UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ ] Quarterly report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[X] Transition Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended January 31, 1997
Commission file number 1-10869
UNIQUE MOBILITY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0579156
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Corporate Circle Golden, Colorado 80401
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code) (303) 278-2002
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 .
The number of shares outstanding (including shares held by affiliates) of the
registrant's common stock, par value $0.01 per share at March 11, 1997 was
13,081,603.
PART I - FINANCIAL INFORMATION
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, October 31
Assets 1997 1996
(unaudited)
Current assets:
Cash and cash equivalents $ 1,082,582 3,230,246
Accounts receivable (note 9) 639,486 569,562
Costs and estimated earnings in excess of
billings on uncompleted contracts (note 3) 268,593 179,483
Inventories (note 4) 378,272 408,145
Prepaid expenses 153,913 37,848
Other current assets 19,447 28,177
Total current assets 2,542,293 4,453,461
Property and equipment, at cost:
Land 335,500 335,500
Building 1,438,090 1,364,500
Molds 102,113 102,113
Transportation equipment 258,675 258,675
Machinery and equipment 1,935,400 1,918,128
4,069,778 3,978,916
Less accumulated depreciation (1,707,973) (1,613,786)
Net property and equipment 2,361,805 2,365,130
Investment in Taiwan joint venture (note 5) 2,695,379 1,366,540
Patent and trademark costs, net of accumulated
amortization of $43,724 and $40,030 530,250 519,966
Other assets 5,233 7,552
$ 8,134,960 8,712,649
(Continued)
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
January 31, October 31,
Liabilities and Stockholders' Equity 1997 1996
(unaudited)
Current liabilities:
Accounts payable $ 209,528 121,790
Note payable to Taiwan joint venture 1,350,472 1,375,121
Other current liabilities (note 6) 292,341 400,574
Current portion of long-term debt 124,004 61,094
Billings in excess of costs and estimated earnings
on uncompleted contracts (note 3) 145,951 25,685
Total current liabilities 2,122,296 1,984,264
Long-term debt, less current portion 734,377 744,389
Total liabilities 2,856,673 2,728,653
Minority interest in consolidated subsidiary 390,514 391,120
Stockholders' equity (notes 7 and 11):
Common stock, $.01 par value, 50,000,000 shares
authorized; 11,772,315 and 11,751,365
shares issued 117,723 117,514
Additional paid-in capital 23,040,409 23,021,339
Accumulated deficit (18,035,564)(17,331,279)
Notes receivable from officers (83,646) (65,816)
Cumulative translation adjustment (23,297) (21,030)
Treasury stock at cost, 39,341 shares (127,852) (127,852)
Total stockholders' equity 4,887,773 5,592,876
Commitments (notes 5 and 10)
$ 8,134,960 8,712,649
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended January 31,
1997 1996
Revenue:
Contract services (note 9) $ 417,275 188,679
Product sales 74,790 115,633
492,065 304,312
Operating costs and expenses:
Costs of revenue 405,579 344,165
Research and development 333,550 286,947
General and administrative 275,544 318,550
Depreciation and amortization 99,201 92,886
Royalty 2,376 1,417
1,116,250 1,043,965
Operating loss (624,185) (739,653)
Other income (expense):
Minority interest share of earnings of
consolidated subsidiary (16,231) (17,147)
Interest income 27,230 25,703
Interest expense (61,920) (55,574)
Equity in loss of Taiwan joint venture (note 5) (16,773) (8,885)
Other (12,406) 186
(80,100) (55,717)
Net loss $ (704,285) 795,370)
Net loss per common share $ (.06) (.07)
Weighted average number of shares of common
stock outstanding (note 8) 11,755,692 10,609,761
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Quarter Ended January 31,
1997 1996
Cash flows from (used by) operating activities:
Net loss (704,285) (795,370)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 99,201 92,886
Minority interest share of earnings of
consolidated subsidiary 16,231 17,148
Noncash compensation expense for common stock
issued for services 1,449 3,750
Equity in loss of Taiwan joint venture 16,773 8,885
Gain on sale of property and equipment - (411)
Other 9,381 -
Change in operating assets and liabilities:
Accounts receivable and costs and estimated
earnings in excess of billings on
uncompleted contracts (159,034) 129,771
Inventories 29,873 59,961
Prepaid expenses and other current assets (107,335) (99,575)
Accounts payable and other current
liabilities (20,495) 91,545
Billings in excess of costs and estimated
earnings on uncompleted contracts 120,266 -
Net cash used by operating activities (697,975) (491,410)
Cash from (used by) investing activities:
Acquisition of property and equipment (90,862) (12,497)
Increase in patent and trademark costs (13,979) (13,223)
Proceeds from sale of property and equipment - 3,094
Net cash used by investing activities (104,841) (22,626)
(Continued)
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(unaudited)
Quarter Ended January 31,
1997 1996
Cash flows provided (used) by financing activities:
Proceeds from borrowings 94,330 -
Repayment of debt (41,432) (18,844)
Repayment of note payable to Taiwan joint
venture participant (1,380,909) -
Proceeds from sale of common stock, net - 500,000
Issuance of common stock under employee stock
purchase plan - 2,693
Distribution paid to holders of minority interest (16,837) (16,837)
Net cash provided (used) by financing activities (1,344,848) 467,012
Decrease in cash and cash equivalents (2,147,664) (47,024)
Cash and cash equivalents at beginning of quarter 3,230,246 1,796,392
Cash and cash equivalents at end of quarter $ 1,082,582 1,749,368
Interest paid in cash during quarter $ 261,164 20,750
Non-cash investing and financing transactions:
In December 1996, the Company financed its additional investment in the Taiwan
joint venture through the issuance of a note payable in the amount of
$1,347,879 (see note 5).
In accordance with the provisions of the Company's stock options plans, the
Company may, and has, accepted promissory notes from officers of the Company in
satisfaction of the exercise price of options exercised. These notes
receivable are recorded as a reduction of shareholders' equity in the
consolidated financial statements. In the first quarter of fiscal 1997 and
1996, the Company issued 20,105 and 13,395 shares of common stock with
an aggregate exercise price of $17,830 and $13,395, respectively, for which
the Company received promissory notes for the same amount.
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
(1) The accompanying financial statements are unaudited; however, in the
opinion of management, all adjustments which were solely of a normal
recurring nature, necessary to a fair statement of the results for the
interim period, have been made. The results for the interim period are
not necessarily indicative of results to be expected for the fiscal year.
(2) Certain fiscal 1996 amounts have been reclassified for comparative purposes.
(3) The estimated period to complete contracts in process ranged from one to
sixteen months at January 31, 1997, and from one to eight months at
October 31, 1996. The Company expects to collect substantially all related
accounts receivable and costs and estimated earnings in excess of billings
on uncompleted contracts within one year. Contracts in process consist of
the following:
January 31, 1997 October 31, 1996
(unaudited)
Costs incurred on uncompleted
contracts $ 1,394,723 1,081,352
Estimated earnings 695,752 596,765
2,090,475 1,678,117
Less billings to date 1,967,833 1,524,319
$ 122,642 153,798
Included in the accompanying
balance sheets as follows:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 268,593 179,483
Billings in excess of costs
estimated earnings on
uncompleted contracts (145,951) (25,685)
$ 122,642 153,798
(4) Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out method and consists of materials, direct labor
and production overhead. Inventories consist of the following:
January 31, 1997 October 31, 1996
(unaudited)
Raw materials $ 235,353 273,527
Work in process 80,364 55,996
Finished products 62,555 78,622
$ 378,272 408,145
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(5) On January 29, 1994, the Company, Kwang Yang Motor Co. Ltd. ("KYMCO"), and
Turn Luckily Technology Co. Ltd. ("TLT"), entered into a joint venture
agreement (the "Joint Venture Agreement") providing for the formation,
funding, and operation of Taiwan UQM Electric Company, Ltd., a company
organized under the laws of the Republic of China ("Taiwan UQM"). Taiwan
UQM was incorporated in April 1995.
In 1994, the Company purchased 39 percent of the initial equity capital of
Taiwan UQM and agreed to invest 39 percent of any additional capital calls.
Pursuant to the Joint Venture Agreement, the venturers are required to
invest additional funds in Taiwan UQM, as the board of directors of Taiwan
UQM by unanimous vote determines to be required.
In November 1996, the Board of Directors of Taiwan UQM resolved to make an
additional capital call on all joint venture partners due December 1, 1996.
The Company's additional capital call obligation approximates $1.35 million
as of January 31, 1997. The Company has reached an agreement with the
joint venture partners to meet this call obligation by paying 50 percent
of the obligation by March 1, 1997, and the remaining 50 percent by
June 1, 1997. The Company will pay interest at 10 percent per annum to
Taiwan UQM on the outstanding capital call obligation. It is the intent
of management of the Company to maintain the Company's equity interest in
Taiwan UQM at 39 percent. The additional capital call obligation has been
accounted for as a financing arrangement. Accordingly, for financial
reporting purposes, the Company recorded $1,347,879 as an addition to its
investment in the joint venture and as a note payable to the joint
venture. The note payable remained outstanding at January 31, 1997, with
the increase in its recorded value to $1,350,472 due to exchange rate
fluctuations.
Summarized unaudited financial information for Taiwan UQM is as follows:
Financial Position January 31, 1997 October 31, 1996
Current assets $ 2,166,393 330,826
Noncurrent assets:
Property and equipment-net 4,956,687 3,160,467
Other 141,474 35,833
Total assets 7,264,554 3,527,126
Current liabilities 350,850 19,816
Noncurrent liabilities 2,476 3,361
Stockholders' equity 6,911,228 3,503,949
Total liabilities
and equity $ 7,264,554 3,527,126
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
Quarter Ended Quarter Ended
Results of Operations January 31, 1997 January 31, 1996
Revenue $ - -
Expenses 43,008 22,782
Net loss $ (43,008) (22,782)
(6) The following table summarizes the composition of the Company's other
current liabilities:
January 31, 1997 October 31, 1996
(unaudited)
Accrued interest $ 29,078 214,002
Accrued legal and accounting fees 70,254 45,237
Accrued payroll, consulting,
personal property and real
estate taxes 45,529 52,585
Other 147,480 88,750
$ 292,341 400,574
(7) The Company has reserved 4,104,000 shares of common stock for key
employees, consultants, and key suppliers under its Incentive and
Non-Qualified Option plans. Options become exercisable as determined
by the Board of Directors and expire within 10 years from the date of
grant. The maximum number of shares that may be granted to any
eligible employee during the term of the Plan is 500,000 shares.
The options require holders to abide by certain Company policies on
the trading of Company's common stock.
The following table summarizes activity under the plans:
Shares Under Per Share
Option Option Price
Outstanding at October 31, 1995 1,852,232 $ .50 - 8.13
Granted 590,000 4.13 - 4.75
Exercised (100,542) .50 - 3.50
Forfeited (315,978) 3.50 - 8.13
Outstanding at October 31, 1996 2,025,712 .50 - 8.13
Granted 500,000 3.31
Exercised (20,105) .75 - 1.00
Forfeited -
Outstanding at January 31, 1997 2,505,607 .50 - 8.13
Exercisable at January 31, 1997 1,606,715
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
In February 1994, the Company's Board of Directors ratified a Stock Option
Plan for Non-Employee Directors pursuant to which Directors may elect to
receive stock options in lieu of cash compensation for their services as
directors. The Company has reserved 250,000 shares of common stock for
issuance pursuant to the exercise of options under the Plan. The options
vest ratably over a three-year period beginning one year from the date of
grant and are exercisable for 10 years from the date of grant. Option
prices are equal to the fair market value of common shares at the date of
grant.
The following table summarizes activity under the plan:
Shares Under Per Share
Option Exercise Price
Outstanding at October 31, 1995 109,333 $ 5.00 - 6.25
Granted 32,000 4.38
Outstanding at October 31, 1996 141,333 4.38 - 6.25
Granted -
Outstanding at January 31, 1997 141,333 4.38 - 6.25
Exercisable at January 31, 1997 56,889
In connection with the original issuance of certain subordinated
convertible term notes to Advent and Techno, the Company granted Advent
and Techno warrants to acquire 790,000 shares of the Company's common
stock at the lower $2.40 per share or the market price of the common stock
averaged over the 30 trading days immediately preceding the date of
exercise. The warrants expire August 1997, and allow for a cashless
exercise of the warrants into common shares based on the spread between
the market price of the common stock on the date of exercise and the $2.40
exercise price. All of these warrants remain outstanding at
January 31, 1997.
The Company has reserved 300,000 shares of common stock for issuance
pursuant to a warrant agreement with an investment banking company. The
warrants are exercisable at $6.00 per share and expire January 1999. The
warrants contain transfer restrictions and provisions for the adjustment of
the exercise price and the number and type of securities issuable upon
exercise based on the occurrence of certain events. All of these warrants
remain outstanding at January 31, 1997.
In connection with the 1995 common stock issuance, the placement agent was
issued warrants expiring July 1998, to acquire 150,000 shares of the
Company's common stock at $5.75 per share. All of these warrants remain
outstanding at January 31, 1997.
In connection with the first 1996 common stock issuance, the placement
agent was issued warrants expiring February 1999 to acquire 50,000 shares
of the Company's common stock at $4.75 per share. All of these warrants
remain outstanding at January 31, 1997.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
In connection with the second 1996 common stock issuance, an investor was
issued warrants expiring May 1998, to acquire 38,100 shares of the
Company's common stock at $5.00 per share. All of these warrants remain
outstanding at January 31, 1997.
In connection with the third 1996 common stock issuance, the placement
agent was issued warrants expiring September 1999 to acquire 50,000 shares
of the Company's common stock at $4.25 per share. All of these warrants
remain outstanding at January 31, 1997.
(8) Net loss per common share amounts are based on the weighted average number
of common shares outstanding during the first quarter of each fiscal year
presented. Outstanding common stock options and warrants were not included
in the computation because the effect of such inclusion would be
antidilutive.
(9) The Company has historically derived significant revenue from contract
services from a few key customers. For the first quarter of fiscal 1997,
the Company derived $244,588 of contract services revenue from two
customers, representing 59 percent of revenue earned from contract
services. These two customers also represented 61 percent of the total
accounts receivable balance at January 31, 1997. For the quarter ended
January 31, 1996, the Company derived $170,633 of contract services
revenue from three customers, representing 90 percent of revenue
earned from contract services. These three customers also represented 56
percent of the total accounts receivable balance at January 31, 1996.
(10) The Company has entered into employment agreements with three of its
officers which expire December 31, 1999. The aggregate annual future
compensation under these agreements through the expiration date is
$1,247,847.
(11) In March 1997, the Company completed the placement of 1,289,288 shares of
its $0.01 par value common stock at $3.50 per share pursuant to offerings
under Regulation S and Regulation D. Net proceeds to the Company amounted
to $4,241,758.
In connection with the offering, the placement agents were issued warrants
to acquire 225,625 shares of the Company's stock at $3.50 per share and
warrants to acquire 50,000 shares of common stock at $4.20 per share. The
warrants expire in March 2000.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this report and
any documents incorporated herein by reference, as well as, in the Company's
Registration Statement on Form S-3 dated October 10, 1996. These forward-looking
statements represent the Company's judgment as of the date of this Report. The
Company disclaims, however, any intent or obligation to update these forward-
looking statements.
The Company has changed its fiscal year end from October 31 to March 31. This
change results in a five month transition period for financial reporting
purposes which commenced on November 1, 1996 and ends on March 31, 1997.
This Report covers the quarterly period from November 1, 1996 through
January 31, 1997. This quarterly report will be followed by a transition period
report on Form 10-K for the five month period ending March 31, 1997.
Financial Condition
The Company's financial condition remained satisfactory throughout the quarter
although liquidity during the quarter decreased due to the investment of $1.4
million of available cash resources in its Taiwan based joint venture company.
Cash and cash equivalents declined $2,147,664 to $1,082,582 at January 31, 1997
from $3,230,246 at October 31, 1996 and working capital ( the excess of current
assets over current liabilities) declined from $2,469,197 at the beginning of
the quarter to $419,997 at the end of the quarter.
Accounts receivable rose to $639,486 at January 31, 1997 from $569,562 at
October 31, 1996 reflecting slower than expected collection on certain
international trade receivables.
Costs and estimated earnings on uncompleted contracts rose $89,110 to $268,593
at the end of the first quarter due to milestone billing arrangements on certain
commercial and government projects.
Raw material and finished product inventories declined while work in process
inventory rose during the quarter resulting in an overall decline in inventory
levels from $408,145 at the beginning of the quarter to $378,272 at January 31,
1997. The decrease in raw material and finished products inventories is
attributable to transfers to work in process and product sales, respectively,
during the quarter.
During the first quarter of fiscal 1997 the Company invested $90,862 for the
acquisition of property and equipment and $13,979 in the prosecution of its
trademarks and patent applications throughout the world. Capital expenditures
during the quarter were primarily directed toward improvements to the Company's
Golden, Colorado facility.
Investment in Taiwan joint venture rose to $2,695,379 at January 31, 1997
compared to $1,366,540 at October 31, 1996 reflecting the recording of future
capital call obligations associated with Taiwan UQM. See also "Liquidity and
Capital Resources" below.
<PAGE>
Accounts payable rose to $209,528 at the end of the first quarter compared to
$121,790 at fiscal 1996 year end. The increase is primarily attributable to
increased component purchases for an internally funded development program
throughout the quarter.
Note payable to Taiwan joint venture was $1,350,472 at January 31, 1997 compared
to $1,375,121 at October 31, 1996. In November 1996 the Company exercised its
option and subsequently tendered cash in the amount of $1,380,909 to a joint
venture participant. The exercise of the option to repurchase the shares and the
payment of the amount due allowed the Company to maintain its 39 percent equity
interest in Taiwan UQM. Also in November, 1996 the board of directors of Taiwan
UQM venture issued an additional capital call to the Company in the amount of
NT$37,050,000 (U.S.D. $1,350,472 at January 31, 1997) which is due in two equal
installments on March 1, 1997 and June 1, 1997 plus accrued interest of 10
percent per annum from December 1, 1996 until the date of payment.
Other current liabilities declined to $292,341 at the end of the first quarter
compared to $400,574 at fiscal 1996 year end. The decrease was primarily
attributable to the payment of accrued interest arising on the note payable to
Taiwan UQM which was paid in December of 1996.
Billings in excess of costs and estimated earnings on uncompleted contracts rose
to $145,951 at January 31, 1997 from $25,685 at October 31, 1996 due to billings
in advance of the performance of the associated work on certain sponsored
development programs.
Long-term debt declined $10,012 during the first quarter due to scheduled
principal payments on the mortgage debt associated with the Company's facility.
Common stock and additional paid-in capital increased to $117,723 and
$23,040,409 at January 31, 1997, respectively, compared to $117,514 and
$23,021,339 at October 31, 1996. The increases were due to the issuance of
common stock upon the exercise of stock options by employees and consultants of
the company and the issuance of common stock to a consulting firm for services.
Results of Operations
Operations for the quarter ended January 31, 1997, resulted in a net loss of
$704,285 or $0.06 per share compared to a net loss of $795,370 or $0.07 per
share for the comparable quarter last year.
Revenue derived from contract services was $417,275 for the fiscal 1997 first
quarter versus $188,679 for the comparable prior year quarter. The increase is
attributable to increased levels of sponsored development activities.
Product sales declined to $74,790 during the first quarter of fiscal 1997 from
$115,633 for the prior year quarter. The decrease is primarily attributable to
decreased product sales to the solar racing market.
Gross profit margins for the first quarter of fiscal 1997 rose to 17.6 percent
compared to a negative margin of 13.1 percent for the first quarter of fiscal
1996. The improvement in margins is attributable to improved absorption of
overhead costs.
<PAGE>
Research and development expenditures during the first quarter of fiscal 1997
rose $46,603 to $333,550 compared to $286,947 for the comparable period last
year. The increase is attributable primarily to production and facilitization
engineering activities associated with the planned launch of volume
manufacturing operations for Invacare.
General and administrative expenses for the quarter ended January 31, 1997
declined to $275,544 from the prior year level of $318,550 due to lower levels
of consulting, legal and travel costs.
Depreciation and amortization expense increased to $99,201 compared to $92,886
in the prior year quarter. The increase is due to depreciation on higher
levels of property and equipment and the amortization of intellectual property
in an expanded number of countries.
Equity in loss of Taiwan joint venture rose to $16,773 for the quarter ended
January 31, 1997 compared to $8,885 during the comparable quarter last year. The
increase is attributable to expanded staffing and operations at Taiwan UQM
preparatory to the launch of manufacturing operations.
Liquidity and Capital Resources
The Company's cash balances and liquidity throughout the first quarter of fiscal
1997 were adequate to meet operating needs.Net cash used by operating activities
rose to $697,975 during the first quarter of fiscal 1997, compared to $491,410
in the comparable prior year quarter, due primarily to higher levels of accounts
receivable and other current assets. Cash requirements during the quarter were
funded primarily from existing cash balances.
In January 1996, Invacare purchased 129,032 shares of common stock at a price of
$3.88 per share. Net proceeds to the Company were $500,000, all of which were
applied to fund the development of a wheelchair motor for Invacare. Contingent
on development milestones, Invacare has further agreed to purchase additional
shares at market price the proceeds of which would be used, in part, to fund the
Company's anticipated capital investment in motor manufacturing tools and
equipment. The Company is currently negotiating with Invacare to manufacture
motors for its wheelchairs; however, there can be no assurance that such
negotiations will be successful.
On March 12, 1997 the Company completed the placement of 1,289,288 shares of its
common stock with various institutional investors and an individual investor in
Europe and Canada in offerings under Regulation S and Regulation D of the
Securities and Exchange Act. The common stock was sold at $3.50 per share which
was the average closing price of the common stock on the American Stock Exchange
for the ten days prior to the pricing date of February 24, 1997. Net proceeds to
the Company after deducting placement agent fees of $270,750 was $4,241,758.
<PAGE>
In fiscal 1994, the Company, KYMCO and TLT entered into a joint venture
agreement which provided for the formation, capitalization and operation of
Taiwan UQM, a company organized under the laws of the Republic of China.
The Company purchased 39 percent of the initial stock of Taiwan UQM for
NT$1,170,000 (US$45,082 on the transaction date). Pursuant to the joint
venture agreement, the venture partners are obligated to meet future capital
calls as the Board of Directors of Taiwan UQM, by unanimous vote, determines.
During fiscal 1995, the company was unable to fund its capital call
obligations. In June 1995, the Company, KYMCO and TLT entered into a waiver
and option agreement pursuant to which KYMCO agreed to purchase those shares of
Taiwan UQM underlying the Company's capital call obligations. The purchase
price of such shares was NT$37,830,000 (U.S.$1,403,493 at October 31, 1995).
The Company was granted the option to repurchase the shares for the original
capital call amount plus 10 percent interest and associated transfer taxes.
In November 1996, the Company exercised its option and subsequently repurchased
the shares from KYMCO, thus maintaining the Company's ownership position at 39
percent of the then outstanding shares of Taiwan UQM. The repurchase price plus
interest and taxes totaled NT$44,175,505 (US$1,612,539 on the transaction date).
In November 1996, the Board of Directors of Taiwan UQM announced an additional
capital call to provide cash to fund facility construction and the launch of
electric component production. The Company's capital call obligation pursuant
thereto is NT$37,050,000 (US$1,350,472 as of January 31, 1997), plus interest at
the rate of 10 percent per annum on the outstanding amount from December 1,
1996, through the due date. The obligation is due and payable in two equal
installments on March 1, 1997 and June 1, 1997. At the date of this report the
ompany has not yet funded its March 1, 1997 capital call obligation, although
it anticipates doing so in the next several weeks from existing cash balances.
Over the next several months, the Company expects to invest substantially
greater amounts of capital to launch manufacturing operations for Invacare,
should Invacare elect to purchase motors from the Company. Anticipated capital
expenditures for production tooling and fixtures, production machinery,
equipment, computer hardware and software are expected to exceed $1.5 million.
There can be no assurance, however, that the Company will launch volume
manufacturin operations for Invacare or others. The Company expects to fund
any such investment requirements from existing cash balances and bank
facilities.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Employment Agreement with Ray A. Geddes.
10.2 Amendment to 401 (k) Savings Plan of Unique Mobility, Inc.
10.3 Amendment to the Unique Mobility, Inc. 1992 Stock Option Plan
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report dated March 13, 1997 regarding completion of
offerings of common stock pursuant to Regulation S and Regulation D.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Unique Mobility, Inc.
Registrant
Date: March 15, 1997 By:/s/ Donald A. French
Donald A. French
Treasurer and Controller
(Principal Financial and
Accounting Officer)
EXHIBIT 10.1
UNIQUE MOBILITY, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of January 1, 1997, by and
between UNIQUE MOBILITY, INC., a corporation organized under the laws of
Colorado ("Employer"), and Ray A. Geddes, an adult resident of Littleton,
Colorado ("Executive").
WHEREAS, Executive is currently a party to an Employment Agreement with
Employer dated January 1, 1994 (the "Old Agreement"); and
WHEREAS, Executive and Employer wish to replace the Old Agreement with
this Agreement:
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, Employer and Executive agree as follows:
1. Termination of Old Agreement. Upon execution of this Agreement, the
Old Agreement is hereby retroactively terminated, effective as of the date
hereof.
2. Employment. Employer hereby agrees to employ Executive as its chief
executive officer and chairman of the Board of Directors for the term of
employment set forth herein, and Executive hereby accepts such employment, all
upon the terms and conditions hereinafter set forth.
3. Duties. Executive shall perform the duties assigned to Executive by
and subject to the control, supervision and direction of the Board of
Directors.
4. Performance. During the term of Executive's employment under this
Agreement and any renewal thereof, Executive shall devote Executive's best
efforts and full working time and attention exclusively to the performance of
the duties hereunder and to promoting and furthering the business of Employer,
and shall not, during the term of employment, be engaged in any other business
activity for personal pecuniary advantage. This paragraph shall not be
construed as preventing Executive from investing Executive's assets in such
form or manner as will not require any services on the part of Executive in
the operation of the affairs of the companies in which such investments are
made, subject to the provisions of Paragraph 17 hereof. Notwithstanding the
foregoing, Executive may perform and assume other activities and
obligations as the Board of Directors shall from time to time approve.
5. Term of Employment, Expiration and Termination.
(a) Subject to the provisions of Paragraphs 15 and 16, the term of
employment of Executive pursuant to this Agreement shall commence on January 1,
1997, and shall continue through December 31, 1999 (the "Original Term of
Employment").
<PAGE>
(b) Upon expiration of this Agreement, if Employer elects to not
continue Executive's employment, Employer shall provide Executive notice of
such fact and shall pay Executive: a lump sum equal to one (1) month's salary
for each year of full-time employment with Employer, except that such sum
shall be not less than twelve (12) month's salary and shall not exceed twenty-
four (24) month's salary.
(c) Upon expiration of this Agreement, if Employer elects to continue
Executive's employment without a written employment agreement, Executive's
employment shall be at will, except that Executive's employment may be
terminated without cause by Employer after notice to Executive. Upon such
termination Employer shall pay Executive: a lump sum equal to one (1) month's
salary for each year of full-time employment with Employer, except that such
sum shall be not less than twelve (12) month's salary and shall not
exceed twenty-four (24) month's salary.
(d) On termination of Executive's employment for cause during the
Original Term of Employment pursuant to Paragraph 15(a), Executive shall
receive no further salary.
(e) On termination of Executive's employment without cause during the
Original Term of Employment pursuant to Paragraph 15(c), Employer shall pay
Executive a lump sum equal to one (1) month's salary for each year of full-
time employment with Employer, except that such sum shall be not less than
twelve (12) month's salary and shall not exceed twenty-four (24) months'
salary. In the event of a material breach of this Agreement by Employer that
is not cured after notice from Executive, Executive may elect to treat such
breach as a constructive termination under this subparagraph entitling
Executive to the benefits hereunder.
(f) On termination of Executive's employment by Executive without
cause either (i) during the Original Term of Employment pursuant to Paragraph
16(b), or (ii) after expiration of the Original Term of Employment if
Executive's employment continues without written agreement, Employer shall pay
Executive a lump sum equal to three (3) month's salary, and Executive shall be
entitled to no other severance benefits.
<PAGE>
(g) If Executive's employment is terminated as a result of a hostile
Change in Control (as defined below) of Employer, such termination shall be
deemed a termination without cause under the provisions of Paragraph 5(e),
except that Executive shall receive at Executive's election either the annual
salary and benefits payable under this Agreement until the expiration date of
the Original Term of Employment, or any renewals thereof, or a severance
amount equal to twice any amount due under Paragraph 5(e). Any termination of
Executive in contemplation of or within twelve (12) months after such Change
in Control, except a termination for cause under Paragraph 15(a), shall be
deemed a termination under this Subparagraph (g). Further, if Executive's
position is materially changed by Employer in contemplation of or within
twelve (12) months after any such Change in Control, Executive may elect to
treat such change as a constructive termination under this subparagraph
entitling Executive to the benefits hereunder. "Change of Control" means the
election of new board members constituting a majority of the directors then
in office, which new board members were not nominated by a majority of the
directors in office on the date hereof.
(h) Upon Executive's voluntary retirement after age sixty-five
during or upon expiration of the Original Term of Employment, or any extensio
thereof, Executive shall receive the severance benefits described under
Paragraph 5(e), i.e., as if the severance was a termination without cause by
the Employer.
(i) Upon any termination of Executive, at Executive's election,
Employer shall assign to Executive or Executive's designee any life and
disability insurance policies or other fringe benefits which may so be
assigned. Any continued cost of such policies or benefits shall be Executive's
responsibility.
(j) Upon the expiration or termination of Executive's employment,
Executive or Executive's legal representative upon request shall promptly
deliver to Employer all originals and all duplicates or copies of all documents,
records, notebooks and similar repositories of or containing Confidential
Information as defined in Paragraph 18 then in his possession, whether prepared
by Executive or not.
6. Compensation. For the services to be rendered by Executive hereunder,
Employer agrees to pay Executive during the term of employment, and Executive
agrees to accept:
(a) An annual base salary of $172,793. Executive's annual base
salary shall not be decreased during the Original Term of Employment.
(b) Executive's salary shall be paid in equal semi-monthly
installments on the 15th and final day of each month during the term of his
employment.
(c) Executive shall receive fringe benefits in accordance with
Employer's policies and practices for employees generally (including, without
limitation, participation in any stock option plans, life and disability
insurance plans, health care and hospitalization plans, medical and dental
reimbursement plans, profit sharing plans, retirement plans and other employee
benefit plans) for which Executive is qualified. At Employer's expense
Executive shall have a medical exam every year. In addition to the foregoing,
Executive shall continue to be provided the use of an automobile for combined
business and personal use on similar or equivalent terms and conditions as was
provided under the old agreement.
(d) During the last quarter of each fiscal year of Employer,
Employer shall review Executive's performance under this Agreement and
establish goals and objectives for Executive's performance for the next
fiscal year. In such review, Employer, in its reasonable discretion, shall
consider increasing Executive's salary and compensation based on relevant
factors such as Executive's performance, Employer's accomplishments, increase
or decrease in Executive's responsibilities, and cost of living increases.
Any salary increases normally are to be effective on January 1 of each year.
<PAGE>
(e) Employer has adopted a bonus plan to be administered by its
Compensation Committee and in the Compensation Committee's discretion may
award bonuses and stock options to Executive on terms to be determined by the
Compensation Committee. As soon as practicable after the effective date of
this agreement, January 1, 1997, Executive shall receive an additional grant
of options to purchase 78,000 shares at an exercise price determined based on
the "Fair Market Value" of the stock as defined under Employer's Stock Option
Plan, on the date of the grant of the option. In addition, the Board of
Directors shall submit for approval by Employer's shareholders its
recommendation that Employer's Stock Option Plan be amended to increase the
maximum number of options to shares for any individual in an appropriate and
sufficient amount above the existing maximium of 500,000 and, upon receipt of
such approval, grant Executive an additional option to 50,000 shares at an
xercise price determined based on the "Fair Market Value" of the Stock, as
defined under the Plan, on the date of the grant of the option.
7. Working Facilities. Executive shall be furnished with appropriate
office space, secretarial assistance, and such other facilities and services
as are suitable to Executive's position and adequate for the performance of
Executive's duties.
8. Expenses. Employer shall reimburse Executive for all reasonable
expenses that Executive incurs in connection with the business of Employer or
any of its subsidiaries and in the performance of Executive's duties under
this Agreement. Employer shall also reimburse Executive for membership fees
and expenses related to Executive's membership in professional organizations,
clubs, societies and groups as may be approved by the Board of Directors from
time to time, subject to such rules, regulations and record-keeping
requirements as may be established from time to time by the Board.
9. Vacations. Executive shall be entitled each year to a vacation of
five (5) weeks, during which time his compensation shall be paid in full.
Vacation time accrued during each calendar year must be used by the end of
each calendar year, or will be lost, and will not accrue from one calendar
year to the next. Exceptions to the foregoing non-accrual policy may be
provided under terms and conditions approved in writing by resolution of the
Board of Directors or its compensation committee in such body's sole
discretion based on prolonged extra-ordinary work demands preventing
Executive's timely taking vacation.
10. Disability. If Executive is unable to perform Executive's services
by reason of illness or incapacity for a period of more than six (6)
consecutive months, and subject to the provisions of Paragraph 11, Employer
may terminate Executive's employment. Employer shall receive a credit
against Executive's salary for any disability compensation benefit for the
same calendar period received by Executive from Worker's Compensation or any
commercial insurance carrier under Paragraph 11.
<PAGE>
11. Insurance for the Benefit of Executive.
(a) Subject to the provisions of Paragraph 6(c), Executive shall be
covered by Employer's medical and disability insurance in effect from time to
time, the premiums for which shall be paid for by Employer.
(b) Employer shall at its expense continuously maintain without
interruption in the name of Executive or Executive's designee or for the
benefit of Executive or Executive's designee, life insurance coverage in an
amount equal to Executive's then current salary for three (3) years.
12. Insurance for the Benefit of Employer. Employer shall have the right
from time to time to apply for and take out in its name and at its own expense,
life, health or other insurance upon Executive in any sum or sums which may be
deemed necessary by Employer to protect its interest under this Agreement and
Executive shall do all such things as may be necessary to assist in the
procuring of such insurance by making a proper application therefor as may be
required by the insurance company and submitting to the usual and customary
medical examinations. Executive, in Executive's capacity as Executive,
shall have no right, title or interest in or to such insurance, but the same
shall be solely for the benefit of Employer and any amounts payable thereunder
shall be solely payable to such Employer.
13. Death During Employment. If Executive dies during the term of his
employment under this Agreement, Employer shall pay to the estate of Executive
the compensation which would otherwise be payable to Executive up to the end
of the third month after the month in which his death occurs. If, by that
time, Executive's estate has not received any proceeds of the insurance
provided for in Paragraph 11, Employer shall continue Executive's salary
hereunder for up to an additional three months, or until such insurance
proceeds are received, whichever is earlier ("Reimbursable Payments"),
provided that Executive's estate shall reimburse Employer for any such
Reimbursable Payments made from the proceeds of such insurance.
14. Representation and Warranty. Executive represents and warrants
that he is not now, and will not be on the date of commencement of this
Agreement, a party to any agreement, contract or understanding, whether of
employment, agency or otherwise, which would in any way restrict or prohibit
Executive from undertaking and performing Executive's duties in accordance
with the terms and provisions of this Agreement.
15. Termination by Employer.
(a) Employer may terminate Executive's employment for cause, which is
defined as follows:
<PAGE>
i) Fraud, malfeasance, or embezzlement against
Employer's assets or conviction of any felony;
ii) Except under circumstances of disability
contemplated by the provisions of Paragraph 10, cessation of Executive's
performance of Executive's duties hereunder or deliberate and substantial
failure to perform them in a capable and conscientious manner;
iii) Violation of the provisions of Paragraph 14; or
iv) Deliberate and substantial breach of Executive's
material obligations under any other provision hereof that is not cured
within 30 days after notice to Executive of the breach.
(b) Should the Board of Directors of Employer determine cause exists,
as defined in Subparagraph (a), to terminate Executive's employment, prior to
termination for such cause, Employer shall provide Executive written notice
reasonably describing the basis for the contemplated termination and a two-
week period of time in which to respond in writing and in person prior to
Employer's final determination of cause. During the period between such notice
and final determination, the Board may suspend the performance of Executive's
duties under this Agreement and direct Executive's non-attendance at work.
However, Executive's right to compensation under this Agreement shall continue
through and to any final termination of employment for cause.
(c) Employer may terminate Executive's employment upon three (3)
months notice without cause, subject to the applicable provisions of Paragraph
5. During the period between such notice and final determination, the Board
may suspend the performance of Executive's duties under this Agreement and
direct Executive's non-attendance at work.
16. Termination by Executive.
(a) Executive shall have the right to terminate his employment on
forty-five (45) days' written notice to Employer of any default by Employer in
performing its duties under this Agreement, subject to the provisions of
Paragraph 5(e) and provided that Executive may not terminate his/her
employment if Employer cures the default within fifteen (15) days after
receiving such notice.
(b) Executive may terminate Executive's employment upon three (3)
months notice without cause, subject to the applicable provisions of
Paragraph 5(f).
<PAGE>
17. Restrictive Covenant.
(a) Executive agrees and covenants that, without the Board's prior
written consent and except on behalf of Employer, he will not in any manner,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, assist or be associated in any manner with any person, firm or
corporation anywhere in the world whose business competes with Unique or any
subsidiary of Unique. This covenant shall remain in effect until a date one
(1) year after the date Executive's employment is terminated or, if his
employment is terminated pursuant to Paragraph 16(a), until the termination
date. Notwithstanding any other provision of this Agreement, Executive may
own up to three percent (3%) of the outstanding stock of a competing publicly
traded corporation so long as he takes no other action furthering the business
of such corporation.
(b) Until a date one (1) year after the termination date, Executive
shall not (i) solicit any other employee of Employer to leave the employ of
Employer, or in any way interfere with the relationship between Employer and
any other employee of Employer, or (ii) induce any customer, supplier,
licensee, or other business relation of Employer to cease doing business with
Employer, or in any way interfere with the relationship between any customer or
business relation and Employer.
18. Confidentiality.
(a) Definitions. For purposes of this Agreement, the following
definitions shall apply:
i) "Inventions" shall mean all inventions,
improvements, modifications, and enhancements, whether or not patentable,
made by Executive within the scope of Executive's duties during
Executive's mployment by Employer.
ii) "Confidential Information" shall mean Employers
proprietary know-how and information disclosed by Employer to Executive or
acquired by Executive from Employer during Executive's employment with
Employer about Employer's plans, products, processes and services, which
Employer protects against disclosure to third parties. Confidential
Information shall not include the Executive's general knowledge and
experience possessed prior to or obtained during his/her employment
with Employer.
(b) Restrictions on Disclosure.
i) During the period of employment with Employer
and thereafter, Executive shall not disclose Confidential Information to
any third parties other than Employer, its employees, agents, consultants,
contractors and designees without the prior written permission of
Employee, or use Confidential Information for any purpose other than the
conduct of Employer's business.
<PAGE>
ii) The restrictions on disclosure and use set forth
herein shall not apply to any Confidential Information which:
A. At the time of disclosure to Executive by Employer is
generally available to the public or thereafter becomes generally
known to the public, through no fault of Executive;
B. Was known by Executive prior to his/her employment with
Employer;
C. Executive at any time receives from a third party not
under any obligation of secrecy or confidentiality to Employer;
D. Employer discloses to a third party not under any
obligation of secrecy or confidentiality to it; and
E. Executive is requested or required to disclose pursuant
to a subpoena or order of a court or other governmental agency, in
which case Executive shall notify Employer as far in advance of
disclosure as is practicable.
(c) Obligations Regarding Inventions. Without any royalty or any
other additional consideration to Executive: (i) Executive shall promptly
inform Employer of any Inventions by a written report, setting forth the
conception and reduction to practice of all inventions; (ii) Executive hereby
agrees to assign and assigns to Employer all of his right, title and interest:
(1) to any Inventions made during the term of his employment by Employer
(including without limitation the right to license or sell such Invention to
others), (2) to applications for United States and foreign letters patent, and
(3) to United States and foreign letters patent granted upon such Inventions;
and (iii) Executive agrees upon request and at the sole cost and expense of
Employer to, at all times, do such acts (such as giving testimony in support
of his inventorship) and execute and deliver promptly to Employer such papers,
instruments, and documents as from time to time may be necessary or useful to
apply for, secure, maintaining, reissue, extend or defend Employer's interest
in any Inventions or any or all United States and foreign letters patent, so
as to secure Employer the full benefits of any Inventions or discoveries or
otherwise to carry into full force and effect the intent of the assignment set
out in subparagraph 18(c)(ii).
(d) Remedies. Executive acknowledges and agrees that Executive's
disclosure of any Confidential Information would result in irreparable injury
to Employer. Executiv acknowledges and agrees that the Confidential
Information is non-public information which Employee has expanded substantial
time, money and effort to develop and is property considered "Trade Secrets"
of Employer within the meaning of Colorado law. Therefore, upon the breach or
threatened breach of the covenants in this paragraph by Executive, Employer
shall be entitled to obtain from any court of competent jurisdiction a
preliminary and permanent injunction prohibiting such disclosure and any other
equitable relief that the court deems appropriate. In addition, Employer shall
be entitled to seek damages.
<PAGE>
(e) Any Confidential Information that is directly or indirectly
originated, developed or perfected to any degree by Executive during the term
of his employment by Employer shall be and remain the sole property of
Employer.
19. Resolution of Disputes. In addition to any other remedies available
to Employer, Employer shall be entitled to specific performance of the
covenants contained in Paragraphs 17 and 18. If either party is successful in
enforcing its rights under this Paragraph 19, the unsuccessful party shall
reimburse the successful party for all of the costs of such enforcement,
including but not limited to costs, litigation expenses and reasonable
attorneys' fees. Except for an action to interpret or enforce Paragraphs 17 or
18, any controversy or claim arising out of or relating to the interpretation,
alleged breach or enforcement of this Agreement shall be settled by arbitration
before a single arbitrator in Denver, Colorado, in accordance with the
commercial rules then in effect of the American Arbitration Association,
Colorado Revised Statutes pertaining to the arbitration of civil disputes. The
arbitrator, who shall be a person experienced in negotiating and making
employment agreements and resolving employment disputes and in any other
pertinent areas of law, shall make reasonably detailed findings to support any
decision and award. The award of the arbitrator shall be final and binding and
may be entered as a judgment in any court of competent jurisdiction. As part
of the award in any arbitration or judicial proceedings, the prevailing party
may be awarded its reasonable attorneys' fees, witness fees, expert witness
fees and related costs and expenses in the discretion of the arbitrator.
20. Notices. All notices under this Agreement shall be delivered by hand
or by registered or certified mail. Notices intended for Executive shall be
addressed to Executive at 5480 South Perry Street, Littleton , Colorado 80123.
Notices intended for Employer shall be addressed to it at 425 Corporate Circle,
Golden, Colorado 80401. All notices shall be effective upon actual delivery if
by hand, or, if by mail, five (5) days after being deposited in the United
States mail, postage prepaid and addressed as required by this section. Either
party may by notice accomplished in accordance with this Paragraph 20 change
the address to which future notices may be sent.
21. Miscellaneous Provisions.
(a) This Agreement contains the entire agreement between the parties
and supersedes all prior agreements and it shall not be amended or otherwise
modified in any manner except by an instrument in writing executed by both
parties.
(b) Neither this Agreement nor any rights or duties under this
Agreement may be assigned or delegated by either party unless the other party
consents in writing.
<PAGE>
(c) Except as otherwise provided herein, this Agreement shall be
binding upon the inure to the benefit of the parties and their respective
heirs, personal representatives, successors and assigns.
(d) This Agreement has been entered into in Colorado and shall be
governed by the laws of that state.
(e) In fulfilling their respective obligations under this Agreement
and conducting themselves pursuant to it, each party shall act reasonably and
in good faith.
(f) If any provisions of this Agreement shall be held to be invalid
or unenforceable for any reason, the invalid or unenforceable provision shall
be deemed severed from this Agreement and the balance of this Agreement shall
remain in full force and effect and be enforceable in accordance with its
terms.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
EXECUTIVE:
/s/ Ray A. Geddes
Ray A. Geddes
EMPLOYER:
UNIQUE MOBILITY, INC.
By: /s/ Donald A. French
Donald A. French its Treasurer
(Name) (Position)
EXHIBIT 10.2
401(k) SAVINGS PLAN
OF
UNIQUE MOBILITY, INC.
Amended and Restated,
Effective November 1, 1996
Executed February 17, 1997
401(k) SAVINGS PLAN
OF
UNIQUE MOBILITY, INC.
amended and restated
effective November 1, 1996
PREAMBLE
UNIQUE MOBILITY, INC., a Colorado corporation (the "Company"), effective
November 1,1989, established a profit sharing plan that allowed before-tax
Employee contributions (the "Plan")and trust (the "Trust"). The Plan was
amended and restated effective November 1, 1993 and is hereby amended and
restated as set forth below, effective generally November 1, 1996. The
Company entered into a trust agreement effective November 1, 1989, with a
trustee (the "Trustee"),which has been amended and restated, as of August 1,
1993. The Plan and Trust are intended to comply with the provisions of the
Code (as defined herein) and ERISA (as defined herein), to qualify
as a profit sharing plan for all purposes of the Code, and to provide a cash or
deferred arrangement that is qualified under Code section 401(k).
Effective April 1, 1997, the Plan Year has changed to the twelve-month
period commencing April 1 and ending the following March 31. The period from
Novemver 1, 1996 through March 31, 1997 is a short Plan Year.
ARTICLE I
Definitions
The following words and phrases shall have the meaning set forth below:
1.1 "Affiliated Entity" means any corporation or other entity, now or
hereafter formed, that is or shall become affiliated with the Company, either
directly or indirectly, through stock ownership or control, and which is (a)
included in the controlled group of corporations within the meaning of Code
section 1563(a) without regard to Code section 1563(a)(4) and Code section
1563(e)(3)(C) in which the Company is also included; (b) included in the group
of entities (whether or not incorporated) under common control (within the
meaning of Code section 414(c) in which the Company is also included;
(c) included in an affiliated service group (within the meaning of Code section
414(m) in which the Company is also included; (d) required to be aggregated
with the Company (within the meaning of Code section 414(o); or (e) affiliated
with the Company through stock ownership or as otherwise determined by the
Company.
1.2 "Alternate Payee" means any Participant's Spouse, former spouse,
child, or other dependent who is recognized by a Qualified Domestic Relations
Order as having a right to receive all, or a portion of, the benefits payable
under this Plan with respect to such Participant.
1.3 "Annual Addition" means the allocations to a Participant's account(s)
for any Plan Year, as described in detail below.
(a) Annual Additions shall include: (i) Company Contributions to
this Plan (and any other defined contribution plan maintained by the Company or
any Affiliated Entity); (ii) Participant After-Tax Contributions to this Plan
and after-tax contributions to any other defined contribution plan maintained
by the Company or any Affiliated Entity; (iii) Participant Before-Tax
Contributions to this Plan and before-tax contributions to any other defined
contribution plan maintained by the Company or any Affiliated Entity;
(iv) forfeitures allocated to a Participant's account(s) in this Plan and any
other defined contribution plan maintained by the Company or any Affiliated
Entity (except as provided in paragraph (b)(iii) below); (v) all amounts paid
or accrued after December 31, 1985 in Taxable Years ending after December 31,
1985, to a welfare benefit fund as defined in Code section 419(e) and allocated
to the separate account (under such welfare benefit fund) of a Key Employee
to provide post-retirement medical benefits; and (vi) contributions allocated
on the Participant's behalf to any individual medical account as defined in
Code section 415(l)(2).
(b) Annual Additions shall not include: (i) Rollover Contributions
to this Plan or rollover contributions, made pursuant to Code section 402(c),
403(a)(4), 403(b)(8), 405(d)(3),408(d)(3), or 409(b)(3)(C) to any other
defined contribution plan maintained by the Company or an Affiliated Entity;
(ii) repayments of loans made to a Participant from a qualified plan maintained
by the Company or any Affiliated Entity; (iii) repayments of forfeitures for
rehired Participants, as described in Code sections 411(a)(7)(B) and
411(a)(3)(D); (iv) direct transfer of employee contributions from one qualified
plan to this Plan or any other qualified defined contribution plan maintained
by the Company or any Affiliated Entity; (v)deductible employee contributions
within the meaning of Code section 72(o) (5); or (vi)employee contributions to
a simplified employee pension, if such contributions are deductible under Code
section 219(a).
1.4 "Break in Service" means a Plan Year in which a Participant fails to
receive credit for more than 500 Hours of Service. A five-year Break in
Service means five consecutive one-year Breaks in Service. A leave of absence
in a non-paid status that is approved in writing by the Company shall not
constitute a Break in Service for eligibility, participation, or vesting
purposes.
1.5 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and rulings in effect thereunder from time to
time.
1.6 "Committee" means the administrative committee provided for in
Section 8.4.
1.7 "Company" means Unique Mobility, Inc., a Colorado corporation, any
successor thereto, and, where the context requires, any Affiliated Entity
that adopts the Plan pursuant to Article XI.
1.8 "Company Contributions" means all contributions to the Plan made by
the Company pursuant to Section 3.1 for the Plan Year.
1.9 "Company Discretionary Contributions" means all contributions to the
Plan made by the Company pursuant to subsection 3.1(a) for the Plan Year.
1.10 "Company Matching Contributions" means all contributions to the Plan
made by the Company pursuant to subsection 3.1(b) for the Plan Year.
1.11 "Compensation" means:
(a) For purposes of determining the limitation on Annual Additions
under Section 3.4 and the minimum contribution under Section 13.4 when the
Plan is top-heavy, Compensation shall mean wages, as defined in Code section
3401(a) for purposes of income tax withholding, and all other payments of
compensation by the Company in the course of its trade or business for which
the Company is required to furnish a written statement to the Employee,
pursuant to Code sections 6041(d) and 6051(a)(3). Compensation shall be
determined without regard to any rules under Code section 3401(a) that limit
the remuneration included in wages based on the nature or location of
employment or based on the Services performed, such as the exception for
agricultural labor in Code Section 3401(a)(2).
(b) For all purposes of the Plan other than determining the
limitation on Annual Additions under Section 3.4 and the minimum contribution
under Section 13.4 when the Plan is top-heavy, Compensation shall mean wages
as defined in Code section 3401(a) for purposes of income tax withholding, but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of employment or based on the services
performed, such as the exception for agricultural labor in Code section
3401(a)(2). Compensation shall also include elective contributions that are
not includable in the Employee's income pursuant to Code sections 125,
402(a)(8), 402(h), 403(b), 414(h)(2) or 457(b).
(c) For purposes of subsections(a) and (b) above, the term "Company"
shall also include all Affiliated Entities and any entity that would be an
Affiliated Entity if the phrase "more than 50%" were substituted for the phrase
"at least 80%" each place it occurs in Code section 1563(a)(1).
(d) For all purposes of the Plan, Compensation taken into account for
any Plan Year or Limitation Year, as the case may be, shall not exceed the
OBRA '93 annual compensation limit in effect for the calendar year in which
the Plan Year or Limitation Year begins. The compensation limit is $150,000
as adjusted by the Secretary of Treasury); provided however, that for the
Short Plan Year the limit shall be 5/12 of the compensation limit. For the
Short Plan Year only, in determining this limit the Compensation of the
following people is aggregated, and their combined Compensation is limited to
5/12 of $150,000 (as adjusted by the Secretary of the Treasury):
(i) an Employee who is either a Five-Percent Owner or one of
the ten most highly compensated Highly Compensated Employees,
(ii) the Spouse of an Employee described in paragraph(i), and
(ii) asny descendant under the age of 19 of an Employee described
in paragraph (i).
Effective April 1, 1997, the preceding sentence is deleted.
1.12 "Determination Date" means, with respect to each Plan Year, the last
day of the preceding Plan Year; provided however, that, in the case of the
first Plan Year of the Plan, the Determination Date shall be the last day of
such Plan Year.
1.13 "Determination Year" means the Plan Year.
1.14 "Disability" means a physical or mental condition of a Participant
that, in the judgment of the Committee based upon medical reports and other
evidence satisfactory to the Committee, presumably permanently prevents him
from satisfactorily performing his usual duties for the Company or the duties
of such other position or job that the Company makes available to him and for
which such Participant is qualified by reason of his training, education,
or experience.
1.15 "Dollar Limitation" means $30,000 or, if greater, one-fourth of the
defined benefit dollar limitation set forth in Code section 415(b)(1)(A), as
adjusted by the Secretary of the Treasury, provided, however, that for the
Short Plan Year only the Dollar Limitation shall be 5/12 of $30,000 or 5/12 or
the defined benefit dollar limitation set forth in Code section 415(b)(1)(A),
as adjusted by the Secretary of the Treasury.
1.16 "Domestic Relations Order" means any judgment, decree or order
including approval of a property settlement agreement) that relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of the Participant and is
made pursuant to a state domestic relations law (including a community
property law).
1.17 "Earliest Retirement Age" means, for purposes of Section14.9, the
earlier of (a) the date on which the Participant is entitled to distribution
under the Plan, or (b) the later of (i)the date the Participant attains age
50, or (ii)the earliest date on which the Participant could begin receiving
benefits under the Plan if the Participant separated from service.
1.18 "Effective Date" means the original effective date of this Plan,
November1, 1989.
1.19 "Employee" means each individual who performs services for the Company
and whose wages are subject to withholding by the Company. The term "Employee"
shall also include leased employees within the meaning of Code section 414(n)
(2). Notwithstanding the foregoing, if leased Employees within the meaning of
Code section 414(n)(2) constitute less than 20% of the Company's nonhighly
compensated work force within the meaning of Code section 414(n)(5)(C)(iii),
the term "Employee" shall not include those leased Employees covered by a plan
described in Code section 414(n)(5).
1.20 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations and rulings in effect thereunder from time
to time.
1.21 "Family Member" means the Spouse, lineal ascendants and descendants
and the spouses of such lineal ascendants or descendants of any Employee who
is, during a Determination Year or a Look-Back Year, a Five-Percent Owner or
one of the ten most highly compensated Highly Compensated Employees of the
Company. Effective April 1, 1997, this section 1.21 shall be deleted.
1.22 "Five-Percent Owner" means:
(a) With respect to a corporation, any person who owns (either
directly or indirectly according to the rules of Code section 318) more than
5% of the value of the outstanding stock of the corporation or stock
possessing more than 5% of the total combined voting power of all stock
of the corporation.
(b) With respect to a non-corporate entity, any person who owns
(either directly or indirectly according to rules similar to those of Code
section 318) more than 5% of the capital or profits interest in the entity.
A person shall be a Five-Percent Owner for a particular year if such person is
a Five-Percent Owner at any time during such year.
1.23 "Highly Compensated Employee" means:
(a) For Plan Years beginning on and after April 1, 1997:
(i) Any Employee who, at any time during the Determination Year
or the Look-Back Year, was a Five-Percent Owner.
(ii) Any Employee who earned at least $80,000 (as adjusted by the
Secretary of the Treasury) during the Look-Back Year and was a member of the
Top-Paid Group.
(b) For the Short Plan Year:
(i) Any Employee who performs service for the Company during the
Determination Year and who, during the Look-Back Year: (A) received
Compensation from the Company in excess of 5/12 of $75,000 (as adjusted by the
Secretary of the Treasury); (B) received Compensation from the Company in
excess of 5/12 of $50,000 (as adjusted by the Secretary of the Treasury) and
was a member of the Top-Paid Group; or (C was an officer of the Company and
received Compensation greater than 5/12 of 50% of the dollar limitation in
effect under Code section 415(b)(1)(A).
(ii) Employees who are both (A)described in paragraph(b)(i)(A),
(b)(i)(B), or(b)(i)(C) above when the words "Determination Year" are
Substituted for the words "Look-Back Year" and (B)one of the 100 Employees
who receive the most Compensation from the Company during the Determination
ear.
(iii)A Five-Percent Owner at any time during the Look-Back Year or
Determination Year.
(iv) If no officer has Compensation in excess of 50% of the limit
described in paragraph (b)(i)(C) above, the highest paid officer for such year
shall be treated as a Highly Compensated Employee.
(v) For purposes of determining Highly Compensated Employees
under paragraph (b)(i)(C), the number of officers shall be limited to 50
(or, if lesser, the greater of three Employees or 10% of all Employees)
excluding those Employees who may be excluded in determining the Top-Paid
Group.
(vi) If any individual is a Family Member, then for purposes of
this subsection, (A)such individual shall not be considered a separate
Employee, and (B)any Compensation paid to such individual (and any applicable
contribution or benefit on behalf of such individual) shall be treated as if
it were paid to (or on behalf of) the Five-Percent Owner or Highly
Compensated Employee.
(vii)Notwithstanding the above, if the Company maintained
significant business activities in at least two significantly separate
geographic areas during the Look-Back Year or the Determination Year, the
Company may elect, in its sole discretion, to identify Highly Compensated
Employees using the simplified method described in Code section 414(q)(12).
Under this method, Highly Compensated Employees are identified using the
method described in subsections(b)(i) through(b)(vi) above, with the following
modifications: (A)the amount "$75,000" in paragraph(b)(i)(A) is replaced by
the amount "$50,000"; (B) paragraph(b)(i)(B) is deleted; and (C)the reference
in paragraph(b)(ii) to paragraph(b)(i)(B) is ignored.
(c) Notwithstanding any other provisions of the Plan, for purposes o
determining the number or identity of Highly Compensated Employees, individuals
who would be treated as leased employees under Code section 414(n) shall be
treated as Employees.
1.24 "Hour of Service" means:
(a) Each hour for which an Employee is paid or entitled to payment b
the Company for the performance of duties for the Company during the applicable
computation period. Hours of Service under this subsection (a) shall be
credited to the Employee for the computation period or periods in which the
duties are performed, regardless of when the Employee is paid for such duties.
(b) Each hour for which an Employee is paid or entitled to payment by
the Company on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including Disability), layoff,
jury duty, military duty or leave of absence. Hours of Service under this
subsection (b) shall be credited to the Employee for the computation period or
periods in which the period during which no duties are performed occurs,
beginning with the first unit of time to which the payment relates.
Notwithstanding the preceding sentence:
(i)No more than 501 Hours of Service shall be credited under
this subsection(b) 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);
(iiAn hour for which an Employee is directly or indirectly paid,
or entitled to payment, on account of a period during which no duties are
performed shall not 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, unemployment compensation or disability insurance laws;
and
(iiHours of Service shall not be credited for a payment that
solely reimburses an Employee for medical or medically related expenses
incurred by the Employee. For purposes of this subsection (b) a payment shall
be deemed to be made by or due from the Company regardless of whether such
payment is made by or due from the Company directly, or indirectly through,
among others, a Trust Fund, or insurer, to which the Company 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 o
are on behalf of a group of Employees in the aggregate.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company. Hours of Service
under this subsection (c) shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is
made. The same Hours of Service shall not be credited both under subsection(a)
or subsection(b) of this Section, as the case may be, and under this
subsection(c).
(d) In the case of each Employee who is absent from work for any
period by reason of the pregnancy of the Employee, by reason of the birth of a
child of the Employee, by reason of the placement of a child with the Employe
in connection with the adoption of such child by such Employee, or for purposes
of caring for such child for a period beginning immediately following such
birth or placement, the Plan shall treat as Hours of Service, solely for
purposes of determining whether a one-year Break in Service has occurred for
purposes of vesting and participation (but not for purposes of benefit
accrual), the following hours: (i)the Hours of Service that otherwise would
normally have been credited to such Employee but for such absence, or (ii)in
any case in which the Plan is unable to determine the hours described in
paragraph(d)(i), eight Hours of Service per day of such absence, provided,
however, that the total number of hours treated as Hours of Service under
this subsectio (d) by reason of any such pregnancy or placement shall not
exceed 501 Hours of Service. The hours described in this subsection (d)
shall be treated as Hours of Service only in the year in which the absence
from work begins, if a Participant would be prevented from incurring a one-
year Break in Service in such year solely because the period of absence is
treated as Hours of Service as provided in this subsectio(d), or in any
other case, in the immediately following year. For purposes of this
subsection (d), the term "year" means the period used in computing a Break in
Service. Notwithstanding the foregoing, the Committee may determine that no
credit will be given pursuant to this subsection(d) unless the Employee
furnishes to the Committee such timely information as the Committee may
reasonably require to establish that the absence from work is for
reasons referred to in the first sentence of this subsection (d) and the numbe
of days for which there was such an absence.
(e) For purposes of calculating the Hours of Service to be credited to
periods during which no duties are performed and determining the computation
periods to which hours shall be credited, the rules set forth in subsections(b)
and(c) of Department of Labor Regulation section 2530.200b-2 are hereby
incorporated by reference as though such provisions were fully set forth at
this point.
1.25 "Key Employee" means an individual described in Code section 416(i)
and the regulations promulgated thereunder.
1.26 "Limitation Year" means the Plan Year for purposes of Code section 415.
1.27 "Look-Back Year" means the twelve months immediately preceding the
Determination Year.
1.28 "Non-Highly Compensated Employee" means an Employee of the Company who
is not a Highly Compensated Employee. For purposes of the Short Plan Year, a
Non-Highly Compensated Employee shall mean an Employee of the Company who is
neither a Highly Compensated Employee nor a Family Member.
1.29 "Non-Key Employee" means any Employee who is not a Key Employee.
1.30 "Normal Retirement Age" means age 65.
1.31 "Participant" means an Employee who has satisfied, and continues to
satisfy, the eligibility requirements of Section 2.1 and who enrolls under the
Plan and accrues benefits under the Plan.
1.32 "Participant After-Tax Contributions" means contributions made to the
Plan by a Participant pursuant to subsection 3.2(a) of the Plan and that are
subject to federal income tax.
1.33 "Participant Before-Tax Contributions" means contributions made to the
Plan by the Company, at the election of the Participant, in lieu of cash
compensation, pursuant to subsection 3.2(a) of the Plan, and which are
excludable from the Participant's income in the year of contribution pursuant
to Code sections 401(k) and 402(a)(8).
1.34 "Participant Contributions" means Participant Before-Tax Contributions
and Participant After-Tax Contributions.
1.35 "Plan Year" means the 12-month period on which the records of the Plan
are kept, which shall be April 1 through March 31, the Taxable Year of the
Company, provided however that there shall be a Short Plan Year from
November 1, 1996 through March 31, 1997.
1.36 "Qualified Domestic Relations Order" means a Domestic Relations Order
that creates or recognizes the existence of an Alternate Payee's right to, or
assigns to an Alternate Payee the right to, receive all or a portion of the
benefits payable with respect to a Participant under the Plan and with respect
to which the requirements of subsection 14.9(c) are met.
1.37 "Qualified Non-Elective Contributions" means any contribution to the
Plan made by the Company pursuant to subsection 3.1(c) for the Plan Year.
Qualified Non-Elective Contributions shall be fully vested when made and shall
be subject to the restrictions of Code section 401(k)(2)(B).
1.38 "Qualified Matching Contributions" means that portion of Company
Matching Contributions so designated by the Company. Any such designation must
be made before the Company Matching Contribution is made to the Plan.
1.39 "Required Beginning Date" means, for the Short Plan Year, April 1 of
the calendar year following the calendar year in which the Participant attains
age 70-1/2. For Plan Years beginning on and after April 1, 1997, Required
Beginning Date means April 1 of the calendar year following the later of the
calendar year in which the Participant attains age 70-1/2 or the calendar in
which the Participant terminates employment with the Company and all Affiliated
Entities; provided however, that the Required Beginning Date for a Participant
who is a Five Percent Owner is April 1 of the calendar year following the
calendar year in which the Participant attains 70-1/2.
1.40 "Rollover Contribution" means a contribution to the Plan by an
Employee of: a nontaxable distribution from a qualified plan under Code section
402(c); a nontaxable distribution from a qualified annuity plan under Code
section 403(a)(4); a nontaxable distribution from a tax-sheltered annuity plan
under Code section 403(b)(8); a nontaxable distribution of the excess of the
proceeds of a qualified bond under Code section 405(d)(3) (issued before
January 1, 1984) over the basis of such bond; a nontaxable distribution from an
individual retirement account or annuity under Code section 408(d)(3); or the
nontaxable redemption of a retirement bond under Code section 409(b)(3)(C)
issued before January 1, 1984).
1.41 "Short Plan Year" shall mean the Plan Year beginning on
November 1, 1996 and ending on March 31, 1997.
1.42 "Spouse" means the person to whom a Participant is lawfully married on
one of the following dates: the date of the Participant's death, the date any
election is filed pursuant to Article VI, or the date the Participant's
benefits commence. Effective on the date of execution of this amendment and
restatement, a former Spouse of a Participant shall have no interest in this
Plan, except as provided in a Qualified Domestic Relations Order or in a
beneficiary designation form executed by the Participant after the Spouse had
become a former Spouse.
1.43 "Stock" means the $0.01 par value common stock of the Company.
1.44 "Taxable Year" means the accounting period of the Company for federal
income tax purposes.
1.45 "Top-Paid Group" means the top 20% of Employees ranked on the basis of
Compensation received during the applicable year. For purposes of this Section
only, a leased employee (as defined in Code section 414(n)(2)) shall be treated
as an Employee unless he is either covered by a safe-harbor plan (described in
Code section 414(n)(5)) maintained by the leasing organization or covered by a
qualified plan maintained by the Employer or an Affiliated Entity. For
purposes of determining the number of Employees in the Top-Paid Group, the
following Employees may be excluded:
(a) any Employee who has not completed six months of service before
the end of the applicable year;
(b) any Employee who normally works less than 17-1/2 hours per week,
as defined in the regulations under Code section 414(q);
(c) any Employee who normally works less than six months during the
applicable year, as defined in the regulations under Code section 414(q);
(d) any Employee who has not had his 21st birthday by the end of the
applicable year; and
(e) any Employee who is a non-resident alien and who receives no
earned income (within the meaning of Code section 911(d)(2)) from the Company
or Affiliated Entity that constitutes income from sources within the United
States (within the meaning of Code section 861(a)(3)) during the applicable
year.
Notwithstanding the foregoing, the Company or Affiliated Entity may elect, on a
consistent and uniform basis, to modify the permissible exclusions set forth
above by substituting any shorter period of service or lower age. The Company
or Affiliated Entity may elect not to exclude any Employees in determining the
Top-Paid Group.
1.46 "Valuation Date" means the last day of each Plan Year and any other
dates as specified in Section 4.2 as of which the assets of the Trust Fund are
valued at fair market value and as of which the increase or decrease in the net
worth of the Trust Fund is allocated among the Participants' accounts. For
purposes of Article XII only, the term "Valuation Date" means the date as of
which the account balances shall be valued, which date shall be the
Determination Date.
1.47 "Year of Service" means a Plan Year in which an Employee has at least
1,000 Hours of Service in the employ of the Company or an Affiliated Entity. A
transfer of employment between Affiliated Entities or between the Company and
an Affiliated Entity shall not be an interruption of service for purposes of
the Plan. Years of Service with an Affiliated Entity shall be treated as Years
of Service with the Company. Once a leased employee (within the meaning of
Code section 414(n)) becomes an Employee, Years of Service shall also include
service during any period the Employee was ineligible to participate in the
Plan because such Employee was a leased employee. For purposes of eligibility
under Section 2.1 and vesting under Section 5.1, Years of Service prior to the
Effective Date shall be included.
ARTICLE II
Participation
2.1 Participation - Required Service - Minimum Age.
Each Employee who is not included in a unit of Employees covered by a
collective bargaining agreement in the negotiation of which retirement benefits
were the subject of good faith bargaining and who has attained age 18 shall be
eligible to become a Participant upon the first day of the month coincident
with or next following the first to occur of (a) the date the Employee
completes a six-consecutive-month period during which the Employee receives
credit for at least 1,000 Hours of Service or (b), if (a) is not completed, the
date the Employee completes a twelve-consecutive-month period during which the
Employee receives credit for at least 1,000 Hours of Service. The six-month
period shall commence on the date the Employee first performs an Hour of
Service for the Company upon initial employment or latest date of reemployment.
The first twelve-consecutive-month period shall commence on the date the
Employee first performs an Hour of Service for the Company upon initial
employment or latest date of reemployment. Subsequent twelve-consecutive-month
periods shall commence on each anniversary of the date the Employee first
performed an Hour of Service for the Company on initial employment or latest
date of reemployment.
Prior to an Employee's satisfying the requirements of this Section
2.1, an Employee shall incur a Break in Service for purposes of eligibility if
he fails to complete at least 250 Hours of Service in his initial
six-consecutive-month period or he fails to complete at least 500 Hours of
Service in his initial twelve-consecutive-month period or any subsequent
twelve-consecutive-month period.
2.2 Reemployment After Cessation of Employment.
An Employee who has satisfied the age and service requirements of Section
2.1, who has subsequently terminated employment and who is thereafter
reemployed shall participate in the Plan beginning upon the date of his
reemployment.
2.3 Enrollment - Procedure.
Each Participant shall fill out and sign an enrollment form supplied by the
Committee (and such other forms as the Committee may require) and return such
form(s) to the Committee. The form(s) shall include, among other information,
the initial rate of the Participant's Before-Tax Contributions and Participant
After-Tax Contributions, the initial investment direction, the post office
address and date of birth of the Participant, and the name, post office
address, and date of birth of each beneficiary of the Participant.
2.4 Absences.
A leave of absence in a non-paid status approved in writing by the Company
shall not constitute a termination of employment for eligibility,
participation, or vesting purposes.
ARTICLE III
Contributions
3.1 Company Contributions.
(a) Company Discretionary Contributions. Each Plan Year the Company
shall contribute to the Trust Fund such amount of Company Discretionary
Contributions, if any, as authorized by the Company. Company Discretionary
Contributions shall be allocated to Company Contributions accounts.
(b) Company Matching Contributions. Each Plan Year the Company shall
contribute Company Matching Contributions to the Trust Fund on behalf of each
Participant who makes Participant Before-Tax Contributions or Participant
After-Tax Contributions for such Plan Year. The amount of the Company Matching
Contributions shall be equal to the Participant Before-Tax Contributions and
Participant After-Tax Contributions made by each Participant for the Plan Year
up to 5% of Compensation. If a Participant makes Participant Contributions in
excess of 5% of Compensation, the Company shall make Company Matching
Contributions on behalf of such Participant equal to 25% of such Participant
Contributions in excess of 5% of Compensation. Neither the Trustee nor any
other person is under any duty to inquire into the correctness of the amount of
Company Matching Contributions. Neither the Trustee nor any other person has
any power, right, or duty to enforce payment of Company Matching Contributions.
The Company may designate all or any portion of any Participant's allocation of
Company Matching Contributions as Qualified Matching Contributions. Such
designation shall be made before such contributions are made to the Trust Fund.
Company Matching Contributions designated as Qualified Matching Contributions
shall be allocated to Participant Before-Tax Contributions accounts. Company
Matching Contributions not so designated shall be allocated to Company
Contributions accounts.
(c) Qualified Non-Elective Contributions. Each Plan Year the Company
shall contribute to the Trust Fund such amount of Qualified Non-Elective
Contributions, if any, as authorized by the Company. The Company may also
elect to treat any portion of forfeitures occurring during the Plan Year as
Qualified Non-Elective Contributions, pursuant to subsection 5.1(e). Qualified
Non-Elective Contributions shall be allocated to Participant Before-Tax
Contribution accounts.
(d) The Company Contributions under this Section for a Plan Year shall
not exceed the amount allowable as a deduction for the Taxable Year ending with
or within a Plan Year pursuant to Code section 404, including carry forwards of
unused deductions for prior Taxable Years. The Company Contributions shall be
paid to the Trustee not later than the due date (including any extensions) for
filing the Company's federal income tax return for such year. The Company
Contributions for a Plan Year may be made without regard to current or
accumulated earnings and profits.
(e) The Company may make additional contributions to the Plan to
resore amounts forfeited from the Company Contributions accounts of certain
rehired Participants, pursuant to subsection 5.1(d). These additional
contributions shall be required only when the forfeitures occurring during the
Plan Year are insufficient to restore such forfeited amounts, as described in
section 5.1(e). This contribution shall be allocated to the Participant's
Company Contributions account.
(f) Direct Rollovers. The Committee may authorize the Trustee to
accept "direct rollovers" from Employees. A "direct rollover" is a voluntary,
direct transfer of assets to this plan from another qualified retirement plan
that is nontaxable under Code sections 402(c) and 401(a)(31). Direct rollovers
may be made by any Employee; however, such Employee shall not be entitled to
receive an allocation of any Company Contributions or to make Participant
Contributions until he has satisfied the applicable eligibility and
participation requirements of section 2.1. Direct rollovers shall be allocated
to Rollover Contributions accounts.
3.2 Participant Contributions.
(a) Participant Before- and After-Tax Contributions. A Participant
shall make contributions to the Plan, through payroll withholding, based upon
his Compensation for each pay period. All or a portion of such contributions
shall be designated, on an appropriate form furnished by the Committee, as
either Participant Before-Tax Contributions (as may be limited by Section 3.5
hereof), or as Participant After-Tax Contributions. Participant Contributions
shall be promptly transferred by the Company to the Trustee. Each Participant
shall designate as his Participant Contributions from 1%-15% of his
Compensation, which shall be in whole percentages and which may be any
combination of Participant Before-Tax Contributions or Participant After-Tax
Contributions. For the first year of Plan participation, the designated rate
of Participant Contributions must be 1% or more. Notwithstanding, subject to
the limitations set forth in Sections 3.4, 3.5 and 3.6, in no event shall any
Participant be permitted to make Participant Before-Tax Contributions to the
Plan for any calendar year in an amount in excess of $7,000 (as adjusted by the
Secretary of the Treasury).
(b) Change in Rate of Participant Contributions. A Participant may
prospectively change his rate of Participant Before-Tax or Participant
After-Tax Contributions, or the characterization of Participant contributions
as Before-Tax or After-Tax, at any time. A Participant who reduces his
Participant Contributions to 0% shall not be permitted to resume making
ParticipantContributions until the completion of six months of participation at
the 0% level. A change must be registered with the Committee in writing at
least 30 days prior to the beginning of the calendar quarter during which it is
requested that it be made effective.
(c) Rollover Contributions. The Committee may authorize the Trustee
to accept Rollover Contributions from Employees. Rollover Contributions may be
made by Employees who have not yet satisfied the requirements of Section 2.1;
however, such Employees shall not be entitled to share in the allocation of
Company Contributions under Sections 3.1, 4.5, and 4.6, to make Participant
After-Tax Contributions pursuant to subsection (a), or to make Participant
Before-Tax Contributions pursuant to subsection (a) until they have satisfied
the requirements of Section 2.1. Rollover Contributions shall be allocated to
Rollover Contributions accounts.
(d) Direct Transfers. The Committee may authorize the Trustee to
accept the direct transfer of assets from the trustee or funding agent of
another qualified retirement plan (the "Transferor Plan") attributable to the
participation under the Transferor Plan of an Employee. Nevertheless, no
amount may be transferred to this Plan, directly or indirectly, from a plan
required to provide automatic survivor benefits pursuant to Code section 401(a)
(11). Direct transfers may be made on behalf of Employees who have not yet
satisfied the requirements of Section 2.1; however, such Employees shall not be
entitled to share in the allocation of Company Contributions under Sections
3.1, 4.5, and 4.6, to make Participant After-Tax Contributions pursuant to
subsection (a), or to make Participant Before-Tax Contributions pursuant to
subsection (a) until they have satisfied the requirements of Section 2.1. The
Committee shall authorize such a direct transfer only if the Transferor Plan is
a plan qualified under Code section 401(a); the Committee may require such
proof of qualified status from the Employee as it considers necessary. Unless
a transfer of assets in kind is specifically authorized by the Committee, all
such direct transfers shall be made in cash pursuant to such procedures, rules
and regulations as the Committee may adopt from time to time. No amounts
representing "qualified voluntary employee contributions" within the meaning of
Code section 219(e) may be directly transferred to this Plan. All amounts
transferred to this Plan pursuant to this Section shall be fully vested at all
times. The Employee shall provide adequate documentation establishing the
appropriate designation of the amount directly transferred to this Plan.
Amounts attributable to after-tax contributions, and the earnings thereon,
shall be allocated to the Employee's Participant After-Tax Contributions
account. Amounts attributable to qualified non-elective contributions,
qualified matching contributions, participant before-tax contributions, and the
earnings thereon, shall be allocated to the Employee's Participant Before-Tax
Contributions account. If the Employee is 100% vested in his Company
Contributions account, then amounts attributable to rollover contributions or
employer contributions (other than qualified non-elective contributions or
qualified matching contributions) shall be allocated to the Employee's Company
Contributionsaccount. If the Employee is less than 100% vested in his Company
Contributions account, then amounts attributable to rollover contributions or
employer contributions (other than qualified non-elective contributions or
qualified matching contributions, as those terms are defined in the regulations
under Code sections 401(k) and 401(m)) shall be allocated to the Employee's
Rollover Contributions account. Such amounts shall thereafter share in the
increase or decrease in the net worth of the Trust Fund, and shall be subject
to the investment directions of the Employee in accordance with the Trust
agreement.
3.3 Return of Contributions.
Upon request of the Company, the Trustee shall return:
(a)To the Company and those Participants who have made contributions,
any contributions made under this Plan (adjusted to reflect any increase or
decrease in the net worth of the Trust Fund attributable thereto) if the
Internal Revenue Service refuses to issue an initial determination letter to
the effect that this Plan and the Trust meet the requirements of the Code.
Such contributions shall be returned within one year after the date of such
denial of qualification. This Plan and the Trust will then terminate.
(b)To the Company, any Company Contribution made under a mistake of
fact. The amount that shall be returned shall not exceed the excess of the
amount contributed (reduced to reflect any decrease in the net worth of the
Trust Fund attributable thereto) over the amount that would have been
contributed without the mistake of fact. Appropriate reductions shall be made
in the accounts of Participants to reflect the return of any contributions
previously credited to such accounts. However, no contribution shall be
returned to the extent that such reduction would reduce the account of a
Participant to an amount less than the balance that would have been credited to
his account had the contribution not been made. Any contribution made under a
mistake of fact shall be returned within one year after the date of payment.
(c)To the Company, any Company Contribution that is not deductible
under Code section 404. All contributions under the Plan are expressly
conditioned upon their deductibility for federal income tax purposes. The
amount that shall be returned shall be the excess of the amountcontributed
(reduced to reflect any decrease in the net worth of the Trust Fund
attributable thereto) over the amount that would have been contributed if there
had not been a mistake in determining the deduction. Appropriate reductions
shall be made in the accounts of Participants to reflect the return of any
contributions previously credited to such accounts. However, no contribution
shall be returned to the extent that such reduction would reduce the account(s)
of a Participant to an amount less than the balance that would have been
credited to his account(s) had the contribution not been made. Any
contribution conditioned on its deductibility shall be returned within one year
after it is disallowed as a deduction.
3.4 Limitation on Annual Additions.
(a) The Annual Additions to a Participant's account(s) in this Plan
and any other defined contribution plan maintained by the Company or an
Affiliated Entity for any Limitation Year shall not exceed in the aggregate the
lesser of (i) 25% of such Participant's Compensation for such Limitation Year
or (ii) the applicable Dollar Limitation. For this purpose, an Affiliated
Entity shall be determined by substituting the phrase "more than 50%" for the
phrase "at least 80%" each place it occurs in Code section 1563(a)(1).
(b) If, as a result of a reasonable error in estimating a
Participant's annual Compensation or as a result of the allocation of
forfeitures, or as a result of other facts and circumstances as provided in the
regulations under Code section 415, the Annual Additions to a Participant's
account(s) would, but for this subsection (b), exceed the foregoing limits, the
Annual Additions shall be reduced, to the extent necessary, in the following
order: Participant After-Tax Contributions, Company Discretionary
Contributions, Company Matching Contributions, Qualified Non-Elective
Contributions, and Participant Before-Tax Contributions. The reduction in
Participant After-Tax Contributions, Participant Before-Tax Contributions,
Qualified Non-Elective Contributions, and any vested Matching Contributions
shall be returned to the Participant. The amount of any reduction in the
Participant's Company Discretionary Contributions or non-vested Company
Matching Contributions shall be placed in a suspense account in the Trust Fund
and used to reduce the Company Contribution to the Plan. The following rules
shall apply to such suspense account: (i) no further Company Contributions may
be made if the allocation thereof would be precluded by Code section 415; (ii)
any increase or decrease in the net value of the Trust Fund attributable to the
suspense account shall not be allocated to the suspense account, but shall be
allocated to the remainder of the Trust Fund; and (iii) all amounts held in the
suspense account shall be allocated as of each succeeding allocation date on
which forfeitures may be allocated under the provisions of the Plan until the
suspense account is exhausted.
3.5 Contribution Limits for Highly Compensated Employees (ACP Test).
(a) Limits on Contributions. Notwithstanding any provision in this
Plan to the contrary, the actual contribution percentage ("ACP") test of Code
section 401(m)(2) shall be satisfied. Code section 401(m) and the regulations
issued thereunder are hereby incorporated by reference.
(b) Permissible Variations of the ACP Test. To the extent permitted
by there gulations under Code sections 401(m) and 401(k), Participant
Before-Tax Contributions and Qualified Non-Elective Contributions may be used
to satisfy this test if not used to satisfy the ADP test of Section 3.6.
(c) Advance Limitation of Participant After-Tax Contributions. The
Committee may limit the Participant After-Tax Contributions of any Highly
Compensated Employee at any time during the Plan Year. This limitation may be
made, if practicable, whenever the Committee believes that the limits of this
Section or Sections 3.4, 3.6, or 3.7 will not be satisfied.
(d) Corrections to Satisfy Test. If the ACP test is not satisfied,
the Company shall decide which one or more of the following methods shall be
employed to satisfy the ACP test:
(i)The Company may make Qualified Non-Elective Contributions to
the Plan;
(iiAfter any recharacterization of Participant Before-Tax
Contributions permitted by paragraph 3.6(d)(ii) is completed, the Participant
After-Tax Contributions (including such recharacterized Participant Before-Tax
Contributions) made by Highly Compensated Employees, together with the net
increase or decrease in the net worth of the Trust Fund attributable to such
contributions, may be returned to such Highly Compensated Employees, without
the consent of either the Highly Compensated Employee or his Spouse, subject to
the rules of subsection (e).
(iiAfter any recharacterization of Participant Before-Tax
Contributions permitted by paragraph 3.6(d)(ii) is completed, the non-vested
Company Matching Contributions allocated to Highly Compensated Employees as of
any date during the Plan Year, together with the net increase or decrease in
the net worth of the Trust Fund attributable to such contributions, may be
forfeited, subject to the rules of subsection (e).
(e) Excess Contributions. If the ACP test is not satisfied and the
Company elects to return certain contributions or forfeit certain Company
Matching Contributions pursuant to paragraphs (d)(ii) and (d)(iii) above, the
following procedure shall be applied to determine the amounts returned or
forfeited. The Highly Compensated Employee(s) with the highest actual
contribution ratio (as defined in the regulations under Code section 401(m))
shall have an amount returned or forfeited until his actual contribution ratio
is reduced to the greater of (i) the actual contribution ratio that causes the
ACP test to be satisfied or (ii) the actual contribution ratio of the Highly
Compensated Employee with the next highest actual contribution ratio. The
process described in the preceding sentence shall continue until the ACP test
is satisfied.
3.6 Contribution Limits for Highly Compensated Employees (ADP Test).
(a) Limits on Contributions. Notwithstanding any provision in this
Plan to the contrary, the actual deferral percentage ("ADP") test of Code
section 401(k)(3) shall be satisfied. Code section 401(k) and the regulations
issued thereunder are hereby incorporated by reference.
(b) Permissible Variations of the ADP Test. To the extent permitted
by the regulations under Code sections 401(m) and 401(k), Participant
Before-Tax Contributions, Qualified Matching Contributions, and Qualified
Non-Elective Contributions may be used to satisfy the ACP test of Section 3.5
if they are not used to satisfy the ADP test.
(c) Advance Limitation of Participant Before-Tax Contributions or
Matching Contributions. The Committee may limit the Participant Before-Tax
Contributions of any Highly Compensated Employee at any time during the Plan
Year (with the result that his share of Company Matching Contributions may be
limited). This limitation may be made, if practicable, whenever the Committee
believes that the limits of this Section or Sections 3.4, 3.5, or 3.7 will not
be satisfied.
(d) Corrections to Satisfy Test. If the ADP test is not satisfied,
the Company shall decide which one or more of the following methods shall be
employed to satisfy the ADP test:
(i)The Company may make Qualified Non-Elective Contributions to
the Plan;
(iiParticipant Before-Tax Contributions of Highly Compensated
Employees, together with the net increase or decrease in the net worth of the
Trust Fund attributable to such contributions, may be recharacterized as
Participant After-Tax Contributions within 2-1/2 months after the close of the
Plan Year, subject to the rules of subsections (e) and (f);
(iiParticipant Before-Tax Contributions of Highly Compensated
Employees, together with the net increase or decrease in the net worth of the
Trust Fund attributable to such contributions, may be distributed to the Highly
Compensated Employee within 12 months after the close of the Plan Year, without
the consent of either the Highly Compensated Employee or his Spouse, subject to
the rules of subsection (e).
(e) Excess Contributions. If the ADP test is not satisfied and the
Company elects to recharacterize or distribute contributions pursuant to
paragraphs (d)(ii) and (d)(iii) above, the following procedure shall be applied
to determine the amounts recharacterized or distributed. The Highly
Compensated Employee(s) with the highest actual deferral ratio (as defined in
the regulations under Code section 401(k)) shall have an amount recharacterized
or distributed until his actual deferral ratio is reduced to the greater of (i)
the actual deferral ratio that causes the ADP test to be satisfied or (ii) the
actual deferral ratio of the Highly Compensated Employee with the next highest
actual deferral ratio. The process described in the preceding sentence shall
continue until the ADP test is satisfied.
(f) Recharacterization. If the Company elects to recharacterize
certain amounts pursuant to paragraph (d)(ii) above, the Committee shall report
the amount recharacterized to the Highly Compensated Employee and the Internal
Revenue Service. The amount recharacterized, when added to any Participant
After-Tax Contributions made by the Highly Compensated Employee, shall not
exceed the maximum possible Participant After-Tax Contribution specified in
subsection 3.2(a).
3.7 Contribution Limits for Highly Compensated Employees (Multiple Use).
(a) Limits on Contributions. Notwithstanding any provision in this
Plan to the contrary, the multiple use test described in the regulations under
Code section 401(m) (which are hereby incorporated by reference) shall be
satisfied.
(b) Corrections to Satisfy Multiple Use Test. If the multiple use
test is not satisfied, the Company shall cause the contributions to the
accounts of the Highly Compensated Employees to be adjusted. To effectuate
this adjustment, the Company may use one or more of the methods described in
paragraphs 3.5(d)(ii), 3.5(d)(iii), 3.6(d)(ii), and 3.6(d)(iii), and may elect
to apply such methods either to all Highly Compensated Employees benefitting
under the Plan or only to those Highly Compensated Employees who are eligible
to participate in both the portion of the Plan subject to Code section 401(k)
and the portion of the Plan subject to Code section 401(m). The Company may
also use any other correction method permitted in the regulations under Code
section 401(m).
3.8 Military Service.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with 414(u) of the Code.
ARTICLE IV
Interests in the Trust Fund
4.1 Participants' Accounts.
The Committee shall establish and maintain separate accounts in the name of
each Participant, but the maintenance of such accounts shall not require any
segregation of assets of the Trust Fund. Each account shall contain the
contributions specified below and the increase or decrease in the net worth of
the Trust Fund attributable to such contributions.
(a) Participant After-Tax Contributions made by each Participant, if
any, together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions, shall be credited to his "Participant
After-Tax Contributions account."
(b) Participant Rollover Contributions made by each Participant, if
any, together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions, shall be credited to his "Participant
Rollover Contributions account."
(c) Each Participant's share of Company Discretionary Contributions,
together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions, shall be credited to his "Company
Contributions account."
(d) Participant Before-Tax Contributions made by each Participant,
together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions, shall be credited to his "Participant
Before-Tax Contributions account."
(e) Each Participant's share of Company Matching Contributions (except
for such contributions as the Company designates as Qualified Matching
Contributions), together with any increase or decrease in the net worth of the
Trust Fund attributable to such contributions, shall be credited to his
"Company Contributions account."
(f) Each Participant's share of Company Matching Contributions that
the Company designates as Qualified Matching Contributions, together with any
increase or decrease in the net worth of the Trust Fund attributable to such
contributions, shall be credited to his "Participant Before-Tax Contributions
account."
(g) Each Participant's share of Qualified Non-Elective Contributions,
together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions, shall be credited to his "Participant
Before-Tax Contributions account."
4.2 Valuation of Trust Fund.
The Trustee shall value the assets of the Trust Fund at least annually, as
of the last day of the Plan Year, and at such other times as may be determined
by the Committee, at their current fair market value and determine the net
worth of the Trust Fund. Such valuation shall not, however, include any
contributions made by the Company or Participants since the preceding Valuation
Date or any unallocated forfeitures. The Trustee shall then determine the
amount of increase or decrease in the net worth of the Trust Fund occurring
since the preceding Valuation Date. Should the Committee determine that the
fair market value as of the next preceding Valuation Date of any class of Stock
not traded on an established market shall not substantially reflect the fair
market value thereof at any time when shares of such class are to be purchased
from the Company or any other person, or at the time of any Company
contribution of shares of such class, a special valuation of such shares shall
be conducted pursuant to this Section 4.2 as of the close of the calendar month
immediately preceding any such purchase or contribution. Any determination
made by the Committee in good faith hereunder with respect to the value of the
Trust Fund, or shares of such class of Stock, or the appropriate time for
valuation hereunder, shall be final and conclusive on all parties hereto.
4.3 Allocation of Increase or Decrease in Net Worth.
The Committee shall, as of each Valuation Date, allocate the increase or
decrease in the net worth of the Trust Fund that has occurred since the
preceding Valuation Date among the Participant's accounts in relation to the
investment options elected by each Participant and the increase or decrease in
each such investment option relative to the Participant's share of each such
investment option.
4.4 Allocation of Participant Contributions.
Except for the temporary investment of Participant After-Tax Contributions,
Participant Before-Tax Contributions, Rollover Contributions, or direct
transfers pursuant to Section 4.7, as of each Valuation Date the Committee
shall first complete the allocations required under Section 4.3. The Committee
shall then credit to the appropriate accounts of each Participant the amount
contributed by him as Participant After-Tax Contributions, or Rollover
Contributions, or direct transfers since the preceding Valuation Date.
4.5 Allocation of Company Contributions.
(a) As of the last day of each quarter, but after any allocations
required by 4.3 and 4.4 as of such date have been completed, the Committee
shall allocate all Company Matching Contributions for such quarter, if any,
among the Company Contributions Accounts of Participants who made Before-Tax
Contributions and/or After-Tax Contributions for such month in proportion to
the Before-Tax Contributions and/or After-Tax Contributions made by each such
Participant up to 5% of the Participant's Compensation and, with respect to
Before-Tax Contributions and/or After-Tax Contributions in excess of 5% of
Compensation, in proportion to 25% of such contributions.
(b) As of the last day of each Plan Year, but after the allocations
required by 4.3 and 4.4 as of such date have been completed, the Committee
shall allocate all Company Discretionary Contributions for such Plan Year and
all forfeitures occurring during such Plan Year (to the extent provided in
Section 5.1(e)) among the Company Contributions accounts of Participants who
made Before-Tax Contributions and/or After-Tax Contributions during such Plan
Year in the proportion which the Compensation of each such Participant for such
Plan Year bears to the aggregate Compensation of all such Participants for such
Plan Year. If the Company makes a Company Discretionary Contribution for a
Plan Year prior to the end of such Plan Year, the contribution shall be held in
a suspense account in the Trust Fund until the end of the Plan Year and shall
then be allocated to Participants' accounts in accordance with the foregoing
provisions of this Section 4.5.
4.6 Allocation of Qualified Non-Elective Contributions.
As of the last day of each Plan Year, the Committee shall first complete
the allocations required by Sections 4.3, 4.4, and 4.5. The Committee shall
then allocate all Qualified Non-Elective Contributions for such Plan Year to
the Participant Before-Tax Contributions accounts of those Participants
eligible to receive an allocation of such contributions, as follows:
(a) Qualified Non-Elective Contributions shall be allocated to the
Participant Before-Tax Contributions account of the Participant with the least
Compensation, until either the Qualified Non-Elective Contributions are
exhausted or the limit of Section 3.4 is reached for that Participant.
(b) The remaining Qualified Non-Elective Contributions, if any, shall
be allocated to the Participant Before-Tax Contributions account of the
Participant with the next lowest Compensation, until either the Qualified
Non-Elective Contributions are exhausted or the limit of Section 3.4 is reached
for that Participant.
(c) The procedure in subsection (b) shall be repeated until all
Qualified Non-Elective Contributions have been allocated.
The Participants who are eligible to receive an allocation of Qualified
Non-Elective Contributions are all those who received credit for one or more
Hours of Service during the Plan Year and are Nonhighly Compensated Employees.
Notwithstanding the preceding sentence, an individual who is a member of a
family group described in paragraph 3.5(b)(v) is not eligible to receive an
allocation of Qualified Non-Elective Contributions.
4.7 Temporary Investment of Participant Contributions.
When Participant Before-Tax Contributions, Participant After-Tax
Contributions, Rollover Contributions, and direct transfers are paid to the
Trustee, they may be maintained in segregated account(s) (for the purpose of
equitable allocation of any increase or decrease in the net worth of the Trust
Fund) until the Valuation Date upon which such contributions are credited
(pursuant to Section 4.4) to the appropriate account(s). Income on the
segregated account(s) shall be added to the principal thereof for transfer
pursuant to Section 4.4 and shall not be allocated pursuant to Section 4.3.
ARTICLE V
Amount of Benefits
5.1 Vesting Schedule - Forfeitures.
(a) Vesting. A Participant shall have a fully vested and
nonforfeitable interest in all his account(s) upon his Normal Retirement Age,
his death while employed or on an approved leave of absence, or his termination
of employment because of a Disability. In all other instances his vested
interest shall be calculated according to the following rules.
(i)Rollover Contributions Account, Participant After-Tax
Contributions Account, and Participant Before-Tax Contributions Account. A
Participant shall be fully vested at all times in his Participant After-Tax
Contributions account, Participant Before-Tax Contributions account, and
Rollover Contributions account.
(iiCompany Contributions Account. A Participant shall become
vested in his Company Contributions account in accordance with the following
schedule:
Years of Service Vested Percentage
0 0
1 33-1/3
2 66-2/3
3 100
(b) Forfeitures. A forfeiture of the non-vested portion of a Highly
Compensated Employee's Company Matching Contribution may occur in any Plan Year
to satisfy the ACP test of Section 3.5, as described in the regulations under
Code section 401(m). In addition, a Participant's non-vested interest shall be
forfeited at the end of the earliest of the following Plan Years:
(i)the Plan Year in which the Participant receives a
distribution of his entire vested interest in his Company Contributions
account;
(ii)the Plan Year in which the Participant terminates
employment, if the Participant terminates employment with the Company while he
is 0% vested; for this purpose, the Participant shall be deemed to have
received a distribution of his vested interest on the date the Participant
terminates employment with the Company; or
(iii)the Plan Year in which the Participant incurs a five-year
Break in Service.
(c) Restoration of Forfeitures. A forfeiture of the non-vested
portion of a Highly Compensated Employee's Company Matching Contribution that
occurred to satisfy the ACP test of Section 3.5 shall not be restored. Other
forfeitures shall be restored under the following conditions.
(i)If a Participant is rehired before he incurs a five-year
Break in Service, and the Participant has received a distribution of his entire
vested interest in his Company Contributions account (with the result that the
Participant forfeited his non-vested interest in such account), then the
Participant may repay to the Plan the entire distribution, without interest,
within five years of his date of reemployment. If timely repayment is made,
the exact amount of the forfeiture shall be restored to the Participant's
account. If timely repayment is not made, no forfeiture shall be restored.
(iiIf a Participant was 0% vested at the time he terminated
employment with the Company, and he is rehired before he incurs a five-year
Break in Service, then the Company shall restore the exact amount forfeited
from his Company Contributions account.
(iiIf a Participant is rehired before he incurs a five-year
Break in Service, and the Participant has not received a distribution of his
entire vested interest in his Company Contributions account (but the
Participant has forfeited his non-vested interest in such account), then the
Company shall restore the exact amount forfeited from such account.
(ivIf a Participant is rehired after he incurs a five-year
Break in Service, then no amount forfeited from his Company Contributions
account shall be restored to such account.
(v)All the rights, benefits, and features available to the
Participant when the forfeiture occurred shall be available with respect to the
restored forfeiture.
(d) Method of Forfeiture Restoration. Forfeitures that are restored
pursuant to subsection (c) shall be accomplished by either (i) a special
Company Contribution to the Plan, or (ii) an allocation of the forfeitures
occurring during the Plan Year pursuant to subsection (e), or (iii) a
combination of (i) and (ii). The Company has the sole discretion to decide
which method shall be used to restore forfeitures.
(e) Allocation of Forfeitures. As of the last day of each Plan Year,
the Company shall decide how to allocate the forfeitures that occurred during
the Plan Year. Forfeitures may be:
(i)treated as a Company Discretionary Contribution and allocated
pursuant to Section 4.5; or
(iitreated as a Company Matching Contribution and allocated
pursuant to subsection 3.1(c); or
(iiused to restore forfeitures pursuant to subsection (d); or
(ivtreated as Qualified Non-Elective Contributions and
allocated pursuant to Section 4.6.
5.2 Credits for Pre-Break Service.
(a) Company Contributions Made After Reemployment.
(i)A Participant who is vested in any portion of his Company
Contributions account, who incurs a Break in Service, and who is thereafter
reemployed, shall receive credit for vesting purposes for Years of Service
prior to his Break in Service upon completing a Year of Service after such
Break in Service.
(iiA Participant who is not vested in any portion of his
Company Contributions account, who incurs a Break in Service, and who is
thereafter reemployed, shall receive credit for vesting purposes for Years of
Service prior to his Break in Service only if (A) he completes a Year of
Service after such Break in Service, and (B) the number of consecutive one-year
Breaks in Service is less than the greater of five or the aggregate number of
Years of Service before such break.
(b) Company Contributions Made Prior to Termination. Years of Service
after a Participant has incurred a five-year Break in Service shall be
disregarded in determining the vested percentage in a Participant's Company
Contributions account at the time of the break.
5.3 Distribution of Vested Amounts.
(a) Upon termination of a Participant's employment, the distributable
amount of the Participant's account(s) shall be paid pursuant to Article VI.
The non-vested portion of the Participant's Company Contributions account shall
be forfeited as provided in subsection 5.1(b).
5.4 Transfers - Portability.
If any other employer adopts this or a similar profit sharing plan and
enters into a reciprocal agreement with the Company that provides that (a) the
transfer of a Participant from such employer to the Company (and vice versa)
shall not be deemed a termination of employment for purposes of the plans, and
(b) service with either or both employers shall be credited for purposes of
vesting under both plans, then the transferred Participant's account shall be
unaffected by the transfer, except, if deemed advisable by the Committee, it
may be transferred to the trustee of the other plan.
5.5 Reemployment - Separate Account.
If a Participant returns to employment with the Company before receiving
the entire vested portion of his Company Contributions account, the vested
portion that has not been distributed shall be held in a separate Company
Contributions account for such Participant. The Participant shall be fully
vested in such account and no further Company Contributions shall be allocated
to that account. In all other respects, such account shall be treated as a
Company Contributions account for purposes of the Plan. A new Company
Contributions account shall be established to which all Company Contributions
made after date of reemployment shall be allocated. If a Participant becomes
fully vested in two or more Company Contributions accounts, all such amounts
shall be merged into one account.
ARTICLE VI
Distribution of Benefits
6.1 Beneficiaries.
Each Participant (or, if the Participant has died, his beneficiary) shall
file with the Committee a designation of the beneficiaries and contingent
beneficiaries to whom the distributable amount (determined in Section 6.3)
shall be paid in the event of his death. A beneficiary designation may be
changed by the Participant (or beneficiary) at any time and without the consent
of any previously designated beneficiary; however, if the Participant is
married, the Participant's Spouse shall be the beneficiary designated to
receive the benefits payable under this Article VI unless the Participant's
Spouse has consented to the designation of a different beneficiary. To be
effective, the Spouse's consent must be in writing, witnessed by a notary
public, and filed with the Committee. Any such election shall be effective
only as to the Spouse who signed the election. Effective as of the date of
execution of this amendment and restatement, if a Participant has designated
his Spouse as his beneficiary, and the Participant and this Spouse subsequently
divorce, then the beneficiary designation shall be void and of no effect on the
day such divorce is final. In the absence of an effective beneficiary
designation as to any portion of the distributable amount of a Participant's
account(s), such amount shall be paid to the Participant's surviving Spouse, or
if none, to his surviving children and issue of deceased children by right of
representation, or if none, to his surviving parents, or if none, to his
estate.
6.2 Consent.
(a) If the Participant's account(s) have an aggregate value of $3,500
or less (calculated in accordance with applicable Treasury regulations), and if
distributions pursuant to Section 6.5 have not begun, then the Committee shall
distribute the distributable amount (determined in Section 6.3) of the
Participant's account(s) without the Participant's (or his Spouse's) consent.
Any such distribution shall be in the form of a lump sum. No such distribution
shall be made until after the Participant has terminated employment with the
Company. Any such distribution shall be made to the Participant, or, if he has
died, to his beneficiary, as determined in Section 6.1.
(b) If the Participant's account(s) have an aggregate value greater
than $3,500 (calculated in accordance with applicable Treasury regulations),
then, except as provided in subsection 6.5(b) or 6.5(d), any distribution of
the Participant's account(s) shall only be made with the consent of the
Participant (or, if the Participant has died, his beneficiary). To be
effective, the consent to the time of distribution must be in writing, signed
by the Participant (or beneficiary), and filed with the Committee within the
90-day period prior to the date the distribution is to commence. A consent once
given shall be irrevocable once distribution has begun.
6.3 Distributable Amount.
The distributable amount of the Participant's account(s) is the vested
portion of his account(s) (as determined by Article V) as of the Valuation Date
coincident with or next preceding the date distribution is made to the
Participant or beneficiary, reduced by any amount that is payable to an
Alternate Payee pursuant to Section 13.9, and reduced by the outstanding
balance of any Plan loan for which the Participant has pledged his account(s).
Notwithstanding the foregoing, the distributable amount is zero for a
Participant with an outstanding loan for which he has pledged his account(s).
6.4 Manner of Distribution.
The distributable amount shall be paid in a lump sum distribution (other
than an annuity); provided that any portion of a Participant's accounts that is
invested in Stock shall be distributed in whole shares of Stock with any
fractional shares converted to and paid in cash.
6.5 Time of Distribution.
All distributions except immediate cash-outs under Section 6.2 and
in-service withdrawals under Section 7.1 shall be subject to the following
rules. Immediate cash-outs shall be subject to the direct transfer rules
discussed in subsection (f).
(a) Earliest Date of Distribution. Unless an earlier distribution is
required by subsection (c), the earliest date that a Participant may elect to
receive a distribution is as follows.
(i)Retirement. Upon termination of employment on or after his
Normal Retirement Age, the Participant may elect to receive a distribution as
soon as practicable after the date on which all allocations required by
Sections 4.2, 4.3, 4.4, 4.5 and 4.6 for the Plan Year in which the Participant
terminated employment are completed.
(iiDisability. If a Participant terminates employment with the
Company because of a Disability, the Participant may elect to receive a
distribution as soon as practicable after the date on which all allocations
required by Sections 4.2, 4.3, 4.4, 4.5 and 4.6 for the Plan Year in which the
Participant terminated employment are completed.
(iiDeath. After the death of a Participant, the Participant's
beneficiary may elect to receive a distribution as soon as practicable after
the date on which all allocations required by Sections 4.2, 4.3, 4.4, 4.5 and
4.6 for the Plan Year in which the Participant died are completed.
(ivTermination of Employment. If a Participant terminates
employment other than by dying, retiring, or incurring a Disability, the
Participant may elect to receive a distribution at any time after (A) the date
on which all allocations required by Sections 4.3, 4.4, 4.5 and 4.6 for the
Plan Year during which termination of employment occurs are completed or (B)the
last day of the calendar quarter in which the Participant terminated
employment. The Participant shall elect whether the distribution shall be made
under (A) or (B) of the preceding sentence. Such date shall be as soon as
practicable after the close of such year or calendar quarter. If the
Participant does not elect to receive a distribution as soon as practicable
after the close of the Plan Year in which the Participant's employment was
terminated, then the Participant may not elect to receive a distribution until
after he has attained the later of Normal Retirement Age or age 62. No amount
may be distributed to a Participant from his Participant Contributions account
unless at least one of the following conditions is satisfied: (A) the
Participant has separated from service (within the meaning of Code section
401(k)(2)(b)(i)(I)); (B) the Participant's employer was Unique Mobility, Inc.
or a corporate Affiliated Entity that disposed of substantially all of the
assets used in one of its trades or businesses and the Participant is employed
by the corporate purchaser of those assets; (C) Unique Mobility, Inc. or a
corporate Affiliated Entity disposes of its interest in a subsidiary employing
the Participant and the Participant continues employment with the subsidiary;
(D) the Participant has attained age 59-1/2; or (E) the Plan terminates and the
Company does not establish or maintain any other defined contribution plan
(other than an employee stock ownership plan as defined in Code section 4975(e)
(7)). If at least one of the conditions is satisfied, distribution shall be
made in a lump sum.
(v)During Employment. A Participant may not obtain a
distribution while employed by the Company, except as provided in subsection(c)
(relating to the required minimum distribution at a Participant's Required
Beginning Date) or Article VII (relating to in-service withdrawals).
(b) If Participant Fails to Elect a Date of Distribution. Unless a
Participant otherwise elects, the Participant shall receive a distribution no
later than 60 days after the close of the latest of: (i) the Plan Year in
which the Participant attains Normal Retirement Age; (ii) the Plan Year in
which occurs the tenth anniversary of the year in which the Participant
commenced participationin the Plan; and (iii) the Plan Year in which the
Participant terminates employment with the Company.
(c) Latest Date of Distribution. Distribution must be made in a lump
sum no later than (i) April 1 of the calendar year following the calendar year
in which the Participant attains age 70-1/2 or (ii) if the Participant so
elects, the Participant's Required Beginning Date.
(d) Distribution Upon Participant's Death. Distribution shall be made
in a lump sum to the Participant's beneficiary by the end of the calendar year
containing the fifth anniversary of the Participant's death. However, if the
beneficiary is the Participant's surviving Spouse, the beneficiary may elect to
defer distribution until the end of the calendar year in which the Participant
would have attained age 70, or, if later, the end of the calendar year
containing the first anniversary of the Participant's death. If the surviving
Spouse makes such an election but dies before receiving the lump sum
distribution, then such Spouse's beneficiary must receive a lump sum
distribution by the end ofthe calendar year containing the fifth anniversary of
such Spouse's death.
(e) Alternate Payee. The earliest date that an Alternate Payee may
receive a distribution shall be determined pursuant to Section 13.9.
(f) Direct Rollover Election. A Participant, an Alternate Payee who
is the Spouse or former Spouse of the Participant, or a surviving Spouse of a
deceased Participant (collectively, the "distributee") may direct the Trustee
to pay all or any portion of his "eligible rollover distribution" to an
"eligible retirement plan" in a "direct rollover." Within a reasonable period
of time before an eligible rollover distribution, the Committee shall inform
the distributee of this direct rollover option, the appropriate withholding
rules, other rollover options, the options regarding income taxation, and any
other information required by Code section 402(f).
An eligible rollover distribution is any distribution other than (i)
distributions required under Code section 401(a)(9), (ii) distributions of
amounts that have already been subject to federal income tax (such as defaulted
loans), (iii) installment payments in a series of substantially equal payments
made at least annually and (A) made over a specified period of ten or more
years, (B) made for the life or life expectancy of the distributee, or (C) made
for the joint life or joint life expectancy of the distributee and his
designated beneficiary, (iv) a distribution to satisfy the limits of Code
section 415 or 402(g), (v) a deemed distribution of a defaulted loan from this
Plan, (vi) a distribution to satisfy the ADP test, or (vii) any other actual or
deemed distribution specified in the regulations issued under Code section
402(c).
For a Participant or an Alternate Payee who is the Spouse or former Spouse
of the Participant, an eligible retirement plan is an individual retirement
account or annuity described in Code section 408(a) or 408(b), an annuity plan
described in Code section 403(a), or the qualified trust of a defined
contribution plan that accepts eligible rollover distributions. For a
surviving Spouse of a deceased Participant, an eligible retirement plan is an
individual retirement account or annuity.
A direct rollover is a payment by the Trustee to the eligible retirement
plan specified by the distributee.
ARTICLE VII
Withdrawals and Loans
7.1 In-Service Withdrawals.
A Participant may withdraw amounts from his account(s) while he is employed
by the Company or an Affiliated Entity only as provided in this Section and
subsection 6.5(c). To request a withdrawal, a Participant must submit a
written request to the Committee.
(a) Participant After-Tax Contributions Account. A Participant may
withdraw all or any portion of his Participant After-Tax Contributions account,
subject to the limits of subsection (e).
(b) Participant Before-Tax Contributions Account. A Participant may
withdraw all or any portion of his Participant Before-Tax Contributions
account, subject to the limits of subsection (d), provided that one of the
following conditions is met:
(i)The Participant has attained age 59-1/2; or
(iiThe Company sells or otherwise disposes of substantially all
its assets (within the meaning of Code section 409(d)(2)) that it used in its
trade or business to an unrelated corporation; or
(iiThe Company sells or otherwise disposes of its interest in a
subsidiary (within the meaning of Code section 409(d)(3)) to an unrelated
person; or
(ivWhile employed by the Company, the Participant has an
immediate and heavy financial need, as defined in subparagraph (A), and the
withdrawal is needed to satisfy the financial need, as explained in
subparagraph(B).
(A) Financial Need. The determination of whether a
Participant has an immediate and heavy financial need is to be made on the
basis of all relevant facts and circumstances. A financial need shall not fail
to qualify as immediate and heavy merely because such need was reasonably
foreseeable or voluntarily incurred by the Participant. A distribution will be
deemed to be made on account of an immediate and heavy financial need of a
Participant if the distribution is on account of: (I) medical expenses
described in Code Section 213(d) incurred by the Participant, the Participant's
spouse or any dependents of the Participant (as defined in Code Section 152);
(II) purchase (excluding mortgage payments) of a principal residence for the
Participant; or (III) payment of tuition for the next semester or quarter of
post-secondary education for the Participant, his spouse, children, or
dependents; or (IV) the need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the Participant's
principal residence.
(B) Satisfaction of Need. The withdrawal must either be
deemed necessary to satisfy the Participant's financial need as determined in
clause (I) or the withdrawal must actually be needed to satisfy the
Participant's financial need as determined in clause (II).
(I) Deemed Satisfaction of Need. In lieu of a
representation by the Participant as set forth above, the Plan Administrator
may deem a distribution to be necessary to satisfy an immediate and heavy
financial need of the Participant if all of the following requirements are
satisfied: (1) the distribution is not in excess of the immediate and heavy
financial need of the Participant; (2) the Participant has obtained all
distributions, other than hardship distributions, and all non-taxable loans
currently available under all Plans maintained by the Company; (3) the
Participant's deferrals and additional Participant contributions under this
Plan and all other plans maintained by the Company will be suspended for at
least 12 months after receipt of the hardship distribution; and (4) the
Participant may not make, under this Plan and all other plans maintained by the
Company, Participant deferral contributions for the Participant's taxable year
immediately following the taxable year of the hardship distribution in excess
of the applicable limit under Code Section 402(g) for such next taxable year
less the amount of such Participant's Before-Tax Contributions for the taxable
year of the hardship distribution.
(II) Actual Determination of Need. A distribution will
not be treated as necessary to satisfy an immediate and heavy financial need of
a Participant to the extent the amount of the distribution is in excess of the
amount required to relieve the financial need or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant. This determination is to be made on the basis of all relevant
facts and circumstances. A distribution generally may be treated as necessary
to satisfy a financial need if the Company reasonably relies upon the
Participant's representation that the need cannot be relieved (1) through
reimbursement or compensation by insurance or otherwise; (2)
by reasonable liquidation of the
Participant's assets, to the extent such liquidation would not itself cause an
immediate and heavy financial need; (3) by cessation of elective contributions
or Participant contributions under the Plan; or (4) by other distributions or
non-taxable (at the time of the loan) loans from Plans maintained by the
Company or by any other employer, or by borrowing from commercial sources on
reasonable commercial terms. For purposes of the foregoing, the Participant's
resources shall be deemed to include those assets of his spouse and minor
children that are reasonably available to the Participant.
A Participant shall elect, at the time of application for a hardship
withdrawal, to either be deemed to have an immediate and heavy financial need
and to thereby be subject to the foregoing restrictions, or to furnish the
above described representations.
(C) The Committee shall make all decisions under this Section
7.1(b)(iv), and in particular the decisions as to the existence of financial
hardship and the amount required to meet such hardship, in accordance with
uniform and nondiscriminatory standards which shall be applied in a similar
fashion to all Participants in similar circumstances. The Committee may
require a Participant to provide such information regarding his or her
financial situation as the Committee shall deem appropriate in order to make a
determination with respect to an application for a hardship distribution.
(c) Notwithstanding subsections (a) and (b), a Participant who has
attained Normal Retirement Age may withdraw all or any portion of all his
account(s), subject to the limits of subsection (e).
(d) A Participant may not withdraw any amount that is subject to a
Qualified Domestic Relations Order or that has been pledged as security for a
loan. The Committee shall issue such rules as to the frequency of withdrawals,
and withdrawal procedures, as it deems appropriate. The Committee may postpone
the withdrawal until after the next Valuation Date. The Committee may have a
special valuation of the Trust Fund performed before a withdrawal is permitted.
The Committee may charge a fee for the withdrawal as well as a fee for having a
special valuation performed.
(e) Withdrawals shall be made in cash. Upon any such withdrawal,
there shall be deducted any withdrawal fee charged by the Trustee.
7.2 Loans to Participants.
The Committee is authorized, as one of the Plan fiduciaries responsible for
investing Plan assets, to establish a Participant loan program. The Committee
shall administer the Plan's loan program in accordance with the following
rules:
(a) Loans are available, on a reasonably equivalent basis, only to
Participants who are active Employees or who are parties-in-interest (within
the meaning of ERISA section 3(14)).
(b) Notwithstanding subsection (a), no loan shall be made to any
individual while the individual falls into any of the following categories, nor
shall any loan be made of amounts accrued while such individual fell into any
of the following categories:
(i)owner-employee within the meaning of Code section
401(c)(3);or
(iiEmployee or officer who owns (or is considered as owning
within the meaning of Code section 318(a)(1) on any day during the taxable year
of the Company or Affiliated Entity) 5% or more of the stock of the Company or
any Affiliated Entity that is an S corporation; or
(iisibling (of the whole- or half-blood), spouse, ancestor or
lineal descendant of any individual described in paragraphs (i) or (ii),
unless such individual has furnished to the Committee a written exemption,
granted by the Department of Labor, covering the loan from the prohibited
transaction provisions of ERISA and the Code.
(c) A Participant shall apply for a loan by submitting a written
application to the Committee specifying the amount the Participant wishes to
borrow.
(d) Maximum Loan Amount.
(i)No loan shall be made that would result in a total
outstanding indebtedness under this plan and all other plans maintained by the
Company and Affiliated Entities in excess of the lesser of:
(A) $50,000, reduced by the excess (if any) of (I) the
highest outstanding balance of loans from this Plan and all other plans
maintained by the Company and Affiliated Entities during the one-year period
ending on the day before such loan is made, over (II) the outstanding balance
of loans from this Plan and all other plans maintained by the Company and
Affiliated Entities on the date such loan is made; or
(B) one-half the vested portion of the Participant's
account(s) under this Plan and all other qualified plans maintained by the
Company and Affiliated Entities.
(iiThe total outstanding indebtedness under this Plan shall not
exceed one-half the vested portion of the Participant's account(s) under this
Plan, less any portion allocated to an Alternate Payee.
(iiNotwithstanding the foregoing, the Committee may, in its sole
discretion, establish lesser limits on the amounts that may be borrowed, which
limits shall be applied in a non-discriminatory manner.
(ivNo loan shall be made of amounts that are required to be
distributed, pursuant to subsection 6.4(b) or 6.5(c), prior to the end of the
term of the loan.
(v)For purposes of this subsection (d), the vested portion of
the Participant's account(s) under this Plan and all other plans maintained by
the Company and Affiliated Entities shall be determined without regard to any
amounts accrued while the Participant was ineligible to obtain a loan (as
described in subsection (b)).
(viFor purposes of this subsection (d), the term "Affiliated
Entity" shall include any entity that would be an Affiliated Entity if the
phrase "more than 50%" were substituted for the phrase "at least 80%" each
place it occurs in Code section 1563(a)(1).
(e) Each loan shall be approved only after the Committee determines
that the Participant intends to repay the loan.
(f) The Committee may establish a minimum amount that a Participant
may borrow. Such minimum shall not exceed $1,000.
(g) The Committee may impose a loan origination fee and loan
maintenance fees.
(h) The loan shall bear reasonable interest as determined by the
Committee (or its agent) by contacting a bank of its choice to ascertain the
appropriate rate as of the date the loan documents are prepared.
(i) The maximum term for a loan is five years unless the proceeds of
such loan are used to acquire the principal residence of the Participant, in
which case the maximum term for the loan is ten years. Furthermore, the term
of the loan shall not extend beyond a Participant's Required Beginning Date.
A Participant who has an outstanding loan must repay the loan no later than the
day before he becomes ineligible to borrow from the Plan pursuant to
subsection (b).
(j) The loan shall carry substantially level amortization provisions
(with payments not less frequently than quarterly) for repayment in full over
its term[, except that loan repayments will be suspended under this plan as
permitted under section 414(u) of the Code].
(k) The loan shall be evidenced by a promissory note. The loan must
be fully secured. No Participant whose account(s) are so pledged may obtain
distribution of any portion of his account(s) that has been pledged. The
rights of the Trustee under such pledge shall have priority over all claims of
the Participant, his beneficiaries and creditors.
(l) If the Participant is an active Employee, loans shall be repaid
through payroll withholding unless the Participant is pre-paying all or part of
his loan, in which case the pre-payment need not be through payroll
withholding.
(m) Loans shall be treated as a directed investment of the
Participant under Section
9.3.
(n) No distribution may be made under Article VI to any Participant
who has an outstanding loan.
(o) All loans shall be due and payable upon separation from service.
(p) The events constituting a default are:
(i)non-payment of a loan installment within 30 days of its due
date; and
(iithe filing of a bankruptcy action against the Participant.
(q) If a default is not cured within five days, the Committee may, in
addition to all other remedies, apply the Participant's account(s) toward
payment of the loan; however, the Trustee may not exercise such right of
set-off until the Participant's account(s) under the Plan have become payable,
pursuant to Section 6.5.
ARTICLE VIII
Allocation of Responsibilities - Named Fiduciaries
8.1 No Joint Fiduciary Responsibilities.
Unique Mobility, Inc., the Trustee(s), and the Committee shall be the named
fiduciaries under the Plan and Trust agreement and shall be the only named
fiduciaries thereunder. The fiduciaries shall have only the responsibilities
specifically allocated to them herein or in the Trust agreement. Such
allocations are intended to be mutually exclusive and there shall be no sharing
of fiduciary responsibilities. Whenever one named fiduciary is required by the
Plan or Trust agreement to follow the directions of another named fiduciary,
the two named fiduciaries shall not be deemed to have been assigned a shared
responsibility, but the responsibility of the named fiduciary giving the
directions shall be deemed his sole responsibility, and the responsibility of
the named fiduciary receiving those directions shall be to follow them insofar
as such instructions are on their face proper under applicable law.
8.2 The Company.
The Company shall be responsible for: (a) making the Company Contributions
and Qualified Non-Elective Contributions hereunder; (b) certifying to the
Trustee the names and specimen signatures of the members of the Committee
acting from time to time; (c) keeping accurate books and records with respect
to its Employees and their Compensation and furnishing such data to the
Committee; (d) selecting agents and fiduciaries to operate and administer the
Plan and Trust; and (e) reviewing periodically the performance of such agents,
managers and fiduciaries.
8.3 The Trustee.
The Trustee shall be responsible for: (a) the investment of the Trust Fund
in accordance with the directions of the Committee; (b) the custody and
preservation of Trust assets delivered to it; and (c) the payment of such
amounts from the Trust Fund as the Committee shall direct.
8.4 The Committee - Plan Administrator.
Unique Mobility, Inc. shall appoint an administrative Committee consisting
of not fewer than three persons who may be, but need not be, Participants,
officers, directors, or Employees of the Company. If the Company does not
appoint a Committee, the Company shall act as the Committee under the Plan.
The members of the Committee shall hold office at the pleasure of the Company
and shall serve without compensation. The Committee shall be the "Plan
Administrator" as defined in section 3(16)(A) of ERISA. It shall be
responsible for establishing and implementing a funding policy consistent with
the objectives of the Plan and with the requirements of ERISA. This
responsibility shall include establishing (and revising as necessary)
short-term and long-term goals and requirements pertaining to the financial
condition of the Plan, communicating such goals and requirements to the persons
responsible for the various aspects of Plan operations and monitoring
periodically the implementation of such goals and requirements. The Committee
shall direct the Trustee concerning the investment of the Trust Fund to the
extent provided in subsection 9.3(d).
8.5 Committee to Construe Plan.
(a) The Committee shall administer the Plan and shall have all power
and authority necessary for that purpose, including, but not by way of
limitation, the discretion and power to interpret the Plan, to determine the
eligibility, status, and rights of all persons under the Plan, and in general
to decide any dispute and all questions arising in connection with the Plan.
The Committee shall direct the Trustee concerning all distributions from the
Trust Fund, in accordance with the provisions of the Plan, and shall have such
other powers in the administration of the Trust Fund as may be conferred upon
it by the Trust agreement. The Committee shall maintain all Plan records
except records of the Trust Fund.
(b) The Committee may adjust the account(s) of any Participant or
former Participant, in order to correct errors and rectify omissions, in such
manner as the Committee believes will best result in the equitable and
nondiscriminatory administration of the Plan.
8.6 Organization of Committee.
The Committee shall elect a chairman and shall adopt such rules as it deems
desirable for the conduct of its affairs and for the administration of the
Plan. It may appoint agents (who need not be members of the Committee) to whom
it may delegate such powers as it deems appropriate, except that any dispute
shall be determined by the Committee. The Committee may make its
determinations with or without meetings. It may authorize one or more of its
members or agents to sign instructions, notices and determinations on its
behalf. The action of a majority of the Committee shall constitute the action
of the Committee.
8.7 Agent for Process.
The chairman of the Committee shall be agent of the Plan for service of all
process.
8.8 Indemnification of Committee Members.
The Company shall indemnify each member of the Committee against any and
all claims, loss, damages, expense and liability arising from any action or
failure to act, except when the same is judicially determined to be due to the
gross negligence or willful misconduct of such member.
ARTICLE IX
Trust Agreement - Investments
9.1 Trust Agreement.
The Company has entered into a Trust agreement to provide for the holding,
investment and administration of the funds of the Plan. The Trust agreement
shall be part of the Plan, and the rights and duties of any person under the
Plan shall be subject to all terms and provisions of the Trust agreement.
9.2 Expenses of Trust.
(a) Except as provided in subsection (b) below, all taxes upon or in
respect of the Trust shall be paid by the Trustee out of the Trust assets. All
expenses of administering the Trust shall be paid by the Trustee, pursuant to
the written direction of the Committee, out of the Trust assets to the extent
they are not paid by the Company. No fiduciary shall receive any compensation
for services rendered to the Plan if the fiduciary is being compensated on a
full time basis by the Company.
(b) All expenses of individually directed transactions in Trust
assets, including without limitation the Trustee's transaction fee, brokerage
commissions, transfer taxes, interest on insurance policy loans, and any taxes
and penalties that may be imposed as a result of a Participant's investment
direction, shall be assessed against the account(s) of the Participant
directing such transactions. Any income or excise tax imposed as a result of
an individually directed transaction shall be assessed against the account(s)
of the Participant or beneficiary directing such transaction.
9.3 Investments.
(a) Section 404(c) Plan. The Plan is intended to be a plan described
in ERISA section 404(c). To the extent that a Participant, beneficiary or
Alternate Payee exercises control over the investment of his accounts, no
person who is a fiduciary shall be liable for any loss, or by reason of any
breach, that is the direct and necessary result of the Participant's,
beneficiary's or Alternate Payee's exercise of control.
(b) Directed Investments. A Participant's accounts shall be invested,
upon the written direction of each Participant, in 10% increments in any one or
more of a series of investment funds established by the Trustee upon the
written direction of the Committee. One such fund may, at the sole discretion
of the Committee, consist of shares of Stock. If so directed by Participants,
up to 100% of the accounts under the Plan may be invested in Stock. The funds
available for investment and the principal features thereof, including a
general description of the investment objectives, the risk and return
characteristics, and the type and diversification of the investment portfolio
of each fund, shall be communicated to the Participants in the Plan from time
to time and any changes in such funds shall be immediately communicated to all
Participants. The beneficiary of a deceased Participant shall direct the
investment of the Participant's accounts and shall have the same rights and
responsibilities as a Participant has pursuant to this Article. If a separate
account is established for an Alternate Payee and if the Alternate Payee does
not receive an immediate distribution from the Plan, the Alternate Payee shall
have the right to direct the investment of the separate account and shall have
the same rights and responsibilities as a Participant has pursuant to this
Article.
(c) Change in Investment Directions. Participants, beneficiaries and
Alternate Payees may change their investment directions, in 10% increments, in
writing or by voice-response with written confirmation, with respect to
investment of new contributions and with respect to the investment of existing
amounts allocated to accounts at any time. Such changes shall be effective,
prospectively, as of the time established by the Committee. The Committee
shall establish procedures for giving investment directions, which shall be
communicated to Participants, beneficiaries and Alternate Payees.
(d) Absence of Directions. To the extent that a Participant,
beneficiary or Alternate Payee fails to affirmatively direct the investment of
his accounts, the Committee shall direct the Trustee in writing concerning the
investment of such accounts. The Committee shall act by majority vote. Any
dissenting member of the Committee shall, having registered his dissent in
writing, thereafter cooperate to the extent necessary to implement the decision
of the Committee.
ARTICLE X
Matters Affecting Company Stock
10.1 Voting, Etc.
The shares of Stock in a Participant's, beneficiary's or Alternate Payee's
accounts, whether or not vested, may be voted by the Participant, beneficiary
or Alternate Payee to the same extent as if duly registered in the
Participant's, beneficiary's or Alternate Payee's name. The Trustee or its
nominee in which the shares are registered shall vote the shares solely as
agent of the Participant, beneficiary or Alternate Payee and in accordance with
the instructions of the Participant, beneficiary or Alternate Payee and shall
not vote the shares unless instructed by the Participant to do so. Each
Participant, beneficiary or Alternate Payee who has Stock allocated to his
accounts shall direct the Trustee concerning the tender (as provided below) and
the exercise of any other rights appurtenant to the Stock. The Trustee shall
follow the directions of the Participant, beneficiary or Alternate Payee.
10.2 Notices.
The Company shall cause to be mailed or delivered to each Participant,
beneficiary and Alternate Payee copies of all notices and other communications
sent to the shareholders of the Company at the same times so mailed or
delivered by the Company to its other shareholders.
10.3 Retention/Sale of Company Stock and Other Securities.
The Trustee is authorized and directed to retain the Stock and any other
securities of the Company acquired by the Trust except as follows:
(a) In the normal course of Plan administration, the Trustee shall
sell Stock to satisfy Plan administration and distribution requirements as
directed by the Committee or in accordance with provisions of the Plan
specifically authorizing such sales.
(b) In the event of a transaction involving the Stock evidenced by the
filing of Schedule 14D-1 with the Securities and Exchange Commission ("SEC") or
any other similar transaction by which any person or entity seeks to acquire
beneficial ownership of 50% or more of the shares of Stock outstanding and
authorized to be issued from time to time under the Company's articles of
incorporation ("tender offer"), the Trustee shall sell, convey, or transfer
Stock pursuant to written instructions of Participants, beneficiaries and
Alternate Payees delivered to the Trustee in accordance with the following
Sections 10.4 through 10.15. For purposes of such provisions, the term
"filing date" means the date relevant documents concerning a tender offer are
filed with the SEC or, if such filing is not required, the date the Trustee
receives actual notice that a tender offer has commenced.
(c) If the Company makes any distribution of securities of the Company
with respect to the shares of Stock held in the Plan, other than additional
shares of Stock (any such securities are hereafter referred to as
"stock rights"), the Trustee shall sell, convey, transfer or exercise such
stock rights pursuant to written instructions of Participants, beneficiaries
and Alternate Payees delivered to the Trustee in accordance with the following
Sections of this Article.
10.4 Tender Offers.
(a) Allocated Stock. In the event of any tender offer, each
Participant, beneficiary and Alternate Payee shall have the right to instruct
the Trustee to tender any or all shares of Stock, whether or not vested,
allocated to the Participant's, beneficiary's or Alternate Payee's accounts
under the Plan on or before the filing date. The Trustee shall follow the
instructions of the Participant, beneficiary or Alternate Payee. The Trustee
shall not tender any Stock for which no instructions are received.
(b) Unallocated Stock. The Trustee shall tender all shares of Stock
that are not allocated to Participant accounts in the same proportion as the
Participants, beneficiaries and Alternate Payees directed the tender of Stock
allocated to their accounts unless the Trustee determines that a pro rata
tender would be inconsistent with its fiduciary duties under ERISA. If the
Trustee makes such a determination, the Trustee shall tender or not tender the
unallocated Stock as it determines to be consistent with its fiduciary duties
under ERISA.
(c) Suspension of Share Purchases. In the event of a tender offer,
the Trustee shall suspend all purchases of Stock pursuant to the Plan unless
the Committee otherwise directs. Until the termination of such tender offer
and pending such Committee direction, the Trustee shall invest available cash
pursuant to the applicable provisions of the Plan and the Trust Agreement.
(d) Temporary Suspension of Certain Cash Distributions.
Notwithstanding anything in the Plan to the contrary, no option to receive cash
in lieu of Stock shall be honored during the pendency of a tender offer unless
the Committee otherwise directs.
10.5 Stock Rights.
(a) General. If the Company makes a distribution of stock rights with
respect to the Stock held in the Plan and if the stock rights become
exercisable or transferable (the date on which the stock rights become
exercisable or transferable shall be referred to as the "exercise date"), each
Participant, beneficiary or Alternate Payee shall determine whether to exercise
the stock rights,sell the stock rights, or hold the stock rights allocated to
his accounts. The provisions of this Section shall apply to all stock rights
received with respect to Stock held in Participant accounts, whether or not the
Stock with respect to which the stock rights were issued are vested.
(b) Independent Fiduciary. The Independent Fiduciary provided for in
Section 10.15 below shall act with respect to the stock rights. All
Participant, beneficiary or Alternate Payee directions concerning the exercise
or disposition of the stock rights shall be given to the Independent Fiduciary,
who shall have the sole responsibility of assuring that the Participants',
beneficiaries' and Alternate Payees' directions are followed.
(c) Exercise of Stock Rights. If, on or after the exercise date, a
Participant, beneficiary or Alternate Payee wishes to exercise all or a portion
of the stock rights allocated to his accounts, the Independent Fiduciary shall
follow the Participant's, beneficiary's or Alternate Payee's direction to the
extent that there is cash or other liquid assets available in the Participant's,
beneficiary's or Alternate Payee's accounts to exercise the stock rights.
Notwithstanding any other provision of the Plan, each Participant, beneficiary
or Alternate Payee who has stock rights allocated to his accounts shall have a
period of five business days following the exercise date in which he may give
instructions to the Committee to liquidate any of the assets held in his
accounts (except shares of Stock or assets such as guaranteed investment
contracts or similar investments), but only if he does not have sufficient cash
or other liquid assets in his accounts to exercise the stock rights. The
liquidation of any necessary investments pursuant to a Participant's,
beneficiary's or Alternate Payee's direction shall be accomplished as soon as
reasonably practicable, taking into account any timing restrictions with
respect to the investment funds involved. The cash obtained shall be used to
exercise the stock rights, as the Participant, beneficiary or Alternate Payee
directs. Any cash that is not so used shall be invested in a cash equivalent
until the next date on which the Participant, beneficiary or Alternate Payee
may change his investment directions under the Plan.
(d) Sale of Stock Rights. On and after the exercise date, the
Independent Fiduciary shall sell all or a portion of the stock rights allocated
to a Participant's, beneficiary's or Alternate Payee's accounts, as the
Participant, beneficiary or Alternate Payee shall direct.
10.6 Other Rights Appurtenant to the Stock.
If there are any rights appurtenant to the Stock, other than voting,
tender, or stock rights, each Participant, beneficiary and Alternate Payee
shall exercise or take other appropriate action concerning such rights with
respect to the Stock, whether or not vested, allocated to their accounts in the
same manner as the other holders of the Stock, by giving written instructions
to the Trustee. The Trustee shall follow all such instructions, but shall take
no action with respect to allocated Stock for which no instructions are
received. The Trustee shall exercise or take other appropriate action
concerning any such rights appurtenant to unallocated Stock.
10.7 Information to Trustee.
Promptly after the filing date, the exercise date, or any other event that
requires action with respect to the Stock, as the case may be, the Committee
shall deliver or cause to be delivered to the Trustee or the Independent
Fiduciary, as the case may be, a list of the names and addresses of
Participants, beneficiaries and Alternate Payees showing (i) the number of
shares of Stock allocated to each Participant's, beneficiary's and Alternate
Payee's accounts under the Plan, (ii) each Participant's, beneficiary's and
Alternate Payee's pro rata portion of any unallocated Stock, and (iii) each
Participant's, beneficiary's and Alternate Payee's share of any stock rights
distributed by the Company. The Committee shall date and certify the accuracy
of such information, and such information shall be updated periodically by the
Committee to reflect changes in the shares of Stock and other assets allocated
to Participants', beneficiaries' and Alternate Payees' accounts.
10.8 Information to Participants.
The Trustee or the Independent Fiduciary, as the case may be, shall
distribute and/or make available to each affected Participant, beneficiary and
Alternate Payee the following materials:
(a) A copy of the description of the terms and conditions of any
tender offer filed with the SEC on Schedule 14D-1, or any similar materials if
such filing is not required, any material distributed to shareholders generally
with respect to the stock rights, and any proxy statements and any other
material distributed to shareholders generally with respect to any action to be
taken with respect to the Stock.
(b) If requested by the Company, a statement from the Company's
management setting forth its position with respect to a tender offer that is
filed with the SEC on Schedule 14D-9 and/or a communication from the Company
given pursuant to 17 C.F.R. 240.14d-9(e), as amended.
(c) An instruction form prepared by the Company and approved by the
Trustee or the Independent Fiduciary, to be used by any Participant,
beneficiary or Alternate Payee who wishes to instruct the Trustee to tender
Stock in response to the tender offer, to instruct the Independent Fiduciary
to sell or exercise Stock rights, or to instruct the Trustee or Independent
Fiduciary with respect to any other action to be taken with respect to the
Stock. The instruction form shall state that (i) if the Participant,
beneficiary or Alternate Payee fails to return an instruction form to the
Trustee by the indicated deadline, the Trustee will not tender any shares of
Stock the Participant, beneficiary
or Alternate Payee is otherwise entitled to tender, (ii) the Independent
Fiduciary will not sell or exercise any right allocated to the Participant's,
beneficiary's or Alternate Payee's accounts except upon the written direction
of the Participant, beneficiary or Alternate Payee, (iii) the Trustee or
Independent Fiduciary will not take any other action that the Participant,
beneficiary or Alternate Payee could have directed, and (iv) the Company
acknowledges and agrees to honor the confidentiality of the Participant's,
beneficiary's or Alternate Payee's directions to the Trustee.
(d) Such additional material or information as the Trustee or the
Independent Fiduciary may consider necessary to assist the Participant,
beneficiary or Alternate Payee in making an informed decision and in completing
or delivering the instruction form (and any amendments thereto) to the Trustee
or the Fiduciary on a timely basis.
10.9 Expenses.
The Trustee and the Independent Fiduciary shall have the right to require
payment in advance by the Company and the party making the tender offer of all
reasonably anticipated expenses of the Trustee and the Independent Fiduciary,
respectively, in connection with the distribution of information to and the
processing of instructions received from Participants, beneficiaries and
Alternate Payees.
10.10 Former Participants.
The Company shall furnish former Participants, beneficiaries and Alternate
Payees who have received distributions of Stock so recently as to not be
shareholders of record with the information furnished pursuant to Section 10.8.
The Trustee and the Independent Fiduciary are hereby authorized to take action
with respect to the Stock distributed to such former Participants,
beneficiaries and Alternate Payees in accordance with appropriate instructions
from them. If the Trustee does not receive appropriate instructions, it shall
take no action with respect to the distributed Stock.
10.11 No Recommendations.
Neither the Committee, the Committee Fiduciary, the Trustee, nor the
Independent Fiduciary shall express any opinion or give any advice or
recommendation to any Participant concerning voting the Stock, any tender
offer, stock rights, or the exercise of any other rights appurtenant to the
Stock, nor shall they have any authority or responsibility to do so. Neither
the Trustee nor the Independent Fiduciary has any duty to monitor or police the
party making a tender offer or the Company in promoting or resisting a tender
offer; provided, however, that if the Trustee or the Independent Fiduciary
becomes aware of activity that on its face reasonably appears to the Trustee or
IndependentFiduciary to be materially false, misleading, or coercive, the
Trustee or the Independent Fiduciary, as the case may be, shall demand promptly
that the offending party take appropriate corrective action. If the offending
party fails or refuses to take appropriate corrective action, the Trustee or
the Independent Fiduciary, as the case may be, shall communicate with affected
Participants, beneficiaries and Alternate Payees in such manner as it deems
advisable.
10.12 Trustee to Follow Instructions.
(a) So long as the Trustee and the Independent Fiduciary, as the case
may be, have determined that the Plan is in compliance with ERISA section
404(c), the Trustee or the Independent Fiduciary shall vote, tender, deal with
stock rights, and act with respect to any other rights appurtenant to the Stock
pursuant to the terms and conditions of the particular transaction or event and
in accordance with instructions received from Participants, beneficiaries and
Alternate Payees. The Trustee or the Independent Fiduciary shall take no action
with respect to Stock, stock rights, or other appurtenant rights for which no
instructions are received, and such Stock, stock rights, or other appurtenant
rights shall be treated like all other Stock, stock rights, or other
appurtenant rights for which no instructions are received.
(b) If the Trustee or Independent Fiduciary determines that the Plan
does not satisfy the requirements of ERISA section 404(c), the Trustee or
Independent Fiduciary shall follow the instructions of the Participant,
eneficiary or Alternate Payee with respect to voting, tender, Stock rights, or
other rights appurtenant to the Stock unless the Trustee or Independent
Fiduciary determines that to do so would be inconsistent with its fiduciary
duties under ERISA. In such case, the Trustee or the Independent Fiduciary
shall take such action as it determines to be consistent with its fiduciary
duties under ERISA.
10.13 Confidentiality.
(a) The Committee shall designate one of its members (the "Committee
Fiduciary") to receive investment directions and to transmit such directions to
the Trustee or Independent Fiduciary, as the case may be. The Committee
Fiduciary shall also receive all Participant, beneficiary and Alternate Payee
instructions concerning voting, tender, stock rights and other rights
appurtenant to the Stock and shall communicate the instructions to the Trustee
or the Fiduciary, as the case may be.
(b) Neither the Committee Fiduciary, the Trustee nor the Independent
Fiduciary shall reveal or release any instructions received from Participants,
beneficiaries or Alternate Payees concerning the Stock to the Company, its
officers, directors, employees, agents, or representatives, except to the
extent necessary to comply with Federal or state law not preempted by ERISA.
If disclosure is required by Federal or state law, the information shall be
disclosed to the extent possible in the aggregate rather than on an individual
basis.
(c) The Committee Fiduciary shall be responsible for reviewing the
confidentiality procedures from time to time to determine their adequacy and
shall ensure that the confidentiality procedures are followed. The Committee
Fiduciary shall also ensure that the Independent Fiduciary provided for in
Section 10.15 is appointed.
(d) The Company, with the Trustee's cooperation, shall take such
action as is necessary to maintain the confidentiality of Participant Account
records including, without limitation, establishment of security systems and
procedures which restrict access to Participant Account records and retention
of an independent agent to maintain such records. If an independent record
keeping agent is retained, such agent must agree, as a condition of its
retention by the Company, not to disclose the composition of any Participant
Accounts to the Company, its officers, directors, employees, or
representatives.
(e) The Company acknowledges and agrees to honor the confidentiality
of the Participants' instructions to the Committee Fiduciary, the Trustee and
the Independent Fiduciary. If the Company, by its own act or omission,
breaches the confidentiality of Participant, beneficiary or Alternate Payee
instructions, the Company agrees to indemnify and hold harmless the Committee
Fiduciary, the Trustee, or the Independent Fiduciary, as the case may be,
against and from all liabilities, claims and demands, damages, costs, and
xpenses, including reasonable attorneys' fees, the Committee Fiduciary, the
Trustee or the Independent Fiduciary may incur as a result thereof.
10.14 Investment of Proceeds.
If Stock or the rights are sold pursuant to the tender offer or the
provisions of the rights, the proceeds of such sale shall be invested in
accordance with the provisions of the Plan and the Trust Agreement.
10.15 Independent Fiduciary.
The Company shall appoint a fiduciary (the "Independent Fiduciary") to act
solely with respect to the Stock in situations which the Committee Fiduciary
determines involve a potential for undue influence by the Company in connection
with the Stock and the exercise of any rights appurtenant to the Stock. If the
Committee Fiduciary so determines, it shall give written notice to the
Independent Fiduciary, which shall have sole responsibility for assuring that
Participants, beneficiaries and Alternate Payees receive the information
necessary to make informed decisions concerning the Stock and are free from
undue influence or coercion and that their instructions are followed to the
extent proper under ERISA. The Independent Fiduciary shall act until it
receives written notice to the contrary from the Committee Fiduciary.
ARTICLE XI
Termination and Amendment
11.1 Termination of Plan or Discontinuance of Contributions.
Unique Mobility, Inc. expects to continue the Plan indefinitely, but the
continuance of the Plan and the payment of contributions are not assumed as
contractual obligations. Unique Mobility, Inc. may terminate the Plan or
discontinue contributions at any time. Upon the termination (or partial
termination) of the Plan or the complete discontinuance of contributions, the
interests of all affected Participants in the Trust Fund shall become fully
vested, notwithstanding any other provision hereof.
11.2 Allocations upon Termination or Discontinuance of Company Contributions.
Upon the termination or partial termination of the Plan or upon the
complete discontinuance of contributions, the Committee shall promptly notify
the Trustee of such termination or discontinuance. The Trustee shall then
determine, in the manner prescribed in Section 4.2, the net worth of the Trust
Fund as of the close of the last business day of the calendar month in which
such notice was received by the Trustee. The Trustee shall advise the
Committee of any increase or decrease in such net worth that has occurred since
the preceding Valuation Date. After crediting to the Participant Before-Tax
Contributions account and Participant After-Tax Contributions account of each
Participant the amount contributed by him since the preceding Valuation Date,
the Committee shall thereupon allocate, in the manner described in Section 4.3,
among the accounts of the Participants then remaining in the Plan, any such
increase or decrease in the net worth of the Trust Fund. Immediately after the
allocation of such increase or decrease in net worth, the Committee shall
allocate among the accounts of the Participants then remaining in the Plan, in
the manner described in Sections 4.5 and 4.6, any Company Contributions,
Qualified Non-Elective Contributions, or forfeitures occurring since the
preceding Valuation Date.
11.3 Procedure Upon Termination of Plan or Discontinuance of Contributions.
If the Plan has been terminated or partially terminated, or if a complete
discontinuance of contributions to the Plan has occurred, then after the
allocations required under Section 11.2 have been completed, the Trustee shall
distribute or transfer the account(s) of affected Participants as follows.
(a) If the Company or Affiliated Entity maintains or establishes
another defined contribution plan (other than an employee stock ownership plan
defined in Code section 4975(e)(7)), then no amount in his accounts may be
distributed to any Participant. Account balances shall be directly transferred
to the other defined contribution plan.
(b) If the Company or Affiliated Entity does not maintain another
defined contribution plan (other than an employee stock ownership plan, defined
in Code section 4975(e)(7)), then the Trustee shall distribute the
Participant's account(s) to the Participants in a lump sum (other than an
annuity) without the consent of Participant.
Any distribution or transfer made pursuant to this Section may be in cash, in
kind, or partly in cash and partly in kind. After all such distributions or
transfers have been made, the Trustee shall be discharged from all obligation
under the Trust; no Participant or beneficiary who has received any such
distribution, or for whom any such transfer has been made, shall have any
further right or claim under the Plan or Trust.
11.4 Amendment by Company.
The Company may at any time amend the Plan in any respect, subject to
Section 11.5, but no amendment shall be made that would have the effect of
vesting in the Company any part of the Trust Fund or of diverting any part of
the Trust Fund to purposes other than for the exclusive benefit of Employees of
the Company or their beneficiaries, and the rights of any Participant with
respect to contributions previously made shall not be adversely affected by any
11.5 Amendment to Vesting Schedule.
If the vesting schedule is amended, each Participant with at least three
Years of Service may elect, within the period specified in the following
sentence after the adoption of the amendment, to have his nonforfeitable
percentage computed under the Plan without regard to such amendment. The
period during which the election may be made shall commence with the date the
amendment is adopted and shall end on the latest of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the
amendment by the Company or Committee.
ARTICLE XII
Plan Adoption by Affiliated Entities
12.1 Adoption of Plan.
The Company may permit any Affiliated Entity to adopt the Plan and Trust
for its Employees. Thereafter, such Affiliated Entity shall deliver to the
Trustee a certified copy of the resolutions or other documents evidencing its
adoption of the Plan and Trust. Such Affiliated Entity shall also execute a
copy of the Trust.
12.2 Agent of Affiliated Entity.
By becoming a party to the Plan, each Affiliated Entity appoints the
Company as its agent with authority to act for it in all transactions in which
it believes such agency will facilitate the administration of the Plan. The
Company shall have the sole authority to amend and terminate the Plan.
12.3 Disaffiliation and Withdrawal from Plan.
(a) Disaffiliation. Any Affiliated Entity that has adopted the Plan
and thereafter ceases for any reason to be an Affiliated Entity shall forthwith
cease to be a party to the Plan.
(b) Withdrawal. Any Affiliated Entity may, by appropriate action and
written notice thereof to the Company, provide for the discontinuance of its
participation in the Plan. Such withdrawal from the Plan shall not be
effective until the end of the Plan Year.
12.4 Effect of Disaffiliation or Withdrawal.
If at the time of disaffiliation or withdrawal, the disaffiliating or
withdrawing entity, by appropriate action, adopts a substantially identical
plan that provides for direct transfers from this Plan, then, as to employees
of such entity, no plan termination shall have occurred; the new plan shall be
deemed a continuation of this Plan for such employees. In such case, the
Trustee shall transfer to the trustee of the new plan all of the assets held
for the benefit of Employees of the disaffiliating or withdrawing entity, and
no forfeitures or acceleration of vesting shall occur solely by reason of such
action. Such payment shall operate as a complete discharge of the Trustee, and
of all organizations except the disaffiliating or withdrawing entity, of all
obligations under this Plan to employees of the disaffiliating or withdrawing
entity and to their beneficiaries. A new plan shall not be deemed
substantially identical to this Plan if it provides slower vesting than this
Plan. Nothing in this Section shall authorize the divesting of any vested
portion of a Participant's account.
12.5 Distribution Upon Disaffiliation or Withdrawal.
(a) Disaffiliation. If an entity disaffiliates from the Company and
the provisions of Section 12.4 are not followed, then the following rules apply
to the account(s) of Participants of the disaffiliating entity.
(i)If the disaffiliating entity maintains a defined
contribution plan (other than an employee stock ownership plan within the
meaning of Code section 4975(e)(7)), then the Trustee shall transfer the
Participant's account(s) to the other plan unless the Participant consents to
an immediate distribution in a lump sum (other than an annuity) of the vested
portion of his account(s). Notwithstanding the preceding sentence, a
Participant may not consent to an immediate distribution from his Participant
Before-Tax Contributions account unless he has attained age 59-1/2.
(iiIf the disaffiliating entity does not maintain a defined
contribution plan (other than an employee stock ownership plan within the
meaning of Code section 4975(e)(7)), then the Trustee shall distribute the
vested portion of Participant's account(s) to the Participant in a lump sum
(other than an annuity), upon the consent of the Participant. If the
Participant does not consent to an immediate distribution, then distribution
may only be made according to Article VI.
(b) Withdrawal. If an Affiliated Entity withdraws from the Plan and
the provisions of Section 12.4 are not followed, then the following rules apply
to the account(s) of Participants who are employees of the withdrawing entity.
(i)If the withdrawing entity maintains a defined contribution
plan that accepts transfers from this Plan, then the Participant may transfer
his account(s) from this Plan to such plan. No forfeitures or acceleration of
vesting shall occur solely by reason of such transfer.
(iiIf the withdrawing entity does not maintain a defined
contribution plan that accepts transfers from this Plan, then the Participant's
account(s) shall remain in this Plan.
(c) Any distribution or transfer made pursuant to this Section may be
in cash, in kind, or partly in cash and partly in kind. After such
distribution or transfer has been made, no Participant or beneficiary who has
received any such distribution, or for whom any such transfer has been made,
shall have any further right or claim under the Plan or Trust.
ARTICLE XIII
Top-Heavy Provisions
13.1 Application of Top-Heavy Provisions.
The provisions of this Article XIII shall be applicable only if the Plan
becomes "top-heavy" as defined below. If the Plan becomes "top-heavy" as of
the Determination Date for a Plan Year, the provisions of this Article XIII
shall apply to the Plan effective as of the first day of such Plan Year and
shall continue to apply to the Plan (whether or not the Plan ceases to be
"top-heavy") until the Plan is terminated or otherwise amended.
13.2 Determination of Top-Heavy Status.
The Plan shall be considered "top-heavy" for a Plan Year if, as of the
determination date for that Plan Year, the aggregate of the account balances of
key employees under the Plan (and under all other plans required or permitted
to be aggregated with this Plan) exceeds 60% of the aggregate of the account
balances of all Employees under the Plan (and under all other plans required or
permitted to be aggregated with this Plan). For purposes of determining the
account balance or the present value of the accrued benefit of any Employee,
distributions made with respect to such Employee within a five-year period
ending on the determination date must be included. This shall also apply to
distributions under a terminated plan which, if it had not been terminated,
would have been required to be included in an aggregation group. However, if
any individual has not performed any services for any employer maintaining the
Plan (other than benefits under the Plan) at any time during the five-year
period ending on the determination date, any accrued benefit for such
individual (and the account of such individual) shall not be taken into
account. Each plan of the Company in which a key employee participates and
each other plan of the Company which enables this Plan to meet the requirements
of Code section 401(a) or Code section 410 is required to be aggregated to
test for top-heaviness. Plans of the Company, which, when considered with the
Plan and other plans of the Company that are required to be aggregated with
this Plan, would continue to satisfy the requirements of Code sections 401(a)
and 410, may be aggregated to test for top-heaviness. If one or more of the
plans required or permitted to be aggregated with this Plan is a defined
benefit plan, the Plan will be top-heavy if the sum of the aggregate account
balances of the key employees under the Plan (and under all other plans
required or permitted to be aggregated with this Plan) and the
aggregate present values of the accrued benefits of the key employees under the
defined benefit plan or plans required or permitted to be aggregated with this
Plan exceeds 60% of the sum of the aggregate account balances of all Employees
under the Plan (and under all other plans required or permitted to be
aggregated with this Plan) and the aggregate present values of the accrued
benefits of all Employees under the defined benefit plan or plans required or
permitted to be aggregated with this Plan. For purposes of computing the
present values of the accrued benefits under a defined benefit plan, if the
aggregation group includes more than one defined benefit plan, the same
actuarial assumptions shall be used with respect to each such defined benefit
plan. The foregoing top-heavy ratio shall be computed in accordance with the
provisions of Code section 416(g), together with the regulations and rulings
thereunder.
13.3 Special Vesting Rule.
The amount credited to the Participant's Company Contributions account
shall vest in accordance with the following schedule if such schedule is more
rapid than the vesting schedule in Section 5.1;
Years of Service Vested Percentage
fewer than 2 0
2 20
3 40
4 60
5 80
6 or more 100
13.4 Special Minimum Contribution.
Notwithstanding the provisions of Sections 3.1 and 4.5 hereof to the
contrary, each active Participant in the Plan who is not a Key Employee and who
is employed by the Company on the last day of the Plan Year, regardless of
whether the Participant received credit for 1,000 or more Hours of Service,
made any required Employee contributions for such year or satisfied any other
requirement for eligibility to share in Company Contributions under Section
4.5, shall be entitled to a minimum Company Contribution, together with
forfeitures, for each Plan Year of an amount not less than the lesser of (i) 3%
of such Participant's Compensation for such year or (ii) the largest percentage
of Compensation provided for any Key Employee as a Company Contribution
(including forfeitures) or Participant Before-Tax Contribution for that Plan
Year; provided however, that Social Security contributions may not be used to
reduce this contribution. If the Company Contributions under Section 3.1 and
the allocation of the Company Contributions under Sections 4.5 and 4.6 do not
satisfy the requirements of the preceding sentence for any Plan Year when this
Plan is a top-heavy plan, the Company shall contribute an additional amount to
the Plan such that each Non-Key Employee shall receive an allocation of at
least the minimum contribution required by this Section for such Plan Year.
For purposes of this Section, Qualified Non-Elective Contributions shall be
considered to be Company Contributions.
13.5 Change in Top-Heavy Status.
If the Plan shall cease to be a "top-heavy" plan as defined in this
Article XIII, and if any change in the benefit structure, vesting schedule or
other component of a Participant's accrued benefit, shall occur as a result of
such change in top-heavy status, the nonforfeitable portion of each
Participant's benefit attributable to Company Contributions and forfeitures
shall not be decreased as a result of such change. In addition, each
Participant with at least three Years of Service with the Company on the date
of such change, may elect to have his nonforfeitable percentage computed under
the Plan without regard to such change in status. The period during which the
election may be made shall commence on the date the Plan ceases to be a
top-heavy plan and shall end on the later of (a) 60 days after the change in
status occurs, (b) 60 days after the change in status becomes effective, or (c)
60 days after the Participant is issued written notice of the change by the
Company or the Committee.
ARTICLE XIV
Miscellaneous
14.1 Right to Dismiss Employees - No Employment Contract.
The Company may terminate the employment of any Employee as freely and with
the same effect as if this Plan were not in existence. Participation in this
Plan by an Employee shall not constitute an express or implied contract of
employment between the Company and the Employee.
14.2 Claims Procedure.
(a) All claims shall be filed in writing by the Participant, his
beneficiary or the authorized representative of the claimant, by completing
such procedures as the Committee shall require. Such procedures shall be
reasonable and may include the completion of forms and the submission of
documents and additional information. For purposes of this Section, a request
for a Plan loan or an in-service withdrawal shall be considered a claim.
(b) The Committee shall review all materials and shall decide whether
to approve or deny the claim. If a claim is denied in whole or in part,
written notice of denial shall be furnished by the Committee to the claimant
within 90 days after the receipt of the claim by the Committee, unless special
circumstances require an extension of time for processing the claim, in which
event notification of the extension shall be provided to the Participant or
beneficiary and the extension shall not exceed 90 days. Such written notice
shall set forth the specific reasons for such denial, specific reference to
pertinent Plan provisions, a description of any additional material or
information necessary for the claimant to perfect his claims and an explanation
of why such material or information is necessary, all written in a manner
calculated to be understood by the claimant. Such notice shall include
appropriate information as to the steps to be taken if the claimant wishes to
submit his claim for review. The claimant or his authorized representative may
request such a review upon written application. He may review pertinent
documents and he may submit issues or comments in writing. The claimant or his
duly authorized representative must request such review within the reasonable
period of time prescribed by the Committee. In no event shall such a period of
time be less than 60 days. The Committee shall decide all such reviews. A
decision on review shall be rendered within 60 days of the receipt of request
for review by the Committee. If special circumstances require a further
extension of time for processing, a decision shall be rendered not later than
120 days following the Committee's receipt of the request for review. If such
an extension of time for review is required, written notice of the extension
shall be furnished to the claimant prior to the commencement of the extension.
The Committee's decision on review shall be furnished to the claimant. Such
decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant, as
well as specific references to the pertinent Plan provisions on which the
decision is based.
(c) The Committee shall have total discretionary authority to
determine eligibility, status, and rights of all persons under the Plan and to
construe any and all terms of the Plan.
14.3 Source of Benefits.
All benefits payable under the Plan shall be paid solely from the Trust
Fund, and the Company assumes no liability or responsibility therefor.
14.4 Exclusive Benefit of Employees.
It is the intention of the Company that no part of the Trust, other than as
provided in Sections 3.3, 9.2 and 14.9 hereof and Section 8.3 of the Trust
agreement, ever to be used for or diverted to purposes other than for the
exclusive benefit of the Employees of the Company and their beneficiaries, and
that this Plan shall be construed to follow the spirit and intent of the Code
and ERISA.
14.5 Forms of Notices.
Wherever provision is made in the Plan for the filing of any notice,
election or designation by a Participant, the action of such Participant shall
be evidenced by the execution of such form as the Committee may prescribe for
the purpose.
14.6 Failure of Any Other Corporation to Qualify.
If any entity adopts this Plan but fails to obtain or retain the
qualification of the Plan under the applicable provisions of the Code, such
entity shall withdraw from this Plan upon a determination by the Internal
Revenue Service that it has failed to obtain or retain such qualification.
Within 30 days after the date of such determination, the assets of the Trust
Fund held for the benefit of the Employees of such entity shall be segregated
and disposed of in accordance with the Plan and Trust.
14.7 Notice of Adoption of the Plan.
The Company shall provide each of its Employees with notice of the adoption
of this Plan and of any amendments and of the salient provisions thereof prior
to the end of the first Plan Year. A complete copy of the Plan shall also be
made available for inspection by Employees.
14.8 Plan Merger.
If this Plan merges or consolidates with, or transfers its assets or
liabilities to, any other qualified plan of deferred compensation, provisions
shall be made so that each Participant would (if the Plan then terminated) be
entitled to receive a benefit immediately after the merger, consolidation
or transfer that is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer if
this Plan had then been terminated.
14.9 Inalienability of Benefits - Domestic Relations Orders.
(a) Except as provided in Section 7.2, relating to Plan loans, and
subsection (b) below, no Participant or beneficiary shall have any right to
assign, alienate, transfer, hypothecate, encumber or anticipate his interest in
any benefits under this Plan, nor shall such benefits be subject to any legal
process to levy upon or attach the same for payment of any claim against any
such Participant or beneficiary.
(b) Subsection (a) shall apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a Domestic Relations Order unless such Domestic Relations Order is
a Qualified Domestic Relations Order in which case the Plan shall make payment
of benefits in accordance with the applicable requirements of any such
Qualified Domestic Relations Order.
(c) In order to be a Qualified Domestic Relations Order, the Domestic
Relations Order:
(i)must clearly specify the name and the last known mailing
address (if
any) of the Participant;
(iimust specify the name and mailing address of each Alternate
Payee covered by the order;
(iimust specify either the amount or percentage of the
Participant's benefits to be paid by the Plan to each such Alternate Payee, or
the manner in which such amount or percentage is to be determined;
(ivmust specify the number of payments or period to which such
order applies;
(v)must specify each plan to which such order applies;
(vimay not require the Plan to provide any type or form of
benefit, or any option, not otherwise provided under the Plan, subject to the
provisions of paragraphs (f)(ii) and (f)(iii);
(vimay not require the Plan to provide increased benefits
(determined on the basis of actuarial value);
(vimay not require the payment of benefits to an Alternate Payee
if such benefits have already been designated to be paid to another Alternate
Payee under another order previously determined to be a Qualified Domestic
Relations Order.
(d) In the case of any payment before a Participant has separated from
service, a Domestic Relations Order shall not be treated as failing to meet the
requirements of subsection (c) solely because such order requires that payment
of benefits be made to an Alternate Payee (i) on or after the date on which the
Participant attains (or would have attained) the Earliest Retirement Age, (ii)
as if the Participant had retired on the date on which such payment is to begin
under such order(but taking into account only the account balance on such
date), and (iii) in any form in which such benefits may be paid under the Plan
to the Participant. For purposes of this subsection (d), the account balance
as of the date specified in the Qualified Domestic Relations Order shall be the
vested portion of the Participant's account(s) on such date.
(e) In the case of any Domestic Relations Order received by the Plan,
the Committee shall promptly notify the Participant and each Alternate Payee of
the receipt of such order and the Plan's procedures for determining the
qualified status of Domestic Relations Orders. Within a reasonable period
after receipt of such order, the Committee shall determine whether such order
is a Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of such determination. The Committee shall establish
reasonable procedures to determine the qualified status of Domestic Relations
Orders and to administer distributions under such qualified orders. Such
procedures shall be in writing, shall provide for the notification of each
person specified in the Domestic Relations Order as entitled to payment of
benefits under the Plan (at the address included in the Domestic Relations
Order) of such procedures promptly upon receipt by the Plan of the Domestic
Relations Order, and shall permit an Alternate Payee to designate a
representative for receipt of copies of notices that are sent to the Alternate
Payee with respect to a Domestic Relations Order. During any period in which
the issue of whether a Domestic Relations Order is a Qualified Domestic
Relations Order is being determined (by the Committee, by a court of competent
jurisdiction, or otherwise), the Committee shall separately account for the
amounts (hereinafter referred to as the "segregated amounts") that would have
been payable to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order. If the order (or
modification thereof) is determined to be a Qualified Domestic Relations Order
within 18 months after the date the first payment would have been required by
such order, the Committee shall pay the segregated amounts (plus any interest
thereon) to the person or persons entitled thereto. However, if it is
determined that the order is not a Qualified Domestic Relations Order, or if
the issue as to whether such order is a Qualified Domestic Relations Order is
not resolved within 18 months after the date the first payment would have been
required by such order, then the Committee shall pay the segregated amounts
(plus any interest thereon) to the person or persons who would have been
entitled to such amounts if there had been no order. Any determination that an
order is a Qualified Domestic Relations Order that is made after the close of
the 18-month period shall be applied prospectively only. If the Plan's
fiduciaries act in accordance with fiduciary provisions of ERISA in treating a
Domestic Relations Order as being (or not being) a Qualified Domestic Relations
Order or in taking action in accordance with this subsection (e), then the
Plan's obligation to the Participant and each Alternate Payee shall be
discharged to the extent of any payment made pursuant to the acts of such
fiduciaries.
(f) The Alternate Payee shall have the following rights under the Plan:
(i)The Alternate Payee may designate beneficiaries in the same
manner as a Participant, pursuant to Section 6.1. However, any such
beneficiary designation shall be effective without the consent of the spouse of
the Alternate Payee. In the absence of an effective beneficiary designation,
the Alternate Payee's beneficiary shall be his surviving spouse, or if none,
his surviving children and issue of deceased children by right of
representation, or if none, his surviving parents, or if none, his estate.
(iiAn Alternate Payee shall receive a distribution of his Plan
assets immediately after the first Valuation Date after the Committee
determines that the Domestic Relations Order is a Qualified Domestic Relations
Order if so provided in the Qualified Domestic Relations Order.
(iiDistribution to an Alternate Payee must occur on or before
the Participant's Required Beginning Date.
(ivUpon the death of an Alternate Payee, distributions shall be
made to his beneficiary in the same manner as distributions are made to the
beneficiary of a deceased Participant pursuant to paragraph 6.5(d); however,
the special rules that apply to a Participant's surviving Spouse shall not
apply to the spouse of an Alternate Payee.
(v)The Alternate Payee may direct the investment of his interest
in the Plan in the same manner as a Participant, pursuant to subsection 9.3(a).
(viThe Alternate Payee (or his beneficiary) may bring claims
against the Plan in the same manner as a Participant pursuant to Section 14.3.
14.10 Payments Due Minors or Incapacitated Persons.
If any person entitled to a payment under the Plan is a minor, or if the
Committee determines that any such person is incapacitated by reason of
physical or mental disability, whether or not legally adjudicated as such, the
Committee shall have the power to cause the payments becoming due to such
person to be made to his personal representative or to another for his benefit,
without responsibility of the Committee or the Trustee to see to the
application of such payments. Payments made pursuant to such power shall
operate as a complete discharge of the Trust Fund, the Trustee and the
Committee.
14.11 Uniformity of Application.
The provisions of this Plan shall be applied in a uniform and
non-discriminatory manner in accordance with rules adopted by the Committee
which rules shall be systematically followed and consistently applied so that
all persons similarly situated shall be treated alike.
14.12 Disposition of Unclaimed Payments.
Each Participant must file with the Committee from time to time in writing
his post office address and the post office address of each of his
beneficiaries and each change of post office address. Any communication,
statement or notice addressed to a Participant or beneficiary at his last post
office address filed with the Committee, or if no address is filed with the
Committee then at his last post office address as shown on the Company's
records, will be binding on the Participant and his beneficiaries for all
purposes of the Plan. Neither the Committee nor the Trustee shall be required
to search for or locate a Participant or beneficiary. If the Committee
notifies a Participant or beneficiary that he is entitled to a distribution and
also notifies him of the provisions of this Section, and the Participant or
beneficiary fails to claim his benefits under the Plan or make his address
known to the Committee, within three calendar years after the notification, the
benefits under the Plan of the Participant or beneficiary will, as the
Committee in its discretion determines, either be forfeited as of the end of
any Plan Year following the three-year waiting period, or continue to be held
in the Trust Fund for the benefit of the Participant. If a Participant's
account(s) are forfeited pursuant to this Section and if the Participant should
later make a claim for his benefit, the Company shall contribute to the Trust
Fund, for distribution, shares of Stock and cash equal in value to the amount
forfeited.
14.13 Pronouns: Gender and Number.
Unless the context clearly indicates otherwise, words in either gender
shall include the other gender and the singular shall include the plural and
vice versa.
14.14 Applicable Law.
This Plan shall be construed and regulated by ERISA, the Code, and, to the
extent applicable, the laws of the State of Colorado.
UNIQUE MOBILITY, INC.
DATE: February 17, 1997 By: /s/ Donald A. French
Treasurer
<PAGE>
Page
ARTICLE I - Definitions................................. 1
1.1 "Affiliated Entity".......................... 1
1.2 "Alternate Payee"............................ 2
1.3 "Annual Addition"............................ 2
1.4 "Break in Service"........................... 2
1.5 "Code"....................................... 2
1.6 "Committee".................................. 2
1.7 "Company".................................... 2
1.8 "Company Contributions"...................... 3
1.9 "Company Discretionary Contributions"........ 3
1.10 "Company Matching Contributions"............. 3
1.11 "Compensation"............................... 3
1.12 "Determination Date"......................... 4
1.13 "Determination Year"......................... 4
1.14 "Disability"................................. 4
1.15 "Dollar Limitation".......................... 4
1.16 "Domestic Relations Order"................... 4
1.17 "Earliest Retirement Age".................... 4
1.18 "Effective Date"............................. 4
1.19 "Employee"................................... 4
1.20 "ERISA"...................................... 5
1.21 "Family Member".............................. 5
1.22 "Five-Percent Owner"......................... 5
1.23 "Highly Compensated Employee"................ 5
1.24 "Hour of Service"............................ 6
1.25 "Key Employee"............................... 8
1.26 "Limitation Year"............................ 8
1.27 "Look-Back Year"............................. 8
1.28 "Non-Highly Compensated Employee"............ 8
1.29 "Non-Key Employee"........................... 8
1.30 "Normal Retirement Age"...................... 8
1.31 "Participant"................................ 8
1.32 "Participant After-Tax Contributions"........ 8
1.33 "Participant Before-Tax Contributions"....... 8
1.34 "Participant Contributions".................. 9
1.35 "Plan Year".................................. 9
1.36 "Qualified Domestic Relations Order"......... 9
1.37 "Qualified Non-Elective Contributions"....... 9
1.38 "Qualified Matching Contributions"........... 9
1.39 "Required Beginning Date".................... 9
1.40 "Rollover Contribution"...................... 9
1.41 "Short Plan Year" ........................... 9
1.42 "Spouse"..................................... 9
1.43 "Stock"..................................... 10
1.44 "Taxable Year".............................. 10
1.45 "Top-Paid Group"............................ 10
1.46 "Valuation Date"............................ 10
1.47 "Year of Service"........................... 11
ARTICLE II - Participation............................. 11
2.1 Participation - Required Service - Minimum Age 11
2.2 Reemployment After Cessation of Employment.. 11
2.3 Enrollment - Procedure...................... 12
2.4 Absences.................................... 12
ARTICLE III - Contributions............................ 12
3.1 Company Contributions....................... 12
3.2 Participant Contributions................... 13
3.3 Return of Contributions..................... 15
3.4 Limitation on Annual Additions.............. 15
3.5 Contribution Limits for Highly Compensated Employees (ACP Test) 16
3.6 Contribution Limits for Highly Compensated Employees (ADP Test) 17
3.7 Contribution Limits for Highly Compensated Employees (Multiple Use)
18
3.8 Military Service.............................19
ARTICLE IV - Interests in the Trust Fund............... 19
4.1 Participants' Accounts...................... 19
4.2 Valuation of Trust Fund..................... 20
4.3 Allocation of Increase or Decrease in Net Worth 20
4.4 Allocation of Participant Contributions..... 20
4.5 Allocation of Company Contributions......... 20
4.6 Allocation of Qualified Non-Elective Contributions 21
4.7 Temporary Investment of Participant Contributions 22
ARTICLE V - Amount of Benefits......................... 22
5.1 Vesting Schedule - Forfeitures.............. 22
5.2 Credits for Pre-Break Service............... 24
5.3 Distribution of Vested Amounts.............. 24
5.4 Transfers - Portability..................... 24
5.5 Reemployment - Separate Account............. 25
ARTICLE VI - Distribution of Benefits.................. 25
6.1 Beneficiaries............................... 25
6.2 Consent..................................... 25
6.3 Distributable Amount........................ 26
6.4 Manner of Distribution...................... 26
6.5 Time of Distribution........................ 26
ARTICLE VII - Withdrawals and Loans.................... 28
7.1 In-Service Withdrawals...................... 28
7.2 Loans to Participants....................... 31
ARTICLE VIII - Allocation of Responsibilities - Named Fiduciaries 33
8.1 No Joint Fiduciary Responsibilities......... 33
8.2 The Company................................. 34
8.3 The Trustee................................. 34
8.4 The Committee - Plan Administrator.......... 34
8.5 Committee to Construe Plan.................. 34
8.6 Organization of Committee................... 35
8.7 Agent for Process........................... 35
8.8 Indemnification of Committee Members........ 35
ARTICLE IX - Trust Agreement - Investments............. 35
9.1 Trust Agreement............................. 35
9.2 Expenses of Trust........................... 35
9.3 Investments................................. 36
ARTICLE X - Matters Affecting Company Stock............ 37
10.1 Voting, Etc................................ 37
10.2 Notices.................................... 37
10.3 Retention/Sale of Company Stock and Other Securities 37
10.4 Tender Offers.............................. 38
10.5 Stock Rights............................... 38
10.6 Other Rights Appurtenant to the Stock...... 39
10.7 Information to Trustee..................... 39
10.8 Information to Participants................ 40
10.9 Expenses................................... 40
10.10 Former Participants....................... 41
10.11 No Recommendations........................ 41
10.12 Trustee to Follow Instructions............ 41
10.13 Confidentiality........................... 42
10.14 Investment of Proceeds.................... 42
10.15 Independent Fiduciary..................... 43
ARTICLE XI - Termination and Amendment................. 43
11.1 Termination of Plan or Discontinuance of Contributions 43
11.2 Allocations upon Termination or Discontinuance of Company
Contributions 43
11.3 Procedure Upon Termination of Plan or Discontinuance of
Contributions 44
11.4 Amendment by Company....................... 44
11.5 Amendment to Vesting Schedule.............. 44
<PAGE>
ARTICLE XII - Plan Adoption by Affiliated Entities..... 45
12.1 Adoption of Plan........................... 45
12.2 Agent of Affiliated Entity................. 45
12.3 Disaffiliation and Withdrawal from Plan.... 45
12.4 Effect of Disaffiliation or Withdrawal..... 45
12.5 Distribution Upon Disaffiliation or Withdrawal 46
ARTICLE XIII - Top-Heavy Provisions.................... 46
13.1 Application of Top-Heavy Provisions........ 46
13.2 Determination of Top-Heavy Status.......... 47
13.3 Special Vesting Rule....................... 47
13.4 Special Minimum Contribution............... 48
13.5 Change in Top-Heavy Status................. 48
ARTICLE XIV - Miscellaneous............................ 49
14.1 Right to Dismiss Employees - No Employment Contract 49
14.2 Claims Procedure........................... 49
14.3 Source of Benefits......................... 50
14.4 Exclusive Benefit of Employees............. 50
14.5 Forms of Notices........................... 50
14.6 Failure of Any Other Corporation to Qualify 50
14.7 Notice of Adoption of the Plan............. 50
14.8 Plan Merger................................ 50
14.9 Inalienability of Benefits - Domestic Relations Orders 51
14.10 Payments Due Minors or Incapacitated Persons 53
14.11 Uniformity of Application................. 53
14.12 Disposition of Unclaimed Payments......... 53
14.13 Pronouns: Gender and Number.............. 54
14.14 Applicable Law............................ 54
EXHIBIT 10.3
UNIQUE MOBILITY, INC.
1992 STOCK OPTION PLAN
amended and restated, effective February 13, 1997
UNIQUE MOBILITY, INC.
1992 STOCK OPTION PLAN
SECTION 1
Introduction
1.1 Establishment. Unique Mobility, Inc., a Colorado corporation
(hereinafter referred to, together with its Affiliated Corporations (as defined
in subsection 2.1(a)) as the "Company" except where the context otherwise
requires), hereby establishes the Unique Mobility, Inc. 1992 Stock Option Plan
(the "Plan") for certain employees of the Company and certain consultants
to the Company.
1.2 Purposes. The purposes of the Plan are to provide those who are
selected for participation in the Plan with added incentives to continue in the
long-term service of the Company and to create in such persons a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to increases in shareholder value, so that the income
of the those participating in the Plan is more closely aligned with the income
of the Company's shareholders. The Plan is also designed to provide a
financial incentive that will help the Company attract, retain and motivate
the most qualified employees and consultants.
1.3 Effective Date. The initial effective date of the Plan was
February 21, 1992 (the "Effective Date"). The Plan was amended, as of
April 16, 1993, to increase the number of authorized shares to two million;
as of January 1, 1993, to provide that the maximum number of shares that may
be subject to options granted to any individual during the term of the Plan may
not exceed 500,000 shares; as of February 20, 1995, to increase the number of
authorized shares to three million; and, as of February 13, 1997, to permit the
transfer of certain Options in specified circumstances. This Plan and each
Option granted hereunder is conditioned on and shall be of no force or effect
until approval of the Plan and any amendment to the Plan by the holders of a
majority of the shares of voting stock of the Company cast at a duly held
shareholders meeting at which a quorum is present and voting (by proxy or in
person) where shareholder approval is required or otherwise necessary or
desirable as provided in Section 11 below.
SECTION 2
Definitions
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Unique
Mobility, Inc. through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) of the Code, and, for
purposes of Incentive Stock Options granted pursuant to the Plan, means any
parent or subsidiary of the Company as defined in Section 424 of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means a committee consisting of members of the Board
who are empowered hereunder to take actions in the administration of the Plan.
Members of the Committee shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any time upon written
notice to the Board. The Committee shall be so constituted that it satisfies
the requirement of "disinterested administration" imposed by Securities and
Exchange Commission Rule 16b-3, as it may be amended from time to time.
(e) "Eligible Employees" means those employees (including, without
limitation, officers and directors who are also employees) of the Company, whose
judgment, initiative and efforts are important to the Company for the management
and growth of its business. For purposes of the Plan, an employee is an
individual whose wages are subject to the withholding of federal income tax
under Section 3401 of the Code.
(f) "Eligible Independent Contractors" means those consultants and
other individuals who provide services to the Company and whose judgment,
initiative and effort are important to the Company for the management and
growth of its business. For purposes of the Plan, an independent contractor
is an individual whose wages are not subject to the withholding of federal
income tax under Section 3401 of the Code.
(g) "Fair Market Value" shall be the average of the bid and asked
prices on the over-the-counter market on the 20 trading days preceding the date
on which the determination of fair market value is made. If the Stock is not
traded on the over-the-counter market, Fair Market Value determined in good
faith by the Committee using all relevant data and information reasonably
available to the Committee.
(h) "Incentive Stock Option" means any Option designated as such and
granted in accordance with the requirements of Section 422 of the Code.
(i) "Non-Qualified Option" means any Option other than an Incentive
Stock Option.
(j) "Option" means a right to purchase Stock at a stated price for a
specified period of time.
(k) "Option Holder" means an Eligible Employee or Eligible
Independent Contractor designated by the Committee from time to time during the
term of the Plan to receive one or more Options under the Plan.
(l) "Option Price" means the price at which shares of Stock subject
to an Option may be purchased, determined in accordance with subsection 6.2(b).
(m) "Share" means a share of Stock.
(n) "Stock" means the common stock, $0.01 par value, of the Company.
2.2 Gender and Number. Except when otherwise indicated by the context,
the masculine gender shall include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
SECTION 3
Plan Administration
3.1 In General. The Committee shall be responsible for the administration
of the Plan. The Committee shall determine the form or forms of the agreements
with Option Holders which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Option Holders with
respect to Options granted pursuant to the Plan, which provisions need not be
identical except as may be provided herein. The Committee may from time to time
adopt such rules and regulations for carrying out the purposes of the Plan as it
may deem proper and in the best interests of the Company. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any agreement entered into hereunder in the manner and to the extent
it shall deem expedient and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any action or
determination made in good faith. The determinations, interpretations and
other actions of the Committee pursuant to the provisions of the Plan shall
be binding and conclusive for all purposes and on all persons.
3.2 Eligible Employees. In accordance with the provisions of the Plan,
the Committee shall, in its sole discretion, select Option Holders from among
Eligible Employees to whom Options will be granted, the number of Shares
subject to each Option and any other terms and conditions of each Option as the
Committee may deem necessary or desirable and consistent with the terms of the
Plan.
3.3 Eligible Independent Contractors. In accordance with the provisions
of the Plan, the Committee shall, in its sole discretion, select Option Holders
from among Eligible Independent Contractors to whom Options will be granted,
the number of shares subject to each Option and any other terms and conditions
of each Option as the Committee may deem necessary or desirable and
consistent with the terms of the Plan.
SECTION 4
Stock Subject to the Plan
4.1 Number of Shares. A total of three million Shares are authorized for
issuance under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the Committee may from
time to time deem necessary. This authorization may be increased from time
to time by approval of the Board and by the shareholders of the Company if,
in the opinion of counsel for the Company, such shareholder approval is
required. Shares that may be issued upon the exercise of Options shall be
applied to reduce the maximum number of Shares remaining available for use under
the Plan. The Company shall at all times during the term of the Plan and
while any Options are outstanding retain as authorized and unissued Stock, or
as treasury Stock, at least the number of Shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an Option
under this Plan that are not used because the terms and conditions of the Option
are not met, including any Shares that are subject to an option that expires or
is terminated for any reason shall automatically become available for use
under the Plan. Any Shares that are withheld by the Company pursuant to
Section 12.2 and any Shares that are used to pay the Option Price shall not
become available for the grant of Options under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
shall at any time increase or decrease the number of its outstanding Shares or
change in any way the rights and privileges of such Shares by means of the
payment of a stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the Shares of Stock as
to which Options may be granted under the Plan and (ii) the Shares then subject
to each outstanding option.
4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company
shall at any time pay or make any dividend or other distribution to the holders
of Stock payable in securities of another corporation or other property (except
money or Stock), a proportionate part of such securities or other property
shall be set aside and delivered to any Option Holder then holding an Option
for the particular type of Stock for which the dividend or other distribution
was made, upon exercise thereof. Prior to the time that any such securities or
other property are delivered to an Option Holder in accordance with the
foregoing, the Company shall be the owner of such securities or other
property and shall have the right to vote the securities, receive any dividends
payable on such securities, and in all other respects shall be treated as the
owner. If securities or other property that have been set aside by the
Company in accordance with this Section are not delivered to an Option Holder
because an Option is not exercised, then such securities or other property shall
remain the property of the Company and shall be dealt with by the Company as it
shall determine in its sole discretion.
4.5 Other Changes in Stock. If there shall be any change, other than as
specified in Sections 4.3 and 4.4, in the number or kind of outstanding Shares
of Stock or of any stock or other securities into which the Stock shall be
changed or for which it shall have been exchanged, and if the Committee shall
in its discretion determine that such change equitably requires an adjustment
in the number or kind of Shares subject to outstanding Options or which have
been reserved for issuance pursuant to the Plan but are not then subject to an
Option, then such adjustments shall be made by the Committee and shall be
effective for all purposes of the Plan and on each outstanding Option that
involves the particular type of stock for which a change was effected.
4.6 Rights to Subscribe. If the Company shall at any time grant to the
holders of its Stock rights to subscribe pro rata for additional Shares thereof
or for any other securities of the Company or of any other corporation, there
shall be reserved with respect to the Shares then subject to an Option held by
any Option Holder of the particular class of Stock involved, the Stock or other
securities which the Option Holder would have been entitled to subscribe for if
immediately prior to such grant the Option Holder had exercised his entire
Option. If, upon exercise of any such Option, the Option Holder subscribes for
the additional Stock or other securities, the Option Holder shall pay to the
Company the price that is payable by the Option Holder for such Stock or other
securities.
4.7 General Adjustment Rules. No adjustment or substitution provided
for in this Section 4 shall require the Company to issue a fractional Share
under any Option agreement and the total substitution or adjustment with respect
to each Option agreement shall be limited by deleting any fractional Share.
In the case of any such substitution or adjustment, the Option Price per
Share in each such Option agreement shall be equitably adjusted by the Committee
to reflect the greater or lesser number of shares of Stock or other securities
into which the Stock subject to the Option may have been changed.
4.8 Determination by the Committee, Etc. Adjustments under this Section 4
shall be made by the Committee, whose determinations with regard thereto shall
be final and binding.
SECTION 5
Participation
5.1 Eligible Employees. The Committee, in its sole and absolute
discretion, shall select those Eligible Employees to be Option Holders in the
Plan. Eligible Employees shall be selected from the employees of the Company
who are performing services in the management, operation and growth of the
Company, and contribute, or are expected to contribute, to the achievement of
long-term corporate objectives. Eligible Employees may be granted from time-to-
time one or more Options; provided, however, that the grant of each such Option
shall be separately approved by the Committee, and receipt of one such Option
shall not result in automatic receipt of any other Option. Upon determination
by the Committee that an Option is to be granted to an Eligible Employee,
written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto.
5.2 Eligible Independent Contractors. The Committee, in its sole and
absolute discretion, shall select those Eligible Independent Contractors to be
Option Holders in the Plan. Eligible Independent Contractors shall be selected
from the consultants and other individuals who are providing services to the
Company with respect to the operation and growth of the Company, and
contribute, or are expected to contribute, to the achievement of long-term
corporate objectives. Eligible Independent Contractors may be granted from
time-to-time one or more Options; provided, however, that the grant of each
such Option shall be separately approved by the Committee, and receipt of one
such Option shall not result in automatic receipt of any other Option. Upon
determination by the Committee that an Option is to be granted to an Eligible
Independent Contractor, written notice shall be given to such person, specifying
the terms, conditions, rights and duties related thereto.
SECTION 6
Stock Options
6.1 Grant of Options to Eligible Employees and Eligible Independent
Contractors. Coincident with or following designation for participation in the
Plan, an Eligible Employee and an Eligible Independent Contractor may be granted
one or more Options. The Committee in its sole discretion shall designate
whether an option is to be considered an Incentive Stock Option or a Non-
Qualified Option. Incentive Stock Options may be granted only to Eligible
Employees. The Committee may grant both an Incentive Stock Option and a Non-
Qualified Option to the same Eligible Employee at the same time or at different
times. Incentive Stock Options and Non-Qualified Options, whether granted at
the same or different times, shall be deemed to have been awarded in separate
grants and shall be clearly identified, and in no event shall the exercise of
one Option affect the right to exercise any other Option or affect the number of
Shares for which any other Option may be exercised. The maximum number of
Shares that may be subject to Options granted to any Eligible Employee or
Eligible Independent Contractor during the term of the Plan shall be 500,000
Shares.
6.2 Option Agreements. Each Option granted under the Plan shall be
evidenced by a written Option agreement, which shall be entered into by the
Company and the Option Holder to whom the Option is granted, and which shall
contain the following terms and conditions, as well as such other terms and
conditions, not inconsistent herewith, as the Committee may consider
appropriate in each case.
(a) Number of Shares. Each Option agreement shall state that it
covers a specified number of Shares, as determined by the Committee.
(b) Price. Each Option granted pursuant to the Plan shall have
an Option Price that determined by the Committee and set forth in the Option
agreement. An Incentive Stock Option shall have an Option Price that is equal
to or greater than the Fair Market Value of the Stock on the date the Option
is granted.
(c) Duration and Exercise of Options. Each Option agreement
shall state the period of time, as determined by the Committee within which the
option may be exercised by the Option Holder (the "Option Period"). The
Option Period must end, in all cases, not more than ten years from the date
an Option is granted. Each Option agreement shall also state the periods of
time, if any, as determined by the Committee, when incremental portions of each
Option may be exercised. Each Option agreement covering an Option granted to
an Option Holder who is subject to Section 16(b) of the Securities Exchange Act
of 1934 shall provide that such Option may not be exercised until at least 6
months after the date the Option was granted.
(d) Eligible Employees: Termination of Employment, Death,
Retirement, Etc. Each Option agreement shall provide as follows with respect
to the exercise of the Option:
(i) If the employment of the Option Holder by the Company is
terminated within the Option Period for cause, as determined by the Company,
the Option shall thereafter be void for all purposes. As used in this
subsection 6.2(d), "cause" shall mean a gross violation, as determined by the
Company, of the Company's established policies and procedures, provided that
the effect of this subsection 6.2(d) shall be limited to determining the
consequences of a termination and that nothing in this subsection 6.2(d)
shall restrict or otherwise interfere with the Company's discretion with
respect to the termination of any employee.
(ii) If the Option Holder retires from employment by the
Company or an Affiliated Corporation within the Option Period but after
attaining age 65, the Option may be exercised by the Option Holder (or, in
the case of his death, by those entitled to do so under his will or by the
laws of descent and distribution) within three months following his
retirement (if otherwise within the Option Period), but not thereafter.
In any such case, the Option may be exercised only as to the Shares as to which
the Option had become exercisable on or before the date of the Option Holder's
retirement from employment or death.
(iii) If the Option Holder dies within the Option Period,
while employed by the Company or an Affiliated Corporation or within the three-
month period referred to in (iv) below, the Option may be exercised by those
entitled to do so under his will or by the laws of descent and distribution
within fifteen months following his death (if otherwise within the Option
Period), but not thereafter. In any such case the Option may be exercised only
as to the Shares as to which the Option had become exercisable on or before the
date of the Option Holder's death.
(iv) If the employment of the Option Holder by the Company is
terminated (which for this purpose means that the Option Holder is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than for cause, retirement after attaining age 65,
or death, the Option may be exercised by the Option Holder within three months
following the date of such termination (if otherwise within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to
the Shares as to which the Option had become exercisable on or before the date
of termination of employment.
(e) Eligible Independent Contractors: Termination of Services,
Death. Each option agreement shall provide as follows with respect to the
exercise of the Option:
(i) If the services of the Option Holder terminate within
the Option Period other than on account of cause or the Option Holder's death,
the Option may be exercised during the remainder of the Option Period. In any
such case, the Option may be exercised only as to the Shares as to which the
Option had become exercisable on or before the date of termination of services.
(ii) If the services of the Option Holder terminate within
the Option Period for cause, as determined by the Company, the Option shall
thereafter be void for all purposes. If the agreement between the Company and
an Independent Contractor provides for termination of the agreement for
"cause," the term "cause" for purposes of this subsection shall have the same
meaning as in such agreement.
(iii) If the Option Holder dies during the Option Period,
the Option may be exercised by those entitled to do so under the Option Holder's
will or by the laws of descent and distribution for fifteen months after the
Option Holder's death (if otherwise in the Option Period) , but not thereafter.
In any such case, the Option may be exercised only as to the Shares as to which
the Option had become exercisable on or before the date of the Option Holder's
death.
(f) Transferability. Each Option agreement shall provide that
the Option granted herein is not transferable by the Option Holder except by
will or pursuant to the laws of descent and distribution, and that such Option
is exercisable during the Option Holder's lifetime only by him, or in the
event of disability or incapacity, by his guardian or legal representative;
provided however, that, during the Option Holder's lifetime, the Option Holder
may transfer a Non-Qualified Option to a member of the Option Holder's
immediate family, a trust of which members of the Option Holder's immediate
family are the only beneficiaries, or a partnership of which members of the
Option Holder's immediate family or trusts for the sole benefit of the Option
Holder's immediate family are the only partners. Immediate family means the
Option Holder's spouse, children, stepchildren, grandchildren, parents,
grandparents, siblings (including half brothers and sisters), and individuals
who are family members by adoption. During the Option Holder's lifetime, the
Option Holder may not transfer an Incentive Option under any circumstance.
(g) Consideration for Grant of Option. Each Option agreement
held by an Option Holder shall contain the Option Holder's agreement to remain
in the employment or service of the Company, at the pleasure of the Company,
for a continuous period of at least one year after the date of such Option
agreement, at the salary rate or other compensation in effect on the date of
such agreement or at such changed rate as may be fixed, from time to time, by
the Company. Nothing in this paragraph shall offset or impair the Company's
right to terminate the services of any employee. An Option agreement between
the Company and an Eligible Independent Contractor shall contain the Option
Holder's agreement to comply with all of the terms and conditions or
specified terms and conditions of the agreement between the Option Holder and
the Company.
(h) Exercise, Payments, Etc. Each Option agreement shall
provide that the method for exercising the Option granted therein shall be by
delivery to the Corporate Secretary of the Company of written notice specifying
the number of Shares with respect to which such Option is exercised and
payment of the Option Price. Such notice shall be in a form satisfactory to the
Committee and shall specify the particular Option (or portion thereof) that is
being exercised and the number of Shares with respect to which the option is
being exercised. The exercise of the Option shall be deemed effective upon
receipt of such notice by the Corporate Secretary and payment to the Company.
The purchase of such Stock shall take place at the principal offices of the
Company upon delivery of such notice, at which time the Option Price of the
Stock shall be paid in full. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder except where payment is made pursuant to subparagraph (E) below
in which case the certificate shall be delivered to the broker.
The Option Price shall be paid by any of the following
methods or any combination of the following methods, as the Committee shall
determine in its sole discretion:
(A) in cash;
(B) by certified or cashier's check payable to the order of the Company;
(C) by delivery to the Company of certificates representing the number
of Shares then owned by the Option Holder, the Fair Market Value of
which equals the Option Price of the Stock purchased pursuant to
the Option, properly endorsed for transfer to the Company; provided
however, that no Option may be exercised by delivery to the Company
of certificates representing Stock, unless such Stock had been held
by the Option Holder for more than six months;
(D) by delivery to the Company of a promissory note, which shall be in
a principal amount equal to the Option Price plus any federal and
state income tax required to be withheld; which shall be full
recourse and secured by all or a portion of the Stock acquired
pursuant to the exercise of the Option; which shall bear interest
at a rate determined by the Committee, but not lower than the rate
required to avoid the imputation of interest under the Code; which
shall provide for level quarterly payments of interest and principal
over its term; which shall become payable in full upon the first to
occur of the fifth anniversary of the date the Option is exercised,
failure to pay any payment of principal and interest within five days
after it is due or termination of the Option Holder's employment or
service for any reason; and which shall contain such other terms and
conditions including the provision of security in addition to the
Stock that the Company, in its sole discretion, deems necessary or
appropriate;
(E) by delivery to the Company of a properly executed notice of exercise
together with irrevocable instructions to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option
Holder necessary to pay the exercise price.
(i) Date of Grant. An Option shall be considered as having been
granted on the date specified in the grant resolution of the Committee.
(j) Withholding.
(i) Non-Qualified Options. Each Option agreement covering
Non-Qualified Options shall provide that, upon exercise of the Option, the
Option Holder shall make appropriate arrangements with the Company to provide
for the amount of additional withholding required by Sections 3102 and 3402 of
the Code and applicable state income tax laws, including payment of such taxes
through delivery of shares of Stock or by withholding Stock to be issued under
the Option, as provided in Section 12.
(ii) Incentive Options. If an Option Holder makes a
disposition (as defined in Section 424(c) of the Code) of any Stock acquired
pursuant to the exercise of an Incentive Stock Option prior to the expiration
of two years from the date on which the Incentive Stock Option was granted or
prior to the expiration of one year from the date on which the Option was
exercised, the Option Holder shall send written notice to the Company at its
principal office in Englewood, Colorado (Attention: Corporate Secretary) of
the date of such disposition, the number of shares disposed of, the amount of
proceeds received from such disposition and any other information relating to
such disposition as the Company may reasonably request. The Option Holder
shall, in the event of such a disposition, make appropriate arrangements with
the Company to provide for the amount of additional withholding,i f any,
required by Sections 3102 and 3402 of the Code and applicable state income
tax laws.
6.3 Restrictions on Incentive Stock Options.
(a) Initial Exercise. Notwithstanding any other provision of
the Plan, the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by an Option Holder
in any calendar year, under the Plan or otherwise, shall not exceed $100,000.
For this purpose, the Fair Market Value of the Shares shall be determined
as of the date of grant of the Option.
(b) Ten Percent Shareholders. Incentive Stock Options granted
to an Option Holder who is the holder of record of 10% or more of the
outstanding Stock of the Company shall have an Option Price equal to 110% of
the Fair Market Value of the Shares on the date of grant of the Option. The
Option Period for any such Option shall not exceed five years.
6.4 Shareholder Privileges. No Option Holder shall have any rights
as a shareholder with respect to any Shares covered by an Option until the
Option Holder becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other rights as
to which there is a record date preceding the date such Option Holder becomes
the holder of record of such Stock, except as provided in section 4.
SECTION 7
Reorganization or Change of Control
7.1 Reorganization. If the Company is merged or consolidated with
another corporation or the Company is a party to a reorganization (other than a
merger, consolidation or reorganization in which the Company is the continuing
corporation and which does not result in any reclassification or change of
outstanding Shares), or if all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation, business entity or person (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company), or
in case of a reorganization (other than a reorganization under the United
States Bankruptcy Code) or liquidation of the Company, the Committee shall, as
to the Plan and outstanding Options, either (i) make appropriate provision for
the adoption and continuation of the Plan by the acquiring or successor
corporation and for the protection of any such outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable with respect to the Stock, provided that no additional benefits shall
be conferred upon the Option Holders holding such Options as a result of such
substitution, and the excess of the aggregate Fair Market Value of the Shares
subject to Options immediately after such substitution over the Option Price
thereof is not more than the excess of the aggregate Fair Market Value of the
Shares subject to such Options immediately before such substitution over the
Option Price thereof, and provided further that any such substitution made
with respect to Incentive Stock Options shall comply with Section 424(a) of the
Code, or (ii) upon written notice to the Option Holders, provide that all
unexercised Options must be exercised within thirty (30) days of the date of
such notice or they will be terminated. If alternative (i) is implemented, the
Committee may, at its sole discretion, provide that Options may be exercisable
in full without regard to the applicable exercise periods set forth in the
Option agreements and if alternative (ii) is implemented, Options shall be
exercisable in full without regard to the applicable exercise periods set
forth in the Option agreements.
7.2 Change of Control. In the event of a change in control of the
Company, as defined below, all Options shall become exercisable in full, without
regard to applicable exercise periods set forth in the Option agreements. For
purposes of the Plan, a "change in control" shall be deemed to have occurred if
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board (and any new director whose election by the
Board or whose nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority thereof.
SECTION 8
Rights of Employees and Independent
Contractors; Option Holders
8.1 Employment. Nothing contained in the Plan or in any Option
granted under the Plan shall confer upon any Option Holder any right with
respect to the continuation of his employment by or service with the Company,
or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement or other contract to the contrary,
at any time to terminate such Option Holder or to increase or decrease the
compensation of the Option Holder from the rate in existence at the time of the
grant of an Option. Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of employment
shall be determined by the Committee at the time.
8.2 Nontransferability. No right or interest of any Option Holder in
an Option granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or involuntarily,
or be subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of an Option Holder's death, an Option Holder's
rights and interests in Options shall, to the extent provided in Section 6, be
transferable by testamentary will or the laws of descent and distribution, and
payment of any amounts due under the Plan shall be made to, and exercise of any
Options may be made by, the Option Holder's legal representatives, heirs or
legatees. If in the opinion of the Committee a person entitled to exercise
rights with respect to the Plan is disabled from caring for his affairs because
of mental condition, physical condition or age, such rights shall be exercised
by such person's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status. Notwithstanding the foregoing an Option Holder may transfer a
Non-Qualified Option to the extent provided in section 6.
SECTION 9
General Restrictions
9.1 Investment Representations. The Company may require any person
to whom an Option is granted, as a condition of exercising such Option, to give
written assurances in substance and form satisfactory to the Company and its
counsel to the effect that such person is acquiring the Stock subject to the
Option for his own account for investment and not with any present intention
of selling or otherwise distributing the same, and to such other effects as
the Company deems necessary or appropriate in order to comply with Federal and
applicable state securities laws. Legends evidencing such restrictions may be
placed on the certificates evidencing the Stock.
9.2 Compliance with Securities Laws. Each Option shall be subject to
the requirement that if at any time counsel to the Company shall determine that
the listing, registration or qualification of the Shares subject to such Option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance or purchase of Shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Committee. Nothing herein shall be
deemed to require the Company to apply for or obtain such listing, registration
or qualification.
SECTION 10
Other Employee Benefits
The amount of any compensation deemed to be received by an Option
Holder as a result of the exercise of an Option shall not constitute "earnings"
with respect to which any other employee benefits of such person are determined,
including without limitation benefits under any pension, profit sharing, life
insurance or salary continuation plan.
SECTION 11
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time-to-time may amend
or modify, the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
shareholders if shareholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that shareholder approval is otherwise necessary
or desirable.
SECTION 12
Withholding
12.1 Withholding Requirement. The Company's obligations to deliver
Shares upon the exercise of an Option shall be subject to the option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
12.2 Withholding With Stock. At the time the Committee grants an
Option, it may, in its sole discretion, grant the Option Holder an election to
pay all such amounts of tax withholding, or any part thereof, by electing to
transfer to the Company, or to have the Company withhold from Shares otherwise
issuable to the Option Holder, Shares having a value equal to the amount
required to be withheld or such lesser amount as may be elected by the Option
Holder. All elections shall be subject to the approval or disapproval of the
Committee. The value of Shares to be withheld shall be based on the Fair
Market Value of the Stock on the date that the amount of tax to be withheld is
to be determined (the "Tax Date"). Any such elections by Option Holders to
have Shares withheld for this purpose will be subject to the following
restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
(c) If the Option Holder is an officer or director of the
Company within the meaning of Section 16 of the 1934 Act ("Section 16"), the
Option Holder must satisfy the requirements of such Section 16 and any
applicable rules thereunder with respect to the use of Stock to satisfy such
tax withholding obligation.
SECTION 13
Requirements of Law
13.1 Requirements of Law. The issuance of Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
13.2 Governing Law. The Plan and all Option agreements hereunder
shall be construed in accordance with and governed by the laws of the State of
Colorado.
SECTION 14
Duration of the Plan
The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Option shall be granted after such termination. If
not sooner terminated under the preceding sentence, the Plan shall fully cease
and expire at the close of business on February 20, 2002. Options
outstanding at the time of the Plan termination may continue to be exercised or
earned in accordance with their terms.
Dated: February 13, 1997
UNIQUE MOBILITY, INC.
By:/s/ Donald A. French
TABLE OF CONTENTS
Page
SECTION 1 INTRODUCTION. . . . . . . . . . . . . . . . . . . 1
1.1 Establishment . . . . . . . . . . . . . . . .1
1.2 Purposes. . . . . . . . . . . . . . . . . . .1
1.3 Effective Date. . . . . . . . . . . . . . . .1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
2.1 Definitions . . . . . . . . . . . . . . . . .1
2.2 Gender and Number . . . . . . . . . . . . . .3
SECTION 3 PLAN ADMINISTRATION . . . . . . . . . . . . . . . 3
3.1 In General. . . . . . . . . . . . . . . . . .3
3.2 Eligible Employees. . . . . . . . . . . . . .3
3.3 Eligible Independent Contractors. . . . . . .3
SECTION 4 STOCK SUBJECT TO THE PLAN. . . . . . . . . . . . .4
4.1 Number of Shares. . . . . . . . . . . . . . .4
4.2 Unused and Forfeited Stock. . . . . . . . . .4
4.3 Adjustments for Stock Split, Stock Dividend, Etc.4
4.4 Dividend Payable in Stock of Another Corporation, Etc.4
4.5 Other Changes in Stock. . . . . . . . . . . .5
4.6 Rights to Subscribe . . . . . . . . . . . . .5
4.7 General Adjustment Rules. . . . . . . . . . .5
4.8 Determination by the Committee, Etc.. . . . .5
SECTION 5 PARTICIPATION. . . . . . . . . . . . . . . . . . .5
5.1 Eligible Employees. . . . . . . . . . . . . .5
5.2 Eligible Independent Contractors. . . . . . .6
SECTION 6 STOCK OPTIONS. . . . . . . . . . . . . . . . . . .6
6.1 Grant of Options to Eligible Employees and Eligible
Independent Contractors . . . . . . . . . . .6
6.2 Option Agreements . . . . . . . . . . . . . .6
6.3 Restrictions on Incentive Stock Options . . 10
6.4 Shareholder Privileges. . . . . . . . . . . 11
SECTION 7 REORGANIZATION OR CHANGE OF CONTROL. . . . . . . 11
7.1 Reorganization. . . . . . . . . . . . . . . 11
7.2 Change of Control . . . . . . . . . . . . . 11
SECTION 8 RIGHTS OF EMPLOYEES AND INDEPENDENT CONTRACTORS; OPTION HOLDERS 12
8.1 Employment. . . . . . . . . . . . . . . . . 12
8.2 Nontransferability. . . . . . . . . . . . . 12
SECTION 9 GENERAL RESTRICTIONS. . . . . . . . . . . . . . .12
9.1 Investment Representations. . . . . . . . . 12
9.2 Compliance with Securities Laws . . . . . . 13
SECTION 10 OTHER EMPLOYEE BENEFITS. . . . . . . . . . . . . 13
SECTION 11 PLAN AMENDMENT, MODIFICATION AND TERMINATION . . 13
SECTION 12 WITHHOLDING. . . . . . . . . . . . . . . . . . . 13
12.1 Withholding Requirement . . . . . . . . . . 13
12.2 Withholding With Stock. . . . . . . . . . . 13
SECTION 13 REQUIREMENTS OF LAW. . . . . . . . . . . . . . . 14
13.1 Requirements of Law . . . . . . . . . . . . 14
13.2 Governing Law . . . . . . . . . . . . . . . 14
SECTION 14 DURATION OF THE PLAN . . . . . . . . . . . . . . 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF UNIQUE MOBILITY, INC. AND CONSOLIDATED
SUBSIDIARIES AS OF JANUARY 31, 1997, AND THE CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 1,082,582
<SECURITIES> 0
<RECEIVABLES> 639,486
<ALLOWANCES> 0
<INVENTORY> 646,865
<CURRENT-ASSETS> 2,542,293
<PP&E> 4,069,778
<DEPRECIATION> 1,707,973
<TOTAL-ASSETS> 8,134,960
<CURRENT-LIABILITIES> 2,122,296
<BONDS> 734,377
0
0
<COMMON> 23,158,132
<OTHER-SE> (18,270,359)
<TOTAL-LIABILITY-AND-EQUITY> 8,134,960
<SALES> 74,790
<TOTAL-REVENUES> 492,065
<CGS> 405,579
<TOTAL-COSTS> 1,116,250
<OTHER-EXPENSES> 18,180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,920
<INCOME-PRETAX> (704,285)
<INCOME-TAX> 0
<INCOME-CONTINUING> (704,285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (704,285)
<EPS-PRIMARY> (.06)
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