasury. The adjusted limitation is
effective as of January 1st of each calendar year and is
applicable to "limitation years" beginning with or within
that calendar year.
(g) For the purpose of this Section, all
qualified defined benefit plans (whether terminated or not)
ever maintained by the Employer shall be treated as one
defined benefit plan, and all qualified defined contribution
plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(h) For the purpose of this Section, if the
Employer is a member of a controlled group of corporations,
trades or businesses under common control (as defined by
Code Section 1563(a) or Code Section 414(b) as modified by
Code Section 415(h)) or is a member of an affiliated service
group (as defined by Code Section 414(m)), all Employees of
such Employers shall be considered to be employed by a
single Employer.
(i) For the purpose of this Section, if this Plan
is a Code Section 413(c) plan, all Employers of a
Participant who maintain this Plan will be considered to be
a single Employer.
(j) 1. If a Participant participates in more
than one defined contribution plan maintained by the
Employer which have different Anniversary Dates, the maximum
"annual additions" under this Plan shall equal the maximum
"annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's
accounts during the "limitation year."
2. If a Participant participates in both a
defined contribution plan subject to Code Section 412 and
defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary
Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan
subject to Code Section 412 prior to crediting "annual
additions" to the Participant's accounts under the defined
contribution plan not subject to Code Section 412.
3. If a Participant participates in more
than one defined contribution plan not subject to Code
Section 412 maintained by the Employer which have the same
Anniversary Date, the maximum "annual additions" under this
Plan shall equal the product of (A) the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited under subparagraphs (1) or
(2) above, multiplied by (B) a fraction (i) the numerator of
which is the "annual additions" which would be credited to
such Participant's accounts under this Plan without regard
to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for all
plans described in this paragraph.
(k) Subject to the exception in Section 4.5(p)
below, if an Employee is (or has been) a Participant in one
or more defined benefit plans and one or more defined
contribution plans maintained by the Employer, the sum of
the defined benefit plan fraction and the defined
contribution plan fraction for any "limitation year" may not
exceed 1.0.
(l) 1. The defined benefit plan fraction for
any "limitation year" is a fraction (A) the numerator of
which is the "projected annual benefit" of the Participant
under the Plan (determined as of the close of the
"limitation year"), and (B) the denominator of which is the
greater of the product of 1.25 multiplied by the "protected
current accrued benefit" or the lesser of: (i) the product
of 1.25 multiplied by the maximum dollar limitation provided
under Code Section 415(b)(1)(A) for such "limitation year,"
or (ii) the product of 1.4 multiplied by the amount which
may be taken into account under Code Section 415(b)(1)(B)
for such "limitation year."
2. For purposes of applying the limitations
of Code Section 415, the "projected annual benefit" for any
Participant is the benefit, payable annually, under the
terms of the Plan determined pursuant to Regulation 1.415-
7(b)(3).
3. For purposes of applying the limitations
of Code Section 415, "protected current accrued benefit" for
any Participant in a defined benefit plan in existence on
July 1, 1982, shall be the accrued benefit, payable
annually, provided for under question T-3 of Internal
Revenue Service Notice 83-10.
(m) 1. The defined contribution plan fraction
for any "limitation year" is a fraction (A) the numerator of
which is the sum of the "annual additions" to the
Participant's accounts as of the close of the "limitation
year" and (B) the denominator of which is the sum of the
lesser of the following amounts determined for such year and
each prior year of service with the Employer: (i) the
product of 1.25 multiplied by the dollar limitation in
effect under Code Section 415(c)(1)(A) for such "limitation
year" (determined without regard to Code Section 415(c)(6)),
or (ii) the product of 1.4 multiplied by the amount which
may be taken into account under Code Section 415(c)(1)(B)
for such "limitation year."
2. Notwithstanding the foregoing, the
numerator of the defined contribution plan fraction shall be
adjusted pursuant to Regulation 1.415-7(d)(1) and questions
T-6 and T-7 of the Internal Revenue Service Notice 83-10.
3. For defined contribution plans in effect
on or before July 1, 1982, the Administrator may elect, for
any "limitation year" ending after December 31, 1982, that
the amount taken into account in the denominator for every
Participant for all "limitation years" ending before January
1, 1983 shall be an amount equal to the product of (A) the
denominator for the "limitation year" ending in 1982
determined under the law in effect for the "limitation year"
ending in 1982 multiplied by (B) the "transition fraction."
4. For purposes of the preceding paragraph,
the term "transition fraction" shall mean a fraction (A) the
numerator of which is the lesser of (i) $51,875 or (ii) 1.4
multiplied by twenty-five percent (25%) of the Participant's
"415 compensation" for the "limitation year" ending in 1981,
and (B) the denominator of which is the lesser of (i)
$41,500 or (ii) twenty-five percent (25%) of the
Participant's "415 compensation" for the "limitation year"
ending in 1981.
5. Notwithstanding the foregoing, for any
"limitation year" in which the Plan is a Top Heavy Plan,
$41,500 shall be substituted for $51,875 in determining the
"transition fraction" unless the extra minimum allocation is
being provided pursuant to Section 4.4. However, for any
"limitation year" in which this Plan is Super Top Heavy,
$41,500 shall be substituted for $51,875 in any event.
(n) Notwithstanding the foregoing, for any
"limitation year" in which the Plan is a Top Heavy Plan, 1.0
shall be substituted for 1.25 in any event.
(o) If the sum of the defined benefit plan
fraction and the defined contribution plan fraction shall
exceed 1.0 in any "limitation year" for any Participant in
this Plan for reasons other than described in (p) below, the
Administrator shall adjust the numerator of the defined
benefit plan fraction so that the sum of both fractions
shall not exceed 1.0 in any "limitation year" for such
Participant.
(p) If (1) the substitution of 1.00 for 1.25 and
$41,500 for $51,875 above or (2) the excess benefit accruals
or "annual additions" provided for in Internal Revenue
Service Notice 82-19 cause the 1.0 limitation to be exceeded
for any Participant in any "limitation year," such
Participant shall be subject to the following restrictions
for each future "limitation year" until the 1.0 limitation
is satisfied: (A) the Participant's accrued benefit under
the defined benefit plan shall not increase (B) no "annual
additions" may be credited to a Participant's accounts and
(C) no Employee contributions (voluntary or mandatory) shall
be made under any defined benefit plan or any defined
contribution plan of the Employer.
4.6 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If as a result of the allocation of
Forfeitures, a reasonable error in estimating a
Participant's Compensation or other facts and circumstances
to which Regulation 1.415-6(b)(6) shall be applicable, the
"annual additions" under this Plan would cause the maximum
"annual additions" to be exceeded for any Participant, the
Administrator shall (1) return any voluntary Employee
contributions credited for the "limitation year" to the
extent that the return would reduce the "excess amount" in
the Participant's accounts (2) hold any "excess amount"
remaining after the return of any voluntary Employee
contributions in a "Section 415 suspense account" (3)
allocate and reallocate the "Section 415 suspense account"
in the next "limitation year" (and succeeding "limitation
years" if necessary) to all Participants in the Plan before
any Employer or Employee contributions which would
constitute "annual additions" are made to the Plan for such
"limitation year" (4) reduce Employer contributions to the
Plan for such "limitation year" by the amount of the
"Section 415 suspense account" allocated and reallocated
during such "limitation year."
(b) For purposes of this Article, "excess amount"
for any Participant for a "limitation year" shall mean the
excess, if any, of (1) the "annual additions" which would be
credited to his account under the terms of the Plan without
regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section
4.5.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account equal to
the sum of "excess amounts" for all Participants in the
Plan during the "limitation year." The "Section 415
suspense account" shall not share in any earnings or losses
of the Trust Fund.
(d) The Plan may not distribute "excess amounts"
to Participants or Former Participants.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of
each Valuation Date to determine the net worth of the assets
comprising the Trust Fund as it exists on the Valuation Date
prior to taking into consideration any contribution to be
allocated for that Plan Year. In determining such net
worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the Valuation
Date and shall deduct all expenses for which the Trustee has
not yet obtained reimbursement from the Employer or the
Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities
held in the Trust Fund which are listed on a registered
stock exchange, the Administrator shall direct the Trustee
to value the same at the last bid price on such exchange on
the Valuation Date. Any unlisted security held in the Trust
Fund shall be valued at its last bid price on the Valuation
Date, which bid price shall be obtained from a registered
broker or an investment banker. If any security, listed or
unlisted, is not traded on the Valuation Date, or if the
exchange on which it is traded was not open for business on
the Valuation Date, then the security shall be valued at the
last bid price available prior to the Valuation Date. In
determining the fair market value of assets other than
securities for which trading or bid prices can be obtained,
the Trustee may appraise such assets itself, or in its
discretion, employ one or more appraisers for that purpose
and rely on the values established by such appraiser or
appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment
with the Employer and, following a 90 day notice, retire for
the purposes hereof on his Normal Retirement Date, Early
Retirement Date, or Late Retirement Date. Such Participant
shall have his account valued, along with all other
Participants, as of the Valuation Date next succeeding the
Normal, Early or Late Retirement Date. Should a Participant
retire within sixty (60) days after a Valuation Date,
however, the Participant's account shall be valued as of the
Valuation Date immediately preceding the Retirement Date.
Upon such Retirement Date, or Valuation Date, whichever is
later, the vested portion of such Participant's account
shall become distributable.
The Trustee shall, within ninety (90) days of the
appropriate Valuation Date, or as soon as practicable, if
longer, segregate the amount of the Vested portion of such
Retired Participant's account and invest these funds in a
separate, federally insured savings account, certificate of
deposit, or U.S. government obligations. All segregated
funds shall not share in Trust fund earnings nor be taken
into consideration for purposes of Section 4.4(c) but shall
be credited or charged with interest, dividends and
appreciation or depreciation in market value attributable to
such segregated funds, for distribution to the Retiree.
A Participant who has reached his Normal
Retirement Date may postpone the termination of his
employment with the Employer to a later date, in which event
the participation of such Participant in the Plan shall
continue until his Late Retirement Date, and any such
Participant shall continue to receive allocations pursuant
to Section 4.4 until his Late Retirement Date. Such
Participant has the option of receiving distributions while
employed. Any such distribution will be made in accordance
with Sections 6.4 and 6.5 as if the Participant had retired
on his Normal Retirement Date, or any date thereafter until
his Late Retirement Date. Upon a Participant's Late
Retirement Date, the Trustee shall distribute all amounts
remaining in such Participant's Account in accordance with
Sections 6.4 and 6.5. A Participant who has reached his
Normal Retirement Age (65th birthday) shall be fully vested
in his Account.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other separation from service, all
amounts credited to such Participant's Account shall become
fully Vested. The Valuation of such Participant's account
shall be determined in accordance with Section 6.1 as if the
Participant had retired as of the date of death and the date
of death shall be considered the Normal Retirement Date.
Pursuant to Sections 6.5 and 6.6, the Administrator shall
direct the Trustee to commence distribution of the deceased
Participant's Account to the Participant's Beneficiary.
(b) Upon the death of a Former Employee who is
still a Participant, the deceased Participant will be
considered to have reached his Normal Retirement Date and
such account shall be distributed to the deceased
Participant's Beneficiary in accordance with Sections 6.5
and 6.6 as if the deceased Participant had reached his
Normal Retirement Date.
(c) The Administrator may require such proper
proof of death and such evidence of the right of any person
to receive payment of the value of the account of a deceased
Participant as the Administrator may deem desirable. The
Administrator's determination of death and of the right of
any person to receive payment shall be conclusive.
(d) The Beneficiary of the death benefit payable
pursuant to this Section shall be the Participant's spouse.
Except, however, the Participant may designate a Beneficiary
other than his spouse if:
(i) the spouse has waived her right to be
the Participant's Beneficiary, or
(ii) the Participant has no spouse, or
(iii)the spouse cannot be located.
In such event, the designation of a
Beneficiary shall be made on a form satisfactory to the
Administrator. A Participant may at any time revoke his
designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again
consent in writing to any such change or revocation. In the
event no valid designation of Beneficiary exists at the time
of the Participant's death, the death benefit shall be
payable to his estate.
(e) Any consent by the Participant's spouse to
waive any rights to the death benefit must be in writing,
must acknowledge the effect of such waiver, and be witnessed
by a Plan representative or a notary public. Further, the
spouse's consent must be irrevocable and must acknowledge
the specific nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and
Permanent Disability prior to his Retirement Date or
separation from service, all amounts credited to such
Participant's Account shall become fully vested. The
Valuation of such Participant's account shall be determined
in accordance with Section 6.1 as if the Participant had
retired as of the Disability Retirement Date and such date
shall be considered the Normal Retirement Date. Pursuant to
Section 6.5 of the Administrator shall direct the Trustee to
commence distribution of such Participant's account.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Terminated Participant's Vested Benefit
does not exceed $25,000 on the Valuation date coinciding
with or subsequent to the termination of a Participant's
employment for any reason other than Death, Total and
Permanent Disability, Normal, Early or Late Retirement, the
cash value thereof shall be liquidated and paid to the
Participant in a single lump sum within 90 days following
the next Valuation Date. If the Participant's account
exceeds $25,000, he can elect a distribution up to $25,000.
The Participant's vested benefit in excess of the
distribution shall remain in the Plan and share in gains and
losses of the Trust and be distributed in accordance with
Section 6.5(a)(i). If such Participant should once again
become an Employee prior to having a One-Year Break in
Service, the Participant shall have the right to repay the
amount of such single sum hereunder to the Trustee, and have
such repaid amount credited to his Participant's Account.
The amount of the Terminated Participant's Account which is
not Vested shall be allocated to the accounts of the
remaining Participants in accordance with the terms of the
Plan at such time as the amount becomes a Forfeiture.
However, no distribution of a Participant's
vested benefits shall be made under this Section 6.4(a) if
the non-forfeitable value of those benefits exceeds $3,500,
unless the Participant and the Participant's spouse consents
in writing to such distribution. The Participant may defer,
in writing, receipt of a distribution exceeding $3,500 until
any time up to the time he attains his Normal Retirement
Date. Failure of a Participant and the Participant's spouse
to consent shall be deemed to be an election to defer
commencement of payment of the benefit.
(b) (i) The Vested portion of any Participant's
Account shall be a percentage of the total amount credited
to his Participant's Account determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
(ii) For any Participant with at least one
Hour of Service after June 30, 1989, the Vested portion of
any Participant's Account shall be a percentage of the total
amount credited to his Participant's Account determined on
the basis of the Participant's number of Years of Service
according to the following schedule:
Vesting Schedule
(For Participants With At Least One Hour of Service After
June 30, 1989)
Years of Service Percentage
1 20%
2 40%
3 60%
4 80%
5 100%
(c) Notwithstanding the vesting schedule in
paragraph (b) above, for any Top Heavy Plan Year, the Vested
portion of the Participant's Account of any Participant who
has an Hour of Service after the Plan becomes top heavy
shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
1 20%
2 40%
3 60%
4 80%
5 100%
If in any subsequent Plan Year, the Plan
ceases to be a Top Heavy Plan, the Administrator shall
revert to the vesting schedule set forth in (b) above. Any
such reversion shall be treated as a Plan amendment pursuant
to the terms of the Plan.
(d) Notwithstanding the vesting schedule above,
the Vested percentage of a Participant's Account shall not
be less than the Vested percentage attained as of the later
of the effective date or adoption date of this Amendment and
restatement.
(e) The computation of a Participant's
nonforfeitable percentage of his interest in the Plan shall
not be reduced as the result of any direct or indirect
amendment to this Article. In the event that the Plan is
amended to change or modify any vesting schedule, a
Participant with at least five (5) Years of Service as of
the expiration date of the election period may elect to have
his nonforfeitable percentage computed under the Plan
without regard to such amendment. If a Participant fails to
make such election, then such Participant shall be subject
to the new vesting schedule. The Participant's election
period shall commence on the adoption date of the amendment
and shall end 60 days after the latest of:
(i) the adoption date of the amendment,
(ii) the effective date of the amendment, or
(iii) the date the Participant receives
written notice of the amendment from the
Employer or Administrator.
(f) 1. If any Former Participant shall be
reemployed by the Employer before a 1-Year Break in Service
occurs, he shall continue to participate in the Plan in the
same manner as if such termination had not occurred.
2. If any Former Participant shall be
reemployed by the Employer before five (5) consecutive 1-
Year Breaks in Service, and such Former Participant had
received a distribution of his entire Vested interest prior
to his reemployment, his forfeited account shall be
reinstated only if he repays the full amount distributed to
him before the end of a period of five (5) consecutive 1-
Year Breaks in Service. In the event the Former Participant
does repay the full amount distributed to him, the
undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses
occurring subsequent to the Anniversary Date or other
valuation date preceding his termination.
3. If any Former Participant is reemployed
after a 1-Year Break in Service has occurred, Years of
Service shall include Years of Service prior to his 1-Year
Break in Service subject to the following rules:
(i) If a Former Participant has a 1-
Year Break in Service, his pre-break and
post-break service shall be used for
computing Years of Service for
eligibility and for vesting purposes
only after he has been employed for one
(1) Year of Service following the date
of his reemployment with the Employer;
(ii) Each non-vested Former Participant
shall lose credits otherwise allowable
under (i) above if his consecutive 1-
Year Breaks in Service equal or exceed
the greater of (A) five (5) or (B) the
aggregate number of his pre-break Years
of Service;
(iii) After five (5) consecutive 1-
Year Breaks in Service, a Former
Participant's Vested Account balance
attributable to pre-break service shall
not be increased as a result of post-
break service;
(iv) If a Former Participant completes
one (1) Year of Service for eligibility
purposes following his reemployment with
the Employer, he shall participate in
the Plan retroactively from his date of
reemployment;
(v) If a Former Participant completes a
Year of Service (a 1-Year Break in
Service previously occurred, but
employment had not terminated), he shall
participate in the Plan retroactively
from the first day of the Plan Year
during which he completes one (1) Year
of Service.
(g) In determining Years of Service for purposes
of Section 6.4(b), Years of Service attributable to the
following shall be excluded:
(i) Years of Service prior to the Effective
Date of the Plan.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election
of the Participant, shall direct the Trustee to distribute
to a Participant or his Beneficiary any amount to which he
is entitled under the Plan in the form of (a) a lump sum
payment or (b) periodic payments. The period over which
such periodic payment(s) shall be made shall be not less
than that specified by the appropriate portion of Section
6.5(a) nor more than the Participant's life expectancy (or
the life expectancy of the Participant and his designated
beneficiary). The amount of any installment payments to be
distributed must be at least an amount equal to the quotient
obtained by dividing the Participant's entire interest by
the life expectancy of the Participant or the joint and
last survivor expectancy of the Participant and his
designated Beneficiary. All distributions shall be eligible
to begin within ninety (90) days following the Valuation
Date which determines the amount of Vested Benefits to be
distributed. Notification of the desire to receive a
distribution, and all elections regarding distributions
pursuant to this section should be submitted in writing to
the Administrator at least 90 days prior to the expected
distribution date. Such election will become effective upon
the later of 90 days prior to the expected distribution date
or two business days after its submission to the
Administrator. The Administrator will direct the Trustee to
distribute the appropriate funds as soon as practicable, but
not longer than 90 days after the election becomes
effective.
(i) A Participant who terminates his
employment prior to his 55th birthday, other than for
reasons of death or disability, who is entitled to an
additional distribution pursuant to Section 6.4(a) may elect
to receive a distribution of the vested portion of his
benefits (as determined pursuant to Section 6.4) from the
following options:
(a) receive the entire nonforfeitable
share of his account in a single lump sum to
be distributed on the first anniversary of
his 55th birthday;
(b) (1) receive one-third (1/3) of the
value of such vested benefits, determined as
of the next Valuation Date succeeding his
55th birthday, to be paid within 90 days or
as soon as practicable following that
Valuation Date;
(2) one-half (1/2) of the unpaid
balance of such vested benefits shall be paid
on the first anniversary of the initial
payment date; and
(3) the Value of the balance of
his vested benefit shall be paid on the
second anniversary of the initial payment
date.
(c) to receive, at any time subsequent
to the Participant's 56th birthday and prior
to the Participant's 65th birthday, the
balance of the entire non-forfeitable share
of his vested benefit by submitting a written
election at least 90 days prior to the date
on which the Participant desires to receive
the distribution.
However, no distribution of a Participant's
Vested Benefits shall be made under this Section 6.5(a)(i)
if the non-forfeitable value of those benefits exceeds
$3,500, unless the Participant and the Participant's spouse
consent in writing to such distribution. The Participant
may defer receipt of a distribution exceeding $3,500 until
any time up to the time he attains his Normal Retirement
Date. Failure of a Participant and the Participant's spouse
to consent shall be deemed to be an election to defer
commencement of payment of the benefit.
(ii) An active Participant who retires on an
Early Retirement Date shall elect to receive a distribution
of the vested portion of his benefits from the following
options:
(a) receive the entire non-forfeitable
share of his account in a single lump sum to
be distributed on the first anniversary of
his Early Retirement Date.
(b) (1) the greater of the value of
such vested benefits up to $25,000, or one-
third (1/3) of the value of such vested
benefits as determined pursuant to Section
6.1 within 90 days following the Valuation
Date which determines the amount of Vested
Benefits to be distributed.
(2) one-half (1/2) of the unpaid
balance of his vested benefits shall be paid
on the first anniversary of the initial
payment date;
(3) the balance of the value of
his vested benefits shall be paid on the
second anniversary of the original payment
date.
(c) receive approximately equal
periodic payments for a length of time
greater than that specified in (b) above but
not to exceed the Participant's life
expectancy (or the life expectancy of the
Participant and his designated beneficiary).
(d) to receive, at any time subsequent
to the first anniversary of the Participant's
Early Retirement Date and prior to the
Participant's 65th birthday, the balance of
the entire non-forfeitable share of his
vested benefit by submitting a written
election at least 90 days prior to the date
on which the Participant desires to receive
the distribution.
However, no distribution of a Participant's
Vested Benefits shall be made under this Section 6.5(a)(ii)
if the non-forfeitable value of those benefits exceeds
$3,500, unless the Participant and the Participant's spouse
consent in writing to such distribution. The Participant
may defer receipt of a distribution exceeding $3,500, until
any time up to the time he attains his Normal Retirement
Date. Failure of a Participant and the Participant's spouse
to consent shall be deemed to be an election to defer
commencement of payment of the benefit.
A Participant may elect to change his
distribution method at any time by notifying the
Administrator in writing. However, a Participant who has
received his first distribution may not change his election
to a lump sum payment until the second anniversary of his
Early Retirement Date.
(iii) A Participant who retires on a
Normal, Late or Disability Retirement Date is entitled to
receive the entire Vested Portion of his account as
determined pursuant to Section 6.1 and subject to the
Participant's election pursuant to Section 6.5. The
Participant may further elect, however, to defer
commencement of the distribution (either lump-sum or
periodic payments) by up to one year, subject to the
provisions of 6.5(b).
(b) Notwithstanding any provision in the Plan to
the contrary, a Participant's benefits shall be distributed
to him no later than the April 1 following the calendar year
in which he attains age seventy and one-half (70-1/2),
regardless of whether or not his employment had terminated
in such year.
However, for a five percent (5%) owner (as
defined in Section 1.22(c)) and a Participant who is not a
five percent (5%) owner who attained age 70-1/2 prior to
1988, the following special rules apply:
(1) A Participant who was a five percent
(5%) owners prior to April 1, 1990, shall
have his benefits distributed to him no later
than the calendar year in which he attained
age 70-1/2.
(2) A Participant other than a five percent
(5%) owner who attained age 70-1/2 prior to
1988 shall begin receiving benefits no later
than the April 1 following the calendar year
in which he terminated employment.
All distributions made pursuant to this
Section 6.5(b) shall be at least equal to the required
minimum distributions under Code Section 401(a)(9). If
payment is to be made in installments, the amount of any
amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the
Participant or the joint and last survivor expectancy of the
Participant and his designated Beneficiary.
If the Participant dies after distributions
to him have begun but before his entire interest has been
distributed to him, the remaining portion of his interest
shall be distributed from the Plan at least as rapidly as
under the method of distribution previously established for
him, if such method is irrevocable at the time of his death.
(c) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse may
be re-determined, but not more frequently than annually, and
in accordance with such rules as may be prescribed by
Treasury regulations. Further, life expectancy and joint
and last survivor expectancy shall be computed using the
return multiples of Regulation 1.72-9. If the Participant's
spouse is not the designated Beneficiary, the method of
distribution selected must ensure that at least 50% of the
present value of the amount available for distribution is
paid within the life expectancy of the Participant.
(d) The restrictions imposed by this Section
shall not apply if a Participant has, prior to January 1,
1984, made a written designation to have his retirement
benefit paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the
Tax Equity and Fiscal Responsibility Act of 1982. Any such
written designation made by a Participant shall be binding
upon the Plan Administrator notwithstanding any contrary
provision of Section 6.5.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) 1. The death benefit payable pursuant to
Section 6.2 shall be distributed to the Participant's
Beneficiary as follows:
(i) One lump-sum payment or,
(ii) Periodic payments commencing no
later than the December 31st of the
calendar year following the calendar
year in which the Participant died in
installments for a period no longer than
the Beneficiary's life expectancy. The
amount of any installment payments to be
distributed must be at least an amount
equal to that obtained by dividing the
deceased Participant's entire interest
by the life expectancy of the
Beneficiary. However, if the
Beneficiary is the surviving spouse of
the deceased Participant, the spouse may
elect to have the distributions commence
on the December 31st of the calendar
year in which the Participant would have
attained age 70 and one-half, or if,
later, the December 31st of the calendar
year following the calendar year in
which the Participant died.
2. All death benefits payable pursuant to
Section 6.2 and 6.6(a)(1) shall, within 90 days following
the Valuation Date which determines the amount of Vested
Benefits to be distributed, be segregated as described in
Section 6.1.
3. A Participant may specify the method by
which payment shall be made to his Beneficiary pursuant to
Section 6.6(a), and subject to the spousal consent
requirement as stated in Section 6.2. A Participant may
revoke the selection by filing a new selection in writing
with the Administrator, provided the applicable spousal
consent requirements, as set forth in 6.2(a), are satisfied.
After the Participant's death, the Beneficiary may revoke
the selection by filing a written request for such change
with the Administrator. The Administrator will allow such
revocation only if the Administrator finds mitigating
circumstances exist which support such revocation. After
such revocation, the Beneficiary may request an alternate
method of payment.
4. Notwithstanding the foregoing, in the
absence of a Participant's election, the Beneficiary will be
paid in a lump sum.
(b) If the distribution of a Participant's
interest has begun in accordance with a method selected in
Section 6.5 and the Participant dies before his entire
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected pursuant to
Section 6.5 as of his date of death.
(c) If a Participant dies before he has begun to
receive any distributions of his interest under the Plan,
his death benefit shall be distributed to his Beneficiaries
within one year after his death.
(d) The one-year distribution requirement of
Section 6.6(c) shall not apply to any portion of the
deceased Participant's interest which is payable to or for
the benefit of a designated Beneficiary. In such event,
such portion may be distributed over the life of such
designated Beneficiary (or over a period not extending
beyond the life expectancy of such designated Beneficiary)
provided such distribution begins not later than one (1)
year after the date of the Participant's death (or such
later date as may be prescribed by Treasury regulations).
Except, however, in the event the
Participant's spouse is his Beneficiary, the requirement
that distributions commence within one year of a
Participant's death shall not apply. In lieu thereof, such
distribution must commence no later than the date on which
the deceased Participant would have attained age seventy and
one-half (70-1/2). If the surviving spouse dies before the
distributions to such spouse begin, then the one year
distribution requirement of Section 6.6(c) shall apply as if
the spouse were the Participant.
(e) For the purpose of this Section, the life
expectancy of a Participant and a Participant's spouse may
be re-determined, but not more frequently than annually and
in accordance with such rules as may be prescribed by
Treasury regulations. Further, life expectancy and joint
and last survivor expectancy shall be computed using the
return multiples of Regulation 1.72-9.
(f) Subject to the spouse's right of consent
afforded under the Plan, the restrictions imposed by this
Section shall not apply if a Participant has, prior to
January 1, 1984, made a written designation to have his
death benefits paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the
enactment of the Tax Equity and Fiscal Responsibility Act of
1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6,
whenever the Trustee is to make a distribution or to
commence a series of payments on or as of an Anniversary
Date, the distribution or series of payments may be made or
begun on such date or as soon thereafter as is practicable,
but in no event later than 180 days after the Anniversary
Date. Except, however, unless a Participant elects in
writing to defer the receipt of benefits (such election may
not result in a death benefit that is more than incidental),
the payment of benefits shall begin not later than the 60th
day after the close of the Plan Year in which the latest of
the following events occurs:
(1) the date on which the Participant
attains the earlier of age 65 or the Normal Retirement Age
specified herein,
(2) the 10th anniversary of the year in
which the Participant commenced participation in the Plan,
or
(3) the date the Participant terminates his
service with the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a
minor, then the Administrator shall direct that such
distribution be paid to the legal guardian of such Minor
Beneficiary. Such payment(s) to the legal guardian of a
Minor Beneficiary shall discharge the Trustee, Employer and
Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the
distribution payable to a Participant or his Beneficiary
hereunder shall, at the expiration of five (5) years after
it shall become payable, remain unpaid solely by reason of
the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last
known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his
Beneficiary, the amount so distributable shall be
reallocated in the same manner as a Forfeiture pursuant to
the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such
benefit shall be restored.
6.10 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections,
provided to a Participant in this Plan shall be subject to
the rights afforded to any "alternate payee" under a
"qualified domestic relations order" as those terms are
defined in Code Section 414(p).
6.11 LOANS TO PARTICIPANTS
(a) Upon the application of any Participant who
has been a member of the plan for more than two years and
with the written approval thereof by the Administrator in
accordance with uniform and non-discriminatory policies, the
Administrator shall direct the Trustees to make a loan or
loans to such Participant. The maximum amount in total of
any such loan or loans shall be the lesser of (i) $50,000 or
(ii) 50% of the value of the Participant's Vested portion of
the Participant's Account. The $50,000 limit is reduced by
the excess of the highest outstanding balance of loans from
the Plan to the Participant in the one year period ending on
the day before the loan is made over the outstanding balance
of loans from the Plan to the Participant on the date the
loan is made. As a condition for the granting of such loan
or loans, the Participant shall execute and deliver to the
Administrator a note payable to the Trustees in the amount
of such loan or loans in a form prescribed by the
Administrator and approved by the Trustees.
(b) Any loan pursuant to paragraph (a) of this
section of Article VI will be charged against the individual
Participant's Account to whom the loan is made, subject to
such restrictions and limitations as shall be established by
the Administrator as to any such Participant's Account. The
Participant's note shall thereupon be considered as an
investment of the particular Participant's Account. All
repayments of principal and interest on the Participant's
note shall be credited to the Participant's Account and
shall not be credited to the account of any Participant
other than the borrower.
(c) Effective January 1, 1991, the note for any
loan under paragraph (a) hereof shall bear interest at a
reasonable rate as provided in IRC Section 4975(d)(i) and as
shall be determined by the Administrator provided, however,
that such rate shall never exceed any applicable maximum
rate permitted by law. Any Participant may prepay unpaid
principal and accrued interest on any loan at any time. The
term of such note shall not be for a period longer than five
years. Such loan shall not be renewable. Each Participant
to whom such a loan is made shall receive a clear statement
of the charges involved in such loan. This statement shall
include the dollar amount and initial annual interest rate
of the finance charge. As a condition of granting the loan,
the Administrator may require repayment by payroll
deduction. Any loan outstanding at the time of a final
distribution will be deducted from the final distribution.
Repayment of loans outstanding while the distribution of
benefits is occurring may be adjusted so that the loan
remains adequately secured as required by law.
6.12 DIRECT ROLLOVERS
(a) This Section applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of
the Plan to the contrary that would otherwise limit a
distributee's election under this part, a distributee may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(b) Definitions
(i) "Eligible rollover distribution": An
eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required
under Section 401(a)(9) of the Internal Revenue Code; the
portion of any other distribution(s) that is not includible
in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer
securities).
(ii) "Eligible retirement plan": An eligible
retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or
a qualified plan described in Section 401(a) of the Code,
that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(iii) "Distributee": A distributee
includes an employee or Former Employee. In addition, the
employee's or Former Employee's surviving spouse and the
employee's or Former Employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse.
(iv) "Direct rollover": A direct rollover is
a payment by the Plan to the eligible retirement plan
specified by the distributee.
ARTICLE VII
AMENDMENT, TERMINATION, AND MERGERS
7.1 AMENDMENT
The Employer, by written resolution signed by the
Chairman of the Board of Directors, shall have the right at
any time to amend the Plan. However, no such amendment
shall authorize or permit any part of the Trust Fund (other
than such part as is required to pay taxes and
administration expenses) to be used for or diverted to
purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; no such
amendment shall cause any reduction in the amount credited
to the account of any Participant or cause or permit any
portion of the Trust Fund to revert to or become the
property of the Employer; and no such amendment which
affects the rights, duties or responsibilities of the
Trustee and Administrator may be made without the Trustee's
and Administrator's written consent. Any such amendment
shall become effective as provided therein upon its
execution. The Trustee shall not be required to execute any
such amendment unless the Trust provisions contained herein
are a part of the Plan and the amendment affects the duties
of the Trustee hereinunder.
For purposes of this Section, a Plan amendment
which has the effect of eliminating or reducing an early
retirement benefit or eliminating an optional form of
benefit (as provided in Treasury regulations) shall be
treated as reducing the amount credited to the account of a
Participant.
7.2 TERMINATION
The Employer, by written resolution signed by the
Chairman of the Board of Directors, shall have the right at
any time to terminate the Plan by delivering to the Trustee
and Administrator written notice of such termination. A
complete discontinuance of the Employer's contributions to
the Plan shall be deemed to constitute a termination. Upon
any termination (full or partial) or complete discontinuance
of contributions, all amounts credited to the affected
Participants' Accounts shall become 100% Vested and shall
not thereafter be subject to forfeiture and all unallocated
amounts shall be allocated to the accounts of all
Participants in accordance with the provisions hereof. Upon
such termination of the Plan, the Employer, by written
notice to the Trustee and Administration, may direct either:
(a) complete distribution of the assets in the
Trust Fund to the Participants, in cash or in kind, in one
"qualified total distribution" (as such term is defined in
the Code) as soon as the Trustee deems it to be in the best
interests of the Participants, but in no event later than
two years after such termination; or,
(b) continuation of the Trust created by this
agreement and the distribution of benefits at such time and
in such manner as though the Plan had not been terminated.
7.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated
with, or its assets and/or liabilities may be transferred to
any other Plan and Trust only if the benefits which would be
received by a Participant of this Plan, in the event of a
termination of the Plan immediately after such transfer,
merger or consolidation, are at least equal to the benefits
the Participant would have received if the Plan had
terminated immediately before the transfer, merger or
consolidation.
ARTICLE VIII
MISCELLANEOUS
8.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a
contract between the Employer and any Participant or to be a
consideration or an inducement for the employment of any
Participant or Employee. Nothing contained in this Plan
shall be deemed to give any Participant or Employee the
right to be retained in the service of the Employer or to
interfere with the right of the Employer to discharge any
Participant or Employee at any time regardless of the effect
which such discharge shall have upon him as a Participant of
this Plan.
8.2 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable out of the Trust Fund to any
person (including a Participant or his Beneficiary) shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void; and no
such benefit shall in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements, or torts
of any such person, nor shall it be subject to attachment or
legal process for or against such person, and the same shall
not be recognized by the Trustee, except to such extent as
may be required by law.
(b) This provision shall not apply to the extent
a Participant or Beneficiary is indebted to the Plan, for
any reason, under any provision of the Plan. At the time a
distribution is to be made to or for a Participant's or
Beneficiary's benefit, such proportion of the amount
distributed as shall equal such indebtedness shall be paid
by the Trustee to the Trustee or the Administrator, at the
direction of the Administrator, to apply against or
discharge such indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given
written notice by the Administrator that such indebtedness
is to be so paid in whole or part from his Participant's
Account. If the Participant or Beneficiary does not agree
that the indebtedness is a valid claim against his Vested
Participant's Account, he shall be entitled to a review of
the validity of the claim in accordance with procedures
provided in Sections 2.12 and 2.13.
(c) This provision shall not apply to a
"qualified domestic relations order" defined in Code Section
414(p), and those other domestic relations orders permitted
to be so treated by the Administrator under the provisions
of the Retirement Equity Act of 1984. The Administrator
shall establish a written procedure to determine the
qualified status of domestic relations orders and to
administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic
relations order," a former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes
under the Plan.
8.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced
according to the Act and the laws of the State of New York,
other than its laws respecting choice of law, to the extent
not preempted by the Act.
8.4 GENDER AND NUMBER
Wherever any words are used herein in the
masculine, feminine or neuter gender, they shall be
construed as though they were also used in another gender in
all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall
be construed as though they were also used in the other form
in all cases where they would so apply.
8.5 LEGAL ACTION
The Trustees or Administrator shall be
reimbursed by the Employer for all costs, attorneys fees, or
other expenses incurred in defending any claim, suit or
proceeding brought against the Trustee, Administrator, Plan
or Trust provided there is no holding that the Trustee or
Administrator breached any duty owed to the Plan or Trust.
Nothing in this section will act to relieve the Trustee or
Administrator from any responsibility, or liability for any
responsibility, obligation or duty under the Code or ERISA.
8.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trustee, by termination of
either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or
by any other means, for any part of the corpus or income of
any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes
other than the exclusive benefit of Participants, Retired
Participants, or their Beneficiaries.
(b) In the event the Employer shall make an
excessive contribution under a mistake of fact pursuant to
Section 403(c)(2)(A) of the Act, the Employer may demand
repayment of such excessive contribution at any time within
one (1) year following the time of payment and the Trustees
shall return such amount to the Employer within the one (1)
year period. Earnings of the Plan attributable to the
excess contributions may not be returned to the Employer but
any losses attributable thereto must reduce the amount so
returned.
8.7 BONDING
Every Fiduciary, except a bank or an insurance
company, unless exempted by the Act and regulations
thereunder shall be bonded in an amount not less than 10% of
the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the
maximum bond, $500,000. The amount of funds handled shall
be determined at the beginning of each Plan Year by the
amount of funds handled by such persons groups or class to
be covered and their predecessors if any, during the
preceding Plan Year, or if there is no preceding Plan Year,
then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the
Plan against any loss by reason of acts of fraud or
dishonesty by the Fiduciary alone or in connivance with
others. The surety shall be a corporate surety company (as
such term is used in Section 412(a)(2) of the Act), and the
bond shall be in a form approved by the Secretary of Labor.
Notwithstanding anything in the Plan to the contrary, the
cost of such bonds shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund
or by the Employer.
8.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their
successors shall be responsible for the validity of any
Contract issued hereunder or for the failure on the part of
the insurer to make payments provided by any such Contract,
or for the action of any person which may delay payment or
render a Contract null and void or unenforceable in whole or
in part.
8.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder
shall not have any responsibility for the validity of this
Plan or for the tax or legal aspects of this Plan. The
insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and
shall have no duty to see to the application of any funds
paid to the Trustee, nor be required to question any actions
directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or
permit any action or allow any benefit or privilege contrary
to the terms of any Contract which it issues hereunder or
the rules of the insurer.
8.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal
representative Beneficiary, or to any guardian or committee
appointed for such Participant or Beneficiary in accordance
with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims hereunder
against the Trustee and the Employer, either of whom may
require such Participant, legal representative Beneficiary,
guardian or committee, as a condition precedent to such
payment, to execute a receipt and release thereof in such
form as shall be determined by the Trustee or Employer.
8.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan
is permitted or required to do or perform any act or matter
or thing, it shall be done and performed by a person duly
authorized by its legally constituted authority.
8.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the
Employer, (2) the Administrator, (3) the Trustee and (4) any
Investment Manager appointed hereunder. The named
Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given
them under the Plan. In general, the Employer shall have
the sole responsibility for making the contributions
provided for under Section 4.1; and shall have the sole
authority to appoint and remove the Trustee, the
Administrator, and any Investment Manager which may be
provided for under the Plan; to formulate the Plan's
"funding policy and method"; and to amend or terminate, in
whole or in parts the Plan. The Administrator shall have
the sole responsibility for the administration of the Plan,
which responsibility is specifically described in the Plan.
The Trustee shall have the sole responsibility of management
of the assets held under the Trustee, except those assets,
the management of which has been assigned to an Investment
Manager, who shall be solely responsible for the management
of the assets assigned to it, all as specifically provided
in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by
it shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information or
action. Furthermore, each named Fiduciary may rely upon any
such direction, information or action of another named
Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for
the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named
Fiduciary shall guarantee the Trust Fund in any manner
against investment loss or depreciation in asset value. Any
person or group may serve in more than one Fiduciary
capacity.
8.13 HEADINGS
The headings and subheadings of this Plan have
been inserted for convenience of reference and are to be
ignored in any construction of the provisions hereof.
8.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the
contrary, if, pursuant to an application filed by or in
behalf of the Plan, the Commissioner of Internal Revenue
Service or his delegate should determine that the Plan as
amended and restated does not qualify as a tax-exempt plan
and trust under Sections 401 and 501 of the Code, and such
determination is not contested or if contested is finally
upheld, then the Plan shall operate as if it had not been
amended and restated.
(b) Notwithstanding any provisions to the
contrary except Sections 3.6 and 4.1(c), any contribution by
the Employer to the Trust Fund is conditioned upon the
deductibility of the contribution by the Employer under the
Code and, to the extent any such deduction is disallowed the
Employer may within one (1) year following a final
determination of the disallowance, whether by agreement with
the Internal Revenue Service or by final decision of a court
of competent jurisdiction demand repayment of such
disallowed contribution and the Trustee shall return such
contribution within one (1) year following the disallowance.
Earnings of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
8.15 UNIFORMITY
All provisions of this Plan shall be interpreted
and applied in a uniform, nondiscriminatory manner.
ARTICLE IX
PARTICIPATING EMPLOYERS
9.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary,
with the consent of the Employer and Trustee, any other
corporation or entity (provided an Owner-Employee of such
entity does not participate in the Plan for Plan Years
beginning before January 1, 1984), whether an affiliate or
subsidiary or not, may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document
evidencing said intent and will of such Participating
Employer.
9.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be
required to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to
commingle, hold and invest as one Trust Fund all
contributions made by Participating Employers, as well as
all increments thereof.
(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an
Employee of the Employer or a Participating Employer, shall
not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Account as well as
his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan,
shall continue to his credit.
(d) All rights and values forfeited by
termination of employment shall inure only to the benefit of
the Employee-Participants of the Participating Employer by
which the forfeiting Participant was employed, except if the
Forfeiture is for an Employee whose Employer is a member of
an affiliated or controlled group, then said Forfeiture
shall be allocated based on the allocation under 4.4(b) to
all Participant Accounts of Participating Employers who are
members of the affiliated or controlled group. Should an
Employee of one ("First") Employer be transferred to an
associated ("Second") Employer (the Employer, an affiliate
or subsidiary), such transfer shall not cause his Account
balance (generated while an Employee of "First" Employer) in
any manner, or by any amount to be forfeited. Such
Employee's Participant Account balance for all purposes of
the Plan, including length of services shall be considered
as though he had always been employed by the "Second"
Employer and as such had received contributions,
forfeitures, earnings or losses, and appreciation or
depreciation in value of assets totaling amount so
transferred.
(e) Any expenses of the Trust which are to be
paid by the Employer or borne by the Trust Fund shall be
paid by each Participating Employer in the same proportion
that the total amount standing to the credit of all
Participants employed by such Employer bears to the total
standing to the credit of all Participants.
9.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be
a part of this Plan; provided however, that with respect to
all of its relations with the Trustee and Administrator for
the purpose of this Plan, each Participating Employer shall
be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly indicates the
contrary the word "Employer" shall be deemed to include each
Participating Employer as related to its adoption of the
Plan.
9.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be
transferred between Participating Employers, and in the
event of any such transfer the Employee involved shall carry
with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder
and the Participating Employer to which the Employee is
transferred shall thereupon become obligated hereunder with
respect to such Employee in the same manner as was the
Participating Employer from whom the Employee was-
transferred.
9.5 PARTICIPATING EMPLOYERS CONTRIBUTION
Any contribution or Forfeiture subject to
allocation during each Plan Year shall be allocated among
all Participants of all Participating Employers in
accordance with the provisions of this Plan. On the basis
of the information furnished by the Administrator, the
Trustee shall keep separate books and records concerning the
affairs of each Participating Employer hereunder and as to
the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not,
register Contracts so as to evidence that a particular
Participating Employer is the interested Employer hereunder
but in the event of an Employee transfer from one
Participating Employer to another, the employing Employer
shall immediately notify the Trustee thereof.
9.6 AMENDMENT
Amendment of this Plan by the Employer at any time
when there shall be a Participating Employer hereunder shall
only be by the written action of each and every
Participating Employer and with the consent of the Trustee
where such consent is necessary in accordance with the terms
of this Plan.
9.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to
discontinue or revoke its participation in the Plan. At the
time of any such discontinuance or revocation satisfactory
evidence thereof and of any applicable conditions imposed
shall be delivered to the Trustee. The Trustee shall
thereafter transfer, deliver and assign Contracts and other
Trust Fund assets allocable to the Participants of such
Participating Employer to such new Trustee as shall have
been designated by such Participating Employer, in the event
that it has established a separate pension plan for its
Employees. If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating
Employer pursuant to the provisions of Article VII hereof.
In no such event shall any part of the corpus or income of
the Trust as it relates to such Participating Employer be
used for or diverted for purposes other than for the
exclusive benefit of the Employees of such Participating
Employer.
9.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any
and all necessary rules or regulations binding upon all
Participating Employers and all Participants, to effectuate
the purpose of this Article.
9.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in
whole or in part from making a contribution to the Trust
Fund which it would otherwise have made under the Plan by
reason of having no current or accumulated earnings or
profits, or because such earnings or profits are less than
the contribution which it would otherwise have made, then,
pursuant to Code Section 404(a)(3)(B), so much of the
contribution which such Participating Employer was so
prevented from making may be made, for the benefit of the
participating employees of such Participating Employer, by
the other Participating Employers who are members of the
same affiliated group within the meaning of Code Section
1504 to the extent of their current or accumulated earnings
or profits, except that such contribution by each such other
Participating Employer shall be limited to the proportion of
its total current and accumulated earnings or profits
remaining after adjustment for its contribution to the Plan
made without regard to this paragraph which the total
prevented contribution bears to the total current and
accumulated earnings or profits of all the Participating
Employers remaining after adjustment for all contributions
made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose
employees a contribution is made under this paragraph shall
not reimburse the contributing Participating Employers.
IN WITNESS WHEREOF, this restated Plan has been
executed the day and year first above written.
ACETO CORPORATION
By:
Arnold Frankel
Chairman, Board of Directors
ATTEST_________________________
Terry Steinberg
Exhibit 24
Independent Auditors' Consent
The Board of Directors
Aceto Corporation:
We consent to incorporation by reference in the Registration
Statement (No. 33-38679) on Form S-8 of Aceto Corporation of
our report dated August 18, 1995, relating to the
consolidated balance sheets of Aceto Corporation and
subsidiaries as of June 30, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and
cash flows and related financial statement schedule VIII for
each of the years in the three-year period ended June 30,
1995, which report appears in the June 30, 1995 annual
report on Form 10-K of Aceto Corporation.
KPMG PEAT MARWICK LLP
Jericho, New York
September 22, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 5 (d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACETO CORPORATION
(Registrant)
By /s/Arnold Frankel /s/Donald Horowitz
Arnold Frankel Donald Horowitz
Chairman of the Board Secretary/Treasurer
and Director (Chief Financial Officer)
Date: September 14, 1995
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signatures Title Date
/s/Arnold Frankel Chairman of the Board 9-14-95
Arnold Frankel and Director
(Chief Executive Officer)
/s/Robert Parsont President and Director 9-14-95
Robert Parsont (Chief Operating Officer)
/s/Donald Horowitz Secretary/Treasurer 9-14-95
Donald Horowitz and Director
(Chief Financial Officer)
/s/Anthony Baldi Director 9-14-95
Anthony Baldi
/s/Thomas Brunner Director 9-14-95
Thomas Brunner
/s/Samuel I. Hendler Director 9-14-95
Samuel I. Hendler
/s/Leonard Schwartz Director 9-14-95
Leonard Schwartz
ACETO CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements
Independent Auditors' Report
Consolidated financial statements:
Consolidated balance sheets as of June 30, 1995 and 1994
Consolidated statements of income for the years ended
June 30, 1995, 1994 and 1993
Consolidated statements of shareholders' equity for the
years ended June 30, 1995, 1994 and 1993
Consolidated statements of cash flows for the years
ended June 30, 1995, 1994 and 1993
Notes to consolidated financial statements
Schedules:
VIII - Valuation and qualifying accounts
All other schedules are omitted because they are not
required or the information required is given in the
consolidated financial statements or notes thereto.
Independent Auditors' Report
The Board of Directors
Aceto Corporation:
We have audited the accompanying consolidated balance sheets of the
Aceto Corporation and subsidiaries as of June 30, 1995 and 1994, and
the related consolidated statements of income, shareholders' equity,
and cash flows for each of the years in the three-year period ended
June 30, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Aceto Corporation and subsidiaries as of June 30, 1995 and 1994, and
the results of their operations and their cash flows for each of the years
in the three-year period ended June 30, 1995 in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Jericho, New York
August 18, 1995
Aceto Corporation and Subsidiaries
Consolidated Balance Sheets
Years ended June 30, 1995 and 1994
Assets 1995 1994
(In thousands)
Current assets:
Cash and cash equivalents $ 1,644 $ 5,122
Short-term investments 9,669 6,794
Receivables:
Trade, less allowance for doubtful
accounts 1995,$204; 1994,$176 26,092 23,579
Other 1,161 755
27,253 24,334
Inventories 30,963 26,613
Prepaid expenses 227 548
Deferred income tax benefit (note 3) 1,542 1,652
Property held for sale (note 8) 619 644
Total current assets 71,917 65,707
Long-term investments 12,813 14,617
Note receivable 188 213
Property and equipment, at cost:
Land 140 140
Buildings and building improvements 886 886
Equipment 1,587 1,462
2,613 2,488
Less accumulated depreciation and
amortization 1,606 1,418
1,007 1,070
Other assets 191 191
Total Assets $86,116 $81,798
See accompanying notes to consolidated financial statements.
Aceto Corporation and Subsidiaries
Consolidated Balance Sheets
Years ended June 30, 1995 and 1994
Liabilities and Shareholders' Equity 1995 1994
(In thousands except par value)
Current liabilities:
Drafts and acceptances payable $ 929 $ 1,350
Current installments on long-term debt (note 2) 250 250
Accounts payable 2,580 2,811
Accrued merchandise purchases 11,355 8,845
Accrued compensation 3,593 3,323
Accrued plant shut-down costs (note 8) 985 1,670
Other accrued expenses 2,255 2,033
Income taxes payable 1,681 1,819
Total current liabilities 23,628 22,101
Long-term debt, excluding current
installments (note 2) 1,500 2,000
Deferred income taxes (note 3) 24 30
Redeemable preferred stock (note 4) 821 821
Commitments and contingencies (note 10)
Shareholders' equity (notes 4 and 6):
Common stock, $.01 par value per share;
Authorized 10,000 shares;
issued: 1995,5,530; 1994,5,530 55 55
outstanding: 1995,4,840; 1994,5,005
Capital in excess of par value 50,168 50,168
Retained earnings 18,747 12,842
68,970 63,065
Less:
Cost of common shares held in treasury;
1995,690 shares; 1994,524 shares 8,827 6,219
Total shareholders' equity 60,143 56,846
Total Liabilities and Shareholders' Equity $86,116 $81,798
See accompanying notes to consolidated financial statements.
Aceto Corporation and Subsidiaries
Consolidated Statements Of Income
Years ended June 30, 1995, 1994 and 1993
1995 1994 1993
(In thousands except per share amounts)
Net sales $164,783 $149,847 $155,267
Cost of sales 139,949 127,026 132,907
Gross profit 24,834 22,821 22,360
Selling, general and
administrative expenses 13,847 12,323 12,947
Provision for plant shut-down
costs (note 8) - 395 7,491
Operating profit 10,987 10,103 1,922
Other income (deductions):
Interest expense (196) (245) (274)
Interest and other
income (note 7) 1,824 1,077 1,651
1,628 832 1,377
Income before income taxes 12,615 10,935 3,299
Income taxes (note 3):
Federal:
Current 4,016 2,601 3,094
Deferred 89 894 (2,013)
State and local:
Current 738 446 518
Deferred 16 - (199)
4,859 3,941 1,400
Net Income $ 7,756 $ 6,994 $ 1,899
Net income per common and
common equivalent share: $ 1.52 $ 1.36 $ 0.36
See accompanying notes to consolidated financial statements.
Aceto Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years ended June 30, 1995, 1994 and 1993
1995 1994 1993
(In thousands)
Operating activities:
Net income $7,756 $6,994 $1,899
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 299 315 878
Write-down of property and equipment
to net realizable value - 161 4,394
Loss (gain) on sale of assets - 145 (19)
Stock distribution to employees 1 12 -
Effect of market value over original
option price for options exercised 272 140 265
Increase (decrease) in allowance for
doubtful accounts 28 (10) -
Decrease (increase) in deferred income
tax benefit 110 894 (2,212)
Changes in operating assets and liabilities:
Decrease in investments
- trading securities 1,044 - -
Decrease (increase) in trade accounts
receivable (2,540) (3,588) 2,318
Decrease (increase) in other receivables (406) 131 (104)
Decrease (increase) in inventories (4,350) (763) 1,750
Decrease (increase) in prepaid expenses 321 (393) (37)
Decrease (increase) in note receivable 25 (213) -
Increase (decrease) in drafts &
acceptances payable (421) 714 (741)
Increase (decrease) in accounts payable (231) 746 (1,607)
Increase (decrease) in accrued
merchandise purchases 2,510 982 (1,650)
Increase (decrease)in accrued compensation 270 (91) 122
Increase (decrease)in accrued plant
shut-down costs (685) (1,175) 2,845
Increase (decrease) in other accrued
expense 222 (991) 639
Increase (decrease)in income taxes payable (138) 800 (371)
Decrease in deferred taxes payable (6) - -
Net cash provided by operating activities 4,081 4,810 8,369
Investing activities:
Purchases of investments - held-to-maturity (7,083) (65,220) (31,712)
Proceeds from investments - held-to-maturity 4,968 62,435 25,864
Purchases of equipment net of insurance
reimbursement (212) (119) (278)
Proceeds from sale of plant and equipment - 301 19
Net cash used in investing activities (2,327) (2,603) (6,107)
Financing activities:
Payments of long-term debt (500) (500) (500)
Payments of cash dividends (1,851) (1,682) (1,487)
Proceeds from exercise of stock options 258 274 333
Payments for purchases of treasury stock (3,139) (793) -
Net cash used in financing activities (5,232) (2,701) (1,654)
Net increase (decrease) in cash and
cash equivalents (3,478) (494) 608
Cash and cash equivalents at beginning of year 5,122 5,616 5,008
Cash and cash equivalents at end of year $ 1,644 $ 5,122 $ 5,616
See accompanying notes to consolidated financial statements.
Aceto Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Dollars in thousands)
Capital in Common Stock
Common Stock Excess of Retained Held in
Issued Par Value Earnings Treasury Total
Balance at June 30, 1992 $47 $38,691 $18,815 $(6,797) $50,756
Net income - - 1,899 - 1,899
Stock dividend paid
(835,000 shares) 8 11,688 (11,702) - (6)
Cash dividends:
Common stock - - (1,405) - (1,405)
Preferred stock - - (77) - (77)
Exercise of stock options
(50,000 shares) - (241) - 660 419
Federal income tax benefit
from 1980 stock option
plan - 178 - - 178
Conversion of redeemable
preferred stock
(20,000 shares) - (128) - 265 137
Balance at June 30, 1993 55 50,188 7,530 (5,872) 51,901
Net income - - 6,994 - 6,994
Stock distribution to employees
(750 shares) 3 - 9 12
Cash dividends:
Common stock - - (1,605) - (1,605)
Preferred stock - - (77) - (77)
Exercise of stock options
(38,000 shares) - (136) - 437 301
Federal income tax benefit
from 1980 stock option
plan - 113 - - 113
Purchase of treasury stock
(57,000 shares) - - - (793) (793)
Balance at June 30, 1994 55 50,168 12,842 (6,219) 56,846
Net income - - 7,756 - 7,756
Stock distribution to
employees (100 shares) - - - 1 1
Cash dividends:
Common stock - - (1,774) - (1,774)
Preferred stock - - (77) - (77)
Exercise of stock options
(45,000 shares) - (136) - 530 394
Federal income tax benefit
from 1980 stock option
plan - 136 - - 136
Purchase of treasury stock
(211,000 shares) - - - (3,139) (3,139)
Balance at June 30, 1995 $55 $50,168 $18,747 $(8,827) $60,143
See accompanying notes to consolidated financial statements.
Aceto Corporation and Subsidiaries
Notes to consolidated financial statements
Years ended June 30, 1995, 1994 and 1993
(Dollars in thousands except amounts and par value per share)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts
of Aceto Corporation and all subsidiaries. All significant
intercompany accounts and transactions are eliminated in
consolidation.
Revenue Recognition
Revenue is recognized at the time goods are sold and
shipped.
Inventories
Inventories consist of finished goods and are stated at the
lower of cost (principally specific identification) or
market (net realizable value). These goods are sold on a
specific identification basis.
Property and Equipment
The Company depreciates buildings and equipment using
principally the straight-line method. The range of
estimated useful lives used in depreciating buildings and
equipment is as follows:
Buildings and building improvements 18 to 20 years
Equipment 3 to 10 years
The costs of additions and improvements which significantly
extend the useful life of existing buildings and equipment
are capitalized. Maintenance and repair costs are charged
to expense as incurred. Effects on income arising from
sales or retirements are reflected in income, except for
trade-ins, in which case the cost of the newly acquired
asset is adjusted for any gain or loss.
Income Taxes
The Company and its wholly owned subsidiaries file a
consolidated Federal income tax return. Deferred tax assets
and liabilities are recognized for the future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those differences are expected to reverse.
Income Per Common and Common Equivalent Share
Income per common and common equivalent share is determined
based on the weighted average number of common and common
equivalent shares outstanding. Weighted average common
shares outstanding for fiscal years ended June 30, 1995,
1994 and 1993 were 5,041,000, 5,095,000 and 5,091,000 and
included common stock equivalents of 63,000, 82,000 and
96,000, respectively. Shares issuable upon the assumed
conversion of preferred stock were excluded from the
computation since they were not dilutive during the three
year period.
Cash and Cash Equivalents
Cash equivalents of $990 and $2,957 at June 30, 1995 and
1994, respectively, consist of U.S. Treasury bills and
commercial paper. The Company considers all highly liquid
debt instruments with original maturities of three months or
less to be cash equivalents.
Marketable Investment Securities
Investments at June 30, 1995 and 1994 consist of U.S.
Treasury, corporate debt and equity securities, and
municipal obligations. As of July 1, 1994, the Company adopted
the provisions of Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities,
and the cumulative effect of this change in the method of accounting
for investments was immaterial. Under Statement 115, the Company
classifies its debt and equity securities as either trading or
held-to-maturity securities. Trading securities are bought and held
principally for the purpose of selling them in the short term.
Held-to-maturity are those securities in which the Company has the
ability and intent to hold until maturity.
Trading securities are recorded at their fair market value
of $5,831 and are classified as short-term investments.
Unrealized gains and losses on trading securities
are included in earnings. Dividend and interest income are
recognized when earned. Held-to-maturity securities are
recorded at cost and are adjusted for the amortization or
accretion of premiums or discounts over the life of the
related security. The cost of held-to-maturity securities
approximates their fair market value.
Held-to-maturity securities at June 30, 1995, consist of:
Due in less Due after one year
than one year through three years
U.S. Treasury securities $ 223 $ 4,019
Corporate debt securities 3,015 8,794
Municipal obligations 600 ---
$3,838 $12,813
(2) Long-term Debt
(a) Long-term debt outstanding at June 30, 1995 and 1994 was
as follows:
1995 1994
Note payable to the Prudential
Insurance Company of America
in equal semi-annual installments
of $250 maturing Jan. 1, 1999,
plus interest at 9.10% payable
quarterly. $1,750 $2,250
Less current installments 250 250
$1,500 $2,000
(b) The agreement underlying the long-term debt contains
certain defined restrictive covenants, including limitations
on corporate acquisitions and mergers and additional debt,
minimum working capital and debt/equity ratios and the
acquisition of the Company's stock.
(c) In addition to the long-term debt, the Company has
lines of credit available which provide for short-term loans
and/or commercial credits totaling $13,000 as of June 30,
1995. The lines of credit are with two banks in which
operating balances are maintained. The credit arrangements
do not: (i) restrict withdrawals of funds; (ii) have a
formal requirement relating to compensating balances for
either credit utilized or available; or (iii) provide for
commitment fees. However, there are informal arrangements
under which the Company maintains compensating balances.
The compensating balance arrangements at June 30, 1995 and
for the year then ended were satisfied by collected
balances.
There were no short-term loans outstanding at any time
during the fiscal years ended June 30, 1995, 1994 and 1993.
(3) Income Taxes
The tax effects of temporary differences that give rise to a
significant portion of the deferred tax assets and
liabilities at June 30, 1995 and 1994 are presented below:
1995 1994
Deferred tax assets:
Plant shut-down costs
not currently deductible $ 394 $ 668
Accrued compensation 596 575
Additional costs inventoried for
tax purposes pursuant to the
Tax Reform Act of 1986 331 337
Allowance for doubtful accounts
receivable 82 72
Other 139 -
Net deferred tax asset $ 1,542 $ 1,652
Deferred tax liabilities:
Differences in depreciation
and amortization of property
and equipment $ (24) $ (30)
In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income
during the periods in which those temporary differences
become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this
assessment. In order to fully realize the deferred tax
asset, the Company will need to generate future taxable
income of approximately $3,900. Taxable income for the
years ended June 30, 1995 and 1994 was approximately $12,168
and $9,626, respectively. Based upon the level of
historical taxable income and projections for taxable income
over the periods which the deferred tax assets are
deductible, management believes it is more likely than not
the Company will realize the benefits of these deductible
differences at June 30, 1995.
Reconciliation of the statutory Federal income tax rate and
the effective tax rate for the fiscal years ended June 30,
1995, 1994 and 1993 is as follows:
1995 1994 1993
Federal statutory tax rate 34.0% 34.0% 34.0%
State and local taxes, net
of Federal income tax
benefit 3.9 2.7 6.4
Other 0.6 (0.7) 2.0
Effective tax rate 38.5% 36.0% 42.4%
(4) Redeemable Preferred Stock
The Company has 2,000,000 authorized shares of redeemable
preferred stock with a par value of $2.50 per share. The
stock is redeemable at the option of either the holder or
issuer at par. All of the outstanding preferred stock is
held by the Aceto Corporation Profit Sharing Plan.
Redeemable preferred stock outstanding at both June 30, 1995
and 1994 consists of the following:
Shares Par Value
Second series 28,000 $ 71
Third series 100,000 250
Fourth series 40,000 100
Fifth series 40,000 100
Sixth series 40,000 100
Seventh series 40,000 100
Eighth series 40,000 100
$821
(a) The second, third, fourth, fifth, sixth, seventh and
eighth series of preferred stock are convertible beginning
on the date of issue into the Company's common stock at
ratios of 8.4, 6.4, 6.4, 5.1, 6.0, 6.0 and 4.2 shares of
preferred stock to 1 share of common stock, respectively,
subject to antidilution provisions. The second, third and
sixth series pay 10%, the fourth and fifth series pay 8%,
the seventh series pays 9.5% and the eighth series pays 9%
annual cumulative cash dividends on par value. All series
have voting rights. In the event of liquidation of the
Company, all series share ratably in the remaining proceeds.
(b) On November 20, 1992 the Aceto Corporation Profit
Sharing Plan converted 26,000 shares of first series
preferred stock of Aceto Corporation into 10,000 shares of
Aceto Corporation common stock. On December 1, 1992, the
Plan converted an additional 17,000 shares of first series
preferred stock and 12,000 shares of second series preferred
stock into 10,000 shares of Aceto Corporation common stock.
(5) Supplemental Cash Flow Information
Cash paid for interest and income taxes during the years
ended June 30, 1995, 1994 and 1993 are as follows:
1995 1994 1993
Interest $ 196 $ 245 $ 302
Income taxes 4,762 2,122 3,838
(6) Stock Option Plan
(a) Under the Company's 1980 stock option plan, the option
price is determined by the Board of Directors and can be
greater or less than the market value of the stock on the
date the options are granted. These options become
exercisable in whole or in part, as determined by the Board
of Directors, beginning on the date of the grant, and must
be exercised no later than five years after the date they
become exercisable.
Through June 30, 1995, options were granted to officers and
key employees who own less than 10% of the Company's stock.
At June 30, 1995, options to purchase 268,000 shares were
available for grant.
(b) The following tabulations summarize the shares of
common stock under option at June 30, 1995, 1994 and 1993 as
adjusted only for stock dividends, if any, occurring in that
year, and the activity with respect to options for the
respective years then ended.
No. of Option Price
Shares Per Share
Shares under option
and exercisable:
June 30, 1995 110,000 $2.27 - 12.50
June 30, 1994 110,000 2.27 - 12.50
June 30, 1993 104,000 2.24 - 12.50
Shares under option
but not exercisable:
June 30, 1995 -- $ --
June 30, 1994 32,000 5.85
June 30, 1993 66,000 5.92
Options granted during
year ended:
June 30, 1995 13,000 $ 12.50
June 30, 1994 12,000 13.50
June 30, 1993 10,000 12.50
Options exercised during
year ended:
June 30, 1995 45,000 $2.27 - 12.50
June 30, 1994 38,000 2.24 - 12.50
June 30, 1993 50,000 2.69 - 11.14
At June 30, 1995, the average option price for the 110,000
options outstanding under the 1980 stock option plan was
$8.41 with expiration dates ranging from December 31, 1995
to December 31, 1999.
(c) Under the Company's 1980 stock option plan, upon
exercise of options, the excess of the option price over the
par value is credited to capital in excess of par value.
When treasury stock is issued upon the exercise of options,
the difference between the option price and the cost of
treasury stock is recorded in capital in excess of par
value. Under the plan, during the period options become
exercisable, compensation is charged to operations for the
excess of fair market value over the option price at the
date of grant. Such charges to operations were $86, $89 and
$83 in 1995, 1994 and 1993, respectively.
(7) Interest and Other Income
Interest and other income earned during the fiscal years
ended June 30, 1995, 1994 and 1993 was comprised of the
following:
1995 1994 1993
Dividends $ 20 $ 34 $ 143
Interest 1,547 1,156 1,061
Net gain (loss) on investments (5) (125) 92
Miscellaneous other income 262 12 355
$1,824 $1,077 $1,651
(8) Plant Shut-Down Costs
The Company's manufacturing subsidiary, Arsynco, Inc.
discontinued all of its operations during the early part of
fiscal 1994 and is preparing its property for sale. In
fiscal 1995 the Company paid the balance of amounts accrued
for severance pay and property maintenance of $258. In
addition, payments of $427 for sampling, waste removal and
closure preparation were charged against the reserve for
environmental compliance. There were no charges to
operations in fiscal 1995. The Company incurred a charge to
operations of $395 in fiscal 1994 and $7,491 in fiscal 1993.
The charge in fiscal 1994 related primarily to asbestos and
waste removal and additional severance payments, not
previously reserved. The charge in fiscal 1993 covered the
write-down of machinery and equipment, severance payments to
approximately 90 employees, compliance with environmental
regulations and maintenance of the property after shut-down.
At June 30, 1995 and 1994, accrued plant shut-down costs
consisted of the following:
1995 1994
Environmental compliance $ 985 $1,412
Severance pay - 170
Property maintenance - 88
$ 985 $1,670
(9) Profit-Sharing and Pension Plans
The Company has profit-sharing plans in which employees of
the parent company and subsidiaries are eligible to
participate. The Company's annual contribution per
employee, which is at management's discretion, is based on a
percentage of compensation paid. The Company also
contributed to a pension plan administered by a union prior
to the shut-down of its manufacturing operations. The
Company's provisions for profit sharing and pension
contributions amounted to $668 in fiscal 1995, $534 in
fiscal 1994, and $725 in fiscal 1993.
(10) Commitments and Contingencies
(a) A subsidiary of the Company manufactures and markets
certain agricultural chemicals which are subject to the
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).
FIFRA requires that test data be provided to the
Environmental Protection Agency (EPA) to register, obtain
and maintain approved labels for pesticide products. The
EPA requires that follow-on registrants of these products
compensate the initial registrant for the cost of producing
the necessary test data on a basis prescribed in the FIFRA
regulations. Follow-on registrants do not themselves
generate or contract for the data. However, when FIFRA
requirements mandate the generation of new test data to
enable all registrant's to continue marketing a pesticide
product, often both the initial and follow-on registrants
establish a task force to jointly undertake the testing
effort. The Company is presently a member of two such task
force groups. The Company estimates the cost of test data
at the time it is first required, which estimates are
amortized over a period of up to five years, updated
annually; and are included in cost of sales.
Liability under FIFRA would arise if the Company marketed
pesticide products not registered under FIFRA, or failed to
compensate the initial registrant for the cost of producing
the necessary test data. Since the Company markets no
pesticide products which are not registered, and compensates
initial registrants for the cost of producing test data, it
believes it does not subject itself to contingent
liabilities in such regard.
(b) The Company and its subsidiaries are subject to various
claims which have arisen in the course of their business.
While any claim has an element of uncertainty, it is the
opinion of management that the ultimate outcome of such
matters will not have a material effect, if any, upon the
Company's financial condition.
(c) The Company enters into foreign exchange contracts
primarily as hedges relating to foreign inventory purchase
commitments. These financial instruments are designed to
minimize exposure and reduce risk from exchange rate
fluctuations in the regular course of business. Gains and
losses on the foreign exchange contracts are reported as a
component of the related transaction. At June 30, 1995 the
Company had contracts maturing at various dates through June
14, 1996 to purchase approximately $18,128 in foreign
currencies (primarily British Pounds, Belgian Francs and
Japanese Yen). The difference between the exchange rates
agreed to under the contracts and the actual exchange rates
at June 30, 1995 is not material.
(d) At June 30, 1995, the Company had non-negotiated letters
of credit of approximately $5,635.
(e) The Company currently leases an office facility under an
operating lease expiring April 2001. The minimum annual
payment under this lease is as follows:
Fiscal year
ending
June 30 Amount
1996 $ 504
1997 507
1998 507
1999 507
2000 507
Thereafter 402
Total rental expense relating to the current office facility
amounted to approximately $470 for each of the years in the
three-year period ended June 30, 1995. The Company has no
capitalized leases as defined by Financial Accounting
Standards Board Statement No. 13.
(11) Segment Information
The Company's operations, which principally consist of the
marketing of chemicals, are considered to be one industry
segment as defined by Financial Accounting Standards Board
Statement No. 14. One of the Company's customers accounted
for 10% of revenues in fiscal 1995 and 11% in fiscal 1994.
None of the Company's customers accounted for as much as 10%
of revenues in fiscal 1993.
Schedule VIII
ACETO CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended June 30, 1995, 1994 and 1993
Balance at Charged to Balance
beginning costs and Deduc- at end
Description of year expenses tions of year
Year ended June 30, 1995:
Allowance for doubtful
accounts $ 176,366 111,191 83,191(a) $ 204,366
Year ended June 30, 1994:
Allowance for doubtful
accounts $ 186,366 91,718 101,718(a) $ 176,366
Year ended June 30, 1993:
Allowance for doubtful
accounts $ 186,366 4,768 4,768(a) $ 186,366
(a) Specific accounts written off as uncollectible.
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<RECEIVABLES> 26,296
<ALLOWANCES> 204
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821
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