As filed with the Securities and Exchange Commission
on June 24, 1998.
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
International Rectifier Corporation
(Exact name of registrant as specified in its charter)
___________________
Delaware 95-1528961
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
233 Kansas Street, El Segundo, California 90245
(Address of principal executive offices)
INTERNATIONAL RECTIFIER CORPORATION RETIREMENT SAVINGS PLAN
(Full title of the plan)
L. Michael Russell,
Vice President and General Counsel
233 Kansas Street, El Segundo, California 90245
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for
service: (310) 726-8000
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered per unit price fee
registered
Common 1,500,000<1><2> $8.25<3> $12,375,000<3> $3,688<3>
Stock, par shares
value $1
per share
Interests in the <1>
Plan
__________________
<FN>
<1> This Registration Statement covers, in addition to the
number of shares of Common Stock stated above and
pursuant to Rule 416(c) under the Securities Act of 1933,
an indeterminate number of shares and interests in the
International Rectifier Corporation Retirement Savings
Plan (the "Plan") which by reason of certain events
specified in the plan may become subject to the Plan.
<2> Each share of Common Stock is accompanied by a share
purchase right pursuant to the Registrant's Rights
Agreement, dated August 14, 1996, as amended, with Chase
Mellon Shareholder Services, as Rights Agent.
<3> Pursuant to Rule 457(h), the maximum offering price, per
share and in the aggregate, and the registration fee were
calculated based upon the average of the high and low
prices of the Common Stock on June 22, 1998, as
reported on the New York Stock Exchange and published in
The Western Edition of The Wall Street Journal.
The Exhibit Index for this Registration Statement is at
page S-4.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant
information) will be sent or given to employees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Securities Act"). Such documents need not be filed with
the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 of
the Securities Act. These documents, which include the
statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof),
taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by
International Rectifier Corporation (the "Company") and the
International Rectifier Corporation Retirement Savings Plan
(the "Plan") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997;
(b) The Company's Quarterly Reports on Forms 10-Q for the
quarterly periods ended September 30, 1997, December
31, 1997, and March 31, 1997;
(c) The Plan's Annual Report on Form 11-K for the fiscal
year ended December 31, 1996; and
(d) The description of the Company's Common Stock
contained in its Registration Statement on Form 8-A
filed with the Commission on June 17, 1985 (which
incorporates by reference the description of the
Company's Common Stock contained in its Registration
Statement on Form S-3 filed with the Commission on
June 14, 1985) and the description of the Company's
share purchase rights contained in its Registration
Statement on Form 8-A filed with the Commission on
August 21, 1996, and any amendment or report filed for
the purpose of updating such descriptions.
All documents subsequently filed by the Company or by
the Plan pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into the prospectus
and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, par value $1 per share,
(the "Common Stock") is registered pursuant to Section 12 of
the Exchange Act, and, therefore, the description of
securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legal matters addressed in the Opinion of Company
Counsel (attached hereto as Exhibit 5.1) have been passed on
for the Company by L. Michael Russell. Mr. Russell is the
Vice President, Secretary and General Counsel of the Company
and is compensated as an employee of the Company. Mr. Russell
is also a participant in the Plan and holds options to acquire
shares of Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the General Corporation
Law of Delaware, the Company's Bylaws provide for
indemnification of directors, employees and agents of the
company against expenses (including attorneys' fees) and other
amounts paid in settlement actually and reasonably incurred by
them in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Company), in which any such person was or is
a party or is threatened to be made a party, if such person
acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interest of the
Company and, with respect to any criminal action or
proceeding, if such person had no reasonable cause to believe
his conduct was unlawful. In the case of an action or suit by
or in the right of the Company, such a person may not be
indemnified in respect of any claim, issue or matter as to
which he has been adjudged liable for negligence or misconduct
in the performance of his duty to the Company, unless and only
to the extent the court in which such action or suit was
brought or the Court of Chancery determines that such person
is fairly and reasonably entitled to indemnity for such
expenses as such court may deem proper. In each case,
indemnification shall be made only upon specific authorization
of a majority of disinterested directors, by written opinion
of independent legal counsel or by the shareholders, unless
the director, officer, employee or agent has been successful
on the merits or otherwise in defense of any action or suit,
in which case he shall be indemnified without such
authorization. The Company's Bylaws require the Company to pay
the expenses incurred by a director or officer in defending or
investigating a threatened or pending action, suit or
proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of such director or officer to
repay such amount if it is ultimately determined that he is
not entitled to indemnification and permit the Company to
advance such expenses to other employees and agents of the
Company upon such terms and conditions as are specified by the
Company's Board of Directors. The advancement of expenses, as
well as indemnification, pursuant to the Company's Bylaws is
not exclusive of any other rights which those seeking
indemnification or advancement of expenses from the Company
may have.
The Company's Certificate of Incorporation eliminates
personal liability of directors to the Company or its
shareholders for monetary damages for breach of fiduciary duty
as director, except for: (i) any breach of the duty of loyalty
to the Company or its shareholders; (ii) acts or omissions not
in good faith or which involve intentional misconduct or
knowing violations of law; (iii) liability under Section 174
of the Delaware General Corporation Law relating to certain
unlawful dividends and stock repurchases; or (iv) any
transaction from which the director derived an improper
personal benefit.
The Company's Bylaws permit the Company to purchase and
maintain insurance on behalf of any director, officer,
employee or agent of the Company against liability asserted
against him or her in any such capacity, whether or not the
Company would have the power to indemnify him against such
liability under the provisions of the Bylaws. However, the
Company maintains liability insurance providing coverage only
with respect to claims made against officers and directors as
to which they are entitled to be indemnified by the Company.
The Company has a policy of directors and officers
liability insurance which insures directors and officers
against the cost of defense, settlement or payment of a
judgment under certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index at page S-4.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus
any facts or events arising after the effective
date of the Registration Statement (or the most
recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new regis-
tration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the
Securities Act, the registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of El
Segundo, State of California, on May 31, 1998.
By: /s/ Derek B. Lidow
-------------------
Derek B. Lidow
Its: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Alexander Lidow, Derek B. Lidow, and Michael P.
McGee, and each of them, his true and lawful attorney-in-fact
and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents,
each acting alone, full power and authority to do and perform
each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents,
each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/ Eric Lidow Chairman of the Board May 26, 1998
Eric Lidow
/s/ Alexander Lidow Chief Executive Officer May 31, 1998
Alexander Lidow and Director (Principal
Executive Officer)
/s/ Derek B. Lidow Chief Executive Officer May 31, 1998
Derek B. Lidow and Director
/s/ Robert J. Mueller Executive Vice President May 31, 1998
Robert J. Mueller - External Affairs and
Business Development
and Director
/s/ Michael P. McGee Vice President, Chief May 31, 1998
Michael P. McGee Financial Officer
(Principal Financial
and Accounting Officer)
/s/ Donald S. Burns Director May 31, 1998
Donald S. Burns
/s/ George Krsek Director May 31, 1998
George Krsek
/s/ Minoru Matsuda Director May 31, 1998
Minoru Matsuda
/s/ James D. Plummer Director May 29, 1998
James D. Plummer
/s/ Jack O. Vance Director May 31, 1998
Jack O. Vance
/s/ Rochus E. Vogt Director May 31, 1998
Rochus E. Vogt
</TABLE>
<PAGE>
THE PLAN. Pursuant to the requirements of the
Securities Act, the Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of El Segundo, State of
California on May 31, 1998.
INTERNATIONAL RECTIFIER
CORPORATION RETIREMENT SAVINGS PLAN
By: International Rectifier
Corporation Retirement
Savings Plan Administrative
Committee
By: /s/ Michael P. McGee
---------------------
Michael P. McGee,
Chairman
By: /s/ George Krause
--------------------
George Krause
By: /s/ Shelley Wagers
--------------------
Shelley Wagers
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 International Rectifier Corporation Retirement
Savings Plan.
4.2 Amendment 1997-1 to the International Rectifier
Corporation Retirement Savings Plan.
4.3 Amendment 1997-2 to the International Rectifier
Corporation Retirement Savings Plan.
4.4 Trust Agreement for the International Rectifier
Corporation Retirement Savings Plan.
5.1 Opinion of Company Counsel (opinion re legality).
5.2 Opinion of O'Melveny & Myers LLP (opinion re
compliance with the Employee Retirement Income
Security Act of 1974).
23.1 Consent of Coopers & Lybrand L.L.P.
(consent of independent public accountants).
23.2 Consent of Company Counsel (included in
Exhibit 5.1).
23.3 Consent of O'Melveny & Myers LLP (included in
Exhibit 5.2).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION
RETIREMENT SAVINGS PLAN
(AMENDED AND RESTATED JANUARY 1, 1997)
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION
RETIREMENT SAVINGS PLAN
INDEX
Page
ARTICLE I TITLE AND DEFINITIONS . . . . . . . . . . . . . . . .3
1.1- Title. . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 - Definitions . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PARTICIPATION. . . . . . . . . . . . . . . . . . . 18
2.1 - Eligibility Requirements. . . . . . . . . . . . . . 18
2.2 - Participation.. . . . . . . . . . . . . . . . . . . 18
2.3 - Reemployment. . . . . . . . . . . . . . . . . . . . 18
2.4 - Designation of Beneficiary. . . . . . . . . . . . . 19
ARTICLE III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 22
3.1 - Company Contributions . . . . . . . . . . . . . . . 22
3.2 - Compensation Deferrals. . . . . . . . . . . . . . . 23
3.3 - Employer Matching Contributions.. . . . . . . . . . 25
3.4 - Discretionary Employer Contributions. . . . . . . . 26
3.5 - Rollover Contributions. . . . . . . . . . . . . . . 27
3.6 - Section 402(g) Limit on Compensation Deferrals. . . 28
3.7 - Section 401(k) Limitations on Compensation
Deferrals. . . . . . . . . . . . . . . . . . . . . 29
3.8 - Section 401(m) Limitations on Employer Matching
Contributions. . . . . . . . . . . . . . . . . . . 35
3.9 - Investment Funds. . . . . . . . . . . . . . . . . . 41
3.10 - Valuation of Accounts. . . . . . . . . . . . . . . 43
3.11 - Rule 16b-3 Provisions. . . . . . . . . . . . . . . 45
3.12 - Section 404(c) Provisions. . . . . . . . . . . . . 45
ARTICLE IV LIMITATION ON ANNUAL ADDITIONS . . . . . . . . . . 48
4.1 - Limitation on Annual Additions. . . . . . . . . . . 48
ARTICLE V VESTING . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . 50
6.1 - Distribution of Benefits. . . . . . . . . . . . . . 50
6.2 - Hardship Withdrawals from Compensation. . . . . . . 52
6.3 - Qualified Domestic Relations Orders.. . . . . . . . 56
6.4 - Inability to Locate Participant.. . . . . . . . . . 56
6.5 - Limitations on Distributions. . . . . . . . . . . . 57
6.6 - Direct Rollovers. . . . . . . . . . . . . . . . . . 60
ARTICLE VII THE COMMITTEE . . . . . . . . . . . . . . . . . . 63
7.1 - Members . . . . . . . . . . . . . . . . . . . . . . 63
7.2 - Committee Action. . . . . . . . . . . . . . . . . . 63
7.3 - Rights and Duties.. . . . . . . . . . . . . . . . . 64
7.4 - Procedure for Establishing Funding
Policy -- Transmittal of Information . . . . . . . 70
7.5 - Other Information.. . . . . . . . . . . . . . . . . 71
7.6 - Compensation, Bonding, Expenses and Indemnity . . . 71
7.7 - Manner of Administering.. . . . . . . . . . . . . . 73
7.8 - Duty of Care. . . . . . . . . . . . . . . . . . . . 73
7.9 - Committee Report. . . . . . . . . . . . . . . . . . 74
ARTICLE VIII AMENDMENT AND TERMINATION. . . . . . . . . . . . 75
8.1 - Amendments. . . . . . . . . . . . . . . . . . . . . 75
8.2 - Discontinuance of Plan. . . . . . . . . . . . . . . 76
8.3 - Failure to Contribute. . . . . . . . . . . . . . . 77
8.4 - Plan Merger or Consolidation; Transfer of Plan
Assets . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 79
9.1 - Contributions Not Recoverable . . . . . . . . . . . 79
9.2 - Limitation on Participant's Rights. . . . . . . . . 80
9.3 - Receipt or Release. . . . . . . . . . . . . . . . . 81
9.4 - Alienation. . . . . . . . . . . . . . . . . . . . . 81
9.5 - Persons Under Incapacity. . . . . . . . . . . . . . 82
9.6 - Governing Law.. . . . . . . . . . . . . . . . . . . 83
9.7 - Headings, etc. Not Part of Plan.. . . . . . . . . . 83
9.8 - Masculine Gender Includes Feminine. . . . . . . . . 84
9.9 - Instruments in Counterparts.. . . . . . . . . . . . 84
9.10 - Reorganization of Company. . . . . . . . . . . . . 84
9.11 - Loans to Participants. . . . . . . . . . . . . . . 84
9.12 - Top-Heavy Plan Requirements. . . . . . . . . . . . 89
APPENDIX A ANNUAL ADDITION LIMITS . . . . . . . . . . . . . .A-1
APPENDIX B TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . .B-1
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION RETIREMENT SAVINGS PLAN
International Rectifier Corporation, a Delaware
corporation (hereinafter sometimes called the "Company"),
maintains the International Rectifier Corporation Retirement
Savings Plan (hereinafter sometimes called the "Plan"). The Plan
was first established by the Company effective April 1, 1988.
The Plan is hereby amended and restated in its entirety,
effective the first day of January, 1997, except as otherwise
noted below.
The Company desires to encourage loyalty, efficiency,
continuity of service and productivity of its Employees. In
order to accomplish these purposes, the Company herein
establishes this Plan to provide incentives and security for its
Employees and their beneficiaries. The Trust created pursuant to
this Plan (incorporated herein by this reference) and its assets
shall not be used for, or diverted to, purposes other than the
exclusive benefit of Participants or their beneficiaries, as
prescribed in Section 401(a) of the Internal Revenue Code of
1986, as amended.
It is also intended that this Plan constitute an
accident and health plan so that amounts distributed on account
of disability are excluded from income under Section 105(c) of
the Internal Revenue Code to the extent provided by law.
<PAGE>
ARTICLE I
TITLE AND DEFINITIONS
1.1- Title.
This Plan is intended to be a profit sharing plan and
shall be known as the International Rectifier Corporation
Retirement Savings Plan. This Plan is a defined contribution
plan. Contributions may be made to this Plan without regard to
the current or accumulated profits of the Company.
1.2 - Definitions.
Whenever the following terms are used in this Plan,
with the first letter capitalized, they shall have the meanings
specified below.
"Account" or "Accounts" shall mean the accounts
maintained by the Committee for each Participant that are
credited with the amounts provided for herein. The following
"Accounts" are maintained under this Plan: Compensation Deferral
Accounts, Employer Matching Contributions Accounts, Discretionary
Employer Contributions Accounts, and Rollover Accounts.
"Anniversary Date" shall mean the last day of each Plan
Year.
"Approved Absence" means a leave of absence (without
pay) granted to an Employee under the Company's established leave
policy.
"Beneficiary" or "Beneficiaries" shall mean the person
or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by a Participant in
accordance with the provisions of Section 2.4 to receive the
benefits specified hereunder in the event of the Participant's
death. If there is no valid Beneficiary designation in effect
that complies with the provisions of Section 2.4, or if there is
no surviving designated Beneficiary, then the Participant's
surviving spouse shall be the Beneficiary. If there is no
surviving spouse to receive any benefits payable in accordance
with the preceding sentence, the duly appointed and currently
acting personal representative of the Participant's estate (which
shall include either the Participant's probate estate or living
trust) shall be the Beneficiary. In any case where there is no
such personal representative of the Participant's estate duly
appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Committee
determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after
the Participant's death), then Beneficiary or Beneficiaries shall
mean the person or persons who can verify by affidavit or court
order to the satisfaction of the Committee that they are legally
entitled to receive the benefits specified hereunder.
In the event any amount is payable under the Plan to a
minor, payment shall not be made to the minor, but instead shall
be paid (i) to that person's then living parent(s) to act as
custodian, (ii) if that person's parents are then divorced, and
one parent is the sole custodial parent, to such custodial
parent, or (iii) if no parent of that person is then living, to a
custodian selected by the Committee to hold the funds for the
minor under the Uniform Transfers or Gifts to Minors Act in
effect in the jurisdiction in which the minor resides. If no
parent is living and the Committee decides not to select another
custodian to hold the funds for the minor, then payment shall be
made to the duly appointed and currently acting guardian of the
estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after
the date the amount becomes payable, payment shall be deposited
with the court having jurisdiction over the estate of the minor.
"Board of Directors" and "Board" shall mean the Board
of Directors of International Rectifier Corporation, or the duly
authorized and appointed Executive Committee of the Board of
Directors of International Rectifier Corporation.
"Break in Employment" shall mean any termination of
Employment by reason of resignation, discharge, retirement,
Disability or death.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean the Committee appointed pursuant
to the provisions of this Plan.
"Company" shall mean International Rectifier
Corporation, a Delaware corporation, any predecessor corporation,
or any successor corporation resulting from merger,
consolidation, or transfer of assets substantially as a whole
which shall expressly agree in writing to continue this Plan and,
where the context so warrants, any Participating Affiliate.
"Company Contributions" shall mean an amount
contributed to this Plan by the Company or by a Participating
Affiliate in accordance with Section 3.1.
"Company Stock" shall mean the common stock of
International Rectifier Corporation.
"Compensation" shall mean all compensation paid by the
Company or a Participating Affiliate to the Employee during the
Plan Year and reportable on Form W-2, including any amounts
contributed to a plan qualifying under Section 401(k) of the Code
as salary reduction contributions or to a cafeteria plan under
Section 125 of the Code. Compensation shall not include (i) any
amounts paid to an Employee prior to the date on which he or she
became a Participant pursuant to Section 2.1, and (ii) any amount
of moving or relocation expenses paid or reimbursed by the
Company or a Participating Affiliate.
Notwithstanding the foregoing, the maximum amount of an
Employee's Compensation which shall be taken into account under
the Plan for any Plan Year ("Maximum Compensation Limitation")
shall be (i) $200,000 for Plan Years beginning on or after
January 1, 1989, (ii) $150,000 for Plan Years beginning on or
after January 1, 1994, and (iii) $160,00 for Plan Years beginning
on or after January 1, 1997, such limitation adjusted at the same
time and in the same manner as under Sections 401(a)(17) and
415(d) of the Code. For any Plan Year of fewer than twelve
months, the Maximum Compensation Limitation shall be reduced to
the amount obtained by multiplying such limitation by a fraction
having a numerator equal to the number of months in the Plan Year
and a denominator equal to twelve.
"Compensation Deferrals" shall mean an amount
contributed to this Plan by the Company in lieu of being paid to
a Participant as salary or wages. Compensation Deferrals shall
be made under salary reduction arrangements between each
Participant and the Company with respect to salary or wages not
yet paid or otherwise available to the Participant as of the date
of the Participant's election under the arrangement. Section 3.2
contains the provisions under which Compensation Deferrals may be
made.
"Compensation Deferral Account" shall mean the Account
maintained for each Participant that is credited with Company
payments to the Plan attributable to the Participant's
Compensation Deferrals that are credited in accordance with
Section 3.2 on behalf of each such Employee, together with the
allocations thereto as required by the Plan.
"Disability" shall mean that a Participant is disabled
due to sickness or injury which qualifies the Participant for
disability payments under the Company's long term disability
plan. A Participant shall be considered totally and permanently
disabled on the date he qualifies for such long term disability
payments.
"Discretionary Employer Contributions" shall mean an
amount contributed to this Plan by the Company in accordance with
Section 3.4.
"Discretionary Employer Contributions Account" shall
mean the Account maintained for each Participant that is credited
in accordance with Section 3.4 on behalf of each such
Participant.
"Effective Date" shall mean April 1, 1988, which was
the original effective date of the Plan. This restatement is
effective January 1, 1997.
"Eligible Employee" shall mean any Employee of the
Company; except that there shall be excluded all leased employees
described in Section 414(n) of the Code, those Employees covered
by a collective bargaining agreement between the Company and any
collective bargaining representative if retirement benefits were
the subject of good faith bargaining between such representative
and the Company, unless the Employee is a member of a group of
employees to whom this Plan has been extended by such a
collective bargaining agreement, and Employees who are
nonresident aliens and receive no United States source income.
"Employee" shall mean every person employed by the
Company, or a Related Company, including any leased employee
described in Section 414(n) of the Code and any other individual
required to be treated as employed by the Company or a Related
Company under Section 414(o) of the Code.
"Employment Commencement Date" means the date on which
the Employee first completes an Hour of Service.
"Employer Matching Contribution" shall mean an amount
contributed to this Plan by the Company or by a Participating
Affiliate in accordance with Section 3.3.
"Employer Matching Contributions Account" shall mean
the Account maintained for each Participant that is credited with
payments to the Plan by the Company and any Participating
Affiliate in accordance with Section 3.3 on behalf of each such
Participant, together with the allocations thereto as required by
the Plan.
"Employment" shall mean that period of actual service
to the Company or a Related Company as an Employee following an
Employee's date of employment, or his most recent date of
reemployment, whichever is later. It shall also include the
following period or periods of absence from actual service if the
Employee was in the service of the Company or a Related Company
on the day prior to such a period:
(a) Service in the Armed Forces of the United
States or the Public Health Service of the United States as
a result of which such Employee is entitled to reemployment
rights from the Company pursuant to the provisions of
Section 2021 et seq. of Title 38 of the United States Code,
provided that the Employee returns to work within the time
period specified in such provisions.
(b) Leaves of absence granted (either before or
after the absence) by the Company in accordance with
nondiscriminatory policies for any purpose, including, but
not limited to, sickness or accident, or for the convenience
of the Company, and vacation periods and temporary layoffs
for lack of work.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"Fiduciary" shall mean all persons defined in Section
3(21) of ERISA associated in any manner with the control,
management, operation, and administration of the Plan or the
assets of the Plan, and such term shall be construed as including
the term "Named Fiduciary" with respect to those Fiduciaries
named in the Plan or who are identified as Fiduciaries pursuant
to procedures specified in the Plan.
"Highly Compensated Employee" shall mean
(a) Any Employee who performs services for the
Company or any Related Company who (i) was a 5% owner of the
Company or any Related Company at any time during the Plan
Year or the preceding Plan Year; or (ii) for the preceding
Plan Year, received compensation from the Company or any
Related company in excess of $80,000 (as adjusted pursuant
to Section 415(d) of the Code) and for the preceding Plan
Year was a member of the "top-paid group" for such year.
(b) Any Employee who separated from service (or
was deemed to have separated) prior to the current Plan
Year, performs no services for the Company or any Related
Company during the current Plan Year, and who met the
description in (a) above for the year of his or her
separation or any year after he or she attained age 55.
(c) The top-paid group for a Plan Year shall
consist of the top 20% of Employees ranked on the basis of
compensation received during the year excluding Employees
described in Section 414(q)(5) of the Code and Treasury
Regulations thereunder. For purposes of this definition of
"Highly Compensated Employee", "compensation" means
compensation within the meaning of Section 415(c)(3) of the
Code, but including elective or salary reduction
contributions to a cafeteria plan, cash or deferred
arrangement or tax-sheltered annuity.
"Hour of Service" shall mean an hour (i) for which an
Employee is paid, or entitled to payment, for the performance of
duties for the Company or a Related Company; (ii) for which the
Employee is paid or entitled to payment by the Company or a
Related Company on account of a period 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; or (iii) for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Company or a Related Company.
"Investment Fund" shall mean one of the funds
established by the Committee for the investment of the assets of
the Plan pursuant to Section 3.9.
"Investment Manager" shall mean a Fiduciary designated
by the Committee under this Plan to whom has been delegated the
responsibility and authority to manage, acquire or dispose of
Plan assets (i) who (1) is registered as an investment adviser
under the Investment Advisers Act of 1940; (2) is a bank, as
defined in that Act; or (3) is an insurance company qualified to
perform investment advisory services under the laws of more than
one state; and (ii) who has acknowledged in writing that he is a
Fiduciary with respect to the management, acquisition, and
control of Plan assets.
"Normal Retirement Age" shall mean a Participant's 65th
birthday or, if later, the date the Participant completes five
Years of Service.
"Participant" shall mean any Employee who becomes
eligible for participation in accordance with the provisions of
this Plan.
"Participating Affiliate" shall mean any Related
Company which, with the approval of the Committee, elects to
participate in this Plan. By electing to participate in this
Plan, a Participating Affiliate agrees to be bound by any Plan or
Trust amendment adopted by resolution of the Board of Directors,
by the written instrument of any person to whom the Board of
Directors has delegated its authority to adopt the amendment or
by any other method of amendment permitted under the Plan. If a
Participating Affiliate ceases to be a Related Company, except by
merger with its parent, the employment of each Employee of the
Participating Affiliate shall be deemed to have terminated for
purposes of this Plan, except to any extent any such Employee is
required by law to continue to be treated under the Plan as an
Employee of the Company.
"Plan" shall mean the International Rectifier
Corporation Retirement Savings Plan set forth herein, now in
effect or hereafter amended.
"Plan Year" shall mean the twelve-consecutive month
period ending on December 31. The Plan Year shall be the
limitation year for purposes of Section 415 of the Code.
"Related Company" shall mean (i) each corporation which
is a member of a controlled group of corporations (within the
meaning of Section 1563(a) of the Code, determined without regard
to Section 1563(a)(4) and (e)(3)(C) thereof) of which the Company
is a component member, (ii) each entity (whether or not
incorporated) which is under common control with the Company, as
such common control is defined in Section 414(c) of the Code and
Regulations issued thereunder, (iii) any organization which is a
member of an affiliated service group (within the meaning of
Section 414(m) of the Code) of which the Company or a Related
Company is a member, and (iv) any organization which is required
by regulations issued under Section 414(o) of the Code to be
treated as a Related Company. For the purposes of Article IV of
this Plan the phrase "more than 50 percent" shall be substituted
for the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1) of the Code. The term "Related Company" shall
also include each predecessor employer to the extent required by
Section 414(a) of the Code. Notwithstanding the foregoing, an
organization shall not be considered a Related Company for any
purpose under the Plan prior to the date it is considered
affiliated under clauses (i) through (iv) above.
"Rollover Account" shall mean the Account maintained
for a Participant that is credited with the amount, if any,
received by the Plan in accordance with Section 3.5 as a rollover
contribution, as defined in Section 402(c)(5) of the Code,
together with the allocations thereto as required by the Plan.
"Trust" shall mean the trust which is established to
hold and invest contributions under this Plan.
"Trustee" (or "Trustees," if more than one is appointed
and acting) shall mean the trustee or trustees, whether original
or successor, appointed under the Trust.
<PAGE>
ARTICLE II
PARTICIPATION
2.1 - Eligibility Requirements.
Each Eligible Employee who was a Participant on January
1, 1997 shall remain a Participant. Each other Eligible Employee
shall become a Participant in the Plan on the first day of the
payroll period which falls immediately after the later of (i) the
date which is 90 days after his or her Employment Commencement
Date, or (ii) the date on which he or she attains age 18.
2.2 - Participation.
Participation of a Participant shall commence as of the
date specified in Section 2.1 and shall continue during the
Participant's Employment with the Company and until the
occurrence of a Break in Employment.
2.3 - Reemployment.
(a) An Employee who has met the eligibility
requirements described herein but who incurs a Break in
Employment prior to becoming a Participant and is later
reemployed as an Eligible Employee shall become a Participant as
of the first day of the payroll period which falls on or
immediately after the date which is 90 days after the date that
he or she first performs an Hour of Service after his or her
period of severance.
(b) A Participant who incurs a Break in Employment and
is later reemployed as an Eligible Employee shall resume
participation immediately upon his reemployment.
2.4 - Designation of Beneficiary.
Upon forms provided by the Committee, each Employee who
becomes a Participant shall designate in writing the Beneficiary
or Beneficiaries whom such Employee desires to receive any
benefits payable under this Plan in the event of such Employee's
death. A Participant may from time to time change his designated
Beneficiary or Beneficiaries without the consent of such
Beneficiary or Beneficiaries by filing a new designation in
writing with the Committee. However, if a married Participant
wishes to designate a person other than his spouse as
Beneficiary, such designation shall be consented to in writing by
the spouse, which consent shall acknowledge the effect of the
designation and be witnessed by a Plan representative or a notary
public. The Participant may change any election designating a
Beneficiary or Beneficiaries without any requirement of further
spousal consent if the spouse's consent so provides.
Notwithstanding the foregoing, spousal consent shall be
unnecessary if it is established (to the satisfaction of a Plan
representative) that there is no spouse or that the required
consent cannot be obtained because the spouse cannot be located,
or because of other circumstances prescribed by Treasury
Regulations. The Company, the Committee and the Trustee may rely
upon his designation of Beneficiary or Beneficiaries last filed
in accordance with the terms of this Plan. Upon the dissolution
of marriage of a Participant, any designation of the
Participant's former spouse as a Beneficiary shall be treated as
though the Participant's former spouse had predeceased the
Participant, unless (i) the Participant executes another
Beneficiary designation that complies with this Section 2.4 and
that clearly names such former spouse as a Beneficiary, or (ii) a
court order presented to the Committee prior to distribution on
behalf of the Participant explicitly requires the Participant to
continue to maintain the former spouse as the Beneficiary. In
any case in which the Participant's former spouse is treated
under the Participant's Beneficiary designation as having
predeceased the Participant, no heirs or other beneficiaries of
the former spouse shall receive benefits from the Plan as a
Beneficiary of the Participant except as provided otherwise in
the Participant's Beneficiary designation.
<PAGE>
ARTICLE III
CONTRIBUTIONS
3.1 - Company Contributions.
(a) The Company and each Participating Affiliate shall
contribute to the Trust for each Plan Year, beginning with the
first Plan Year, the amounts required pursuant to Sections 3.2
and 3.3, and may contribute amounts pursuant to Section 3.4.
(b) In no event shall the aggregate contribution for
any Plan Year made by the Company and any Participating
Affiliates under Sections 3.2, 3.3 and 3.4, and under any other
profit sharing or stock bonus plan(s) maintained by the Company
or a Participating Affiliate, exceed 15% of the Compensation paid
or accrued to all Participants, plus the amount of any "unused
pre-87 limitation carryforwards" available under Section
404(a)(3)(A) of the Code. The Compensation taken into account
for purposes of the preceding sentence shall be Compensation paid
or accrued during the Company's taxable year ending with or
within the Plan Year to which the Company contribution relates.
3.2 - Compensation Deferrals.
(a) Subject to the limitations in Sections 3.1, 3.6,
3.7 and 4.1, each Participant may elect Compensation Deferrals,
in the manner prescribed by the Committee, in whole percentages
from 2% to 20%. A Participant's election to commence
Compensation Deferrals shall be effective no earlier than the
first day of the first payroll period commencing in the month
following the Committee's receipt of such election. The
Committee may permit telephonic elections. The Participant's
compensation shall be reduced by the amount of his Compensation
Deferrals, which shall be credited to the Participant's
Compensation Deferral Account, and shall be made in accordance
with rules established by the Committee.
(b) A Participant's Compensation Deferral percentage
will remain in effect, notwithstanding any change in Com-
pensation, until the Participant elects to change the percentage.
A Participant may elect at any time to suspend, change or resume
Compensation Deferrals, provided he makes an election in the
manner prescribed by the Committee. The Committee may permit
telephonic elections. After the Committee receives a
Participant's election to suspend, change or resume Compensation
Deferrals, such election shall be effective as of the first day
of the first payroll period in the month following the
Committee's receipt of such election.
(c) To make Compensation Deferrals under this Section,
the Company will reduce the Participant's compensation in the
amount authorized by the Participant and make a contribution to
the Trustee equal to such reduction as of the earliest date on
which such amount can reasonably be segregated from the Company's
general assets; provided, however, that such contribution shall
be made no later than the fifteenth business day of the month
following the date on which such amount would otherwise have been
payable to the Participant in cash, or as of such earlier or
later date (in the case of any available extensions of time) as
may be required or permitted by regulations issued pursuant to
ERISA. Compensation Deferrals constitute Company contributions
under the Plan and are intended to qualify as elective contribu-
tions under Code Section 401(k).
(d) As of the last day of the Plan Year, the Committee
shall determine the amount of Compensation Deferrals in excess of
those permitted under Section 3.7 of the Plan, and any excess
shall be distributed to the Participant responsible for the
excess Compensation Deferral in accordance with the Code,
Treasury Regulations and Section 3.7(d).
3.3 - Employer Matching Contributions.
(a) Subject to the limitations of Section 3.1, 3.8 and
4.1, for each payroll period the Company shall make an Employer
Matching Contribution to the Plan equal to 150% of the first $200
of Compensation deferred by each Participant during the Plan
Year, plus 50% of the next $1,400 of Compensation deferred by
each Participant during the Plan Year, plus 25% of the next $800
of Compensation deferred by each Participant during the Plan
Year. The aggregate Employer Matching Contributions made by the
Company in any Plan Year with respect to any Participant shall
not exceed $1,200. The Company shall pay to the Trustee the
Employer Matching Contribution for any Plan Year within the time
prescribed by law, including extensions of time, for the filing
of the Company's federal income tax return for the Company's
taxable year ending with or within the Plan Year to which the
contribution relates.
(b) The Employer Matching Contributions for any
payroll period shall be allocated to the Employer Matching
Contributions Account maintained for the Participant on behalf of
whom the contribution under Section 3.3(a) was made.
3.4 - Discretionary Employer Contributions.
(a) Subject to the limitations of Sections 3.1 and
4.1, the Board of Directors, in its sole discretion, may provide
that the Company shall make a Discretionary Employer Contribution
in any Plan Year. The amount and timing of any such contribution
shall be determined by the Board of Directors. Discretionary
Employer Contributions may be in the form of cash or Company
Stock. In the event of a Discretionary Employer Contribution in
the form of Company Stock, the Company Stock shall be valued as
of the date it is contributed to the Plan. Discretionary
Employer Contributions shall be allocated equally among all
Participants who are Employees as of the last day of the payroll
period with respect to which the contribution is being made.
(b) The Discretionary Employer Contributions for any
payroll period shall be allocated to the Discretionary Employer
Contributions Account maintained for the Participant on behalf of
whom the contribution under Section 3.4(a) was made. Each
Discretionary Employer Contributions Account shall thereupon be
credited with the appropriate number of shares (if any, or
fractional shares) of Company Stock contributed as Discretionary
Employer Contributions pursuant to Section 3.4(a).
3.5 - Rollover Contributions.
(a) An Eligible Employee, regardless of whether he has
satisfied the participation requirements of Section 2.1 who, as a
result of a termination of employment, disability or attainment
of age 59-1/2, has received a distribution from a plan which
meets the requirements of Section 401(a) of the Code may, in
accordance with procedures approved by the Committee, transfer
the distribution received from the other plan to the Trust;
provided that the distribution is eligible for rollover treatment
and exclusion from the gross income of the Participant in
accordance with Section 402(c) of the Code.
(b) The Committee shall develop such procedures, and
may require such information from an Employee desiring to make
such a transfer, as it deems necessary or desirable to determine
that the proposed transfer will meet the requirements of this
Section. Upon approval by the Committee, the amount transferred
shall be deposited in the Trust and shall be credited to an
account which shall be referred to as the "Rollover Account."
Such account shall be 100% vested in the Employee and shall share
in income allocations as provided in the Plan, but shall not
share in Company contribution allocations. Upon termination of
employment, the total amount of the Employee's Rollover Account
shall be distributed in accordance with Article VI.
(c) Upon such transfer by an Eligible Employee who has
not yet completed the participation requirements of Section 2.1,
his Rollover Account shall represent his sole interest in the
Plan until he becomes a Participant.
3.6 - Section 402(g) Limit on Compensation Deferrals.
(a) Compensation Deferrals made on behalf of any
Participant under this Plan and all other plans (which are
described in Section 3.6(c)) maintained by the Company or a
Related Company shall not exceed the limitation under Code
Section 402(g)(1) for the taxable year of the Participant, as
adjusted annually under Section 402(g)(5) of the Code, and shall
be effective as of January 1 of each calendar year.
(b) In the event that the dollar limitation provided
for in Section 3.6(a) is exceeded, the Participant is deemed to
have requested a distribution of the excess amount by the first
March 1 following the close of the Participant's taxable year,
and the Committee shall distribute such excess amount, and any
income allocable to such amount, to the Participant by April
15th.
(c) In the event that a Participant is also a
participant in (i) another qualified cash or deferred arrangement
as defined in Section 401(k) of the Code, (ii) a simplified
employee pension, as defined in Section 408(k) of the Code, or
(iii) a salary reduction arrangement, within the meaning of
Section 3121(a)(5)(D) of the Code, and the elective deferrals, as
defined in Section 402(g)(3) of the Code, made under such other
arrangement(s) and this Plan cumulatively exceed the dollar limit
under Section 3.6(a) for such Participant's taxable year, the
Participant may, not later than March 1 following the close of
his taxable year, notify the Committee in writing of such excess
and request that the Compensation Deferrals made on his behalf
under this Plan be reduced by an amount specified by the
Participant. The Committee may then determine to distribute such
excess in the same manner as provided in Section 3.6(b).
3.7 - Section 401(k) Limitations on Compensation Deferrals.
(a) The Committee will estimate, as soon as practical
before the close of the Plan Year and at such other times as the
Committee in its discretion determines, the extent, if any, to
which Compensation Deferral treatment under Section 401(k) of the
Code may not be available to any Participant or class of
Participants. In accordance with any such estimate, the
Committee may modify the limits in Section 3.2(a), or set initial
or interim limits, for Compensation Deferrals relating to any
Participant or class of Participants. These rules may include
provisions authorizing the suspension or reduction of
Compensation Deferrals above a specified dollar amount or
percentage of Compensation.
(b) For each Plan Year, an actual deferral percentage
will be determined for each Participant equal to the ratio of the
total amount of the Participant's Compensation Deferrals
allocated under Section 3.2(a) for the Plan Year divided by the
Participant's Compensation in the Plan Year. For purposes of
this Section 3.7, "Compensation" shall meet the requirements of
Section 414(s) of the Code and Treasury Regulations. An Em-
ployee's Compensation taken into account for this purpose shall
be limited to Compensation received during the Plan Year while
the Employee is a Participant. Except as otherwise provided in
this Section 3.7(b), with respect to Participants who have made
no Compensation Deferrals under this Plan, such actual deferral
percentage will be zero.
(c) The average of the actual deferral percentages for
Highly Compensated Employees in the Plan Year (the "High
Average") when compared with the average of the actual deferral
percentages for non-Highly Compensated Employees in the preceding
Plan Year (the "Low Average") must meet one of the following
requirements:
(1) The High Average is no greater than 1.25
times the Low Average; or
(2) The High Average is no greater than two times
the Low Average, and the High Average is no greater than the
Low Average plus two percentage points.
(d) If, at the end of a Plan Year, a Participant or
class of Participants has excess Compensation Deferrals, then the
Committee may elect, at its discretion, to pursue any of the
following courses of action or any combination thereof:
(1) Excess Compensation Deferrals, and any
earnings attributable thereto through the end of the Plan
Year, may be distributed to the Participant within the 2-1/2
month period following the close of the Plan Year to which
the excess Compensation Deferrals relate to the extent
feasible, but in all events no later than 12 months after
the close of such Plan Year.
Any such excess Compensation Deferrals distributed
from the Plan with respect to a Participant for a Plan Year
shall be reduced by any amount previously distributed to
such Participant under Section 3.6(b) for the Participant's
taxable year ending with or within such Plan Year.
(2) The Company, in its discretion, may make a
contribution to the Plan, which will be allocated as a fixed
dollar amount among the Accounts of some or all non-Highly
Compensated Employees (as determined by the Company) who
have (i) met the requirements of Section 2.1, (ii) who have
completed more than 500 Hours of Service in the relevant
Plan Year, and (iii) who are Employees on the last day of
the Plan Year. Such contributions shall be fully (100%)
vested at all times, and shall be subject to the withdrawal
restrictions which are applicable to Compensation Deferrals.
Such contributions shall be considered "Qualified Non-
Elective Contributions" under applicable Treasury
Regulations.
(e) Excess Compensation Deferrals shall be determined
by the Committee in accordance with this Section 3.7(e). The
Committee shall calculate a tentative reduction amount to the
Compensation Deferrals of the Highly Compensated Employee(s) with
the highest actual deferral percentage equal to the amount which,
if it were actually reduced, would enable the Plan to meet the
limits in (c) above, or to cause the actual deferral percentage
of such Highly Compensated Employee(s) to equal the actual
deferral percentage of the Highly Compensated Employee(s) with
the next-highest actual deferral percentage, and the process
shall be repeated until the limits in (c) above are satisfied.
The aggregate amount of the tentative reduction amounts in the
preceding sentence shall constitute "Refundable Contributions".
The entire aggregate amount of the Refundable Contributions shall
be refunded to Highly Compensated Employees. The amount to be
refunded to each Highly Compensated Employee (which shall
constitute his excess Compensation Deferrals) shall be determined
as follows: (i) the Compensation Deferrals of the Highly
Compensated Employee(s) with the highest dollar amount of
Compensation Deferrals shall be refunded to the extent that there
are Refundable Contributions or to the extent necessary to cause
the dollar amount of Compensation Deferrals of such Highly
Compensated Employee(s) to equal the dollar amount of
Compensation Deferrals of the Highly Compensated Employee(s) with
the next-highest Compensation Deferrals, and (ii) the process in
the foregoing clause shall be repeated until the total amount of
Compensation Deferrals refunded equals the total amount of
Refundable Contributions. The earnings attributable to excess
Compensation Deferrals will be determined in accordance with
Treasury Regulations. The Committee will not be liable to any
Participant (or his Beneficiary, if applicable) for any losses
caused by inaccurately estimating or calculating the amount of
any Participant's excess Compensation Deferrals and earnings
attributable to the Compensation Deferrals.
(f) If the Committee determines that an amount to be
deferred pursuant to the election provided in Section 3.2 would
cause Company contributions under this and any other tax-
qualified retirement plan maintained by any Company to exceed the
applicable deduction limitations contained in Section 404 of the
Code, or to exceed the maximum Annual Addition determined in
accordance with Article IV, the Committee may treat such amount
in accordance with the rules in Section 3.7(d)(1) hereof.
(g) In the discretion of the Committee, the tests
described in this section may be applied by aggregating the Plan
with any other defined contribution plans permitted under the
Code. For purposes of determining whether the Plan satisfies the
requirements of this Section 3.7, all Compensation Deferrals and
Elective Contributions under any other Plan maintained by the
Company which is aggregated with this Plan for purposes of
Section 401(a) or 410(b) of the Code (other than Section
410(b)(2)(A)(ii)) are to be treated as made under a single plan.
Furthermore, if two or more plans are permissively aggregated for
purposes of the test described in this section, the aggregated
plans must also satisfy Code Sections 401(a)(4) and 410(b) as
though they were a single plan.
3.8 - Section 401(m) Limitations on Employer Matching
Contributions.
(a) The Committee will estimate, as soon as practical,
before the close of the Plan Year and at such other times as the
Committee in its discretion determines, the extent, if any, to
which Employer Matching Contributions may not be available to any
Participant or class of Participants under Code Section 401(m).
In accordance with any such estimate, the Committee may modify
the percentages in Section 3.3 or set initial or interim limits
or percentages, for Employer Matching Contributions relating to
any Participant or class of Participants. After determining the
amount of excess Compensation Deferrals, if any, under
subsections 3.7(a) and (b), the Committee shall determine the
aggregate contribution percentage under (b) below.
(b) For each Plan Year, a contribution percentage will
be determined for each Participant equal to the ratio of the
total amount of the Participant's Employer Matching Contributions
allocated under Sections 3.3 and 3.4 for the Plan Year divided by
the Participant's Compensation in the Plan Year. For purposes of
this Section 3.8, "Compensation" shall meet the requirements of
Section 414(s) of the Code and Treasury Regulations. For
purposes of this Section 3.8, the Company, in its sole
discretion, may treat all or any part of its Compensation
Deferrals as Employer Matching Contributions to the extent
permitted by Treasury Regulations. To the extent Compensation
Deferrals are treated as Employer Matching Contributions for
purposes of this Section 3.8, the Plan must satisfy Section
3.7(b) by excluding such amounts from Compensation Deferrals. An
Employee's Compensation taken into account for this purpose shall
be limited to Compensation received during the Plan Year while
the Employee is a Participant. Except as otherwise provided in
this Section 3.8(b), with respect to Participants for whom there
were no Employer Matching Contributions under this Plan, such
contribution percentage will be zero.
(c) The average of the contribution percentages for
Highly Compensated Employees in the Plan Year ("High Average")
when compared with the average of the contribution percentages
for non-Highly Compensated Employees in the preceding Plan Year
("Low Average") must meet one of the following requirements:
(1) The High Average is no greater than 1.25
times the Low Average; or
(2) The High Average is no greater than two times
the Low Average, and the High Average is no greater than the
Low Average plus two percentage points.
(d) If, at the end of a Plan Year, a Participant or a
class of Participants has excess contributions, then the
Committee may elect, at its discretion, to pursue any of the
following courses of action or any combination thereof:
(1) Excess Employer Matching Contributions (and
any earnings attributable thereto through the end of the
Plan Year) attributable to excess Compensation Deferrals
under Section 3.6 or 3.7 may be forfeited.
(2) Excess Employer Matching Contributions (and
any earnings attributable thereto through the end of the
Plan Year) that are not vested may be forfeited.
(3) Excess Employer Matching Contributions (and
any earnings attributable thereto through the end of the
Plan Year) will be distributed to the Participant within the
2-1/2 month period following the close of the Plan Year to
the extent feasible, and in all events no later than 12
months after the close of Plan Year.
(4) Notwithstanding the foregoing, the conditions
in this paragraph (4) must be met if there are Employer
Matching Contributions allocated to a Participant which are
attributable to excess Compensation Deferrals under Section
3.6 or 3.7. In such case, such Employer Matching
Contributions shall not be allocated to the Account of any
Participant who had excess Employer Matching Contributions
in such Plan Year. In addition, Employer Matching
Contributions remaining in the Plan allocated to the
Participant after satisfying Section 3.8 cannot exceed the
amount which may be allocated under Section 3.3 when taking
into account only those Compensation Deferrals remaining in
the Plan after satisfying Sections 3.6, 3.7 and 3.8. Any
such excess Employer Matching Contributions (and earnings
attributable thereto) must be forfeited or distributed
pursuant to paragraphs (1), (2) or (3) above.
(e) Excess Employer Matching Contributions shall be
determined by the Committee in accordance with this Section
3.8(e). The Committee shall calculate a tentative reduction
amount to the Employer Matching Contributions made with respect
to the Highly Compensated Employee(s) with the highest
contribution percentage equal to the amount which, if it were
actually reduced, would enable the Plan to meet the limits in (c)
above, or to cause the contribution percentage of such Highly
Compensated Employee(s) to equal the actual contribution
percentage of the Highly Compensated Employee(s) with the
next-highest contribution percentage, and the process shall be
repeated until the limits in (c) above are satisfied. The
aggregate amount of the tentative reduction amounts in the
preceding sentence shall constitute "Refundable Matching
Contributions". The entire aggregate amount of the Refundable
Matching Contributions shall be refunded to Highly Compensated
Employees. The amount to be refunded to each Highly Compensated
Employee (which shall constitute his excess Employer Matching
Contributions) shall be determined as follows: (i) the Employer
Matching Contributions made with respect to the Highly
Compensated Employee(s) with the highest dollar amount of
Employer Matching Contributions shall be refunded to the extent
that there are Refundable Matching Contributions or to the extent
necessary to cause the dollar amount of Employer Matching
Contributions of such Highly Compensated Employee(s) to equal the
dollar amount of Employer Matching Contributions made with
respect to the Highly Compensated Employee(s) with the
next-highest Employer Matching Contributions, and (ii) the
process in the foregoing clause shall be repeated until the total
amount of Employer Matching Contributions refunded equals the
total amount of Refundable Matching Contributions. The earnings
attributable to excess contributions will be determined in accor-
dance with Treasury Regulations. The Committee will not be
liable to any Participant (or to his Beneficiary, if applicable)
for any losses caused by inaccurately estimating or calculating
the amount of any Participant's excess contributions and earnings
attributable to the contributions.
(f) The tests of Sections 3.7(c) and 3.8(c) shall be
met in accordance with the prohibition against the multiple use
of the alternative limitation under Code Section 401(m)(9). For
purposes of determining whether the Plan satisfies the
requirements of this Section, all Compensation Deferrals and
Matching Contributions under any other Plan maintained by he
Company which is aggregated with this Plan for purposes of
Section 401(a) or 410(b) of the Code (other than Section
410(b)(2)(A)(ii)) are to be treated as made under a single plan.
Furthermore, if two or more plans are permissively aggregated for
purposes of the test described in this section, the aggregated
plans must also satisfy Code Sections 401(A)(4) and 410(b) as
thought they were a single plan. If it is necessary to make
corrections concerning the prohibition against the multiple use
of the alternative limitation under Code Section 401(m)(9), the
correction shall be made by reducing and refunding the
Compensation Deferrals of Highly Compensated Employees. All
Highly Compensated Employees shall be subject to such correction.
3.9 - Investment Funds.
(a) Separate Investment Funds shall be established and
maintained by the Committee under this Plan. The Committee may,
in its discretion, terminate any Investment Fund. Pursuant to
Section 7.3(b), the Committee shall determine the number of
Investment Funds and the Committee, the Trustee or the Investment
Manager shall determine the investments to be made under the
Investment Funds. One Investment Fund shall be a Company Stock
Fund, which is a pool of assets maintained by the Trustee,
invested in Company Stock (except for cash or cash equivalents
pending distribution or investment and a short-term investment
component which may be retained in the Committee's discretion to
provide liquidity for such fund). Any cash dividends on Company
Stock in the Company Stock Fund shall be reinvested in Company
Stock.
(b) Pursuant to rules established by the Committee and
subject to the provisions of this Section, each Participant shall
have the right and obligation to designate in which of the
Investment Funds his Accounts will be invested, and to change
such designation. The designation shall be on such forms as are
established by the Committee or pursuant to such other methods
(including telephonic transfers if authorized by the Committee).
The Committee shall describe to the Participants the investments
to be made under each Investment Fund in such detail as the
Committee deems appropriate in its sole discretion. Up to 100%
of the Trust assets may be invested in Company Stock; the amount
of Trust assets that may be invested in Company Stock will be the
amount selected by the Participants to be so invested. If a
Participant does not make an election with respect to the
investment of his Accounts, they will be invested in the fund
selected by the Committee as announced to Participants.
(c) Participant loans made pursuant to this Plan shall
not be included in any of the Investment Funds. Instead, for any
Participant who takes such a loan, such loan shall be considered
an investment of his Accounts. Such Participant's Accounts shall
be credited with the investment gain or loss attributable to such
loan. The Committee may establish other rules, regulations, and
procedures regarding the Investment Funds as it deems appropriate
in its sole discretion.
3.10 - Valuation of Accounts.
(a) The value of the Accounts invested in the
Investment Funds shall be established on each business day by the
Trustee or the applicable Investment Manager, and investment
gains and losses shall be allocated to such Accounts according to
the investment elections of Participants.
(b) Notwithstanding anything to the contrary herein,
if the Committee determines that an alternative method of
allocating earnings and losses would better serve the interests
of Participants and Beneficiaries or could be more readily
implemented, the Committee may substitute such alternative;
provided that any such alternative method must result in Plan
earnings being allocated on the general basis of Account
balances.
(c) Amounts invested in the Company Stock Fund shall
be invested in Company Stock (except for cash or cash equivalents
pending distribution or investment and a short-term investment
component which may be retained in the Committee's discretion to
provide liquidity for such fund). Each Participant's Account
shall be credited with a number of units (which represent
proportionate interests in the Company Stock Fund) that can be
purchased with the amount that such Participant has designated to
be invested in the Company Stock Fund. Cash dividends received
on the Company Stock shall be used to purchase additional shares
of Company Stock. Stock dividends and stock splits on the
Company Stock shall be reflected by an adjustment to the number
of shares of Company Stock held in the Company Stock Fund.
(d) Full and fractional shares of Company Stock
allocated to a Participant's Accounts will be voted by the
Trustee according to the Participant's instructions. The Trustee
will not vote shares of stock allocated to Participant's Accounts
for which instructions are not received from Participants.
Shareholder rights with respect to Company Stock, other than
voting rights, which can be exercised by Participants may be
passed through to Participants and exercised in a similar manner
to voting rights or will be exercised in such other manner as is
legally required. However, where the circumstances (such as the
lack of time or the lack of liquid funds to satisfy a requirement
to pay for additional shares of stock) make it impractical to
pass such rights through to Participants and no other specific
legal requirement exists, the rights will be exercised (or sold)
by the Trustee in a manner that the Trustee deems prudent under
the circumstances and otherwise consistent with the fiduciary
standards of ERISA.
3.11 - Rule 16b-3 Provisions.
The Committee may (but need not) adopt such rules
and/or take such actions or implement such measures and/or
limitations as it deems desirable in order to comply with 17
C.F.R. 240.16b-3, promulgated under Section 16 of the Securities
Exchange Act of 1934 ("SEC Section 16"). Neither the Company,
the Board, the Committee, the Investment Manager, the Trustee nor
the Plan shall have any liability to any Participant in the event
that any Participant has any liability under SEC Section 16 due
to any rule so adopted, the failure to adopt any rule, any Plan
provision (or lack thereof), or any transaction under the Plan.
3.12 - Section 404(c) Provisions.
(a) This Plan is intended to constitute a plan
described in Section 404(c) of ERISA, and the regulations
thereunder. As a result, with respect to elections described in
this Plan and any other exercise of control by a Participant or
his or her Beneficiary over assets in the Participant's Accounts,
such Participant or Beneficiary shall be solely responsible for
such actions and neither the Trustee, the Committee, the Company,
an Investment Manager nor any other person or entity which is
otherwise a Fiduciary shall be liable for any loss or liability
which results from such Participant's or Beneficiary's exercise
of control.
(b) The Committee shall provide to each Participant or
his or her Beneficiary the information described in Section
2530.404b-1(b)(2)(i)(B)(1) of the Department of Labor
Regulations. Upon request by a Participant or his or her
Beneficiary, the Committee shall provide the information
described in Section 2530.404b-1(b)(2)(i)(B)(2) of the Department
of Labor Regulations.
(c) The Committee shall take such actions and
establish such procedures as it deems necessary to ensure the
confidentiality of information relating to the purchase, sale,
and holding of Company Stock, and the exercise of voting, tender
and similar rights with respect to such stock by a Participant or
his or her Beneficiary. Notwithstanding the foregoing, such
information may be disclosed to the extent necessary to comply
with applicable state and federal laws.
(d) In the event of a tender or exchange offer with
respect to the Company, or in the event of a contested election
with respect to the Board of Directors, the Company shall, at its
own expense, appoint an independent Fiduciary to carry out the
Committee's administrative functions with respect to the Company
Stock Fund. Such independent Fiduciary shall not be an
"affiliate" of the Company as such term is defined in Section
2530.404b-1(e)(3) of the Department of Labor Regulations.
(e) The Committee may take such other actions or
implement such other procedures as it deems necessary or
desirable in order that the Plan comply with Section 404(c)
ERISA.
<PAGE>
ARTICLE IV
LIMITATION ON ANNUAL ADDITIONS
4.1 - Limitation on Annual Additions.
Notwithstanding anything else contained herein, the
Annual Additions, to all the Accounts of a Participant shall not
exceed the lesser of $30,000 (or, if greater, 1/4 of the defined
benefit dollar limitation in effect under Section 415(b)(1) of
the Code for the limitation year) or 25% of the Participant's
Section 415 Compensation from the Company and all Related
Companies during the Plan Year, in accordance with the provisions
of Appendix A attached hereto.
<PAGE>
ARTICLE V
VESTING
A Participant's Compensation Deferral Account, Employer
Matching Contributions Account, Discretionary Employer
Contributions Account and Rollover Account shall be 100% vested
and nonforfeitable at all times.
<PAGE>
ARTICLE VI
DISTRIBUTIONS
6.1 - Distribution of Benefits.
(a) Benefits shall become distributable to a
Participant or his Beneficiary (in the case of death) (i) upon a
Break in Employment or (ii) upon the written request, in such
manner as the Committee may prescribe, of the Participant at any
time on or after such Participant's attainment of age 62.
(b) The amount of the benefits distributable to a
Participant pursuant to (a) above shall be the amount credited to
such Participant's Compensation Deferral Account, Employer
Matching Contributions Account, Discretionary Employer
Contributions Account and Rollover Account as of the date on
which the amount representing the distribution is liquidated from
the Investment Funds pending distribution. The value of the
amount distributed in the form of cash from the portion of a
Participant's Accounts held in the Company Stock Fund shall be
the net proceeds at the sale of the Company Stock liquidated
pending distribution, plus cash for any fractional share which is
not liquidated.
(c) Distributions shall be in the form of a cash lump
sum.
(d) If the nonforfeitable balance in the Participant's
Accounts exceeds $3,500, distribution shall be made upon a Break
in Employment as soon as practicable after the Participant
consents to a distribution of the nonforfeitable balance of his
Accounts in writing. If the Participant does not consent,
distribution shall be made as soon as practicable following the
later of the Break in Employment or attainment of Normal
Retirement Age. An explanation of the Participant's right to
defer distribution of the nonforfeitable balance of his Accounts
shall be provided to the Participant no less than 30 and no more
than 90 days before the date such distribution is to be made
(consistent with such regulations as the Secretary of the
Treasury may prescribe).
(e) If a terminating Participant consents to immediate
distribution, the nonvested portion of his Accounts, if any,
shall be forfeited and his rights with respect to the forfeited
portion shall be governed by Section 5.2(d).
(f) If the nonforfeitable balance of a terminating
Participant's Accounts is a distribution to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution
may commence less than 30 days after the notice described in
subsection (d) is given, provided that: (i) the Committee
clearly informs the Participant that the Participant has the
right to a period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and (ii) the Participant, after receiving the notice,
affirmatively elects an immediate distribution.
6.2 - Hardship Withdrawals from Compensation
Deferral Accounts and Rollover Accounts.
(a) Subject to the approval of the Committee and
guidelines promulgated by the Committee, withdrawals from the
Participant's Compensation Deferral Account and Rollover Account
may be permitted to meet a financial hardship resulting from:
(1) Uninsured medical expenses previously
incurred by the Participant, or the Participant's spouse or
dependent or necessary to obtain such medical care;
(2) The purchase (excluding mortgage payments) of
a principal residence of the Participant;
(3) The payment of tuition for the next 12 months
of post-secondary education for the Participant, or the
Participant's spouse, children or dependents;
(4) The prevention of eviction of the Participant
from his principal residence, or foreclosure on the mortgage
of the Participant's principal residence; and
(5) Any other event described in Treasury
Regulations or rulings as an immediate and heavy financial
need and approved by the Committee as a reason for
permitting distribution under this section.
The Committee shall determine, in a non-discriminatory manner,
whether a Participant has a financial hardship. A distribution
may be made under this section only if such distribution does not
exceed the amount required to meet the immediate financial need
created by the hardship (including taxes or penalties reasonably
anticipated from the distribution) and is not reasonably
available from other resources of the Participant.
(b) The withdrawal amount shall not in any event
exceed the value of the Participant's Compensation Deferral
Account and/or Rollover Account as of the Valuation Date
immediately following the Committee's acceptance of the
Participant's written application for a hardship withdrawal. In
addition, except as provided otherwise in the following sentence,
the withdrawal amount of any withdrawal pursuant to this
Section 6.2 from a Participant's Compensation Deferral Account
shall not exceed the value of the Participant's Compensation
Deferrals to such Account, less previous withdrawals and
excluding earnings. Notwithstanding the foregoing, any
distribution under this section may include earnings accrued to
the Participant's Compensation Deferral Account prior to 1989.
Payment of the withdrawal shall be in a single sum no later than
the end of the month following the date on which the withdrawal
is approved by the Committee.
(c) A Participant shall not be permitted to make any
withdrawals under this Section 6.2 until he has obtained all
distributions, other than hardship distributions, and all non-
taxable loans currently available under all qualified profit
sharing and retirement plans maintained by the Company or a
Related Company.
(d) The Participant's request for a withdrawal shall
include his written statement that the need cannot be relieved:
(i) through reimbursement or compensation by insurance or
otherwise; (ii) by reasonable liquidation of the Participant's
assets, to the extent such liquidation would not itself cause
immediate and heavy financial need; (iii) by cessation of
Compensation Deferrals under the Plan; or (iv) by other
distributions or nontaxable loans currently available from plans
maintained by the Company or a Related Company, or by borrowing
from commercial sources on reasonable commercial terms.
(e) If a Participant withdraws any amount from his
Compensation Deferral Account and/or Rollover Account pursuant to
this section, he must agree in writing that he shall be unable to
elect that any Compensation Deferrals or any other employee
contributions (excluding mandatory employee contributions to a
defined benefit plan) be made on his behalf under this Plan or
under any other plan maintained by the Company or a Related
Company until one year after receipt of the withdrawal. For
purposes of the preceding sentence, a plan includes any qualified
plan or nonqualified plan of deferred compensation and any stock
purchase or stock option plan, but does not include cafeteria
plans or any other health or welfare benefit plans. In addition,
a Participant who withdraws any amount from his Compensation
Deferral Account and/or Rollover Account pursuant to this section
shall be unable to elect any Compensation Deferrals under this
Plan or under any other plan maintained by the Company or a
Related Company for the Participant's taxable year immediately
following the taxable year of the withdrawal to any extent that
such Compensation Deferral would exceed the applicable limit
under Section 402(g) of the Code for such taxable year, reduced
by the amount of such Participant's Compensation Deferrals for
the taxable year of the withdrawal.
6.3 - Qualified Domestic Relations Orders.
Subject to the procedures established by the Committee
under Section 9.4(b), benefits may be paid from the
nonforfeitable balance of a Participant's Accounts in accordance
with a qualified domestic relations order as defined in Section
414(p) of the Code without regard to whether the Participant has
attained the "earliest retirement age," as defined in Section
414(p) of the Code.
6.4 - Inability to Locate Participant.
In the case of any distribution of an account under
this Plan, if the Committee is unable to make such payment
within three years after payment is due a Participant or
Beneficiary because it cannot locate such Participant or
Beneficiary, the Trustee shall direct that such amount shall be
forfeited and shall be used to reduce the amount the Company is
required to contribute pursuant to Section 3.3. If, after such
forfeiture, the Participant or Beneficiary later claims such
benefit, such account shall be reinstated from forfeitures of
Participants in this Plan occurring during the Plan Year in which
such reinstatement occurs; provided, however, that if such
forfeitures are not sufficient to provide such reinstatement, an
additional Company contribution shall be made for the Plan Year
in which reinstatement occurs to cover such reinstatement.
Establishment of an account through such reinstatement shall not
be deemed an "annual addition" under Section 415 of the Code or
Article IV of the Plan.
6.5 - Limitations on Distributions.
(a) When benefits become distributable, the Committee
shall direct the Trustee to distribute the amount described above
promptly, the payment of such benefits to commence,
notwithstanding anything to the contrary contained herein, no
later than 60 days following the close of the later of the Plan
Year in which (i) a Participant reaches Normal Retirement Age,
(ii) the Participant incurs a Break in Employment, or (iii)
occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan (unless the amount of the
Participant's benefit has not been calculated by that date or the
Participant cannot be located, in which case distribution shall
begin no later than 60 days after the payment can be calculated
or the Participant located).
(b) Notwithstanding anything to the contrary contained
herein, the distribution options under the Plan shall comply with
Section 401(a)(9) of the Code and regulations promulgated
thereunder, which are hereby incorporated by this reference as a
part of the Plan. Accordingly, unless otherwise permitted by
law, the entire interest of each Participant shall be distributed
in a single lump sum, by April 1 of the calendar year following
the calendar year in which the Participant reaches age 70-1/2.
Except as provided by law, a Participant who reached age 70-1/2
before January 1, 1988 and who was not a five percent owner of
the Company at any time during the Plan Year ending with or
within the calendar year in which the Participant attains age 66-
1/2 or thereafter, is not required to receive distribution of his
interest until he separates from service. If a Participant
receives a distribution upon his or her required beginning date
(described above) and continues employment past the required
beginning date, additional distributions shall be made annually
to reflect additional accruals in accordance with Treasury
Regulations. Effective January 1, 1997, the requirement that
distributions commence following age 70-1/2, but before
termination of employment, shall only apply in the case of a
Participant who is a five percent (5%) owner with respect to the
Plan Year in which the Participant attains age 70-1/2. For all
Participants other than the 5% owners referred to in the
preceding sentence, it is intended that distributions prior to
termination of employment be limited to the amount, if any,
required under Code Section 411(d)(6)(B)(ii). Accordingly, (i)
no distribution to such a Participant shall be made unless the
Participant elects to commence distributions, (ii) the amount of
the distributions to such a Participant shall not exceed the
amount which the Participant would have been required to receive,
based upon the Participant's Account balance as of December 31,
1996 under the terms of this Plan as they existed at such time,
and (iii) if, by regulation, ruling or otherwise, it is
established that it is permissible to delay any distributions for
such a Participant until the Participant terminates employment,
then distributions shall be so delayed. In the case of any
Participant whose distributions commenced before January 1, 1997,
distributions shall cease for the 1997 and subsequent Plan Years
if the employee so elects.
6.6 - Direct Rollovers.
(a) This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a Distributee's
election under this Section, if a Distributee will receive an
Eligible Rollover Distribution of at least $200, the Distributee
may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover; provided,
however, that a Distributee may not elect to have an Eligible
Rollover Distribution of less than $500 paid directly to an
Eligible Retirement Plan unless the Distributee elects to have
his or her entire Eligible Rollover Distribution paid directly to
the Eligible Retirement Plan.
(b) Definitions.
(1) An "Eligible Rollover Distribution" is any
distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or joint
life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities); and any other type of distribution
which the Internal Revenue Service announces (pursuant to
regulation, notice or otherwise) is not an Eligible Rollover
Distribution.
(2) An "Eligible Retirement Plan" is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described Section
408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the Surviving Spouse, an
Eligible Retirement Plan is an individual retirement account
or individual retirement annuity.
(3) A "Distributee" includes an Employee or
former Employee. In addition, the Employee's or former
Employee's Surviving Spouse and the Employee's or former
Employee's Spouse or former Spouse who is the alternate
payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are Distributees with regard
to the interest of the Spouse or former Spouse.
(4) A "Direct Rollover" is a payment by the Plan
to the Eligible Retirement Plan specified by the
Distributee.
<PAGE>
ARTICLE VII
THE COMMITTEE
7.1 - Members.
A committee (hereinafter referred to as the
"Committee") shall be appointed by, and shall serve at the
pleasure of, the Board. The number of members comprising the
Committee shall be determined by the Board which may from time to
time vary the number of members. A member of the Committee may
resign by delivering a written notice of resignation to the
Board. The Board may remove any member by delivering a certified
copy of its resolution of removal to such member. Vacancies in
the membership of the Committee shall be filed promptly by the
Board.
7.2 - Committee Action.
The Board shall choose a Chairman for the Committee and
the Committee shall choose a Secretary. The Secretary shall
keep minutes of the Committee's proceedings and all records and
documents pertaining to the Committee's administration of the
Plan. Any action of the Committee shall be taken pursuant to the
vote or written consent of a majority of its members present, and
such action shall constitute the action of the Committee and be
binding upon the same as if all members had joined therein. A
member of the Committee shall not vote or act upon any matter
which relates solely to himself as a Participant. The Chairman
or any other member or members of the Committee designated by the
Chairman may execute any certificate or other written direction
on behalf of the Committee. The Trustee or any third person
dealing with the Committee may conclusively rely upon any
certificate or other written direction so signed.
7.3 - Rights and Duties.
(a) The Company shall be the Plan Administrator (as
defined in Section 3(16)(A) of ERISA.) The Company delegates
its duties under the Plan to the Committee. The Committee shall
act as the Fiduciary with respect to control and management of
the Plan for purposes of ERISA on behalf of the Participants and
their Beneficiaries, shall enforce the Plan in accordance with
its terms, shall be charged with the general administration of
the Plan, and shall have all powers necessary to accomplish its
purposes, including, but not by way of limitation, the following:
(1) To determine all questions relating to the
eligibility of Employees to participate;
(2) To construe and interpret the terms and
provisions of this Plan;
(3) To compute, certify to, and direct the
Trustee with regard to the amount and kind of benefits
payable to Participants and their Beneficiaries;
(4) To authorize all disbursements by the Trustee
from the Trust;
(5) To maintain all records that may be necessary
for the administration of the Plan other than those
maintained by the Trustee;
(6) To provide for the disclosure of all
information and the filing or provision of all reports and
statements to Participants, Beneficiaries or governmental
agencies as shall be required by ERISA or other law, other
than those prepared and filed by the Trustee;
(7) To make and publish such rules for the
regulation of the Plan as are not inconsistent with the
terms hereof;
(8) To appoint a plan administrator or, any other
agent, and to delegate to them or to the Trustee such powers
and duties in connection with the administration of the Plan
as the Committee may from time to time prescribe, and to
designate each such administrator or agent as Fiduciary with
regard to matters delegated to him; and
(9) To make decisions on claims in a manner
consistent with regulations of the Secretary of Labor for
presentation of claims by Participants and Beneficiaries for
Plan benefits, which shall include consideration of such
claims, review of claim denials and issuance of a decision
on review. Such claims decisions shall at a minimum consist
of the following:
(A) The Committee shall notify Participants
and, where appropriate, Beneficiaries of their right to
claim benefits under the claims procedures, and shall
provide the name of the person or persons with whom
such claims should be filed.
(B) The Committee shall act upon claims
initially made and communicate a decision to the
claimant promptly and, in any event, not later than 90
days after the claim is received by the Committee,
unless special circumstances require an extension of
time for processing the claim. If an extension is
required, notice of the extension shall be furnished
the claimant prior to the end of the initial 90-day
period, which notice shall indicate the reasons for the
extension and the expected decision date. The
extension shall not exceed 90 days. The claim may be
deemed by the claimant to have been denied for purposes
of further review described below in the event a
decision is not furnished to the claimant within the
period described in the three preceding sentences.
Every claim for benefits which is denied shall be
denied by written notice setting forth in a manner
calculated to be understood by the claimant (i) the
specific reason or reasons for the denial,
(ii) specific reference to any provisions of this Plan
on which denial is based, (iii) description of any
additional material or information necessary for the
claimant to perfect his claim with an explanation of
why such material or information is necessary, and
(iv) an explanation of the procedure for further
reviewing the denial of the claim under the Plan.
(C) The Committee shall review claim denials
if review is timely requested. The review given after
denial of any claim shall be a full and fair review
with the claimant or his duly authorized representative
having 60 days after receipt of denial of his claim to
request such review, the right to review all pertinent
documents and the right to submit issues and comments
in writing.
(D) The Committee shall issue a decision not
later than 60 days after receipt of a request for
review from a claimant unless special circumstances,
such as the need to hold a hearing, require a longer
period of time, in which case a decision shall be
rendered as soon as possible but not later than 120
days after receipt of the claimant's request for re-
view. The decision on review shall be in writing and
shall include specific reasons for the decision written
in a manner calculated to be understood by the claimant
with specific reference to any provisions of this Plan
on which the decision is based.
(b) With respect to management or control of
investments, the Committee shall have the power to direct the
Trustee in writing with respect to the investment of the Trust
assets or any part thereof. Where investment authority,
management and control of Trust assets have been delegated to the
Trustee by the Committee, the Trustee shall be the Fiduciary with
respect to the investment, management and control of the Trust
assets contributed by the Company and Participants with full
discretion in the exercise of such investment, management and
control. Except as otherwise provided by law, the Committee may
appoint one or more Investment Manager(s), as defined in Section
1.2 of the Plan, to invest the Trust assets or any part thereof.
Where investment authority, management, and control of Trust
assets is not specifically delegated to the Trustee, the Trustee
shall be subject to the direction of the Committee or the
Investment Manager(s) appointed by the Committee, if any, regard-
ing the investment, management and control of such assets, and in
such case the Committee, or the Investment Manager(s), as the
case may be, shall be the Fiduciary with respect to the
investment, management and control of such assets.
(c) Each Fiduciary under the Plan and Trust shall be
solely responsible for its own acts or omissions. Except to the
extent required by ERISA or the Code, no Fiduciary shall have the
duty to question whether any other Fiduciary is fulfilling any or
all of the responsibilities imposed upon such other Fiduciary by
ERISA or by any regulations or rulings issued thereunder. No
Fiduciary shall have any liability for a breach of fiduciary
responsibility of another Fiduciary with respect to the Plan or
Trust unless he knowingly participates in such breach, knowingly
undertakes to conceal such breach, has actual knowledge of such
breach and fails to take reasonable remedial action to remedy
said breach or, through his negligence in performing his own
specific fiduciary responsibilities, has enabled such other
Fiduciary to commit a breach of the latter's fiduciary
responsibilities.
7.4 - Procedure for Establishing Funding Policy --
Transmittal of Information.
In order to enable the Committee to establish a funding
policy and perform its other functions under the Plan, the
Company shall supply full and timely information to the Committee
on all matters relating to the Compensation, employment,
retirement, death, or the cause for termination of employment of
each Participant and such other pertinent facts as may be
required. The Committee shall advise the Trustee and the
Investment Manager, as appropriate, of such of the foregoing
facts as may be pertinent to the duties of the Trustee and
Investment Manager under the Plan.
7.5 - Other Information.
To enable the Committee to perform its functions, the
Company shall supply full and timely information to the
Committee on all matters relating to the compensation of all
Participants, their employment, retirement, death or other cause
for termination of employment, and such other pertinent facts as
the Committee may require; and the Committee shall advise the
Trustee of such of the foregoing facts as may be pertinent to the
Trustee's duties under the Plan.
7.6 - Compensation, Bonding, Expenses and Indemnity.
(a) The members of the Committee shall serve without
compensation for their services hereunder.
(b) Members of the Committee and any delegates shall
be bonded to the extent required by Section 412(a) of ERISA and
the regulations thereunder. Bond premiums and all expenses of
the Committee or of any delegate who is an employee of the
Company shall be paid by the Company and the Company shall
furnish the Committee and any such delegate with such clerical
and other assistance as is necessary in the performance of their
duties.
(c) The Committee is authorized at the expense of the
Company to employ such legal counsel as it may deem advisable to
assist in the performance of its duties hereunder. Expenses and
fees in connection with the administration of the Plan and the
Trust shall be paid from the Trust assets to the fullest extent
permitted by law, unless the Company determines otherwise.
(d) To the extent permitted by applicable state law,
the Company shall indemnify and save harmless the Committee and
each member thereof, the Board of Directors and any delegate of
the Committee who is an employee of the Company against any and
all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to
the Plan, other than expenses and liabilities arising out of
willful misconduct. This indemnity shall not preclude such
further indemnities as may be available under insurance purchased
by the Company or provided by the Company under any by-law,
agreement or otherwise, as such indemnities are permitted under
state law. Payments with respect to any indemnity and payment of
any expenses and fees under this Section shall be made only from
assets of the Company and shall not be made directly or
indirectly from Trust assets.
7.7 - Manner of Administering.
The Committee shall have full discretion to construe
and interpret the terms and provisions of this Plan, which
interpretation or construction shall be final and binding on all
parties, including but not limited to the Company and any
Participant or Beneficiary, except as otherwise provided by law.
The Committee shall administer such terms and provisions in a
uniform and nondiscriminatory manner and in full accordance with
any and all laws applicable to the Plan.
7.8 - Duty of Care.
In the exercise of the powers and duties of the
Committee as Plan Administrator and Fiduciary with respect to
the investment, management and control of the Plan, each member
of the Committee shall use the care, prudence, and diligence
under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims.
7.9 - Committee Report.
The Committee shall apprise the Board of Directors of
the investment results of the Plan and shall report such other
information as may be appropriate to inform the Board of
Directors of the status and operation of the Plan and Trust.
<PAGE>
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 - Amendments.
The Company shall have the right to amend or modify the
Plan by resolution of the Board of Directors and to amend or
cancel any amendments. Furthermore, the Committee has the
authority to adopt any amendment to the Plan which is necessary
to maintain the qualification and tax exempt status of the Plan
under the Code, and any other amendments to the Plan which do not
have the effect of increasing the liability of the Company in a
manner which would cause a significant detriment to the Company.
Any amendment shall be stated in an instrument in writing,
executed in the same manner as the Plan. Except as may be re-
quired to permit the Plan and Trust to meet the requirements for
qualification and tax exemption under the Code, or the
corresponding provisions of other or subsequent revenue laws or
of ERISA, no amendment may be made which may:
(a) Cause any of the assets of the Trust, at any time
prior to the satisfaction of all liabilities with respect to
Participants and their Beneficiaries, to be used for or
diverted to purposes other than for the exclusive benefit of
Participants or their Beneficiaries;
(b) Decrease the accrued benefit of any Participant or
Beneficiary within the meaning of Section 411(d)(6) of the
Code;
(c) Create or effect any discrimination in favor of
Participants who are Highly Compensated Employees; and
(d) Increase the duties or liabilities of the Trustee
without its written consent.
8.2 - Discontinuance of Plan.
(a) It is the Company's expectation that this Plan and
the payment of contributions hereunder will be continued
indefinitely, but continuance of the Plan by the Company is not
assumed as a contractual obligation, and the Company reserves the
right to permanently discontinue contributions hereunder. In the
event of the complete discontinuance of contributions by the
Company, the entire interest of each Participant affected thereby
shall immediately become 100% vested. The Company shall not be
liable for the payment of any benefits under this Plan and all
benefits hereunder shall be payable solely from the assets of the
Trust.
(b) The Company may terminate this Plan at any time.
Upon complete termination or partial termination of the Plan, the
entire interest of each of the affected Participants shall become
100% vested. The Trustee shall thereafter, upon direction of the
Committee, distribute to the Participants the amounts in such
Participant's Company and Voluntary Contribution Accounts in the
same manner as set forth in Article VI.
8.3 - Failure to Contribute.
Any failure by the Company to contribute to the Trust
in any year when no contribution is required under this Plan
shall not of itself be a discontinuance of contributions under
this Plan.
8.4 - Plan Merger or Consolidation; Transfer of Plan Assets.
(a) This Plan shall not be merged or consolidated
with, nor shall its assets or liabilities be transferred to, any
other plan unless each Participant in this Plan (if the Plan then
terminated) would receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the
benefit such Participant would have been entitled to receive
immediately before the merger, consolidation or transfer (if this
Plan had been terminated). Where the foregoing requirement is
satisfied, this Plan and its related Trust may be merged or
consolidated with another qualified plan and trust.
(b) The Committee may, in its discretion, authorize a
plan to plan transfer, provided such a transfer will meet the
requirements of Section 414(l) of the Code and that all other
actions legally required are taken. In the event of a transfer
of assets from the Plan pursuant to this subsection, any
corresponding benefit liabilities shall also be transferred.
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 - Contributions Not Recoverable.
Except where contributions or earnings are required to
be returned to the Company by the provisions of this Plan as
permitted or required by ERISA or the Code, it shall be
impossible for any part of the contributions or earnings made
under this Plan to be used for, or diverted to, purposes other
than the exclusive benefit of Participants or their
Beneficiaries. Notwithstanding this or any other provision of
this Plan, the Company shall be entitled to recover, and the
Participants under this Plan shall have no interest in (i) any
contributions made under this Plan by mistake of fact, so long as
the contribution is returned within one year after payment, and
(ii) in the event that the Company receives an adverse
determination from the Internal Revenue Service with respect to
the Plan's initial qualification with the result that the Trust
is not exempt from Federal income tax and the Company's
contributions to the Trust are not deductible in determining its
Federal income tax, any contributions and earnings made prior to
that time, so long as such amounts are returned within one year
after such determination and the application for determination
was made by the time prescribed by law for filing the Company's
return for the taxable year in which the Plan was adopted or such
later date as the Secretary of the Treasury may prescribe, and
(iii) any contributions for which deduction is disallowed under
Section 404 of the Code, so long as the contributions are
returned to the Company within one year following such
disallowance or as permitted or required by the Code or ERISA.
In the event of such mistake of fact, determination by the
Commissioner, or disallowance of deductions, contributions shall
be returned to the Company, subject to the limitations, if any,
of Section 403(c) of ERISA.
9.2 - Limitation on Participant's Rights.
Participation in this Plan shall not give any Employee
the right to be retained as an Employee of the Company or any
right or interest under the Plan other than as herein provided.
The Company reserves the right to dismiss any Employee without
any liability for any claim either against the Trustee, the Trust
except to the extent provided in the Trust, or against the
Company. All benefits under the Plan shall be provided solely
from the assets of the Trust.
9.3 - Receipt or Release.
Any payment to any Participant or Beneficiary in
accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims against the
Trustee, the Committee, and the Company. The Trustee may require
such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.
9.4 - Alienation.
(a) None of the benefits, payments, proceeds or claims
of any Participant or Beneficiary shall be subject to any claim
of any creditors and, in particular, the same shall not be
subject to attachment or garnishment or other legal process by
any creditor, nor shall any such Participant or Beneficiary have
the right to alienate, anticipate, commute, pledge, encumber or
assign any of the benefits or payments or proceeds which such
Participant or Beneficiary may expect to receive, contingently or
otherwise, under this Plan.
(b) The provisions of this Section 9.4 shall also
apply to the creation, assignment, or recognition of a right to
any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless (i) such order is determined to
be a qualified domestic relations order, as defined in Section
414(p) of the Code, or (ii) the Committee determines in its
discretion to treat any domestic relations order entered before
January 1, 1985 as a qualified domestic relations order. The
Committee shall establish reasonable procedures to determine the
qualified status of domestic relations orders and to administer
distributions under such qualified orders. In the event a
qualified domestic relations order exists with respect to a
benefit payable under the Plan, the benefits otherwise payable to
a Participant or Beneficiary shall be payable to the alternate
payee specified in the qualified domestic relations order.
(c) Notwithstanding subsection (a), a loan described
in Section 9.11 of the Plan, shall not be considered a violation
of this Section.
9.5 - Persons Under Incapacity.
In the event any amount is payable under the Plan to a
person for whom a conservator has been legally appointed, the
payment shall be distributed to the duly appointed and currently
acting conservator, without any duty on the part of the Committee
to supervise or inquire into the application of any funds so
paid.
9.6 - Governing Law.
This Plan shall be construed, administered, and
governed in all respects under applicable federal law, and to
the extent that federal law is inapplicable, under the laws of
the State of California; provided, however, that if any provision
is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with this
Plan's remaining qualified within the meaning of Section 401(a)
of the Code. If any provisions of this instrument shall be held
by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to
be fully effective.
9.7 - Headings, etc. Not Part of Plan.
Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the
construction of the provisions hereof.
9.8 - Masculine Gender Includes Feminine.
As used in this Plan, the masculine gender shall
include the feminine gender.
9.9 - Instruments in Counterparts.
This Plan may be executed in several counterparts, each
of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument, which may be
sufficiently evidenced by any one counterpart.
9.10 - Reorganization of Company.
This Plan shall inure to the benefit of, and be binding
upon the parties hereto and their successors and assigns. If the
Company merges or consolidates with or into a successor, this
Plan shall continue in effect unless the successor terminates
this Plan.
9.11 - Loans to Participants.
(a) Each Participant shall have the right, subject to
prior approval by the Committee, to borrow from his Accounts.
Application for a loan must be submitted by a Participant to the
Committee on such form(s) as the Committee may require. The
Committee may permit telephonic loan applications. Approval
shall be granted or denied as specified in subsection (b), on the
terms specified in subsection (c). For purposes of this Section
9.11, but only to the extent required by Department of Labor
Regulations Section 2550.408b-1, the term "Participant" shall
include any Employee, former Employee, Beneficiary or alternate
payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, who is a party in interest and has an
interest in the Plan that is not contingent.
(b) The Committee shall grant any loan which meets
each of the requirements of paragraphs (1), (2) and (3) below:
(1) The amount of the loan, when added to the
outstanding balance of all other loans to the Participant
from all qualified plans of the Company or any Related
Company shall not exceed the lesser of:
(A) $50,000, reduced by the excess, if any,
of a Participant's highest outstanding balance of all
loans from the Plan or any other qualified plan
maintained by the Company or any Related Company during
the preceding 12 months over the outstanding balance of
such loans on the loan date, or
(B) 50% of the value of the vested balance
of the Participant's Compensation Deferral and Rollover
Accounts;
(2) The loan shall be for at least $1,000; and
(3) No more than one loan may be outstanding to a
Participant at any time.
(c) Each loan granted shall, by its terms, satisfy
each of the following additional requirements:
(1) Each loan must be repaid within five years
(except that if the Committee is satisfied that the loan
proceeds are being used to purchase the principal residence
of a Participant, the Committee may, in its discretion,
establish a term of up to 10 years for repayment);
(2) Each loan must require substantially level
amortization over the term of the loan, with payments not
less frequently than quarterly; and
(3) Each loan must be adequately secured, with
the security to consist of the balance of the Participant's
Accounts.
(A) In the case of any Participant who is an
active Employee, automatic payroll deductions shall be
required as additional security.
(B) In the case of any other Participant,
the outstanding loan balance may at no time exceed 50%
of the outstanding vested balance of the Participant's
Accounts. If such limit is at any time exceeded, or if
the Participant fails to make timely repayment, the
loan will be treated as in default and become
immediately payable in full.
(C) The investment gain or loss attributable
to the loan shall not be included in the calculation or
allocation of the increase or decrease in fair market
value of the Investment Funds. Instead, the entire
gain or loss (including any gain or loss attributable
to interest payments or default) shall be allocated to
the Accounts of the Participant.
(4) Each loan shall bear reasonable rate of
interest, which rate shall be the prime rate (as determined
by the Committee) as of the last day of the quarter
preceding the quarter in which the loan is made, plus one
percent. Furthermore, the Participant's Accounts shall be
charged a setup fee not to exceed the fee charged by the
Plan's recordkeeper at the time the loan is made; such setup
fee shall be paid to the Plan's recordkeeper.
(d) All loan payments shall be transmitted by the
Company to the Trustee as soon as practicable but not later than
the end of the month during which such amounts were received or
withheld. Each loan may be prepaid in full at any time. Any
prepayment shall be paid directly to the Trustee in accordance
with procedures adopted by the Committee.
(e) Each loan shall be evidenced by a promissory note
executed by the Participant and payable in full to the Trustee,
not later than the earliest of (i) a fixed maturity date meeting
the requirements of subsection (c)(1) above, (ii) the
Participant's death, or (iii) the termination of the Plan. Such
promissory note shall evidence such terms as are required by this
Section 9.11.
(f) The Committee shall have the power to modify the
above rules or establish any additional rules with respect to
loans extended pursuant to this section. Such rules may be
included in a separate document or documents and shall be
considered a part of this Plan; provided, each rule and each loan
shall be made only in accordance with the regulations and rulings
of the Internal Revenue Service and Department of Labor and other
applicable state or federal law. The Committee shall act in its
sole discretion to ascertain whether the requirements of such
regulations and rulings and this section have been met.
9.12 - Top-Heavy Plan Requirements.
For any Plan Year for which this Plan is a Top-Heavy
Plan, as defined in Section B.3 of Appendix B, attached hereto,
and despite any other provisions of this Plan to the contrary,
this Plan will be subject to the provisions of Appendix B.
IN WITNESS WHEREOF, the undersigned has caused this
document to be executed by its duly authorized officer on this
22nd day of July, 1997.
INTERNATIONAL RECTIFIER CORPORATION
By /s/ Michael P. McGee
--------------------
Its Vice President and
Chief Financial Officer
<PAGE>
APPENDIX A
ANNUAL ADDITION LIMITS
Article IV of the Plan shall be construed in
accordance with this Appendix A. Unless the context clearly
requires otherwise, words and phrases used in this Appendix
A shall have the same meanings that are assigned to them under
the Plan.
A.1 - Definitions.
As used in this Appendix A, the following terms shall
have the meanings specified below.
"Annual Additions" shall mean the sum credited to a
Participant's Accounts for any Plan Year of (i) Company
contributions, (ii) voluntary contributions, (iii) forfeitures,
(iv) amounts credited after March 31, 1984 to an individual
medical account, as defined in Section 415(l)(2) of the Code
which is part of a Defined Benefit Plan maintained by the
Company, and (v) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement medical
benefits allocated to the separate account required with respect
to a key employee (as defined in Section B.2(e) of Appendix B to
the Plan) under a welfare benefit plan (as defined in Section
419(e) of the Code) maintained by the Company.
"Defined Benefit Plan" means a plan described in
Section 414(j) of the Code.
"Defined Contribution Plan" means a plan described in
Section 414(i) of the Code.
"Defined Benefit Plan Fraction" shall mean a fraction,
the numerator of which is the projected annual benefit
(determined as of the close of the relevant Plan Year) of the
Participant under all Defined Benefit Plans maintained by one or
more Related Companies, and the denominator of which is the
lesser of (i) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for
the Plan Year, or (ii) the product of 1.4 multiplied by the
amount which may be taken into account under Section 415(b)(1)(B)
of the Code with respect to the Participant for the Plan Year.
"Defined Contribution Plan Fraction" shall mean a
fraction, the numerator of which is the sum of the annual
additions to a Participant's accounts under all Defined
Contribution Plans maintained by one or more Related Companies,
and the denominator of which is the sum of the lesser of (i) or
(ii) for such Plan Year and for each prior Plan Year of service
with one or more Related Companies, where (i) is the product of
1.25 multiplied by the dollar limitation in effect under Section
415(c)(1)(A) of the Code for the Plan Year (determined without
regard to Section 415(c)(6) of the Code), and (ii) is the product
of 1.4 multiplied by the amount which may be taken into account
under Section 415(c)(1)(B) of the Code (or Section 415(c)(7) of
the Code, if applicable) with respect to the Participant for the
Plan Year. Solely for purposes of this definition, contributions
made directly by an Employee to a Defined Benefit Plan which
maintains a qualified cost-of-living arrangement as such term is
defined in Section 415(k)(2) shall be treated as Annual
Additions. Notwithstanding the foregoing, the numerator of the
Defined Contribution Plan Fraction shall be adjusted pursuant to
Treasury Regulations 1.415-7(d)(1), Questions T-6 and T-7 of
Internal Revenue Service Notice 83-10, and Questions Q-3 and Q-14
of Internal Revenue Service Notice 87-21.
"Section 415 Compensation" shall mean a Participant's
wages within the meaning of Code Section 3401(a) and all other
payments of compensation to the Participant by the Company (in
the course of the Company's business) for which the Company is
required to provide the Participant a written statement under
Code Sections 6041(d), 6051(a)(3) and 6052. Section 415
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 the employment or the
services performed. Compensation for any limitation year is the
compensation actually paid or includible in gross income during
such year. Effective January 1, 1998, "Section 415 Compensation"
shall include elective deferrals as defined in Section 402(g)(3)
of the Code and any amount which is contributed or deferred by
the Company or a Related Company at the election of an Employee
and which is not includible in the gross income of the Employee
by reason of Code Section 125.
A.2 - Annual Addition Limitations.
(a) The compensation limitation of Section 4.1 of the
Plan shall not apply to any contribution for medical benefits
(within the meaning of Section 419A(f)(2)) after separation from
service which is treated as an Annual Addition. In the event
that Annual Additions to all the accounts of a Participant would
exceed the limitations of Section 4.1 of the Plan, they shall be
reduced in the following priority: (i) return of voluntary
contributions to the Participant; (ii) reduction of Company
contributions.
(b) If any Company or any Related Company contributes
amounts, on behalf of Participants covered by the Plan, to other
Defined Contribution Plans, the limitation on Annual Additions
provided in Article IV of the Plan shall be applied to Annual
Additions in the aggregate to the Plan and such other plans.
Reduction of Annual Additions, where required, shall be
accomplished by first refunding any voluntary contributions to
Participants, then by reducing contributions under such other
plans pursuant to the directions of the fiduciary for
administration of such other plans or under priorities, if any,
established by the terms of such other plans, and then, if
necessary, by reducing contributions under the Plan.
(c) In any case where a Participant under the Plan is
also a participant under a Defined Benefit Plan or a Defined
Benefit Plan and other Defined Contribution Plans maintained by
the Company or a Related Company, the sum of the Defined Benefit
Plan Fraction and the Defined Contribution Plan Fraction shall
not exceed 1.0. Reduction of contributions to or benefits from
all plans, where required, shall be accomplished by first
reducing benefits under such other Defined Benefit Plan or plans,
then by allocating any excess in the manner set out above with
respect to the Plan, and finally by reducing contributions or
allocating any excess contributions with respect to other Defined
Contribution Plans, if any; provided, however, that adjustments
necessary under this or the next preceding paragraph may be made
in a different manner and priority pursuant to the agreement of
the Committee and the administrators of all other plans covering
such Participant, provided such adjustments are consistent with
procedures and priorities prescribed by Treasury Regulations
under Section 415 of the Code.
(d) In the event the limitations of Section 4.1 of the
Plan or this Appendix A are exceeded and the conditions specified
in Treasury Regulations Section 1.415-6(b)(6) are met, the
Committee may elect to apply the procedures set forth in Treasury
Regulations Section 1.415-6(b)(6).
<PAGE>
APPENDIX B
TOP-HEAVY PROVISIONS
Section 9.13 of the Plan shall be construed in
accordance with this Appendix B. Definitions in this Appendix B
shall govern for the purposes of this Appendix B. Any other
words and phrases used in this Appendix B, however, shall have
the same meanings that are assigned to them under the Plan,
unless the context clearly requires otherwise.
B.1 - General.
This Appendix B shall be effective for Plan Years
beginning on or after January 1, 1984. This Appendix B shall be
interpreted in accordance with Section 416 of the Code and the
regulations thereunder.
B.2 - Definitions.
(a) The "Benefit Amount" for any Employee means (i) in
the case of any defined benefit plan, the present value of his
normal retirement benefit, determined on the Valuation Date as if
the Employee terminated on such Valuation Date, plus the
aggregate amount of distributions made to such Employee within
the five-year period ending on the Determination Date (except to
the extent already included on the Valuation Date) and (ii) in
the case of any defined contribution plan, the sum of the amounts
credited, on the Determination Date, to each of the accounts
maintained on behalf of such Employee (including accounts
reflecting any nondeductible employee contributions) under such
plan plus the aggregate amount of distributions made to such
Employee within the five-year period ending on the Determination
Date. For purposes of this Section, the present value shall be
computed using a 5% interest assumption and the mortality
assumptions contained in the defined benefit plan for benefit
equivalence purposes, provided that, if more than one defined
benefit plan is being aggregated for top-heavy purposes, the
actuarial assumptions which shall be used for testing top-
heaviness are those of the plan with the lowest interest
assumption, provided further that if the lowest interest
assumption is the same for two or more plans, the actuarial
assumptions used shall be that of the plan with the greatest
value of assets on the applicable date.
(b) "Company" means any company (including
unincorporated organizations) participating in the Plan or plans
included in the "aggregation group" as defined in this
Appendix B.
(c) "Determination Date" means the last day of the
preceding Plan Year or, in the case of the first Plan Year of the
Plan, the last day of the Plan Year.
(d) "Employees" means employees, former employees,
beneficiaries, and former beneficiaries who have a Benefit Amount
greater than zero on the Determination Date.
(e) "Key Employee" means any Employee who, during the
Plan Year containing the Determination Date or during the four
preceding Plan Years, is:
(1) one of the ten Employees of a Company having
annual compensation from such Company of more than the
limitation in effect under Section 415(c)(1)(A) of the Code
and owning (or considered as owning within the meaning of
Section 318 of the Code) both more than a 1/2% interest and
the largest interests in such Company (if two Employees have
the same interest the Employee having the greater annual
compensation from the Company shall be treated as having a
larger interest);
(2) a 5% owner of a Company;
(3) a 1% owner of a Company who has an annual
compensation above $150,000; or
(4) an officer of a Company having an annual
compensation greater than 50% of the amount in effect under
Section 415(b)(1)(A) of the Code for any such Plan Year
(however, no more than the lesser of (i) 50 employees or
(ii) the greater of 3 employees or 10% of the Company's
employees shall be treated as officers). For purposes of
determining the number of employees taken into account under
this Section B.2(e)(4), employees described in Section
414(q)(5) of the Code shall be excluded.
(f) A "Non-Key Employee" means an Employee who is not
a Key Employee.
(g) "Valuation Date" means the first day (or such
other date which is used for computing plan costs for minimum
funding purposes) of the 12-month period ending on the
Determination Date.
(h) A "Year of Service" shall be calculated using the
Plan rules that normally apply for determining vesting service.
These definitions shall be interpreted in accordance
with Section 416(i) of the Code and the regulations thereunder
and such rules are hereby incorporated by reference. The term
"Key Employee" shall not include any officer or employee of an
entity referred to in Section 414(d) of the Code. For the
purpose of this subsection, "compensation" shall mean
compensation as defined in Section 414(q)(4) of the Code and
shall be determined without regard to Sections 125, 402(a)(8),
402(h)(1)(B) or, in the case of employer contributions made
pursuant to a salary reduction agreement, Section 403(b).
B.3 - Top-Heavy Definition.
The Plan shall be top-heavy for any Plan Year if, as of
the Determination Date, the "top-heavy ratio" exceeds 60%. The
top-heavy ratio is the sum of the Benefit Amounts for all
employees who are Key Employees divided by the sum of the Benefit
Amounts for all Employees. For purposes of this calculation
only, the following rules shall apply:
(a) The Benefit Amounts of all Non-Key Employees who
were Key Employees during any prior Plan Year shall be
disregarded.
(b) The Benefit Amounts of all employees who have not
performed any services for any Company at any time during
the five-year period ending on the Determination Date shall
be disregarded; provided, however, if an Employee performs
no services for five years and then again performs services,
such Employee's Benefit Amount shall be taken into account.
(c) (1) Required Aggregation. This calculation
shall be made by aggregating any plans, of the Company
or a Related Company, qualified under Section 401(a) of
the Code in which a Key Employee participates or which
enables this Plan to meet the requirements of Section
401(a)(4) or 410 of the Code; all plans so aggregated
constitute the "aggregation group."
(2) Permissive Aggregation. The Company may
also aggregate any such plan to the extent that such
plan, when aggregated with this aggregation group,
continues to meet the requirements of Section 401(a)(4)
and Section 410 of the Code.
If an aggregation group includes two or more defined benefit
plans, the actuarial assumptions used in determining an
Employee's Benefit Amount shall be the same under each
defined benefit plan and shall be specified in such plans.
The aggregation group shall also include any terminated plan
which covered a Key-Employee and which was maintained within
the five-year period ending on the Determination Date.
(d) This calculation shall be made in accordance with
Section 416 of the Code (including 416(g)(3)(B) and
(g)(4)(A)) and the regulations thereunder and such rules are
hereby incorporated by reference. For purposes of
determining the accrued benefit of a Non-Key Employee who is
a Participant in a defined benefit plan, this calculation
shall be made using the method which is used for accrual
purposes for all defined benefit plans of the Company, or if
there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under
Section 411(b)(1)(C) of the Code.
B.4 - Minimum Benefits or Contributions, Compensation
Limitations and Section 415 Limitations.
If the Plan is top-heavy for any Plan Year, the
following provisions shall apply to such Plan Year:
(a) (1) Except to the extent not required by Section
416 of the Code or any other provision of law,
notwithstanding any other provision of this Plan, if the
Plan and all other plans which are part of the aggregation
group are defined contribution plans, each Participant (and
any other Employee required by Section 416 of the Code)
other than Key employees shall receive an allocation of
employer contributions and forfeitures from a plan which is
part of the aggregation group at least equal to 3% (or, if
lesser, the largest percentage allocated to any Key Employee
for the Plan Year) of such Participant's compensation for
such Plan Year (the "defined contribution minimum"). For
purposes of this subsection, salary reduction contributions
on behalf of a Key Employee must be taken into account. For
purposes of this subsection, a non-Key Employee shall be
entitled to a contribution if he is employed on the last day
of the Plan Year (i) regardless of his level of
compensation, (ii) without regard to whether he has made any
mandatory contributions required under the Plan, and (iii)
regardless of whether he has less than 1,000 Hours of
Service (or the equivalent) for the accrual computation
period.
(2) Except to the extent not required by Section
416 of the Code or any other provision of law,
notwithstanding any other provisions of the Plan, if the
Plan or any other plan which is part of the aggregation
group is a defined benefit plan each Participant who is a
participant in any such defined benefit plan (who is not a
Key Employee) who accrues a full Year of Service during such
Plan Year shall be entitled to an annual normal retirement
benefit from a defined benefit plan which is part of the
aggregation group which shall not be less than the product
of (i) the employee's average compensation for the five
consecutive years when the employee had the highest
aggregate compensation and (ii) the lesser of 2% per Year of
Service or 20% (the "defined benefit minimum"). A Non-Key
Employee shall not fail to accrue a benefit merely because
he is not employed on a specified date or is excluded from
participation because (i) his compensation is less than a
stated minimum or (ii) he fails to make mandatory employee
contributions. For purposes of calculating the defined
benefit minimum, (i) compensation shall not include
compensation in Plan Years after the last Plan Year in which
the Plan is top-heavy and (ii) a Participant shall not
receive a Year of Service in any Plan Year before January 1,
1984 or in any Plan Year in which the Plan is not top-heavy.
This defined benefit minimum shall be expressed as a life
annuity (with no ancillary benefits) commencing at normal
retirement age. Benefits paid in any other form or time
shall be the actuarial equivalent (as provided in the plan
for retirement benefit equivalence purposes) of such life
annuity. Except to the extent not required by Section 416
of the Code or any other provisions of law, each Participant
(other than Key Employees) who is not a participant in any
such defined benefit plan shall receive the defined
contribution minimum (as defined in paragraph (a)(1) above).
(3) If a non-Key Employee is covered by plans
described in both paragraphs (1) and (2) above, he shall be
entitled only to the minimum described in paragraph (1),
except that for the purpose of paragraph (1) "3% (or, if
lesser, the largest percentage allocated to any key employee
for the Plan Year)" shall be replaced by "5%".
Notwithstanding the preceding sentence, if the accrual rate
under the plan described in (2) would comply with this
Section B.4 absent the modifications required by this
Section, the minimum described in paragraph (1) above shall
not be applicable.
(b) For purposes of this Section, "compensation" shall
mean all earnings included in the Employee's Form W-2 for the
calendar year that ends within the Plan Year, not in excess of
$200,000, adjusted at the same time and in the same manner as
under Section 415(d) of the Code.
U6 (1) Unless the Plan qualifies for an exception
under Section B.4(c)(2), "1.0" shall be substituted for
"1.25" in the definitions of Defined Benefit Plan Fraction
and Defined Contribution Plan Fraction used in Appendix A to
the Plan.
(2) A Plan qualifies for an exception from the
rule of Section B.4(c)(1) if the Benefit Amount of all
Employees who are Key Employees does not exceed 90% of the
sum of the Benefit Amounts for all Employees and one of the
following requirements is met:
(A) A defined benefit minimum of 3% per Year
of Service (up to 30%) is provided;
(B) For Participants covered only by a
defined contribution plan, a defined contribution
minimum of 4% is provided;
(C) For Participants covered by both types
of plans, benefits from the defined contribution
minimum are comparable to the 3% defined benefit
minimum;
(D) The plan provides a floor offset where
the floor is a 3% defined benefit minimum; or
(E) A defined contribution minimum of 7-1/2%
of compensation is provided for any non-Key Employee
who is covered under both a defined benefit plan and a
defined contribution plan (each of which is top-heavy)
of a Company.
AMENDMENT 1997-1
TO THE INTERNATIONAL RECTIFIER CORPORATION
RETIREMENT SAVINGS PLAN
WHEREAS, International Rectifier Corporation (this
"Corporation") maintains the International Rectifier Corporation
Retirement Savings Plan (the "Plan");
WHEREAS, the Internal Revenue Service has requested
that certain Plan amendments, as set forth herein, be adopted in
connection with the issuance of a favorable determination letter
for the Plan;
WHEREAS, this Board of Directors deems it to be
necessary and advisable, and in the best interests of this
Corporations's stockholders, that the Plan be amended as set
forth herein; and
WHEREAS, this Board of Directors has the right to amend
the Plan pursuant to Section 8.1 thereof;
NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby
amended, effective January 1, 1997, as follows:
1. The third paragraph of the introduction to the
Plan, which begins "It is also intended that this Plan constitute
an accident and health plan . . .", is deleted in its entirety.
2. The definition of "Eligible Employee" in Section
1.2 of the Plan is amended to read as follows:
"'Eligible Employee' shall mean any Employee
of the Company; except that there shall be
excluded (i) all leased employees (as such
term is used for purposes of the definition
of Employee in this Section 1.2), (ii) those
Employees covered by a collective bargaining
agreement between the Company and any
collective bargaining representative if
retirement benefits were the subject of good
faith bargaining between such representative
and the Company, unless the Employee is a
member of a group of employees to whom this
Plan has been extended by such a collective
bargaining agreement, and (iii) Employees who
are nonresident aliens and receive no United
States source income."
3. The definition of "Employee" in Section 1.2 of the
Plan is amended to read as follows:
"'Employee' shall mean every person employed
by the Company, or a Related Company,
including any leased employee and any other
individual required to be treated as employed
by the Company or a Related Company under
Section 414(o) of the Code. For purposes of
the foregoing sentence, 'leased employee'
shall mean any person who is not an employee
of the Company or a Related Company and who
provides services to the Company or a Related
Company if (i) such services are provided
pursuant to an agreement between the Company
or a Related Company and any other person,
(ii) such person has performed such services
for the Company or a Related Company (or
related persons) on a substantially full-time
basis for a period of at least 1 year, and
(iii) such services are performed under
primary direction or control by the Company
or a Related Company; interpreted
consistently with Section 414(n) of the Code.
Notwithstanding the foregoing, 'Employee'
shall not include any leased employee if (i)
such leased employee is covered by a money
purchase pension plan maintained by the
leasing organization which provides for (1) a
nonintegrated employer contribution rate for
each participant of at least 10 percent of
compensation, as defined in Section 415(c)(3)
of the Code, but including amounts
contributed pursuant to a salary reduction
agreement which are excludable from the
employee's gross income under Section 125,
402(a)(8), 402(h) or 403(b) of the Code, (2)
immediate participation, and (3) full and
immediate vesting, and (ii) leased employees
do not constitute 20 percent of the non-
highly compensated workforce of the Company
and Related Companies; interpreted
consistently with Section 414(n) of the
Code."
4. The definition of "Defined Benefit Plan" in
Section A.1 of Appendix A to the Plan is amended by replacing
"414(j)" with "415(k)(1)" therein.
5. The definition of "Defined Contribution Plan" in
Section A.1 of Appendix A to the Plan is amended by replacing
"414(i)" with "415(k)(1)" therein.
IN WITNESS WHEREOF, this Board of Directors has caused
this Amendment 1997-1 to be executed on its behalf by the
undersigned duly authorized officer of the Corporation on this
24th day of November, 1997.
INTERNATIONAL RECTIFIER CORPORATION
By: /s/ Michael P. McGee
-----------------------
Print Name: Michael P. McGee
AMENDMENT 1997-2
TO THE INTERNATIONAL RECTIFIER CORPORATION
RETIREMENT SAVINGS PLAN
WHEREAS, International Rectifier Corporation (this
"Corporation") maintains the International Rectifier Corporation
Retirement Savings Plan (the "Plan");
WHEREAS, this Board of Directors deems it to be
advisable, and in the best interests of the Corporation and its
shareholders, that the Plan be amended (i) to reduce the maximum
compensation deferral limit under the Plan from 20% to 15%, (ii)
to provide that rollover contributions will not be accepted under
the Plan from an employee until the employee is eligible to
participate in the Plan, (iii) to increase the minimum benefit
limit from $3,500 to $5,000, (iv) to clarify the 90-day waiting
period that is imposed on certain Plan loans, and (v) to clarify
the limitations on the amounts of Plan loans; and
WHEREAS, this Board of Directors has the right to amend
the Plan pursuant to Section 8.1 thereof;
NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby
amended as follows:
1. The first sentence of Section 3.2(a) of the Plan
is amended, effective as of January 1, 1998, to read as follows:
"Subject to the limitations in Sections 3.1, 3.6, 3.7
and 4.1, each Participant may elect Compensation
Deferrals, in the manner prescribed by the Committee,
in whole percentages from 2% to 15%."
2. Effective January 1, 1998, Section 3.5(c) of the
Plan is deleted in its entirety and Section 3.5(a) of the Plan is
amended to read as follows:
"A Participant who, as a result of a termination of
employment, disability or attainment of age 59-1/2, has
received a distribution from a plan which meets the
requirements of Section 401(a) of the Code may, in
accordance with procedures approved by the Committee,
transfer the distribution received from the other plan to
the Trust; provided that the distribution is eligible for
rollover treatment and exclusion from the gross income of
the Participant in accordance with Section 402(c) of the
Code."
3. The first sentence of Section 6.1(d) of the Plan
is amended, effective as of January 1, 1998, to read as follows:
"If the nonforfeitable balance in the Participant's
Accounts exceeds $5,000, distribution shall be made
upon a Break in Employment as soon as practicable after
the Participant consents to a distribution of the
nonforfeitable balance of his Accounts in writing."
4. Section 9.11(b)(3) of the Plan is amended,
effective January 1, 1997, to read as follows:
"No more than one loan may be outstanding to a
Participant at any one time and a Participant shall not
be granted a new loan during the 90-day period
following the date on which a prior loan is repaid."
5. Section 9.11(b)(1)(B) of the Plan is amended,
effective January 1, 1997, to read as follows:
"50% of the value of the vested balance of the Participant's
Accounts;"
IN WITNESS WHEREOF, this Board of Directors has caused
this Amendment 1997-2 to be executed on its behalf by the
undersigned duly authorized officer of the Corporation on this
24th day of November, 1997.
INTERNATIONAL RECTIFIER CORPORATION
By: /s/ Michael P. McGee
------------------------
Print Name: Michael P. McGee
TRUST AGREEMENT
TRUST AGREEMENT, dated as of the thirty-first day of
December, 1996, between INTERNATIONAL RECTIFIER CORPORATION,
a California corporation, having an office at 100 N. Sepulveda
Blvd., El Segundo, California 90245-4359 (the "Sponsor"), and
FIDELITY MANAGEMENT TRUST COMPANY, a Massachusetts trust
company, having an office at 82 Devonshire Street, Boston,
Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor is the sponsor of the International
Rectifier Corporation Retirement Savings Plan (the "Plan"); and
WHEREAS, the Sponsor wishes to establish a trust to hold
and invest plan assets under the Plan for the exclusive benefit
of participants in the Plan and their beneficiaries; and
WHEREAS, the Administration Committee (the "Named
Fiduciary") is the named fiduciary of the Plan (within the
meaning of section 402(a) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); and
WHEREAS, the Trustee is willing to hold and invest the
aforesaid plan assets in trust among several investment options
selected by the Named Fiduciary; and
WHEREAS, the Sponsor wishes to have the Trustee perform
certain ministerial recordkeeping and administrative functions
under the Plan; and
WHEREAS, the Administrative Committee (the "Administrator")
is the administrator of the Plan (within the meaning of section
3(16)(A) of ERISA); and
WHEREAS, the Trustee is willing to perform recordkeeping
and administrative services for the Plan if the services are
purely ministerial in nature and are provided within a framework
of plan provisions, guidelines and interpretations conveyed in
writing to the Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants and agreements set forth below, the
Sponsor and the Trustee agree as follows:
Section 1. Trust. The Sponsor hereby establishes the
International Rectifier Corporation Retirement Savings Plan
Trust (the "Trust"), with the Trustee. The Trust shall consist
of an initial contribution of money or other property
acceptable to the Trustee in its sole discretion, made by the
Sponsor or transferred from a previous trustee under the Plan,
such additional sums of money and Sponsor Stock (hereinafter
defined) as shall from time to time be delivered to the Trustee
under the Plan, all investments made therewith and proceeds
thereof, and all earnings and profits thereon, less the payments
that are made by the Trustee as provided herein, without
distinction between principal and income. The Trustee hereby
accepts the Trust on the terms and conditions set forth in this
Agreement. In accepting this Trust, the Trustee shall be
accountable for the assets received by it, subject to the
terms and conditions of this Agreement.
Section 2. Exclusive Benefit and Reversion of Sponsor
Contributions. Except as provided under applicable law, no part
of the Trust may be used for, or diverted to, purposes other
than the exclusive benefit of the participants in the Plan or
their beneficiaries prior to the satisfaction of all liabilities
with respect to the participants and their beneficiaries.
Section 3. Disbursements.
(a) Administrator Directed Disbursements. The Trustee shall
make disbursements in the amounts and in the manner that the
Administrator directs from time to time in writing. The
Trustee shall have no responsibility to ascertain such
direction's compliance with the terms of the Plan or of any
applicable law or the direction's effect for tax purposes or
otherwise; nor shall the Trustee have any responsibility to see
to the application of any disbursement.
(b) Participant Withdrawal Requests. The Administrator
hereby directs that, pursuant to the Plan, a participant
withdrawal request (full withdrawal) may be made by the
participant by telephone, and the Trustee shall process such
request only after the identity of the participant is verified
by use of a personal identification number ("PIN") and social
security number. The Trustee shall forward the withdrawal
document to the participant for execution and submission for
approval to the Administrator. The Administrator shall have
the responsibility for approving the withdrawal and instructing
the Trustee to send the proceeds to the Administrator or to the
participant if so directed by the Administrator.
(c) Limitations. The Trustee shall not be required to make
any disbursement in excess of the net realizable value of the
assets of the Trust at the time of the disbursement. The
Trustee shall be required to make all disbursements in cash in
accordance with the hierarchy of investments to be converted
to cash as detailed in the Plan Administrative Manual unless
the Administrator has provided written directions to the contrary.
Section 4. Investment of Trust.
(a) Selection of Investment Options. The Trustee shall have
no responsibility for the selection of investment options under
the Trust and shall not render investment advice to any person
in connection with the selection of such options.
(b) Available Investment Options. The Named Fiduciary shall
direct the Trustee as to what investment options: (i) the Trust
shall be invested in during the period beginning on the date of
the initial transfer of assets to the Trust and ending on the
date of the completion of the reconciliation of participant
records ("participant recordkeeping reconciliation period"),
and (ii) the investment options in which Plan participants may
invest, subject to the following limitations. The Named
Fiduciary may determine to offer as investment options
only (i) securities issued by the investment companies
advised by Fidelity Management & Research Company ("Mutual
Funds"), (ii) equity securities issued by the Sponsor or
an affiliate which are publicly traded and which are
"qualifying employer securities" within the meaning of
section 407(d)(5) of ERISA ("Sponsor Stock"), (iii) notes
evidencing loans to Plan participants in accordance with
the terms of the Plan, and (iv) collective investment funds
maintained by the Trustee for qualified plans; provided,
however, that the Trustee shall be considered a fiduciary
with investment discretion only with respect to Plan assets
that are invested in collective investment funds maintained by
the Trustee for qualified plans. The investment options
initially selected by the Named Fiduciary are identified on
Schedules "A" and "C" attached hereto. The Named Fiduciary
may add additional investment options with the consent of the
Trustee and upon mutual amendment of this Trust Agreement and
the Schedules thereto to reflect such additions.
(c) Participant Direction. Each Plan participant shall direct
the Trustee in which investment option(s) to invest the assets
in the participant's individual accounts. Such directions may
be made by Plan participants by use of the telephone exchange
system maintained for such purposes by the Trustee or its agent,
in accordance with written Telephone Exchange Guidelines
attached hereto as Schedule "G". In the event that the Trustee
fails to receive a proper direction, the assets shall be
invested in the investment option set forth for such purpose
on Schedule "C", until the Trustee receives a proper direction.
(d) Mutual Funds. The Sponsor hereby acknowledges that it
has received from the Trustee a copy of the prospectus for
each Mutual Fund selected by the Named Fiduciary as a Plan
investment option or short-term investment fund. Trust
investments in Mutual Funds shall be subject to the following
limitations:
(i) Execution of Purchases and Sales. Purchases and
sales of Mutual Funds (other than for exchanges) shall be
made on the date on which the Trustee receives from the
Sponsor in good order all information and documentation
necessary to accurately effect such purchases and sales (or
in the case of a purchase, the subsequent date on which the
Trustee has received a wire transfer of funds necessary to
make such purchase). Exchanges of Mutual Funds shall be made
in accordance with the Telephone Exchange Guidelines attached
hereto as Schedule "G".
(ii) Voting. At the time of mailing of notice of each
annual or special stockholders' meeting of any Mutual Fund, the
Trustee shall send a copy of the notice and all proxy
solicitation materials to each Plan participant who has shares
of the Mutual Fund credited to the participant's accounts,
together with a voting direction form for return to the Trustee
or its designee. The Sponsor shall have the right to direct the
Trustee as to the manner in which the Trustee is to vote the
Mutual Fund shares held in any short-term investment fund or
liquidity reserve. The participant shall have the right to
direct the Trustee as to the manner in which the Trustee is to
vote the shares credited to the participant's accounts (both
vested and unvested). The Trustee shall vote the shares as
directed by the participant. The Trustee shall not vote shares
for which it has received no directions from the participant.
During the participant recordkeeping reconciliation period, the
Sponsor shall have the right to direct the Trustee as to the
manner in which the Trustee is to vote the shares of the
Mutual Funds in the Trust including Mutual Fund shares held
in any short-term investment fund for liquidity reserve.
With respect to all rights other than the right to vote, the
Trustee shall follow the directions of the participant and
if no such directions are received, the directions of the
Named Fiduciary. The Trustee shall have no further duty to
solicit directions from participants or the Sponsor.
(e) Sponsor Stock. Trust investments in Sponsor Stock
shall be made via the IR Stock Fund (the "Stock Fund") which
shall consist of shares of Sponsor Stock and short-term liquid
investments, including Fidelity Institutional Cash Portfolios:
Money Market Portfolio: Class A or such other Mutual Fund or
commingled money market pool as agreed to by the Sponsor and
Trustee, necessary to satisfy the Fund's cash needs for
transfers and payments. A cash target range shall be
maintained in the Stock Fund. Such target range may be changed
as agreed to in writing by the Sponsor and the Trustee. The
Trustee is responsible for ensuring that the actual cash held
in the Stock Fund falls within the agreed upon range over time.
Each participant's proportional interest in the Stock Fund shall
be measured in units of participation, rather than shares of
Sponsor Stock. Such units shall represent a proportionate
interest in all of the assets of the Stock Fund, which includes
shares of Sponsor Stock, short-term investments and at times,
receivables for dividends and/or Sponsor Stock sold and
payables for Sponsor Stock purchased. A Net Asset Value
("NAV") per unit will be determined daily for each unit
outstanding of the Stock Fund. The return earned by the Stock
Fund will represent a combination of the dividends paid on
the shares of Sponsor Stock held by the Stock Fund, gains
or losses realized on sales of Sponsor Stock, appreciation
or depreciation in the market price of those shares owned,
and interest on the short-term investments held by the
Stock Fund. Dividends received by the Stock Fund are
reinvested in additional shares of Sponsor Stock.
Investments in Sponsor Stock shall be subject to the
following limitations:
(i) Acquisition Limit. Pursuant to the Plan, the
Trust may be invested in Sponsor Stock to the extent necessary
to comply with investment directions under Section 4(c) of
this Agreement.
(ii) Fiduciary Duty of Named Fiduciary. The Named
Fiduciary shall continually monitor the suitability under the
fiduciary duty rules of section 404(a)(1) of ERISA (as modified
by section 404(a)(2) of ERISA) of acquiring and holding Sponsor
Stock. The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from the directions of
the Named Fiduciary with respect to the acquisition and holding
of Sponsor Stock, unless it is clear on their face that the
actions to be taken under those directions would be prohibited
by the foregoing fiduciary duty rules or would be contrary to
the terms of the Plan or this Agreement.
(iii) Execution of Purchases and Sales. (A) Purchases
and sales of Sponsor Stock (other than for exchanges) shall be
made on the open market on the date on which the Trustee
receives from the Sponsor in good order all information and
documentation necessary to accurately effect such purchases and
sales (or, in the case of purchases, the subsequent date on
which the Trustee has received a wire transfer of the funds
necessary to make such purchases). Exchanges of Sponsor Stock
shall be made in accordance with the Telephone Exchange
Guidelines attached hereto as Schedule "G". Such general
rules shall not apply in the following circumstances:
(1) If the Trustee is unable to purchase or sell
the total number of shares required to be purchased or sold on
such day as a result of market conditions; or
(2) If the Trustee is prohibited by the Securities
and Exchange Commission, the New York Stock Exchange, or any
other regulatory body from purchasing or selling any or all of
the shares required to be purchased or sold on such day.
In the event of the occurrence of the circumstances
described in (1) or (2) above, the Trustee shall purchase or
sell such shares as soon as possible thereafter and shall
determine the price of such purchases or sales to be the
average purchase or sales price of all such shares purchased
or sold, respectively. The Trustee may follow directions from
the Named Fiduciary to deviate from the above purchase and
sale procedures provided that such direction is made in writing
by the Named Fiduciary.
(B) Purchases and Sales from or to Sponsor. If
directed by the Sponsor in writing prior to the trading date,
the Trustee may purchase or sell Sponsor Stock from or to the
Sponsor if the purchase or sale is for adequate consideration
(within the meaning of section 3(18) of ERISA) and no
commission is charged. If Sponsor contributions or
contributions made by the Sponsor on behalf of the participants
under the Plan are to be invested in Sponsor Stock, the
Sponsor may transfer Sponsor Stock in lieu of cash to the
Trust. In either case, the number of shares to be
transferred will be determined by dividing the total amount
of Sponsor Stock to be purchased or sold by the 4:00 p.m.
closing price of the Sponsor Stock on the New York Stock
Exchange on the trading date.
(C) Use of an Affiliated Broker. The Sponsor hereby
directs the Trustee to use Fidelity Brokerage Services, Inc.
("FBSI") to provide brokerage services in connection with any
purchase or sale of Sponsor Stock in accordance with directions
from Plan participants. FBSI shall execute such directions
directly or through its affiliate, National Financial Services
Company ("NFSC"). The provision of brokerage services shall be
subject to the following:
(1) As consideration for such brokerage services,
the Sponsor agrees that FBSI shall be entitled to remuneration
under this authorization provision in the amount of three and
one-half cents ($.035) commission on each share of Sponsor Stock.
Any change in such remuneration may be made only by a signed
agreement between Sponsor and Trustee.
(2) Following the procedures set forth in
Department of Labor Prohibited Transaction Class Exemption
86-128, the Trustee will provide the Sponsor with the following
documents: (1) a description of FBSI's brokerage placement
practices; (2) a copy of PTCE 86-128; and (3) a form by which
the Sponsor may terminate this authorization to use a broker
affiliated with the Trustee. The Trustee will provide the
Sponsor with this termination form annually, as well as
quarterly and annual reports which summarize all securities
transaction-related charges incurred by the Plan, and the
Plan's annualized turnover rate.
(3) Any successor organization of FBSI, through
reorganization, consolidation, merger or similar transactions,
shall, upon consummation of such transaction, become the
successor broker in accordance with the terms of this
authorization provision.
(4) The Trustee and FBSI shall continue to rely
on this authorization provision until notified to the contrary.
The Sponsor reserves the right to terminate this authorization
upon sixty (60) days' written notice to FBSI (or its successor)
and the Trustee, in accordance with Section 11 of this Agreement.
(iv) Securities Law Reports. The Named Fiduciary shall
be responsible for filing all reports required under Federal or
state securities laws with respect to the Trust's ownership of
Sponsor Stock, including, without limitation, any reports
required under section 13 or 16 of the Securities Exchange Act
of 1934, and shall immediately notify the Trustee in writing
of any requirement to stop purchases or sales of Sponsor Stock
pending the filing of any report. The Trustee shall provide to
the Named Fiduciary such information on the Trust's ownership
of Sponsor Stock as the Named Fiduciary may reasonably request
in order to comply with Federal or state securities laws.
(v) Voting and Tender Offers. Notwithstanding any other
provision of this Agreement, the provisions of this Section
shall govern the voting and tendering of Sponsor Stock. The
Sponsor, after consultation with the Trustee, shall provide
and pay for all printing, mailing, tabulation and other costs
associated with the voting and tendering of Sponsor Stock.
(A) Voting. (1) When the issuer of the Sponsor Stock
prepares for any annual or special meeting, the Sponsor shall
notify the Trustee thirty (30) days in advance of the intended
record date and shall cause a copy of all materials to be
sent to the Trustee. Based on these materials, the Trustee
shall prepare a voting instruction form. At the time of
mailing of notice of each annual or special stockholders'
meeting of the issuer of the Sponsor Stock, the Sponsor
shall cause a copy of the notice and all proxy solicitation
materials to be sent to each Plan participant with an
interest in Sponsor Stock held in the Trust, together with
the foregoing voting instruction form to be returned to the
Trustee or its designee. The form shall show the
proportional interest in the number of full and fractional
shares of Sponsor Stock credited to the participant's accounts
held in the Stock Fund. The Sponsor shall provide the Trustee
with a copy of any materials provided to the participants and
shall certify to the Trustee that the materials have been
mailed or otherwise sent to participants.
(2) Each participant with an interest in the Stock
Fund shall have the right to direct the Trustee as to the
manner in which the Trustee is to vote (including not to vote)
that number of shares of Sponsor Stock reflecting such
participant's proportional interest in the Stock Fund (both
vested and unvested). Directions from a participant to the
Trustee concerning the voting of Sponsor Stock shall be
communicated in writing, or by mailgram or similar means.
These directions shall be held in confidence by the Trustee
and shall not be divulged to the Sponsor, or any officer or
employee thereof, or any other person. Upon its receipt of
the directions, the Trustee shall vote the shares of Sponsor
Stock reflecting the participant's proportional interest in
the Stock Fund as directed by the participant. The Trustee
shall not vote shares of Sponsor Stock reflecting a
participant's proportional interest in the Stock Fund for
which it has received no direction from the participant.
(B) Tender Offers. (1) Upon commencement of a
tender offer for any securities held in the Trust that are
Sponsor Stock, the Sponsor shall notify each Plan participant
with an interest in such Sponsor Stock of the tender offer
and utilize its best efforts to timely distribute or cause
to be distributed to the participant the same information
that is distributed to shareholders of the issuer of Sponsor
Stock in connection with the tender offer, and, after
consulting with the Trustee, shall provide and pay for a
means by which the participant may direct the Trustee whether
or not to tender the Sponsor Stock reflecting such
participant's proportional interest in the Stock Fund
(both vested and unvested). The Sponsor shall provide the
Trustee with a copy of any material provided to the
participants and shall certify to the Trustee that the
materials have been mailed or otherwise sent to participants.
(2) Each participant shall have the right to direct
the Trustee to tender or not to tender some or all of the
shares of Sponsor Stock reflecting such participant's
proportional interest in the Stock Fund (both vested and
unvested). Directions from a participant to the Trustee
concerning the tender of Sponsor Stock shall be communicated
in writing, or by mailgram or such similar means as is agreed
upon by the Trustee and the Sponsor under the preceding
paragraph. These directions shall be held in confidence by
the Trustee and shall not be divulged to the Sponsor, or any
officer or employee thereof, or any other person except to the
extent that the consequences of such directions are reflected in
reports regularly communicated to any such persons in the
ordinary course of the performance of the Trustee's services
hereunder. The Trustee shall tender or not tender shares of
Sponsor Stock as directed by the participant. The Trustee
shall not tender shares of Sponsor Stock reflecting a
participant's proportional interest in the Stock Fund for which
it has received no direction from the participant.
(3) A participant who has directed the Trustee to
tender some or all of the shares of Sponsor Stock reflecting
the participant's proportional interest in the Stock Fund may,
at any time prior to the tender offer withdrawal date, direct
the Trustee to withdraw some or all of the tendered shares
reflecting the participant's proportional interest, and the
Trustee shall withdraw the directed number of shares from the
tender offer prior to the tender offer withdrawal deadline.
Prior to the withdrawal deadline, if any shares of Sponsor
Stock not credited to participants' accounts have been
tendered, the Trustee shall redetermine the number of
shares of Sponsor Stock that would be tendered under Section
4(e)(v)(B)(3) if the date of the foregoing withdrawal were
the date of determination, and withdraw from the tender
offer the number of shares of Sponsor Stock not credited to
participants' accounts necessary to reduce the amount of
tendered Sponsor Stock not credited to participants' accounts
to the amount so redetermined. A participant shall not be
limited as to the number of directions to tender or withdraw
that the participant may give to the Trustee.
(4) A direction by a participant to the Trustee
to tender shares of Sponsor Stock reflecting the participant's
proportional interest in the Stock Fund shall not be considered
a written election under the Plan by the participant to
withdraw, or have distributed, any or all of his withdrawable
shares. The Trustee shall credit to each proportional interest
of the participant from which the tendered shares were taken
the proceeds received by the Trustee in exchange for the
shares of Sponsor Stock tendered from that interest. Pending
receipt of directions (through the Administrator) from the
participant or the Named Fiduciary, as provided in the Plan,
as to which of the remaining investment options the proceeds
should be invested in, the Trustee shall invest the proceeds
in the Mutual Fund described in Schedule "C".
(vi) Shares Credited. For all purposes of this Section,
the number of shares of Sponsor Stock deemed "credited" or
"reflected" to a participant's proportional interest shall
be determined as of the last preceding valuation date. The
trade date is the date the transaction is valued.
(vii) General. With respect to all rights other than
the right to vote, the right to tender, and the right to
withdraw shares previously tendered, in the case of Sponsor
Stock credited to a participant's proportional interest in the
Stock Fund, the Trustee shall follow the directions of the
participant and if no such directions are received, the
directions of the Named Fiduciary. The Trustee shall have no
duty to solicit directions from participants. With respect to
all rights other than the right to vote and the right to
tender, in the case of Sponsor Stock not credited to
participants' accounts, the Trustee shall follow the
directions of the Named Fiduciary.
(viii) Conversion. All provisions in this Section 4(e)
shall also apply to any securities received as a result of a
conversion of Sponsor Stock.
(f) Notes. The Administrator shall act as the Trustee's
agent for participant loan notes and as such shall (i) collect
and remit all principal and interest payments to the Trustee
and (ii) keep the proceeds of such loans separate from the
other assets of the Administrator and clearly identify such
assets as Plan assets. To originate a participant loan, the
Plan participant shall direct the Trustee as to the term and
amount of the loan to be made from the participant's individual
account. Such directions shall be made by Plan participants
by use of the telephone exchange system maintained for such
purpose by the Trustee or its agent. The Trustee shall
determine, based on the current value of the participant's
account on the date of the request and any guidelines provided
by the Sponsor, the amount available for the loan. Based on
the interest rate supplied by the Sponsor in accordance with
the terms of the Plan, the Trustee shall advise the participant
of such interest rate, as well as the installment payment
amounts. The Trustee shall distribute the loan note with the
proceeds check to the participant. The Trustee also shall
distribute truth-in-lending disclosure to the participant. To
facilitate recordkeeping, the Trustee may destroy the original
of any promissory note made in connection with a loan to a
participant under the Plan, provided that the Trustee first
creates a duplicate by a photographic or optical scanning or
other process yielding a reasonable facsimile of the promissory
note and the Plan participant's signature thereon, which
duplicate may be reduced or enlarged in size from the actual
size of the original promissory note.
(g) Participation in Commingled Pools. To the extent that
the Named Fiduciary selects as an investment option the Managed
Income Portfolio of the Fidelity Group Trust for Employee
Benefit Plans (the "Group Trust"), the Sponsor hereby
(i) agrees to the terms of the Group Trust and adopts said
terms as a part of this Agreement and (ii) acknowledges that
it has received from the Trustee a copy of the Group Trust,
the Declaration of Separate Fund for the Managed Income
Portfolio of the Group Trust, and the Circular for the
Managed Income Portfolio.
(h) Reliance of Trustee on Directions. (i) The Trustee
shall not be liable for any loss, or by reason of any breach,
which arises from any participant's exercise or non-exercise of
rights under this Section 4 over the assets in the
participant's accounts.
(ii) The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from the Named Fiduciary's
exercise or non-exercise of rights under this Section 4, unless
it was clear on their face that the actions to be taken under
the Named Fiduciary's directions were prohibited by the
fiduciary duty rules of section 404(a) of ERISA or were
contrary to the terms of the Plan or this Agreement.
(i) Trustee Powers. The Trustee shall have the following
powers and authority:
(i) Subject to paragraphs (b), (c), (d) and (e) of this
Section 4, to sell, exchange, convey, transfer, or otherwise
dispose of any property held in the Trust, by private contract
or at public auction. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or
other property delivered to the Trustee or to inquire into the
validity, expediency, or propriety of any such sale or other
disposition.
(ii) Subject to paragraphs (b) and (c) of this Section 4,
to invest in guaranteed investment contracts and short term
investments (including interest bearing accounts with the
Trustee or money market mutual funds advised by affiliates of
the Trustee) and in collective investment funds maintained by
the Trustee for qualified plans, in which case the provisions
of each collective investment fund in which the Trust is
invested shall be deemed adopted by the Sponsor and the
provisions thereof incorporated as a part of this Trust as
long as the fund remains exempt from taxation under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986, as amended.
(iii) To cause any securities or other property held as
part of the Trust to be registered in the Trustee's own name, in
the name of one or more of its nominees, or in the Trustee's
account with the Depository Trust Company of New York and to
hold any investments in bearer form, but the books and records
of the Trustee shall at all times show that all such investments
are part of the Trust.
(iv) To keep that portion of the Trust in cash or cash
balances as the Named Fiduciary or Administrator may, from time
to time, deem to be in the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver any and
all documents of transfer or conveyance and to carry out the
powers herein granted.
(vi) To borrow funds from a bank not affiliated with the
Trustee in order to provide sufficient liquidity to process
Plan transactions in a timely fashion; provided that the cost
of such borrowing shall be allocated in a reasonable fashion
to the investment fund(s) in need of liquidity.
(vii) To settle, compromise, or submit to arbitration any
claims, debts, or damages due to or arising from the Trust; to
commence or defend suits or legal or administrative proceedings;
to represent the Trust in all suits and legal and administrative
hearings; and to pay all reasonable expenses arising from any
such action, from the Trust if not paid by the Sponsor.
(viii) To employ legal, accounting, clerical, and other
assistance as may be required in carrying out the provisions of
this Agreement and to pay their reasonable expenses and
compensation from the Trust if not paid by the Sponsor.
(ix) To do all other acts although not specifically
mentioned herein, as the Trustee may deem necessary to carry
out any of the foregoing powers and the purposes of the Trust.
Section 5. Recordkeeping and Administrative Services to Be
Performed.
(a) General. The Trustee shall perform those recordkeeping
and administrative functions described in Schedule "A" attached
hereto. These recordkeeping and administrative functions shall
be performed within the framework of the Administrator's written
directions regarding the Plan's provisions, guidelines and
interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of
all investments, receipts, disbursements, and other
transactions hereunder, and shall report the value of the assets
held in the Trust as of the last day of each fiscal quarter of
the Plan and, if not on the last day of a fiscal quarter, the
date on which the Trustee resigns or is removed as provided in
Section 8 of this Agreement or is terminated as provided in
Section 10 (the "Reporting Date"). Within thirty (30) days
following each Reporting Date or within sixty (60) days in the
case of a Reporting Date caused by the resignation or removal
of the Trustee, or the termination of this Agreement, the
Trustee shall file with the Administrator a written account
setting forth all investments, receipts, disbursements, and
other transactions effected by the Trustee between the
Reporting Date and the prior Reporting Date, and setting
forth the value of the Trust as of the Reporting Date. Except
as otherwise required under ERISA, upon the expiration of six
(6) months from the date of filing such account with the
Administrator, the Trustee shall have no liability or
further accountability to anyone with respect to the propriety
of its acts or transactions shown in such account, except with
respect to such acts or transactions as to which the Sponsor
shall within such six (6) month period file with the Trustee
written objections.
(c) Inspection and Audit. All records generated by the
Trustee in accordance with paragraphs (a) and (b) shall be
open to inspection and audit, during the Trustee's regular
business hours prior to the termination of this Agreement,
by the Administrator or any person designated by the
Administrator. Upon the resignation or removal of the Trustee
or the termination of this Agreement, the Trustee shall provide
to the Administrator, at no expense to the Sponsor, in the
format regularly provided to the Administrator, a statement
of each participant's accounts as of the resignation, removal,
or termination, and the Trustee shall provide to the
Administrator or the Plan's new recordkeeper such further
records as are reasonable, at the Sponsor's expense.
(d) Effect of Plan Amendment. A confirmation of the
current qualified status of the Plan is attached hereto
as Schedule "F". The Trustee's provision of the
recordkeeping and administrative services set forth in this
Section 5 shall be conditioned on the Sponsor delivering to
the Trustee a copy of any amendment to the Plan as soon as
administratively feasible following the amendment's adoption,
with, if requested, an IRS determination letter or an opinion
of counsel substantially in the form of Schedule "F" covering
such amendment, and on the Administrator providing the Trustee
on a timely basis with all the information the Administrator
deems necessary for the Trustee to perform the recordkeeping
and administrative services and such other information as
the Trustee may reasonably request.
(e) Returns, Reports and Information. The Administrator
shall be responsible for the preparation and filing of all
returns, reports, and information required of the Trust or
Plan by law. The Trustee shall provide the Administrator
with such information as the Administrator may reasonably
request to make these filings. The Administrator shall also
be responsible for making any disclosures to Participants
required by law, except such disclosure as may be required
under federal or state truth-in-lending laws with regard to
Participant loans, which shall be provided by the Trustee.
Section 6. Compensation and Expenses. Within thirty (30) days
of receipt of the Trustee's bill, which shall be computed and
billed in accordance with Schedule "B" attached hereto and
made a part hereof, as amended from time to time, the Sponsor
shall send to the Trustee a payment in such amount or the
Sponsor may direct the Trustee to deduct such amount from
participants' accounts. All expenses of the Trustee relating
directly to the acquisition and disposition of investments
constituting part of the Trust, and all taxes of any kind
whatsoever that may be levied or assessed under existing or
future laws upon or in respect of the Trust or the income
thereof, shall be a charge against and paid from the
appropriate Plan participants' accounts.
Section 7. Directions and Indemnification.
(a) Identity of Administrator and Named Fiduciary. The
Trustee shall be fully protected in relying on the fact that
the Named Fiduciary and the Administrator under the Plan are
the individuals or persons named as such above or such other
individuals or persons as the Sponsor may notify the Trustee in writing.
(b) Directions from Administrator. Whenever the
Administrator provides a direction to the Trustee, the Trustee
shall not be liable for any loss, or by reason of any breach,
arising from the direction if the direction is contained in a
writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been
submitted (and not withdrawn) in writing to the Trustee by
the Administrator in the form attached hereto as Schedule "D",
provided the Trustee reasonably believes the signature of the
individual to be genuine. Such direction may also be made via
electronic data transfer (EDT) in accordance with procedures
agreed to by the Administrator and the Trustee; provided,
however, that the Trustee shall be fully protected in relying
on such direction as if it were a direction made in writing by
the Administrator. The Trustee shall have no responsibility
to ascertain any direction's (i) accuracy, (ii) compliance
with the terms of the Plan or any applicable law, or (iii)
effect for tax purposes or otherwise.
(c) Directions from Named Fiduciary. Whenever the Named
Fiduciary or Sponsor provides a direction to the Trustee, the
Trustee shall not be liable for any loss, or by reason of any
breach, arising from the direction (i) if the direction is
contained in a writing (or is oral and immediately confirmed
in a writing) signed by any individual whose name and signature
have been submitted (and not withdrawn) in writing to the
Trustee by the Named Fiduciary in the form attached hereto
as Schedule "E" and (ii) if the Trustee reasonably believes the
signature of the individual to be genuine, unless it is clear
on the direction's face that the actions to be taken under the
direction would be prohibited by the fiduciary duty rules of
section 404(a) of ERISA or would be contrary to the terms of
the Plan or this Agreement.
(d) Co-Fiduciary Liability. In any other case, the Trustee
shall not be liable for any loss, or by reason of any breach,
arising from any act or omission of another fiduciary under the
Plan except as provided in section 405(a) of ERISA.
(e) Indemnification. The Sponsor shall indemnify the Trustee
against, and hold the Trustee harmless from, any and all loss,
damage, penalty, liability, cost, and expense, including without
limitation, reasonable attorneys' fees and disbursements, that
may be incurred by, imposed upon, or asserted against the
Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by
any individual or person with respect to the Plan or Trust,
excepting only any and all loss, etc., arising solely from the
Trustee's negligence or bad faith.
(f) Survival. The provisions of this Section 7 shall
survive the termination of this Agreement.
Section 8. Resignation or Removal of Trustee.
(a) Resignation. The Trustee may resign at any time upon
sixty (60) days' notice in writing to the Sponsor, unless a
shorter period of notice is agreed upon by the Sponsor.
(b) Removal. The Sponsor may remove the Trustee at any
time upon sixty (60) days' notice in writing to the Trustee,
unless a shorter period of notice is agreed upon by the Trustee.
Section 9. Successor Trustee.
(a) Appointment. If the office of Trustee becomes vacant
for any reason, the Sponsor may in writing appoint a successor
trustee under this Agreement. The successor trustee shall have
all of the rights, powers, privileges, obligations, duties,
liabilities, and immunities granted to the Trustee under this
Agreement. The successor trustee and predecessor trustee shall
not be liable for the acts or omissions of the other with
respect to the Trust.
(b) Acceptance. When the successor trustee accepts its
appointment under this Agreement, title to and possession of
the Trust assets shall immediately vest in the successor
trustee without any further action on the part of the
predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or
reasonably may be requested in writing by the Sponsor or the
successor trustee to vest title to all Trust assets in the
successor trustee or to deliver all Trust assets to the
successor trustee.
(c) Corporate Action. Any successor of the Trustee or
successor trustee, through sale or transfer of the business
or trust department of the Trustee or successor trustee, or
through reorganization, consolidation, or merger, or any
similar transaction, shall, upon consummation of the
transaction, become the successor trustee under this Agreement.
Section 10. Termination. This Agreement may be terminated
at any time by the Sponsor upon sixty (60) days' notice in
writing to the Trustee. On the date of the termination of
this Agreement, the Trustee shall forthwith transfer and
deliver to such individual or entity as the Sponsor shall
designate, all cash and assets then constituting the Trust.
If, by the termination date, the Sponsor has not notified
the Trustee in writing as to whom the assets and cash are
to be transferred and delivered, the Trustee may bring an
appropriate action or proceeding for leave to deposit the
assets and cash in a court of competent jurisdiction. The
Trustee shall be reimbursed by the Sponsor for all costs and
expenses of the action or proceeding including, without
limitation, reasonable attorneys' fees and disbursements.
Section 11. Resignation, Removal, and Termination Notices.
All notices of resignation, removal, or termination under this
Agreement must be in writing and mailed to the party to which
the notice is being given by certified or registered mail, return
receipt requested, to the Sponsor c/o Michael P. McGee,
International Rectifier Corporation, 100 North Sepulveda
Boulevard, El Segundo, CA 90245-43359, and to the Trustee c/o
John M. Kimpel, Fidelity Investments, 82 Devonshire Street,
Boston, Massachusetts 02109, or to such other addresses as the
parties have notified each other of in the foregoing manner.
Section 12. Duration. This Trust shall continue in effect
without limit as to time, subject, however, to the provisions
of this Agreement relating to amendment, modification, and
termination thereof.
Section 13. Amendment or Modification. This Agreement may be
amended or modified at any time and from time to time only by
an instrument executed by both the Sponsor and the Trustee.
Notwithstanding the foregoing, to reflect increased operating
costs the Trustee may once each calendar year, but not prior to
January 1, 1999, amend Schedule "B" without the Sponsor's
consent upon seventy-five (75) days' written notice to the
Sponsor.
Section 14. General.
(a) Performance by Trustee, its Agents or Affiliates. The
Sponsor acknowledges and authorizes that the services to be
provided under this Agreement shall be provided by the Trustee,
its agents or affiliates, including Fidelity Investments
Institutional Operations Company or its successor, and that
certain of such services may be provided pursuant to one or
more other contractual agreements or relationships.
(b) Entire Agreement. This Agreement contains all of the
terms agreed upon between the parties with respect to the
subject matter hereof.
(c) Waiver. No waiver by either party of any failure or
refusal to comply with an obligation hereunder shall be deemed
a waiver of any other or subsequent failure or refusal to so comply.
(d) Successors and Assigns. The stipulations in this Agreement
shall inure to the benefit of, and shall bind, the successors
and assigns of the respective parties.
(e) Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
(f) Section Headings. The headings of the various sections
and subsections of this Agreement have been inserted only for
the purposes of convenience and are not part of this Agreement
and shall not be deemed in any manner to modify, explain, expand
or restrict any of the provisions of this Agreement.
Section 15. Governing Law.
(a) Massachusetts Law Controls. This Agreement is being made
in the Commonwealth of Massachusetts, and the Trust shall be
administered as a Massachusetts trust. The validity,
construction, effect, and administration of this Agreement shall
be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, except to the extent those
laws are superseded under section 514 of ERISA.
(b) Trust Agreement Controls. The Trustee is not a party to
the Plan, and in the event of any conflict between the
provisions of the Plan and the provisions of this Agreement,
the provisions of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers
as of the day and year first above written.
INTERNATIONAL RECTIFIER
CORPORATION
Attest: /s/ Gerald A. Koris By: /s/ Alexander Lidow
--------------------- -----------------------
Secretary Chief Executive Officer
FIDELITY MANAGEMENT TRUST COMPANY
Attest: /s/ Douglas O. Kent By: /s/ Susan Belekewicz
--------------------- -----------------------
Assistant Clerk Vice President
<PAGE>
[International Rectifier Letterhead]
June 16, 1998
International Rectifier Corporation
233 Kansas Street
El Segundo, California 90245
Re: Registration on Form S-8 of International
Rectifier Corporation
Ladies and Gentlemen:
At your request, I have examined the Registration
Statement on Form S-8 to be filed by International Rectifier
Corporation ("Company") with the Securities and Exchange
Commission in connection with the registration under the
Securities Act of 1933, as amended, of 1,500,000 shares of
Common Stock of the Company, $1 par value per share ("Shares")
and interests in the Plan (together with the Shares, the
"Securities"), to be issued pursuant to the International
Rectifier Corporation Retirement Savings Plan ("Plan").
I have examined the proceedings heretofore taken
and to be taken in connection with the authorization of the
Plan and the Shares that may be sold pursuant to the Plan.
Based upon the foregoing examination and upon such
matters of fact and law as I have deemed relevant, I am of
the opinion that the Securities have been duly authorized by
all necessary corporate action on the part of the Company and,
when issued in accordance with such authorization and appropriate
actions as contemplated thereby and by the Plan and related
agreements, the Securities will be validly issued, fully paid
and nonassessable.
I consent to the use of this opinion as an exhibit
to the aforesaid Registration Statement.
Respectfully submitted,
/s/ L. Michael Russell
-----------------------
L. Michael Russell
Vice President,
General Counsel and Secretary
<PAGE>
[O'MELVENY & MYERS LLP LETTERHEAD}
June
18th
1 9 9 8
(714) 760-9600
412,260-047
NB1-339230.V1
International Rectifier Corporation
233 Kansas Street
El Segundo, California 90245
Re: International Rectifier Corporation
Retirement Savings Plan
Gentlemen:
In connection with the preparation of the Registration
Statement on Form S-8 (the "Registration Statement") to be
submitted by International Rectifier Corporation (the "Company")
to the Securities and Exchange Commission with respect to the
International Rectifier Corporation Retirement Savings Plan, as
amended (the "Plan"), you have requested our opinion as to
whether the provisions of the written documents constituting the
Plan comply with the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). We consent to
the use of this opinion as an exhibit to the Registration
Statement.
We have been advised by you that the Plan, as amended
and restated as of January 1, 1997, received a favorable
determination letter, dated October 9, 1997, from the Internal
Revenue Service (the "Service") that the Plan satisfies the
requirements of the Tax Reform Act of 1986, as amended, and
subsequent legislation (the "Determination Letter"). We have
also been advised by you that the Determination Letter was
contingent upon the adoption of certain amendments to the Plan
submitted to the Service on September 30, 1997 and that these
amendments were duly adopted by the Company on November 24, 1997
in the form of Amendment 1997-1 to the Plan. In addition, we
have been advised by you that certain other Plan amendments were
adopted on December 24, 1997 in the form of Amendment 1997-2 to
the Plan and that these amendments were submitted to the Service
and received a favorable determination letter from the Service
dated February 26, 1998.
Based on the foregoing, and our examination of the Plan
and accompanying trust, it is our opinion that the form of the
Plan satisfies the essential substantive requirements of ERISA
and the Internal Revenue Code of 1986, as amended. Our opinion
and any determination letter issued by the Internal Revenue
Service covers only the form of the Plan and leaves open the
question of whether in operation the Plan is qualified.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
registration statement on Form S-8, for the International
Rectifier Corporation Retirement Savings Plan, of our report
dated July 17, 1997 on our audits of the consolidated financial
statements and the consolidated financial statement schedules of
International Rectifier Corporation as of June 30, 1997 and 1996
and for the years ended June 30, 1997, 1996, and 1995 appearing
in the Company's 1997 Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Los Angeles, California
June 19, 1998
