UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-12906
RICHARDSON ELECTRONICS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 36-2096643
(State of incorporation) (I.R.S. Employer Identification No.)
40W267 Keslinger Road, LaFox, Illinois 60147
(Address of principal executive offices and zip code)
(Registrant's telephone number including area code): (708) 208-2200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of August 24, 1994, there were outstanding 8,190,249 shares of
Common Stock,$.05 par value, and 3,247,296 shares of Class B
Common Stock, $.05 par value, which are convertible into Common
Stock on a share for share basis, of the registrant and the
aggregate market value of such shares, held by non-affiliates of
the registrant was approximately $27,500,000.
(Cover page continued)
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K Document
Part I
Item 1 - Business Page 11, Note B on pages 18 and 19,
and Note J on page 22 of regis
trant's Annual Report to Stock
holders for the fiscal year ended
May 31, 1994
Part II
Item 5 - Market for the Pages 15 (for dividends), 20 (for
Registrant's Common dividend restriction) and 24 (for
Stock and Related stock prices) of registrant's
Security Holder Matters Annual Report to Stockholders for
the fiscal year ended May 31, 1994
Item 6 - Selected Page 10 of registrant's Annual
Financial Data Report to Stockholders for the
fiscal year ended May 31, 1994
Item 7 - Management's Pages 11 to 13 of registrant's
Discussion and Analysis Annual Report to Stockholders for
of Results of Operations the fiscal year ended May 31, 1994
and Financial Condition
Item 8 - Financial Pages 14 to 23 of the registrant's
Statements and Annual Report to Stockholders for
Supplementary Data the fiscal year ended May 31, 1994
Part III
Item 10 - Directors and Registrant's Proxy Statement to be
Executive Officers of used in connection with its Annual
Registrant Meeting of Stockholders scheduled
to be held October 11, 1994,
captions ELECTION OF DIRECTORS -
Information Relating to Directors,
Nominees and Executive Officers,
ELECTION OF DIRECTORS - Af
filiations, and SECTION 16 FILINGS
Item 11 - Executive Registrant's Proxy Statement to be
Compensation used in connection with its Annual
Meeting of Stockholders scheduled
to be held October 11, 1994,
captions ELECTION OF DIRECTORS -
Directors Compensation, and
EXECUTIVE COMPENSATION, except
captions REPORT ON EXECUTIVE COM
PENSATION and PERFORMANCE GRAPH
Item 12 - Security Registrant's Proxy Statement to be
Ownership of Certain used in connection with its Annual
Beneficial Owners and Meeting of Stockholders scheduled
Management to be held October 11, 1994,
captions ELECTION OF DIRECTORS -
Information Relating to Directors,
Nominees and Executive Officers,
and PRINCIPAL STOCKHOLDERS
Item 13 - Certain Registrant's Proxy Statement to be
Relationships and used in connection with its Annual
Related Transactions Meeting of Stockholders scheduled
to be held October 11, 1994, c
aption EXECUTIVE COMPENSATION -
Compensation / Stock Option Commit
tee Interlocks and Insider
Participation
Part IV
Item 14 - Exhibits, Exhibits and Financial Statement
Financial Statements and Schedules as specified in Item 14
Schedules, and Reports
on Form 8-K
Except as specifically incorporated herein by reference, the
above mentioned Annual report to Stockholders and Proxy Statement
are not deemed filed as part of this report.
PART I
Item 1. Business
The registrant (herein with its subsidiaries referred to as
the "Company" or "Richardson") operates in one industry as a
distributor of electronic components, including vacuum tubes,
semiconductors and related products. These devices are used
primarily to control electrical power, amplify signals, or as
display devices in a variety of industrial, communication and
scientific applications. Historically, the Company manufactured
certain of the electron tubes it distributed. See Note B of the
"Notes to Consolidated Financial Statements" of the Annual Report
to Stockholders for the Year Ended May 31, 1994 discussing the
phase-down of its involvement in manufacturing operations. In
addition, the Company distributes a variety of closed circuit
television ("CCTV") equipment and other security systems related
products.
Consolidated sales in 1994 set a new record at $172.1
million, up 8.1 percent over the prior year. The Company
believes that much of its growth is attributable to its
concentration on specialized areas of the electronics market.
Historically, the Company's primary business was the distribution
of electron tubes and it continues to be a major distributor of
these products. In recent years, the Company has followed the
migration of its customers to newer technologies, capitalizing on
its expertise as a value-added distributor. In 1994, due to the
significant increase in new product offerings including solid
state components and cathode ray tubes, such products represented
47% of consolidated sales compared to 23% five years ago. The
addition of new product lines is primarily based upon
compatibility with the Company's existing customer base. The
Company also seeks new applications and customers (including,
without limitation, through new and expanded distribution
franchises) for its existing product lines.
A significant portion of the Company's sales are of
replacement parts. Specialized areas of the original equipment
industry and research and development applications are also
served by the Company. The marketing and sales organization of
the Company is divided into four strategic business units (SBUs):
Electron Device Group (EDG), Solid State and Components Group
(SSC), Display Products Group (DPG), and Security Systems
Division (SSD). EDG distributes power grid tubes and continuous
wave magnetrons for industrial heating applications and also
thyratrons, ignitrons, receiving tubes and special purpose tubes
which are sold to many industries, including automotive, steel,
plastics and textiles companies. EDG also distributes high
voltage switch tubes and x-ray tubes used in x-ray imaging
equipment and specialty tubes for analytical equipment, as well
as camera tubes, photomultipliers, switch tubes, magnetrons,
hydrogen thyratrons and imaging equipment to the medical
industry. Power grid tube and camera tube product lines are sold
by EDG to the radio and television broadcast industry. In
addition, EDG assists other SBU's to market cathode ray tubes
(CRTs), semiconductors and other products to the broadcast
industry. EDG also serves the avionics, marine, microwave and
communications markets with product lines including traveling
wave tubes, klystrons, planar triodes, hydrogen thyratrons,
magnetrons and display storage tubes.
SSC distributes RF transistors and amplifiers, communi
cations modules, passive components, silicon controlled
rectifiers, integrated circuits, semiconductors, high voltage
capacitors, resistors, broadcast amplifiers, and other RF and
microwave semiconductors for avionics, broadcast, communications,
data display and industrial applications. DPG markets data
display and instrumentation CRTs that are used in data display,
marine, medical, radar, and avionic applications. It also
distributes flyback transformers and various components for
monitor and terminal repair. SSD distributes closed-circuit
television (CCTV) equipment, as well as fiber optic, microwave,
intercommunication, access control and other security related
products, equipment and accessories, for both initial
installation and replacement. In addition, SSD is an approved
repair service organization. Sales trends for each SBU are
summarized and analyzed in Management's Discussion and Analysis
on page 11 of the Annual Report to Stockholders for the Year
Ended May 31, 1994.
Sales in the global market for electron tubes in which the
Company participates, principally through EDG, is estimated by
the Company to have been approximately $2.2 billion in 1993. The
Company participates through SSC in specialized segments of the
semiconductor portion of the market by distributing power semicon
ductors and RF and microwave semiconductors. According to
industry estimates, European, United States and Japan-based
factory sales for power semiconductors were approximately $4.5
billion in 1993. Richardson estimates the portion of this market
it serves at $650 million. DPG estimates factory sales of CRTs in
the global market were approximately $5 billion in 1993.
Richardson estimates the available market it serves for
replacement CRTs is approximately $150 million. The Company esti
mates that annual wholesale sales for CCTV and related security
equipment in which the Company participates as a distributor,
principally through SSD, were approximately $220 million in 1993.
Sales of solid state components, primarily RF semiconduc
tors, have grown rapidly in recent years. Semiconductors have
been replacing electron tubes in a number of applications, such
as low power television and radio transmitters. However, in many
applications, including higher power broadcasting and industrial
equipment, electron tubes are more suitable than semiconductors
due to the higher power capabilities of tubes and their ability
to withstand severe environmental and other conditions which
often damage semiconductors. Semiconductors, however, continue to
expand the range of their applications. Consequently, many parts
of the market for electron tubes in which the Company
participates, have been declining. EDG sales, which serve the
Company's traditional electron tube market, have declined 6% in
1994, 5% in 1993 and 11% in 1992. Last year the decrease was
principally attributable to general market trends, poor economic
conditions in Europe and Latin America, and foreign exchange rate
fluctuations (see "Management's Discussion and Analysis of
Results of Operations and Financial Condition - Sales Analysis,
EDG" in the accompanying financial statements). In response to
this trend, EDG is seeking to add additional products and expand
existing marketing agreements.
The Company has found that a replacement market for power
semiconductors exists and that many of its tube customers have
semiconductor requirements as well. In addition SSC's sales to
original equipment manufacturers has grown and accounted for
approximately 59% of the SBU's 1994 sales. SSC's sales have
increased 34% in 1994, 15% in 1993 and 15% in 1992 (see
"Management's Discussion and Analysis of Results of Operations
and Financial Condition - Sales Analysis, SSC" in the Annual
Report to Stockholders for the Year Ended May 31, 1994.)
The Company's sales of CRT's and other display products have
increased 42% in 1994, 17% in 1993 and 50% in 1992 (see
"Management's Discussion and Analysis of Results of Operations
and Financial Condition - Sales Analysis, DPG" in the Annual
Report to Stockholders for the Year Ended May 31, 1994.)
SSD's sales increased 2% in 1994, declined 13% in 1993 and
increased 17% in 1992. (see "Management's Discussion and Analysis
of Results of Operations and Financial Condition - Sales
Analysis, SSD" in the Annual Report to Stockholders for the Year
Ended May 31, 1994.)
Developments in the Past Fiscal Year
In 1993, the Company developed a plan to reorganize its
sales staff on a specialty basis by SBU wherever possible. This
plan was implemented throughout North America in fiscal 1994. In
addition to Corporate Account Managers, who continue to sell the
Company's full line of products to large national and
international accounts, the Company utilizes a specialty sales
staff for selling products for specific SBUs. In addition,
several sales engineers were added to the sales staff in the
United States and Europe to improve technical service to
customers who purchase SSC products. The specialty sales staff is
deployed based upon their sales and technical experience to
service the products and achieve the growth objectives of the SBU
they represent.
As part of the Department of Justice (DOJ) settlement
reached in October 1991, the Company agreed not to make further
acquisitions of power grid tube product lines without the
approval of the government. This affected the Company's ability
to acquire product lines to fully utilize the capacity of its
manufacturing facilities in LaFox, Illinois and Brive, France.
The LaFox facility, which has been phasing down its operations,
experienced underutilization and manufacturing inefficiencies of
$.5 million, $.1 million and $1.4 million in 1994, 1993 and 1992,
respectively. The Brive facility has sustained similar
inefficiencies of $3.7 million, $3.1 million and $2.2 million in
1994, 1993 and 1992. In addition, the company incurred warranty
costs on manufactured products of $.8 million, $.4 million and
$.3 million in 1994, 1993 and 1992.
In response to the persistent underutilization and
production inefficiencies which were not resolved by other
actions taken, the Board of Directors approved management's plan
to phase down the Company's involvement in the manufacture of
electron tubes. In developing this plan, the Company solicited
offers for the sale of the Brive operation from strategic buyers,
including local management who has expressed preliminary interest
in a management buy-out. The Board has authorized the Company to
pursue the buy-out proposal as well as other alternatives.
The plan includes a $26.5 million charge against 1994
earnings for the estimated cost of the phase-down. Of this
charge, $21.4 million consists of asset write-downs and costs
related to the sale or disposition of the Brive facility. The
balance, $5.1 million, represents an increase in the provision
for the phase-down of domestic manufacturing and settlement of
certain litigation, originally established at $20.0 million in
1991. See details of management's plan, the related costs and
employees affected in Note B of the "Notes to Consolidated
Financial Statements" of the Annual Report to Stockholders for
the Year Ended May 31,1994. The plan will be completed in fiscal
1995.
Products
The following is a description of some of the Company's
products:
Power Amplifier / Oscillator Tubes are vacuum or gas filled
tubes used in applications where current or voltage amplification
and/or oscillation is required. Some areas of use are: induction
heating, diathermy equipment, sonic generators, communications
and radar systems and power supplies for voltage regulation or
amplification.
Thyratrons and Rectifiers are vacuum or gas filled tubes
used to control the flow of electrical current. Thyratrons are
used to control ignitrons, electric motor speed controls, theatri
cal lighting and machinery such as printing presses and various
types of medical equipment. Rectifiers are used to restrict
electric current flow to one direction in power supply
applications.
RF Power Transistors are "solid state" high-frequency power
amplifiers used in land mobile, aircraft and satellite
communications and in many types of electronic instrumentation.
Closed-circuit Television ("CCTV") products include cameras,
lenses, monitors, scanners, time lapse recorders and associated
accessories. CCTV products are used in surveillance applications
and monitoring hazardous environments in the work-place.
Magnetrons are high vacuum oscillator tubes which are used
to generate energy at microwave frequencies. The pulsed magnetron
is predominantly used to generate high energy microwave signals
for radar applications. Magnetrons are also used in heating
applications such as microwave ovens and devices used by the
medical industry.
Receiving/Industrial Receiving Tubes are vacuum tubes used
to regulate or amplify small amounts of power in a wide variety
of electrical and electronic equipment. Communications, medical
instrumentation, consumer electronics, and industrial controls
are typical applications for this product.
Planar Triodes are high frequency triodes manufactured using
a special process to enable them to operate at several thousand
megahertz (MHZ). Aircraft instrumentation and television
translators use planar triodes.
Klystrons are vacuum tubes used to amplify or generate power
at microwave frequencies by means of velocity modulation.
Applications include radar and telecommunications systems.
Silicon Controlled Rectifiers (SCR's) and Power Semicon
ductor Modules are used in many industrial control applications,
and have spawned new applications because of their ability to
switch large amounts of power at high speeds. These silicon power
devices are capable of operating at up to 4,000 volts at 2,000
amperes.
Ignitrons are mercury pool tubes used to control the flow of
large amounts of electrical current. They are used most often in
welding equipment, power conversion and power rectification
equipment.
Electronic Display Tubes are small gas filled tubes which
contain multiple elements which can display either numerical or
alphabetical characters on command. These display tubes are used
in scientific and medical equipment and in various commercial
applications.
Camera Tubes are vacuum tubes used to change a visible light
image to electronic signals which are then transmitted to a
monitor for conversion back to a visible image. Camera tubes are
used in broadcast, security and medical applications.
Traveling Wave Tubes are high vacuum microwave amplifiers
whose electrical signal can be adjusted by means of electrostatic
or magnetic fields. Applications include satellite as well as
ground telecommunications and electronic countermeasure devices.
Cathode Ray Tubes ("CRTs") are vacuum tubes which convert an
electrical signal into a visual image to display information on
computer terminals or televisions used in the medical, scientific
and publishing industries as well as in general business
applications.
High Voltage and Power Capacitors are used in industrial,
avionics, medical and broadcast applications for filtering, high
current by-pass, feed through capacitance for harmonic
attenuation, pulse shaping, grid and plate blocking, tuning of
tank circuits, antenna coupling, and energy discharge.
Microwave Diodes are specialized diodes intended for use at
microwave and RF frequencies for oscillator, mixer, switching,
and power control, and amplifier applications in broadcast,
avionic, telecommunication, medical and industrial equipment.
Distribution and Marketing
The Company buys, warehouses and distributes more than
55,000 types of tubes and semiconductors ranging in price from $1
to $21,000 for tubes and $.10 to $2,500 for semiconductors and
related components. The Company processes approximately 550
orders per day averaging more than $1,250 each (for an average
total of $687,000 per day). The Company distributes electron
tubes it manufactures as well as electron tubes, power, RF and
microwave semiconductors and related products purchased from
other sources, including Varian Associates, Inc., Motorola, Inc.,
Clinton Electronics Corp., Burle Industries, Inc., Panasonic
Industrial Company, Philips, SGS Thomson, ITT Electron
Technology Division, RF Products, Microwave Associates, Powerex,
M/A-COM, Joslyn Jennings, Semtech Corp. and Dale Electronics. No
single outside supplier currently accounts for more than 10% of
the Company's purchases in any year, other than Varian which
accounted for approximately 17%, 22% and 21% of purchases in
fiscal 1994, 1993 and 1992, respectively. The Company believes
that the loss of any one supplier, other than Varian, would not
cause a material adverse impact on its earnings and revenues. The
Company believes that relationships with Varian are satisfactory.
The Company has entered into marketing distribution
agreements with various manufacturers in the tube, semiconductor,
and CCTV industries. The most significant is a distributor
agreement with the Electron Device Group of Varian Associates,
Inc. ("Varian") under which the Company is Varian's exclusive
distributor of power grid tubes throughout the world with the
exception of the United States and certain former Eastern Bloc
countries where the Company is one of Varian's stocking
distributors. This distributor agreement replaces the joint
venture between the Company and Varian named Varian Supply
Company ("VASCO") which was dissolved in fiscal 1992 as part of
the Company's settlement of the DOJ's investigation of the
Company. Such settlement also included an agreement by the
Company to obtain DOJ approval, except under limited
circumstances, for the acquisition of any company (or its power
grid tube assets) engaged in the rebuilding, manufacture, or
distribution of power grid tubes. (See Note K of the "Notes to
Consolidated Financial Statements" of the Annual Report to
Stockholders for the Year Ended May 31,1994.) Varian product
accounted for 18%, 20% and 25% of net sales of the Company in
fiscal 1994, 1993 and 1992, respectively.
Customer orders are taken by the regional sales offices and
directed to the Company's headquarters and distribution facility
in LaFox, Illinois or to one of its international distribution
centers. The Company utilizes a sophisticated data processing
network which provides on-line, real-time interconnection of all
sales offices, manufacturing facilities and central distribution
operations. Information on stock availability, customers, and
competitive market analyses are instantly obtainable by
management and the entire distribution network. Most of the
products distributed by Richardson are critical to the function
of the equipment in which they are used, therefore, Richardson
utilizes this system to facilitate same day shipment of over 90%
of its customer orders received.
In 1994 the Company reorganized its sales staff on a
specialty basis wherever possible (see Part I, Item 1., Business
- - - Developments in the Past Fiscal Year".)
The Company markets its products to manufacturers and users
of equipment in, among others, the areas of communications,
industrial heating, marine, medical care and avionics. The
Company also sells to customers who purchase for resale,
including electronics distributors and service companies. The
Company has established supply contracts, generally for a one-
year term, with certain customers, and is committed pursuant to
these contracts to maintain minimum inventories so as to provide
product without significant delay. Management believes that for
the past two fiscal years approximately 20% of the Company's
sales were made under such supply contracts. During the past five
years no single customer has represented more than 10% of the
Company's sales.
The Company emphasizes sales to replacement markets. Some of
these markets may expand as new equipment utilizing electron
tubes continues to be sold. For example: equipment such as video
monitors and computer display terminals which use cathode ray
tubes also present expanding market opportunities for replacement
purposes; new communications equipment using microwave devices
such as traveling wave tubes and klystrons and RF transistors
continues to be developed for applications with high power or
high-frequency requirements that tube technology alone can
provide. Richardson sales include products for use in
applications in the following industries: automotive, avionics,
broadcasting, closed-circuit television, communications, food
processing, marine, medical, steel, and telecommunications, as
well as federal, state and local governments.
The Company's backlog of firm orders scheduled for future
delivery within 12 months was $29,700,000, $22,400,000 and
$21,400,000 as of May 31, 1994, 1993 and 1992, respectively. The
Company's backlog consists primarily of commercial contracts that
require future shipping dates. The level of the Company's backlog
is not indicative of future sales.
International
International sales represented approximately 46% of the
Company's fiscal 1994 sales. These sales were $79,123,000,
$75,101,000, and $77,916,000 in fiscal years 1994, 1993 and 1992,
respectively. Export sales shipped directly from the United
States, principally to European and Latin American customers,
were $29,667,000, $28,396,000 and $29,839,000 in 1994,1993 and
1992. The Company has 33 locations throughout the world. See Note
J of the "Notes to Consolidated Financial Statements" of the
Annual Report to Stockholders for the Year Ended May 31,1994 for
details of the Company's international operations, including
sales, operating income and identifiable assets.
Manufacturing
The Company distributes its manufactured products
principally under the trade names "National", "Cetron" and
"Amperex". Located in LaFox, Illinois and Brive, France, the
Company's manufacturing operations, including value-added,
accounted for approximately 18% of its product distribution
requirements in fiscal 1994. Such manufacturing operations
contributed sales of approximately $30 million in fiscal 1994,
$33 million in fiscal 1992 and $35 million in fiscal 1992.
The products currently manufactured by the Company include
thyratrons and rectifiers, power tubes, ignitrons, electronic
display tubes, phototubes, SCR Assemblies, CW and pulsed
magnetrons and spark gap tubes. The materials used in the
manufacturing process are readily available and consist of glass
bulbs and tubing, nickel, stainless steel and other metals,
plastic and metal bases, ceramics, and a wide variety of
fabricated metal components.
See above, Part I, Item 1. Business, Developments in the
Past Fiscal Year for information on the Company's planned phase-
down of manufacturing operations. These plans include the sale or
disposition of the Company's Brive operations. As part of any
sale, the Company intends to enter into purchase commitments with
the buyer in order to assure an uninterrupted source of supply
for its customers. It is anticipated that the higher earnings
levels and stability which will result from the elimination of
manufacturing inefficiencies will be partially offset by reduced
profit margins on distributed product.
Research and Development
The objective of the Company's research and development is
to increase the number of applications for its products and to
develop existing technology with respect to advanced products.
The Company emphasizes product development rather than basic
research. The ability of the Company to compete is, in part,
dependent upon its ability to anticipate changing market needs
and to provide the required products.
At present, a staff of 11 persons are involved, on a full-
or part-time basis, in various phases of product development. The
Company's expenditures in this area were $358,000, $584,000 and
$548,000 in fiscal 1994, 1993 and 1992.
Employees
As of May 31, 1994, the Company employed 392 individuals on
a full time basis at U.S. locations. Of these, 53 are employed in
administrative and clerical positions, 219 are employed in sales
and distribution, and 120 are employed in value-added and product
manufacturing. The Company's foreign subsidiaries employ an
additional 262 individuals of which 119 individuals are engaged
in administrative, sales and distribution and 143 in
manufacturing. All of the Company's U.S. employees are non-union.
A portion of the Company's employees in Brive, France are
represented by unions. The Company's relations with such unions
have been satisfactory.
Competition
Although the Company believes it is an important distributor
of electron tubes and semiconductors in the United States, it
competes worldwide with other general line distributors and
manufacturers and other distributors of electronic components
(including original equipment manufacturers), many of which are
substantially larger and have greater resources than the Company.
The Company also competes against manufacturers of
semiconductors, which have replaced electron tubes in many
applications. Also see above Part I, Item 1, Business, Develop
ments in the Past Fiscal Year.
Patents and Trademarks
The Company acquired certain manufacturing patents and
trademarks in connection with acquisitions, including the
trademarks "National", "Cetron," and "Amperex." The Company
believes that although the patents and trademarks it has obtained
have value, they will not be determinative of the Company's
success, which depends principally upon its marketing technical
support, product dlivery and upon the quality and economic value
of its products.
Item 2. Properties
The Company owns facilities on approximately 300 acres in
LaFox, Illinois, consisting of a modern, single and two-story
concrete, brick and steel constructed building containing
approximately 255,000 square feet of manufacturing, warehouse and
office space. The Company also owns a four-story building
containing approximately 45,000 square feet of warehouse space on
1.5 acres in Geneva, Illinois. The Company's United Kingdom
subsidiary owns a 12,000 square foot single story brick building
in Lincoln, England which it utilizes as a sales office and
warehouse hub for European sales distribution. The Company's
Spanish subsidiary owns a 3,510 square foot office and warehouse
space in a 55,000 square foot industrial concrete building
constructed in 1988 in Madrid, Spain. The Company's Italian
subsidiary owns an office and warehouse facility located in
Florence, Italy which consists of approximately 6,400 square feet
of a brick and concrete industrial building. A French subsidiary
of the Company owns a single and two-story concrete, brick and
steel constructed building of approximately 130,000 square feet
in Brive, France, which it uses for manufacturing, warehouse and
office.
The Company also rents branch sales offices on a short-term
basis in or near Boston, New York, Orlando, Dallas, San
Francisco, Los Angeles, Seattle and Miami; and in Montreal,
Canada; and Munich, Germany. Additional sales offices, which
include warehouse space, leased on a short-term basis, are
located in or near Toronto, Canada; Paris, France; Tokyo, Japan
and Singapore. Additional warehouse space in Geneva, Illinois is
also rented on a short-term basis. The Company also leases a
facility from a trust, of which Edward J. Richardson, Chairman of
the Board of the Company, is the principal beneficiary. Such
facility is used by SSD as its sales office and warehouse. Under
the terms of this lease, the Company is obligated to make rental
payments of $68,705 per year, expiring in 1996. In the opinion of
management, the lease is on terms no less favorable to the
Company than similar leases which would be available from unre
lated third parties.
Item 3. Legal Proceedings
No material developments have occurred in the matter of
Panache Broadcasting of Pennsylvania, Inc. v. Richardson Electron
ics, Ltd., Varian Associates, Inc., and Varian Supply Company,
pending in the United States District Court for the Northern
District of Illinois, Eastern Division, docket no. 90 C 6400. The
complaint alleges violations of Sections 1 and 2 of the Sherman
Act and Section 7 of the Clayton Act As previously reported the
matter remains primarily in the discovery stage and the Court has
not determined whether the matter may be maintained as a class
action.
The United States Government advised the Company in March
1994 that the Government may assert a claim for damages and
penalties against the Company under the False Claims Act and the
Lanham Act for conduct in connection with a $3.1 million contract
completed in 1989 to supply certain tubes. The False Claims Act
permits the Government to seek a civil penalty for each violation
of not less than $5,000 nor more than $10,000, plus three times
its damages. The Company believes it has not violated these
statutes and is discussing the resolution of the matter with the
Government. If such discussions are not satisfactorily concluded,
the Company plans to vigorously defend itself against any
litigation the Government may initiate.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of stockholders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year ended May 31, 1994.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters
Incorporated herein by reference to pages 15 (for dividend
payments), 20 (for dividend restriction) and 24 (for market data)
of the Annual Report to Stockholders for the Year Ended May 31,
1994.
Item 6. Selected Financial Data
Incorporated herein by reference to page 10 of the Annual
Report to Stockholders for the Year Ended May 31, 1994.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated herein by reference to pages 11 to 13 of the
Annual Report to Stockholders for the Year Ended May 31, 1994.
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference to pages 14 through 23 of
the Annual Report to Stockholders for the Year Ended May 31,
1994.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
No event has occurred within the 24 month period prior to
the date of Company's most recent financial statements, which
would require disclosure under Item 9 of this Report.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning Directors and Executive Officers of
the Company is contained in the Company's Proxy Statement to be
used in connection with its Annual Meeting of Stockholders
scheduled to be held October 11, 1994, under the captions
"ELECTION OF DIRECTORS - Information Relating to Directors,
Nominees and Executive Officers," "ELECTION OF DIRECTORS -
Affiliations" and "SECTION 16 FILINGS," which information is
incorporated herein by reference.
Item 11. Executive Compensation
Incorporated herein by reference is information concerning
executive compensation is contained in the Company's Proxy
Statement to be used in connection with its Annual Meeting of
Stockholders scheduled to be held October 11, 1994, under the
captions "ELECTION OF DIRECTORS - Directors Compensation" and
"EXECUTIVE COMPENSATION," except for captions "REPORT ON
EXECUTIVE COMPENSATION" and "PERFORMANCE GRAPH."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information concerning Security ownership of certain
beneficial owners and management is contained in the Company's
Proxy Statement to be used in connection with its Annual Meeting
of Stockholders scheduled to be held October 11, 1994, under the
caption "ELECTION OF DIRECTORS - Information Relating to
Directors, Nominees and Executive Officers" and "PRINCIPAL
STOCKHOLDERS," which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related
transactions is contained in the Company's Proxy Statement to be
used in connection with its Annual Meeting of Stockholders
scheduled to be held October 11, 1994, under the caption
"EXECUTIVE COMPENSATION - Compensation Committee Interlocks and
Insider Participation," which information is incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following consolidated financial statements of the
registrant and its subsidiaries included on pages 14 through 23
of its Annual Report to Stockholders for the fiscal year ended
May 31, 1994 are incorporated herein by reference:
Filing
Method
Report of Independent Accountants E - Exhibit 13
1. FINANCIAL STATEMENTS E - Exhibit 13
Consolidated Balance Sheets - May 31, 1994 and E
1993
Consolidated Statements of Operations - Years E
ended May 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows -Years E
ended May 31, 1994, 1993 and 1992
Consolidated Statements of Stockholders' Equity - E
Years ended May 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements E
The following consolidated financial information for the
fiscal years 1994, 1993 and 1992 is submitted herewith:
2. FINANCIAL STATEMENT SCHEDULES:
VIII Valuation and Qualifying Accounts E - Exhibit 99.1
IX Short-Term Borrowings E - Exhibit 99.2
XIII Other Investments E - Exhibit 99.3
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore, have been omitted.
(b) REPORTS ON FORM 8-K.
There were no reports on Form 8-K during the last quarter of
the period covered by this report.
(c) EXHIBITS Filing
Method
3(a) Restated Certificate of Incorporation of the NA
Company, incorporated by reference to
Appendix B to the Proxy Statement/ Pro
spectus dated November 13, 1986, included in
the Company's Registration Statement on Form
S-4 Commission File No. 33-8696.
3(b) By-laws of the Company, as amended. E
4(a) Specimen forms of Common Stock and Class B NA
Common Stock certificates of the Company
incorporated by reference to Exhibit 4(a) to
the Company's Registration Statement on Form
S-1, Commission File No. 33-10834.
4(b) Indenture between the Company and Conti NA
nental Illinois National Bank and Trust
Company of Chicago (including form of 7-1/4%
Convertible Subordinated Debentures due
December 15, 2006) incorporated by reference
to Exhibit 4(b) to the Company's Annual
Report on Form 10-K for the fiscal year
ended May 31, 1990.
10(a) $13,000,000 Senior Term Note dated March 28, NA
1994 delivered to American National Bank,
incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended February 28, 1994.
10(b) Industrial Building Lease, dated April 14, NA
1993 between the Company and the American
National Bank & Trust, as trustee under
Trust No. 56120 dated 2-23-83, incorporated
by reference to Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1994.
10(c) The Company's Employees Profit Sharing Plan E
and Trust Agreement, (as amended and
restated effective June 1, 1989) dated July
14, 1994.
10(d) The Company's Amended and Restated Incentive NA
Stock Option Plan effective April 8, 1987
incorporated by reference to Exhibit 10(m)
to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1987.
10(d)(1) First Amendment to the Company's Amended and NA
Restated Incentive Stock Option Plan
effective April 11, 1989 incorporated by
reference to Exhibit 10(l)(1) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1989.
10(d)(2) Second Amendment to the Company's Amended NA
and Restated Incentive Stock Option Plan
effective April 11, 1989 incorporated by
reference to Exhibit 10(l)(2) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1991.
10(e) The Company's Amended and Restated Employees NA
Stock Purchase Plan, incorporated by
reference to the Company's Proxy Statement
used in connection with its Annual Meeting
of Stockholders held October 2, 1985.
10(e)(1) First Amendment to Amended and Restated NA
Employees Stock Purchase Plan, incorporated
by reference to Appendix D to the Company's
Proxy Statement/Prospectus dated November
13, 1986 included in its Registration
Statement on Form S-4, Commission File No.
33-8696.
10(e)(2) Second Amendment to Amended and Restated NA
Employees Stock Purchase Plan, incorporated
by reference to Appendix E to the Company's
Proxy Statement/Prospectus dated November
13, 1986 included in its Registration
Statement on Form S-4, Commission File No.
33-8696.
10(e)(3) Third Amendment to Amended and Restated NA
Employees Stock Purchase Plan incorporated
by reference to Exhibit 10(m)(3) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1990.
10(e)(4) Fourth Amendment to Amended and Restated NA
Employees Stock Purchase Plan incorporated
by reference to Exhibit 10(m)(4) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1991.
10(e)(5) Fifth Amendment to Amended and Restated NA
Employees Stock Purchase Plan incorporated
by reference to Exhibit 10(m)(5) to the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1991.
10(f) Employees Stock Ownership Plan and Trust E
Agreement, effective as of June 1, 1987,
dated July 14, 1994.
10(g) Stock Option Plan for Non-Employee directors NA
incorporated by reference to Appendix A to
the Company's Proxy Statement dated August
30, 1989 for its Annual Meeting of
Stockholders held on October 18, 1989.
10(h) The Company's Employees' Incentive Compen NA
sation Plan incorporated by reference to
Appendix A to the Company's Proxy Statement
dated August 31, 1990 for its Annual Meeting
of Stockholders held on October 9, 1990.
10(h)(1) First Amendment to Employees Incentive NA
Compensation Plan incorporated by reference
to Exhibit 10(p)(1) to the Company's Annual
Report on Form 10-K for the fiscal year
ended May 31, 1991.
10(i) Richardson Electronics, Ltd. Employees' 1994 NA
Incentive Compensation Plan incorporated by
reference to Exhibit A to the Company's
Proxy Statement dated August 31, 1994 for
its Annual Meeting of Stockholders held on
October 11, 1994.
10(j) Correspondence outlining Agreement between NA
the Company and Arnold R. Allen with respect
to Mr. Allen's employment by the Company,
incorporated by reference to Exhibit 10(v)
to the Company's Annual Report on Form 10-K,
for the fiscal year ended May 31, 1985.
10(j)(1) Letter dated February 3, 1992 between the NA
Company and Arnold R. Allen outlining Mr.
Allen's engagement as a consultant by the
Company, incorporated by reference to
Exhibit 10 (r)(1) to the Company's Annual
Report on Form 10-K, for the fiscal year
ended May 31, 1992.
10(j)(2) Letter dated April 1, 1993 between the NA
Company and Arnold R. Allen regarding Mr.
Allen's engagement as consultant by the
Company, incorporated by reference to
Exhibit 10(i)(2) to the Company's Annual
Report on Form 10-K for the fiscal year
ended May 31, 1994.
10(k) Letter dated January 14, 1992 between the NA
Company and Jacques Bouyer setting forth the
terms of Mr. Bouyer's engagement as a
management consultant by the Company for
Europe, incorporated by reference to Exhibit
10(t)(1) to the Company's Annual Report on
Form 10-K for the fiscal year ended on May
31, 1992.
10(k)(1) Letter dated January 15, 1992 between the NA
Company and Jacques Bouyer setting forth the
terms of Mr. Bouyer's engagement as a
management consultant by the Company for the
United States, incorporated by reference to
Exhibit 10(t)(1) to the Company's Annual
Report on Form 10-K for the fiscal year
ended on May 31, 1992.
10(l) Letter dated November 27, 1992 between the NA
Company and Ad Ketelaars setting forth the
terms of Mr. Ketelaars' employment by the
Company, incorporated by reference to
Exhibit 10(k) to the Company's Annual Report
on Form 10-K for the fiscal year ended on
May 31, 1994.
10(m) Letter dated January 13, 1994 between the E
Company and Samuel Rubinovitz setting forth
the terms of Mr. Rubinovitz' engagement as
management consultant by the Company.
10(n) Letter dated April 1, 1994 between the E
Company and Leonard R. Prange setting forth
the terms of Mr. Prange's employment by the
Company.
10(o) Letter dated April 4, 1994 between the E
Company and Bart F. Petrini setting forth
the terms of Mr. Petrini's employment by the
Company.
10(p) Letter dated May 20, 1994 between the E
Company and William J. Garry setting forth
the terms of Mr. Garry's employment by the
Company.
10(q) The Company's Directors and Officers Lia NA
bility Insurance Policy issued by Chubb
Group of Insurance Companies Policy Number
8125-64-60A incorporated by reference to
Exhibit 10(u) to the Company's Annual Report
on Form 10-K for the fiscal year ended May
31, 1991.
10(q)(1) The Company's Directors and Officers Lia E
bility Insurance Policy renewal issued by
Chubb Group of Insurance Companies Policy
Number 8125-64-60B.
10(q)(2) The Company's Directors and Officers Lia E
bility Insurance Policy issued by National
Union Fire Insurance Policy Number 4392020.
10(q)(3) The Company's Directors and Officers Lia E
bility Insurance Policy issued by CNA In
surance Companies Policy Number
DOX600028634.
10(r) Plea Agreement, dated September 30, 1991, NA
executed by Registrant in the matter of
United States of America v. Richardson
Electronics, Ltd., filed in the United
States District Court for the Northern
District of Illinois, Eastern Division, as
Docket No. 91 CR 0791, with Information
attached, incorporated by reference to
Exhibit 10(a) of the Company's Current
Report on Form 8-K for September 30, 1991.
10(r)(1) Stipulation, dated September 30, 1991, NA
executed by Registrant in the matter of
United States of America v. Richardson
Electronics, Ltd., filed in the United
States District Court for the Northern
District of Illinois, Eastern Division, as
Docket No. 91 C 6211, with proposed Final
Judgment attached, incorporated by reference
to Exhibit 10(b) of the Company's Current
Report on Form 8-K for September 30, 1991.
10(r)(2) Settlement Agreement, dated September 30, NA
1991, between Registrant and the United
States of America, incorporated by reference
to Exhibit 10(c) of the Company's Current
Report on Form 8-K for September 30, 1991.
10(r)(3) Distributor Agreement, executed August 8, NA
1991, between Registrant and Varian Asso
ciates, Inc., incorporated by reference to
Exhibit 10(d) of the Company's Current
Report on Form 8-K for September 30, 1991.
10(r)(4) First Amendment to Distributor Agreement NA
(which is Exhibit 10(v)(4) hereto) between
Varian Associates, Inc. and the Company as
of April 10, 1992, incorporated by reference
to Exhibit 10(v)(5) of the Company's Annual
Report on Form 10-K for the fiscal year
ended May 31, 1992.
10(r)(5) Amendment, dated as of September 30, 1991, NA
between Registrant and Varian Associates,
Inc., incorporated by reference to Exhibit
10(e) of the Company's Current Report on
Form 8-K for September 30, 1991.
10(r)(6) Final Judgment, dated April 1, 1992, in the NA
matter of United States of America v.
Richardson Electronics, Ltd., filed in the
United States District Court for the
Northern District of Illinois, Eastern
Division, as Docket No. 91 C 6211 incorpo
rated by reference to Exhibit 10(v)(7) to
the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1992.
10(s) Trade Mark License Agreement dated as of May NA
1, 1991 between North American Philips
Corporation and the Company incorporated by
reference to Exhibit 10(w)(3) of the
Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1991.
10(t) Amended and Restated Administrative NA
Agreement between the Company and the
Company's National Electronics Division and
the Defense Logistics Agency dated February
3, 1992, incorporated by reference to
Exhibit 10(x)(2) to the Company's Annual
Report on Form 10-K for the fiscal year
ended May 31, 1992.
11 Statement re computation of net income per E
share.
13 Annual Report to Stockholders for fiscal E
year ending May 31, 1994 (except for the
pages and information thereof expressly
incorporated by reference in this Form 10-K,
the Annual Report to Stockholders is
provided solely for the information of the
Securities and Exchange Commission and is
not deemed "filed" as part of this Form 10-
K).
21 Subsidiaries of the Company. E
23 Consent of Independent Accountants. E
99.1 Schedule VIII E
99.2 Schedule IX E
99.3 Schedule XIII E
99.4 Appendix E
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RlCHARDSON ELECTRONICS, LTD.
By: /S/ Edward J. Richardson,
Chairman of the Board and
President
By: /S/ William J. Garry,
Vice President and
Chief Financial Officer
Date: August 26, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
/s/Edward J. Richardson, /s/ Dennis R Gandy,
Chairman of the Board Director
(principal executive August 26, 1994
officer), President
and Director
August 26, 1994
/s/ Arnold R Allen, /s/ David Gilden,
Director Director
August 26, 1994 August 26, 1994
/s/ Joel Levine, /s/ Scott Hodes,
Director Director
August 26, 1994 August 26, 1994
/s/Leonard R. Prange, /s/ Samuel Rubinovitz,
Director Director
August 26, 1994 August 26, 1994
/s/ Jacques Bouyer, /s/ Kenneth J. Douglas,
Director Director
August 26, 1994 August 26, 1994
EXHIBIT 3(b)
BY-LAWS
OF
RICHARDSON ELECTRONICS, LTD.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE.--The registered office shall be
established and maintained at the Office of the United States
Corporation Company, in the City of Dover, in the County of Kent,
in the State of Delaware, and said corporation shall be the
registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES.--The corporation may have other
offices, either within or without the State of Delaware, at such
place or places as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders
for the election of directors and for such other business as may be
stated in the notice of the meeting, shall be held at such place,
either within or without the State of Delaware, and at such time
and date as the Board of Directors, by resolution, shall determine
and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place
of meeting, the annual meeting of stockholders shall be held at the
registered office of the corporation in Delaware on the first
Thursday in October of each year.
If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding business
day. At each annual meeting, the stockholders entitled to vote
shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. OTHER MEETINGS.--Meetings of stockholders for any
purpose other than the election of directors may be held at such
time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting.
SECTION 3. VOTING.--Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation and
in accordance with the provisions of these By-Laws shall be
entitled to such number of votes, in person or by proxy, for each
share of stock entitled to vote held by such stockholder as
provided in the Certificate of Incorporation or the resolution or
resolutions of the directors establishing the voting rights, if
any, of Preferred Stock or any series thereof, but no proxy shall
be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote
for directors and the vote upon any question before the meeting,
shall be by ballot. All elections for directors shall be decided
by plurality vote; all other questions shall be elected by majority
vote except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the address
of each, and the number of shares held by each, shall be open to
the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 4. QUORUM.--Except as otherwise required by Law, by
the Certificate of Incorporation or by these By-Laws, the presence,
in person or by proxy, of stockholders holding stock of the
corporation entitled to vote having a majority of voting power
shall constitute a quorum at all meetings of the stockholders. In
case a quorum shall not be present at any meeting, a majority in
voting interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the
requisite amount of stock entitled to vote shall be represented,
any business may be transacted which might have been transacted at
the meeting as originally noticed; but only those stockholders
entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
SECTION 5. SPECIAL PURPOSES.--Special meetings of the
stockholders for any purpose or purposes may be called by the
Chairman of the Board, President or Secretary, or by resolution of
the directors.
SECTION 6. NOTICE OF MEETINGS.--Written notice, stating the
place, date and time of the meeting, and the general nature of the
business to be considered, shall be given to each stockholder
entitled to vote thereat at his address as it appears on the
records of the corporation, not less than ten nor more than sixty
days before the date of the meeting.
SECTION 7. ACTION WITHOUT MEETING.--Unless otherwise provided
by the Certificate of Incorporation, any action required to be
taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting, may be
taken without a meeting without prior notice and without a vote, if
a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented
in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM.--The number of directors shall be
ten (10). The directors shall be elected at the annual meeting of
the stockholders and each director shall be elected to serve until
his successor shall be elected and shall qualify.
SECTION 2. RESIGNATIONS.--Any director, member of a committee
or other officer may resign at any time. Such resignation shall be
made in writing, and shall take effect at the time specified
therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, President or Secretary. The acceptance
of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES.--If the office of any director, member
of a committee or other officer becomes vacant, the remaining
directors in office, though less than a quorum by a majority vote,
may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall be
duly chosen.
SECTION 4. REMOVAL.--Except as hereinafter provided, any
director or directors may be removed either for or without cause at
any time by the affirmative vote of the holders of the shares of
stock outstanding and entitled to vote having a majority of the
voting power, at a special meeting of the stockholders called for
the purpose and the vacancies thus created may be filled, at the
meeting held for the purpose of removal, by the affirmative vote of
a majority in voting interest of the stockholders entitled to vote.
Unless the Certificate of Incorporation otherwise provides,
stockholders may effect removal of a director who is a member of a
classified Board of Directors only for cause. If the Certificate
of Incorporation provides for cumulative voting and if less than
the entire board is to be removed, no director may be removed
without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election
of the entire board of directors, or, if there be classes of
directors, at an election of the class of directors of which he is
a part.
If the holders of any class or series are entitled to elect
one or more directors by the provisions of the Certificate of
Incorporation, these provisions shall apply, in respect to the
removal without cause of a director or directors so elected, to the
vote of the holders of the outstanding shares of that class or
series and not to the vote of the outstanding shares as a whole.
SECTION 5. INCREASE OF NUMBER.--The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of
a majority of the directors, though less than a quorum, or, by the
affirmative vote of a majority in voting interest of the
stockholders, at the annual meeting or at a special meeting called
for that purpose, and by like vote the additional directors may be
chosen at such meeting to hold office until the next annual
election and until their successors are elected and qualify.
SECTION 6. POWERS.--The Board of Directors shall exercise all
of the powers of the corporation except such as are by law, or by
the Certificate of Incorporation of the corporation or by these
By-Laws conferred upon or reserved to the stockholders.
SECTION 7. COMMITTEES.--The Board of Directors may, by
resolution or resolutions passed by a majority of the whole board,
designate one or more committees, each committee to consist of two
or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of
any member of such committee or committees, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, or in these By-Laws, shall have and may
exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation
or a revocation of a dissolution, or amending the By-Laws of the
corporation; and, unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend
or to authorize the issuance of stock.
SECTION 8. MEETINGS.--The newly elected directors may hold
their first meeting for the purpose or organization and the
transaction of business, if a quorum be present, immediately after
the annual meeting of the stockholders; or the time and place of
such meeting may be fixed by consent in writing of all the
directors.
Regular meetings of the directors may be held without notice
at such places and times as shall be determined from time to time
by resolution of the directors.
Special meetings of the board may be called by the Chairman of
the Board or by the Secretary on the written request of any two
directors on at least two day's notice to each director and shall
be held at such place or places as may be determined by the
directors, or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors,
or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
SECTION 9. QUORUM.--A majority of the directors shall
constitute a quorum for the transaction of business. If at any
meeting of the board there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time
until a quorum is obtained, and no further notice thereof need be
given other than by announcement at the meeting which shall be so
adjourned.
SECTION 10. COMPENSATION.--By resolution of the Board,
Directors may be compensated for their services as directors or as
members of committees, and receive a fixed fee and expenses of
attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in
any other capacity as an officer, agent or otherwise, and receiving
compensation therefor.
SECTION 11. ACTION WITHOUT MEETING.--Any action required or
permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting, if prior
to such action a written consent thereto is signed by all members
of the board, or of such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the
board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS.--The officers of the corporation shall be
a Chairman of the Board, a President, a Chief Financial Officer, a
Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors
are elected and qualified. In addition, the Board of Directors may
elect one or more Vice-Presidents and such Assistant Secretaries
and Assistant Treasurers as they may deem proper. None of the
officers of the corporation need be directors. The officers shall
be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same
person.
SECTION 2. OTHER OFFICERS AND AGENTS.--The Board of Directors
may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
SECTION 3. CHAIRMAN.--The Chairman of the Board of Directors
shall be the chief executive officer of the corporation. He or she
shall preside at all meetings of the stockholders and of the Board
of Directors; and, subject to the direction and control of the
Board of Directors, he or she shall be in charge of the business of
the corporation and shall direct the policy and management of the
corporation. In general he or she shall discharge all the duties
incident to the position of chief executive officer and such other
duties as may be prescribed by the Board of Directors from time to
time. He or she may sign certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors have authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the corporation, or shall
be required by law to be otherwise signed or executed, and he or
she may accomplish such execution either under or without the seal
of the corporation and either individually or with the Secretary,
any Assistant Secretary, or any other officer thereunto authorized
by the Board of Directors or these By-Laws, according to the
requirements of the form of the instrument. He or she may vote or
execute consents or proxies with respect to all securities which
the corporation is entitled to vote except as and to the extent
such authority shall be vested in a different officer or agent of
the corporation by the Board of Directors.
SECTION 4. PRESIDENT.--The President shall be the chief
operating officer of the corporation and, subject to the direction
and control of the Board of Directors and Chairman of the Board,
shall in general supervise, manage and control all of the
operations, business and affairs of the corporation. In the
absence of the Chairman of the Board, he or she shall preside at
all meetings of the stockholders and of the Board of Directors. He
or she may sign certificates for shares of the corporation, any
deeds, mortgages, bonds, contracts or other instruments which the
Board of Directors have authorized to be executed, except in cases
where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-Laws to some
other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed, and he or she may
accomplish such execution either under or without the seal of the
corporation and either individually or with the Secretary, any
Assistant Secretary, or any other officer thereunto authorized by
the Board of Directors or these By-Laws, according to the
requirements of the form of the instrument. In general he or she
shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Chairman of the Board
or by the Board of Directors from time to time.
SECTION 5. VICE-PRESIDENT.--The Vice President (or in the
event there be more than one Vice President, each of the Vice
Presidents) shall assist the Chairman of the Board and President in
the discharge of their duties as the Chairman of the Board and
President may direct and shall perform such other duties as from
time to time may be assigned to him or her by the Chairman of the
Board or President or by the Board of Directors. In the absence of
the President or in the event of his or her inability or refusal to
act, the Vice President (or in the event there be more than one
Vice President, the Vice Presidents in the order designated by the
Board of Directors, or by the Chairman of the Board if the Board of
Directors has not made such a designation, or by the President if
neither the Chairman of the Board nor the Board of Directors has
made such a designation, or in the absence of any designation, then
in the order of seniority of tenure as Vice President) shall
perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
President. Except in those instances in which the authority to
execute is expressly delegated to another officer or agent of the
corporation or a different mode of execution is expressly
prescribed by the Board of Directors or these By-Laws, the Vice
President (or each of them if there are more than one) may execute
for the corporation certificates for its shares and any contracts,
deeds, mortgages, bonds or other instruments which the Board of
Directors has authorized to be executed, and he or she may
accomplish such execution either under or without the seal of the
corporation and either individually or with the Secretary, any
Assistant Secretary, or any other officer thereunto authorized by
the Board of Directors, according to the requirements of the form
of the instrument.
SECTION 6. CHIEF FINANCIAL OFFICER.--The Chief Financial
Officer shall be the chief financial officer and principal
accounting officer of the corporation having the duties,
responsibility and authority incident to such position for all
financial and accounting matters involving the corporation. He or
she shall have such other duties, responsibilities and authority as
may be determined by and be responsible to, the Board of Directors,
the Audit Committee, the Chairman of the Board, and the President.
SECTION 7. TREASURER.--The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate
account of receipts and disbursements in books belonging to the
corporation. He or she shall deposit all moneys and other
valuables in the name and to the credit of the corporation in such
depositaries as may be designated by the Board of Directors or
pursuant to their authorization.
The Treasurer shall disburse the funds of the corporation as
may be ordered by the Board of Directors, or the Chairman of the
Board or the President, or the Chief Financial Officer, taking
proper vouchers for such disbursements. He or she shall render to
the Chairman of the Board, the President, the Chief Financial
Officer and Board of Directors at the regular meetings of the Board
of Directors, or whenever they may request it, an account of all
his or her transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he or
she shall give the corporation a bond for the faithful discharge of
his or her duties in such amount and with such surety as the board
shall prescribe. He or she shall be responsible to the Chief
Financial Officer.
SECTION 8. SECRETARY.--The Secretary shall give, or cause to
be given, notice of all meetings of stockholders and directors, and
all other notices required by law or by these By-Laws, and in case
of his or her absence or refusal or neglect so to do, any such
notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the directors, or
stockholders, upon whose requisition the meeting is called as
provided in these By-Laws. He or she shall record all the
proceedings of the corporation and of the directors in a book to be
kept for that purpose, and shall perform such other duties as may
be assigned to him or her by the directors or Chairman of the Board
or the President. He or she shall have the custody of the seal of
the corporation and shall affix the same to all instruments
requiring it, when authorized by the directors or the Chairman of
the Board or the President, and attest the same.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
- - --Assistant Treasurers and Assistant Secretaries, if any, shall be
elected and shall have such powers and shall perform such duties as
shall be assigned to them, respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK.--Certificates of stock,
signed by the Chairman of the Board, President or Vice-President,
and the Treasurer or an Assistant Treasurer, or Secretary or an
Assistant Secretary, shall be issued to each stockholder certifying
the number of shares owned by him in the corporation. Any of or
all the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES.--A new certificate of stock may
be issued in the place of any certificate theretofore issued by the
corporation, alleged to have been lost or destroyed, and the
directors may, in their discretion, require the owner of the lost
or destroyed certificate, or his legal representatives, to give the
corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against
any claim that may be made against it on account of the alleged
loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES.--The shares of stock of the
corporation shall be transferable only upon its books by the
holders thereof in person or by their duly authorized attorneys or
legal representatives, and upon such transfer the old certificates
shall be surrendered to the corporation by the delivery thereof to
the person in charge of the stock and transfer books and ledgers,
or to such other person as the directors may designate, by whom
they shall be cancelled, and new certificates shall thereupon be
issued. A record shall be made of each transfer and whenever a
transfer shall be made for collateral security, and not absolutely,
it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE.--In order that the
corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS.--Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of
funds legally available therefor at any regular or special meeting,
declare dividends upon the capital stock of the corporation as and
when they deem expedient. Before declaring any dividend there may
be set apart out of any funds of the corporation available for
dividends, such sum or sums as the directors from time to time in
their discretion deem proper for working capital or as a reserve
fund to meet contingencies or for equalizing dividends or for such
other purposes as the directors shall deem conducive to the
interests of the corporation.
SECTION 6. SEAL.--The corporate seal shall be circular in form
and shall contain the name of the corporation, the year of its
creation and the words "CORPORATE SEAL DELAWARE." Said seal may be
used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR.--The fiscal year of the corporation
shall be determined by resolution of the Board of Directors.
SECTION 8. CHECKS.--All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued
in the name of the corporation shall be signed by such officer or
officers, agent or agents of the corporation, and in such manner as
shall be determined from time to time by resolution of the Board of
Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE.--Whenever any notice
is required by these By-Laws to be given, personal notice is not
meant unless expressly so stated, and any notice so required shall
be deemed to be sufficient if given by depositing the same in the
United States mail, postage prepaid, addressed to the person
entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on
the day of such mailing. Stockholders not entitled to vote shall
not be entitled to receive notice of any meetings except as
otherwise provided by Statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate
of Incorporation of the corporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be
made at any annual meeting of the stockholders or at any special
meeting thereof if notice of the proposed alteration or repeal or
By-Law or By-Laws to be made be contained in the notice of such
special meeting, by the affirmative vote of the stock issued and
outstanding and entitled to vote thereat having a majority of the
voting power, or by the affirmative vote of a majority of the Board
of Directors, at any regular meeting of the Board of Directors, or
at any special meeting of the Board of Directors, if notice of the
proposed alteration or repeal, or By-Law or By-Laws to be made, be
contained in the notice of such special meeting.
ARTICLE VII
INDEMNIFICATION
SECTION 1. GENERAL.--The corporation shall indemnify, and
advance Expenses (as hereinafter defined) to, Indemnitee (as
hereinafter defined) as provided in this Article and to the fullest
extent permitted by applicable law, as the same exists or may
hereafter be amended.
SECTION 2. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION.--Indemnitee shall be entitled to the
rights of indemnification provided in this Section 2 if, by reason
of his Corporate Status (as hereinafter defined), he is, or is
threatened to be made, a party to any Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the
corporation. Pursuant to this Section 2, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines
(including, without limitation, excise taxes assessed on an
Indemnitee with respect to an employee benefit plan) and amounts
paid in settlement actually and reasonably incurred by him or on
his behalf in connection with such Proceeding or any claim, issue
or matter therein, if he acted in Good Faith.
SECTION 3. PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION.--Indemnitee shall be entitled to the rights of
indemnification provided in this Section 3 if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to
any Proceeding brought by or in the right of the corporation to
procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified against Expenses, judgments,
penalties and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such Proceeding
if he acted in Good Faith. Notwithstanding the foregoing, no
indemnification against such Expenses, judgments, penalties and
amounts paid in settlement shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall
have been adjudged to be liable to the corporation if applicable
law prohibits such indemnification; provided, however, that, if
applicable law so permits, indemnification against Expenses,
judgments, penalties and amounts paid in settlement shall
nevertheless be made by the corporation in such event if and only
to the extent that the Court of Chancery of the State of Delaware,
or the court in which such Proceeding shall have been brought or is
pending, shall determine.
SECTION 4. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS
WHOLLY OR PARTLY SUCCESSFUL.--Notwithstanding any other provision
of this Article, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified to the
maximum extent permitted by law against all Expenses, judgments,
penalties, fines, and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one
or more but less than all claims, issues or matters in such
Proceeding, the corporation shall indemnify Indemnitee to the
maximum extent permitted by law against all Expenses, judgments,
penalties, fines, and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
SECTION 5. INDEMNIFICATION FOR EXPENSES OF A
WITNESS.--Notwithstanding any other provision of this Article, to
the extent that Indemnitee is, by reason of his Corporate Status,
a witness in any Proceeding, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf
in connection therewith.
SECTION 6. ADVANCEMENT OF EXPENSES.--Notwithstanding any
provisions to the contrary in Section 7, the corporation shall
advance all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days
after the receipt by the corporation of a statement or statements
from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence
the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be
determined that Indemnitee is not entitled to be indemnified
against such Expenses. Any advance and undertaking to repay
pursuant to this Section 6 shall be unsecured and interest free.
SECTION 7. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION.--
(a) To obtain indemnification under this Article, Indemnitee
shall submit to the corporation a written request, including
therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the corporation shall, promptly
upon receipt of such a request for indemnification, advise the
Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 7(a) hereof, a
determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific
case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined)
(unless Indemnitee shall request that such determination be made by
the Board of Directors or the stockholders, in which case by the
person or persons or in the manner provided for in clauses (ii) or
(iii) of this Section 7(b)) in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; (ii)
if a Change of Control shall not have occurred, (A) by the Board of
Directors by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined), or (B) if a
quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of
Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be
delivered to Indemnitee or (C) by the stockholders of the
corporation; or (iii) as provided in Section 8(b) of this Article;
and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. Indemnitee shall cooperate
with the person, persons or entity making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees
and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be
borne by the corporation (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the corporation
hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 7(b) of this Article, the Independent Counsel shall be
selected as provided in this Section 7(c). If a Change of Control
shall not have occurred, the Independent Counsel shall be selected
by the Board of Directors, and the corporation shall give written
notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change of Control shall have
occurred, the Independent Counsel shall be selected by Indemnitee
(unless Indemnitee shall request that such selection be made by the
Board of Directors, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the corporation
advising it of the identity of the Independent Counsel so selected.
In either event, Indemnitee or the corporation, as the case may be,
may, within 7 days after such written notice of selection shall
have been given, deliver to the corporation or to Indemnitee, as
the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 13 of this Article, and the
objection shall set forth with particularity the factual basis of
such assertion. If such written objection is made, the Independent
Counsel so selected may not serve as Independent Counsel unless and
until a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 7(a) hereof, no
Independent Counsel shall have been selected and not objected to,
either the corporation or Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been
made by the corporation or Indemnitee to the other's selection of
Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the Court or by such other person
as the Court shall designate, and the person with respect to whom
an objection is so resolved or the person so appointed shall act as
Independent Counsel under Section 7(b) hereof. The corporation
shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 7(b) hereof, and the corporation shall
pay all reasonable fees and expenses incident to the procedures of
this Section 7(c), regardless of the manner in which such
Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 9(a)(iii) of this Article, Independent Counsel shall be
discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional
conduct then prevailing).
SECTION 8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.--
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making
such determination shall presume that Indemnitee is entitled to
indemnification under this Article if Indemnitee has submitted a
request for indemnification in accordance with Section 7(a) of this
Article, and the corporation shall have the burden of proof to
overcome that presumption in connection with the making by any
person, persons or entity of any determination contrary to that
presumption.
(b) If the person, persons or entity empowered or selected
under Section 7 of this Article to determine whether Indemnitee is
entitled to indemnification shall not have made such determination
within 60 days after receipt by the corporation of the request
therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional
30 days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 8(b) shall
not apply (i) if the determination of entitlement to
indemnification is to be made by the stockholders pursuant to
Section 7(b) of this Article and if (A) within 15 days after
receipt by the corporation of the request for such determination
the Board of Directors has resolved to submit such determination to
the stockholders for their consideration at an annual meeting
thereof to be held within 75 days after such receipt and such
determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the
purpose of making such determination, such meeting is held for such
purpose within 60 days after having been so called and such
determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 7(b) of this Article.
(c) The termination of any Proceeding or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not (except
as otherwise expressly provided in this Article) of itself
adversely affect the right of Indemnitee to indemnification or
create a presumption that Indemnitee did not act in Good Faith.
(d) For purposes of any determination of Good Faith,
Indemnitee shall be deemed to have acted in Good Faith if
Indemnitee's action is based on the records or books of account of
the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the
course of their duties, or on the advice of legal counsel for the
Enterprise or on information or records given or reports made to
the Enterprise by an independent certified public accountant or by
an appraiser or other expert selected with reasonable care by the
Enterprise. The provisions of this Section 7(d) shall not be
deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Article.
(e) The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to
indemnification under this Article.
SECTION 9. REMEDIES OF INDEMNITEE.-
(a) In the event that (i) a determination is made pursuant to
Section 7 of this Article that Indemnitee is not entitled to
indemnification under this Article, (ii) advancement of Expenses is
not timely made pursuant to Section 6 of this Article, (iii) the
determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 7(b) of this Article and
such determination shall not have been made and delivered in a
written opinion within 90 days after receipt by the corporation of
the request for indemnification, (iv) payment of indemnification is
not made pursuant to Section 5 of this Article within ten (10) days
after receipt by the corporation of a written request therefor, or
(v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made
pursuant to Section 8 of this Article, Indemnitee shall be entitled
to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of his
entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee
first has the right to commence such proceeding pursuant to this
Section 9(a). The corporation shall not oppose Indemnitee's right
to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 7 of this Article that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 9 shall be conducted in all
respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse
determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 9 the corporation shall have the burden of
proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Section 7 or 8 of this Article that
Indemnitee is entitled to indemnification, the corporation shall be
bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 9, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) The corporation shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this
Section 9 that the procedures and presumptions of this Article are
not valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the corporation is bound
by all the provisions of this Article.
(e) In the event that Indemnitee, pursuant to this Section 9,
seeks a judicial adjudication of or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this
Article, Indemnitee shall be entitled to recover from the
corporation, and shall be indemnified by the corporation against,
any and all expenses (of the types described in the definition of
Expenses in Section 13 of this Article) actually and reasonably
incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in said
judicial adjudication or arbitration that Indemnitee is entitled to
receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection
with such judicial adjudication or arbitration shall be
appropriately prorated.
SECTION 10. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE;
SUBROGATION.--
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Article shall not be deemed
exclusive of any other rights to which Indemnitee may at any time
be entitled under applicable law, the Certificate of Incorporation,
the By-Laws, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. The rights conferred by this Article
shall be deemed contract rights and no amendment, alteration or
repeal of this Article or of any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or
omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal. The provisions of this Article
shall continue as to an Indemnitee whose Corporate Status has
ceased and shall inure to the benefit of his heirs, executors and
administrators.
(b) To the extent that the corporation maintains an insurance
policy or policies providing liability insurance for directors,
officers, employees, agents or fiduciaries of the corporation or of
any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person serves at the
request of the corporation, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director,
officer, employee or agent under such policy or policies.
(c) In the event of any payment under this Article, the
corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all
papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to
enable the corporation to bring suit to enforce such rights.
(d) The corporation shall not be liable under this Article to
make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or
otherwise.
(e) The corporation shall have the express authority to enter
into such agreements as the Board of Directors deems appropriate
for the indemnification of present or future directors, officers,
employees or agents of the corporation in connection with their
service to, or status with, any Enterprise.
SECTION 11. SEVERABILITY.--If any provision or provisions of
this Article shall be held to be invalid, illegal or unenforceable
for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Article
(including without limitation, each portion of any Section of this
Article containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of
this Article (including, without limitation, each portion of any
Section of this Article containing any such provision held to be
invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
SECTION 12. CERTAIN PERSONS NOT ENTITLED TO INDEMNIFICATION OR
ADVANCEMENT OF EXPENSES.--Notwithstanding any other provision of
this Article, no person shall be entitled to indemnification or
advancement of Expenses under this Article with respect to any
Proceeding, or any claim therein other than to enforce
indemnification rights under this Article, brought or made by him
against the corporation.
SECTION 13. DEFINITIONS.--For purposes of this Article:
(a) "Change in Control" means a change in control of the
corporation occurring after the Effective Date of a nature that
would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A (or in response to any similar item
on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the corporation is
then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed
to have occurred if after the Effective Date (i) any "person" (as
such term is used in Sections 1 3(d) and 1 4(d) of the Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the corporation
representing 50% or more of the combined voting power of the
corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such
percentage interest; (ii) the corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of
Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors (including for this purpose any new director
whose election or nomination for election by the corporation's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who
is or was a director, officer, employee, agent or fiduciary of the
corporation or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the corporation.
(c) "Disinterested Director" means a director of the
corporation who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
(d) "Effective Date" means September 11, 1986.
(e) "Enterprise" shall mean the corporation and any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise of which Indemnitee is or was serving at
the request of the corporation as a director, officer, employee,
agent or fiduciary.
(f) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all
other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute
or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(g) "Good Faith" shall mean Indemnitee having acted in good
faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal Proceeding, having had no reasonable cause
to believe Indemnitee's conduct was unlawful.
(h) "Indemnitee" includes any person who is, or is threatened
to be made, a witness in or a party to any Proceeding as described
in Sections 2, 3, 4 or 5 of this Article by reason of his Corporate
Status.
(i) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained
to represent (i) the corporation or Indemnitee in any matter
material to either such party, or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the corporation or Indemnitee in an
action to determine Indemnitee's rights under this Article.
(j) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or any other
threatened, pending or completed proceeding whether civil,
criminal, administrative or investigative, except one initiated by
an Indemnitee. For purposes of the foregoing sentence, a
"Proceeding" shall not be deemed to have been initiated by
Indemnitee where Indemnitee seeks pursuant to Section 9 of this
Article to enforce his rights under this Article.
SECTION 14. NOTICES.--Any notice, request or other
communication required or permitted to be given to the corporation
under this Article shall be in writing and either delivered in
person or sent by telex, telegram or certified or registered mail,
postage prepaid, return receipt requested, to the Secretary of the
corporation and shall be effective only upon receipt by the
Secretary.
SECTION 15. MISCELLANEOUS.--Use of the masculine pronoun shall
be deemed to include usage of the feminine pronoun where
appropriate.
RICHARDSON ELECTRONICS, LTD.
EMPLOYEES PROFIT-SHARING PLAN
AND TRUST AGREEMENT
As Amended and Restated
Effective June 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I--TITLES AND PURPOSE. . . . . . . . . . . . . . . . . . . . . . .2
1.1 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Exclusive Benefit. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Type of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II--DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .3
24. "Account". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 "Account Balance". . . . . . . . . . . . . . . . . . . . . . . . . .4
2.3 "Administrator". . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.4 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . . . . .4
2.5 "Annual Addition". . . . . . . . . . . . . . . . . . . . . . . . . .4
2.6 "Beneficiary". . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.7 "Benefit Commencement Date". . . . . . . . . . . . . . . . . . . . .4
2.8 "Break in Service" . . . . . . . . . . . . . . . . . . . . . . . . .5
2.9 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.10 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.11 "Compensation" . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.12 "Computation Period" . . . . . . . . . . . . . . . . . . . . . . . .7
2.13 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.14 "Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.15 "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.16 "Entry Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.17 "ERISA". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.18 "Highly Compensated Employee". . . . . . . . . . . . . . . . . . . .7
2.19 "Hour of Service". . . . . . . . . . . . . . . . . . . . . . . . . .9
2.20 "Key Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.21 "Leave of Absence" . . . . . . . . . . . . . . . . . . . . . . . . 13
2.22 "Limitation Year". . . . . . . . . . . . . . . . . . . . . . . . . 13
2.23 "Non-Key Employee" . . . . . . . . . . . . . . . . . . . . . . . . 13
2.24 "Normal Retirement Date" . . . . . . . . . . . . . . . . . . . . . 13
2.25 "Participant". . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.26 "Permanent Disability" . . . . . . . . . . . . . . . . . . . . . . 13
2.27 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.28 "Plan Year". . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.29 "Qualified Domestic Relations Order" . . . . . . . . . . . . . . . 14
2.30 "Related Employer" . . . . . . . . . . . . . . . . . . . . . . . . 15
2.31 "Richardson" . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.32 "Spouse" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.33 "Termination of Employment". . . . . . . . . . . . . . . . . . . . 15
2.34 "Top-Heavy Determination Date" . . . . . . . . . . . . . . . . . . 15
2.35 "Top-Heavy Year" . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.36 "Trust". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.37 "Trustee". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.38 "Valuation Date" . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.39 "Vested Account Balance" . . . . . . . . . . . . . . . . . . . . . 18
2.40 "Year of Service". . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III--PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Eligibility To Participate . . . . . . . . . . . . . . . . . . . . 19
3.2 Duration of Participation; Re-employment . . . . . . . . . . . . . 19
ARTICLE IV--CONTRIBUTIONS BY EMPLOYER. . . . . . . . . . . . . . . . . . 21
4.1 Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Limitation on Matching Contributions . . . . . . . . . . . . . . . 22
4.3 Time for Payment . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Binding Determination by Administrator . . . . . . . . . . . . . . 25
ARTICLE V--ELECTIVE, SUPPLEMENTAL AND ROLLOVER
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 26
5.1 Manner and Amount of Elective Contributions. . . . . . . . . . . . 26
5.2 Limitation on Elective Contributions . . . . . . . . . . . . . . . 26
5.3 Excess Elective Contributions. . . . . . . . . . . . . . . . . . . 28
5.4 Elective Contribution Agreement. . . . . . . . . . . . . . . . . . 28
5.5 Voluntary Contributions. . . . . . . . . . . . . . . . . . . . . . 29
5.6 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI--ALLOCATION OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . 30
6.1 Manner of Allocation . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Allocations in Top-Heavy Years . . . . . . . . . . . . . . . . . . 31
6.3 Administrator to Notify Trustee. . . . . . . . . . . . . . . . . . 33
ARTICLE VII--ACCOUNTS OF PARTICIPANTS. . . . . . . . . . . . . . . . . . 34
7.1 Separate Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Adjustments to Accounts. . . . . . . . . . . . . . . . . . . . . . 34
7.3 Crediting of Employer Contributions. . . . . . . . . . . . . . . . 35
7.4 Crediting of Forfeitures . . . . . . . . . . . . . . . . . . . . . 36
7.5 Crediting of Rollover Contributions. . . . . . . . . . . . . . . . 36
7.6 Limitation on Allocations. . . . . . . . . . . . . . . . . . . . . 36
7.7 Combined Plan Limitation . . . . . . . . . . . . . . . . . . . . . 38
7.8 Correction of Error. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII--VESTING OF INTEREST IN TRUST . . . . . . . . . . . . . . . 41
8.1 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Disability Retirement. . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Other Termination of Employment. . . . . . . . . . . . . . . . . . 41
8.5 Treatment of Forfeited Amounts; Reinstatement. . . . . . . . . . . 41
8.6 Computation of Years of Service. . . . . . . . . . . . . . . . . . 42
8.7 Vesting on Termination of Trust or Termination of
Employer's Agreement to Contribute . . . . . . . . . . . . . . . 42
8.8 Vesting Following Plan Amendment . . . . . . . . . . . . . . . . . 43
8.9 Vesting Following Partial Distributions. . . . . . . . . . . . . . 43
8.10 Participant Contribution Accounts
and Rollover Accounts. . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX--DISTRIBUTIONS AND WITHDRAWALS. . . . . . . . . . . . . . . . 45
9.1 Benefit Commencement Date. . . . . . . . . . . . . . . . . . . . . 45
9.2 Payment to Participants. . . . . . . . . . . . . . . . . . . . . . 46
9.3 Payment to Beneficiaries . . . . . . . . . . . . . . . . . . . . . 47
9.4 Extent of Further Participation in Trust . . . . . . . . . . . . . 48
9.5 Payment to Persons Under Legal Disability. . . . . . . . . . . . . 48
9.6 Payment in Installments. . . . . . . . . . . . . . . . . . . . . . 49
9.7 Withdrawals of 1986 Plan Voluntary Contributions . . . . . . . . . 51
9.8 Election of Pre-TEFRA Distribution . . . . . . . . . . . . . . . . 51
9.9 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . 52
9.10 Compliance with Regulations. . . . . . . . . . . . . . . . . . . . 53
9.11 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.12 Withdrawals Due to Permanent Disability. . . . . . . . . . . . . . 55
ARTICLE X--DESIGNATION OF BENEFICIARIES. . . . . . . . . . . . . . . . . 56
10.1 Participants to Name Beneficiaries . . . . . . . . . . . . . . . . 56
10.2 No Beneficiary Designated; Death of Beneficiary. . . . . . . . . . 56
10.3 No Liability for Payment to Beneficiaries. . . . . . . . . . . . . 56
10.4 Qualified Domestic Relations Orders. . . . . . . . . . . . . . . . 57
ARTICLE XI--FIDUCIARY CAPACITY AND RESPONSIBILITY. . . . . . . . . . . . 58
11.1 General Fiduciary Standard of Conduct. . . . . . . . . . . . . . . 58
11.2 Allocation of Responsibility Among Fiduciaries . . . . . . . . . . 58
11.3 Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.4 Powers and Duties of Administrator . . . . . . . . . . . . . . . . 59
11.5 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.6 Indemnification by Employer. . . . . . . . . . . . . . . . . . . . 62
11.7 Service in Multiple Capacities . . . . . . . . . . . . . . . . . . 62
ARTICLE XII--THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . 63
12.1 Appointment and Membership . . . . . . . . . . . . . . . . . . . . 63
12.2 Compensation and Expenses. . . . . . . . . . . . . . . . . . . . . 63
12.3 Committee Procedures and Actions . . . . . . . . . . . . . . . . . 63
12.4 Resignation or Removal of Committee Member . . . . . . . . . . . . 64
ARTICLE XIII--THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 65
13.1 Creation and Acceptance of Trust . . . . . . . . . . . . . . . . . 65
13.2 Appointment of Trustee . . . . . . . . . . . . . . . . . . . . . . 65
13.3 Trustee Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.4 Compensation, Expenses and Taxes . . . . . . . . . . . . . . . . . 65
13.5 Trustee Procedures and Actions . . . . . . . . . . . . . . . . . . 65
13.6 Resignation or Removal of Trustee. . . . . . . . . . . . . . . . . 66
13.7 Powers and Duties of Trustee . . . . . . . . . . . . . . . . . . . 67
13.8 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.9 Controversies. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.10 Legal Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.11 Supplemental Trusts. . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XIV--INVESTMENT OF TRUST ASSETS. . . . . . . . . . . . . . . . . 70
14.1 Pooled Investment Fund . . . . . . . . . . . . . . . . . . . . . . 70
14.2 Investment Powers. . . . . . . . . . . . . . . . . . . . . . . . . 70
14.3 Loans to Participants. . . . . . . . . . . . . . . . . . . . . . . 73
14.4 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . 75
14.5 Investment in Qualifying Employer Securities . . . . . . . . . . . 75
ARTICLE XV--INVESTMENT MANAGER . . . . . . . . . . . . . . . . . . . . . 77
15.1 Appointment of Investment Manager. . . . . . . . . . . . . . . . . 77
15.2 Acceptance of Appointment. . . . . . . . . . . . . . . . . . . . . 77
15.3 Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 77
15.4 Investment Authority . . . . . . . . . . . . . . . . . . . . . . . 77
15.5 Resignation or Removal of Investment Manager . . . . . . . . . . . 78
15.6 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XVI--INVESTMENT FUNDS. . . . . . . . . . . . . . . . . . . . . . 79
16.1 Directed Investments . . . . . . . . . . . . . . . . . . . . . . . 79
16.2 Investment Elections . . . . . . . . . . . . . . . . . . . . . . . 79
16.3 Transfers Between Investment Funds . . . . . . . . . . . . . . . . 80
16.4 Authority to Revise Election Procedures. . . . . . . . . . . . . . 80
ARTICLE XVII--AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . 81
17.1 Right to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . 81
17.2 Retroactivity of Amendments. . . . . . . . . . . . . . . . . . . . 81
17.3 Limitations on Right to Amend. . . . . . . . . . . . . . . . . . . 81
ARTICLE XVIII--ADOPTION, WITHDRAWAL AND TERMINATION. . . . . . . . . . . 82
18.1 Adoption of Agreement. . . . . . . . . . . . . . . . . . . . . . . 82
18.2 Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . . . 82
18.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XIX--MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 84
19.1 No Reversion to Employer . . . . . . . . . . . . . . . . . . . . . 84
19.2 Evidence of Action; Necessary Parties. . . . . . . . . . . . . . . 85
19.3 Rights of Participants Limited . . . . . . . . . . . . . . . . . . 85
19.4 Assignment and Alienation. . . . . . . . . . . . . . . . . . . . . 86
19.5 Missing Participants or Beneficiaries. . . . . . . . . . . . . . . 87
19.6 Merger and Consolidation of Plan . . . . . . . . . . . . . . . . . 87
19.7 Severability of Agreement. . . . . . . . . . . . . . . . . . . . . 88
19.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 88<PAGE>
THIS AGREEMENT, executed at LaFox, Illinois, this 14th
day of July, 1994, by and between RICHARDSON ELECTRONICS, LTD., a
corporation organized and existing under the laws of the State of
Delaware ("Richardson"), and SCOTT HODES and WILLIAM G. SEILS, as
Trustees (collectively, the "Trustee").
W I T N E S S E T H:
WHEREAS, effective as of May 31, 1970, Richardson adopted
the Richardson Electronics, Ltd. and Subsidiaries Employees Profit-
Sharing Plan and Trust (the "Agreement"), a profit-sharing plan and
trust qualified under Section 401(a) of the Internal revenue Code
of 1986 (the "Code") and entitled to tax exemption under Section
501(a) of the Code; and
WHEREAS, Richardson has reserved the right to amend the
Agreement at any time;
WHEREAS, effective as of June 1, 1984 Richardson amended
and restated the Agreement (the "1986 Plan");
WHEREAS, effective as of June 1, 1987 Richardson further
amended and restated the Agreement in order to incorporate a cash
or deferred provision (the "1987 Plan");
WHEREAS, effective as of June 1, 1989 Richardson again
amended and restated the Agreement, in part to incorporate changes
required by the Tax Reform Act of 1986, other applicable legisla-
tion and applicable regulations and rulings thereunder (collective-
ly, "TRA"); and
WHEREAS, as Richardson now desires further to amend the
Agreement in order to incorporate into a single document both all
amendments to the 1987 Plan which have previously been made and new
amendments required in order to comply with the applicable
provisions of TRA.
NOW, THEREFORE, based upon the mutual covenants contained
herein and other good and valuable consideration, it is hereby
agreed by Richardson and the Trustee that the Agreement shall again
be amended and restated as follows, effective as of June 1, 1989
(except as otherwise set forth herein):
ARTICLE I
TITLES AND PURPOSE
1.1 Titles
The Plan and the Trust as amended and restated herein
shall be known, respectively, as the RICHARDSON ELECTRONICS, LTD.
EMPLOYEES PROFIT-SHARING PLAN (the "Plan") and the RICHARDSON
ELECTRONICS, LTD. EMPLOYEES PROFIT-SHARING TRUST (the "Trust").
The Plan and the Trust shall collectively be known as the RICH-
ARDSON ELECTRONICS, LTD. EMPLOYEES PROFIT-SHARING PLAN AND TRUST
AGREEMENT (as amended and restated effective June 1, 1989)
(hereinafter called the "Agreement").
1.2 Purpose
The purpose of the Plan is to establish a retirement fund
out of the profits of the Employer which will help to provide for
the future security of the Participants.
1.3 Exclusive Benefit
The Trust shall be for the exclusive benefit of the
Participants and their Beneficiaries. In no event shall the income
or principal of the Trust be paid or revert to the Employer or any
Related Employer, except as otherwise provided in Section 19.1.
1.4 Type of Plan
For purposes of Section 401(a)(27)(B) of the Code, the
Plan is intended to qualify as a profit-sharing plan that includes
a cash-or-deferred arrangement within the meaning of Code Section
401(k).
ARTICLE II
DEFINITIONS
When used herein, the words and terms set forth below
shall have the respective meanings indicated, unless a different
meaning is clearly required by the context. Whenever appropriate,
words used in the singular shall be deemed to include the plural,
and vice versa, and the masculine gender shall be deemed to include
the feminine and neuter genders, unless a different meaning is
clearly required by the context.
2.1 "Account": Collectively, all of the following
separate accounts maintained under the Plan for the benefit of a
Participant, including all adjustments thereto under Article VII,
unless a specific reference is made to one of such separate
accounts:
(a) The separate Employer Contribution Account
maintained for each Participant for the purpose of
recording his share of the contributions made by the
Employer pursuant to Section 4.l(a)(1) and forfeitures;
(b) The separate Elective Contribution Account
maintained for each Participant for the purpose of
recording Elective Contributions pursuant to Section
5.1(a);
(c) The separate Supplemental Contribution Account
maintained for each Participant for the purpose of
recording Supplemental Contributions pursuant to Section
5.1(b);
(d) The separate Matching Contribution Account
maintained under the Plan for the purpose of recording
Matching Contributions pursuant to Section 4.1(a)(3);
(e) In the case of a Participant who incurs a Break
in Service, the separate Forfeiture Suspense Account
maintained for the Employee under Section 8.5;
(f) In the case of a Participant who is re-employed
after incurring a Break in Service, the separate Pre-
Break Account, if any, required to be maintained under
Section 8.9(b);
(g) In the event that a contribution is made by or
on behalf of a Participant pursuant to Section 5.6, the
separate Rollover Contribution Account maintained under
the Plan for the purpose of recording such contribution;
and
(h) In the event that contributions were made by or
on behalf of a Participant pursuant to provisions of
Section 5.1 of the 1986 Plan, the separate Participant
Contribution Account maintained under the Plan for the
purpose of recording such contributions.
The term "Account" shall not, unless otherwise specifically
provided herein, include the Excess Contribution Account, if any,
or the Excess Forfeiture Account, if any, established pursuant to
Section 7.6.
2.2 "Account Balance": The total amount held for the
benefit of a Participant in his Account (or in the specific
separate account referred to), as determined on the immediately
preceding Valuation Date in accordance with the provisions of
Article VII.
2.3 "Administrator": The person administering the Plan
pursuant to Section 11.3.
2.4 "Anniversary Date": The last day of each Plan Year.
2.5 "Annual Addition:" With respect to a Participant
for any Limitation Year, the sum of (a) Employer contributions
allocated on behalf of such Participant for such Limitation Year
under the Plan and under any other qualified defined contribution
plan maintained by the Employer; (b) forfeitures, if any, allocated
on behalf of such Participant for such Limitation Year under any
such qualified defined contribution plan; (c) such Participant's
voluntary non-deductible contributions under any qualified plan of
the Employer for such Limitation Year; (d) amounts allocated on
behalf of such Participant for such Limitation Year to an individu-
al medical account, as defined in Section 415(1)(2) of the Code,
which is part of a pension or annuity plan maintained by the
Employer; and (e) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after said
date, which are attributable to post-retirement medical benefits
allocated for such Limitation Year to the separate account of such
Participant under a welfare fund, as defined in Section 419(e) of
the Code, maintained by the Employer, if he is a Key Employee for
such year. For purposes of this Section 2.5, "Employer" shall
include any Related Employer.
2.6 "Beneficiary": Any person (natural or otherwise)
entitled to receive any benefits which may become payable upon or
after a Participant's death.
2.7 "Benefit Commencement Date": The date on which the
payment of a Participant's Vested Account Balance commences, as
determined in accordance with the provisions of Section 9.1.
2.8 "Break in Service":
(a) Except as otherwise provided under Section 2.8(b),
one or more consecutive Computation Periods during each of which an
Employee has not completed more than 500 Hours of Service. For
eligibility purposes, an Employee shall not incur a Break in
Service solely because he fails to complete more than 500 Hours of
Service during the Computation Period beginning on his hire date.
(b) Notwithstanding Section 2.8(a), a Computation Period
beginning in 1985 or thereafter shall not be included in a Break in
Service if the sum of the Employee's Hours of Service completed
during such Computation Period plus the Employee's "Childbirth
Leave Hours" (as hereafter defined) attributable to such Computa-
tion Period exceeds 500. For purposes of this Section 2.8(b), an
Employee's Childbirth Leave Hours shall be the number of Hours of
Service (but not in excess of 501 for any one continuous period of
absence) which the Employee would have completed but for the fact
that the Employee is absent from the employment of the Employer and
all Related Employers for a period commencing on or after the first
day of the Computation Period beginning in 1985 (1) by reason of
the pregnancy of the Employee, (2) by reason of the birth of a
child of the Employee, (3) by reason of the placement of a child
with the Employee in connection with the adoption of such child by
the, Employee or (4) for purposes of caring for such child for
period beginning immediately following such birth or placement;
provided, however, that in the case of any Employee with respect to
whom it is not possible to determine the number of Hours of Service
which such Employee would have completed but for such absence, such
Employee shall be credited with 8 Childbirth Leave Hours for each
work day of such absence; and provided further, that an hour which
is considered an Hour of Service under Section 2.19(b) shall not
also be considered a Childbirth Leave Hour. All Childbirth Leave
Hours for any period of absence shall be attributed to the
Computation Period during which such period of absence begins if
the result of such attribution is to prevent such Computation
Period from being considered a Break in Service; otherwise, all
Childbirth Leave Hours shall be attributed to the immediately
following Computation Period. The Administrator shall adopt
regulations under which an Employee may be required to furnish
reasonable information on a timely basis establishing the number of
Childbirth Leave Hours to which such Employee is entitled with
respect to any period of absence from employment, and any Employee
who fails to furnish such information with respect to any period of
absence shall not be credited with any Childbirth Leave Hours for
such period of absence.
(c) Notwithstanding Section 2.8(a), a Computation Period
shall not be included in a Break in Service if the Employee would
have completed at least 500 Hours of Service but for a period of
absence due to layoff (for not more than 6 months), jury duty or
Leave of Absence, other than a period of absence described in
Section 2.8(b).
2.9 "Code": The Internal Revenue Code of 1986, as now in
effect or as hereafter amended, and any regulation issued pursuant
thereto by the Internal Revenue Service. Whenever any provision of
the Code is renumbered or otherwise amended, this Agreement shall,
to the extent possible, be construed by reference to the successor
to such provision.
2.10 "Committee": The committee, if any, established
pursuant to the provisions of Article XII to assist the Adminis-
trator in the administration of the Plan.
2.11 "Compensation":
(a) Except as otherwise provided in this Section 2.11,
the term "Compensation" shall mean wages, within the meaning of
Section 3401(a) of the Code, and all other payments of compensation
paid to a Participant by the Employer (during the course of the
Employer's trade or business) during a Plan Year for services
rendered by him as an Employee for which the Employer is required
to furnish the Employee a written statement under Sections 6041(d)
and 6051(a)(3) of the Code, determined without regard to any rules
under Section 3401(a) which limit the remuneration included in
wages based upon the nature or location of the employment or the
services performed [such as the exception for agricultural labor in
Section 3401(a)(2)]. Except as provided in Section 6.1(e), in the
case of an individual who was a Participant for a period consisting
of less than the entire Plan Year, his Compensation shall be deemed
to include only the taxable remuneration paid to him for the period
while he was a Participant. The Compensation of each Participant
taken into account for any Plan Year shall not exceed $200,000
(subject to cost-of-living adjustments prescribed by the Secretary
of the Treasury), except that effective for Plan Years beginning
after December 31, 1993 the Compensation of each Participant taken
into account for any Plan Year shall not exceed $150,000 (subject
to cost-of-living adjustments prescribed by the Secretary of the
Treasury). In connection with determining the Compensation of a
Participant for purposes of the limitation in the preceding
sentence, the family aggregation rules in Section 414(q)(6) of the
Code shall apply, except that in applying such rules with respect
to a particular 12-month period, the term "family" shall include
only the spouse of a Participant and any lineal descendants of such
Participant who have not attained the age of 19 before the close of
such period.
(b) Except for purposes of Sections 7.6 and 7.7,
notwithstanding the provisions of Section 2.11(a), there shall be
included in Compensation any amount contributed by the Employer or
a Related Employer pursuant to a salary reduction agreement with
the Employee and excluded from his gross income under Sections 125,
402(e)(3), 402(h) or 403(b) of the Code.
2.12 "Computation Period": For eligibility purposes, the
Computation Period is the 12-month period beginning on an
Employee's employment date or re-employment date, subject to
Sections 2.40 and 3.2(b) and (c). For all other purposes under the
Plan, including without limitation vesting, the Computation Period
is the Plan Year.
2.13 "Effective Date": June 1, 1989 (except as otherwise
set forth herein).
2.14 "Employee": Any person employed by and receiving
Compensation from the Employer or any Related Employer (or who
would be receiving such remuneration except for a Leave of
Absence). The term "Employee" shall not include any person who is
a "leased employee" within the meaning of Code Section 414(n)(2).
2.15 "Employer": Richardson and any successor to it.
The term "Employer" shall also include any corporation or other
unincorporated business organization which adopts the Agreement for
the exclusive benefit of its Employees pursuant to the provisions
of Section 18.1. Anything to the contrary notwithstanding, a mere
change in the identity, form or organization of the Employer shall
not affect its status under the Plan or the Trust in any manner.
2.16 "Entry Date": November 30 of each Plan Year and the
last day of each Plan Year.
2.17 "ERISA": The Employee Retirement Income Security
Act of 1974, as now in effect or as hereafter amended, and any
regulation issued pursuant thereto by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corpora-
tion. Whenever any provision of ERISA is renumbered or otherwise
amended, this Agreement shall, to the extent possible, be construed
by reference to the successor to such provision.
2.18 "Highly Compensated Employee":
(a) Except as otherwise provided in this Section 2.18,
an Employee shall be considered a Highly Compensated Employee for
any Plan Year, if, during such Plan Year or the immediately
preceding Plan Year (the "Lookback Year"), he:
(1) Was at any time described in Section 2.20(a)
(3);
(2) Received Compensation in excess of $75,000 [as
adjusted by the Secretary of the Treasury pursuant to
Section 414(q)(1) of the Code];
(3) Received Compensation in excess of $50,000 [as
adjusted pursuant to Section 414(q)(1) of the Code], and
was a member of the Top-Paid Group [as defined in Section
2.18(c)]; or
(4) At any time was an officer described in Section
2.20(a)(1), taking into account the limitation provided
in Section 2.20(b), provided that if no officer is
described in Section 2.20(a)(1), the officer who earns
the highest Compensation for such Plan Year or Lookback
Year shall be treated as described in Section 2.20(a)(1)
for purposes of this Section 2.18.
(b) Notwithstanding the provisions of Section 2.18(a),
an Employee shall not be treated as described in Sections 2.18(a)
(2), (3) or (4) for any Plan Year if such Employee was not
described in any of such sections in the immediately preceding Plan
Year [determined without regard to this Section 2.18(b)], unless
such Employee is also a member of the group consisting of the 100
Employees who received the greatest Compensation in such Plan Year
with respect to which such determination is being made.
(c) For any Plan Year, the "Top-Paid Group" shall
consist of the group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid during such Plan Year.
For purposes of this Section 2.18(c), there shall be excluded (1)
Employees who have not completed 6 months of service; (2) Employees
who normally work less than 17-1/2 hours per week; (3) Employees
who normally work during not more than 6 months during any Plan
Year; (4) Employees who have not attained the age of 21; and (5)
except as otherwise provided in Treasury Regulations issued under
Section 414(q) of the Code, Employees who are included in a unit of
Employees covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between employee
representatives and the Employer or a Related Employer.
(d) A former Employee shall be treated as Highly
Compensated Employee if he was a Highly Compensated Employee either
when his employment was terminated or at any time after attaining
age 55.
(e) A nonresident alien who receives no earned income
[within the meaning of Section 911(d)(2) of the Code] which
constitutes income from sources within the United States [within
the meaning of Section 861(a)(3) of the Code] from the Employer or
any Related Employer during any Plan Year shall not be considered
an Employee for such Plan Year for any purpose of this Section
2.18.
(f) For purposes of Sections 4.2 and 5.2, if an Employee
is a member of the family (as defined below) of either (1) a
shareholder who owns more than 5% of the stock of the Employer or
(2) a Highly Compensated Employee who is a member of the group
which consists of the 10 Highly Compensated Employees who were paid
the greatest Compensation by the Employer during the Plan Year
(including for this purpose any Elective, Matching or Supplemental
Contributions made on behalf of such Highly Compensated Employee by
the Employer pursuant to Article IV during that calendar year),
then such Employee shall not be treated as being a separate
Employee for purposes of determining which individuals are the
Highly Compensated Employees. Further, any Compensation paid to
such Employee and any Elective, Matching or Supplemental Contribu-
tions made on behalf of such Employee pursuant to Article IV shall
be treated as if it were paid to or on behalf of such 5% owner or
Highly Compensated Employee. For purposes of this Section 2.18,
the term "family" shall mean an Employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants
or descendants.
(g) The purpose of this Section 2.18 is to conform to
the definition of "highly compensated employee" set forth in
Section 414(q) of the Code, which is incorporated herein by
reference, and to the extent that this Section 2.18 shall be
inconsistent with Section 414(q) of the Code, either by excluding
Employees who would be classified as "highly compensated employees"
thereunder or by including Employees who would not be so classi-
fied, the provisions of Section 414(q) of the Code shall govern and
control. The Administrator may make any elective adjustment to the
definition of Highly Compensated Employee permitted by Section
414(q) of the Code, including specifically the elections referred
to the in last sentence of Section 414(q)(8) or in Section
414(q)(12), in accordance with Treasury Regulations issued thereun-
der.
2.19 "Hour of Service":
(a) Each Employee shall be credited with an Hour of
Service for:
(1) Each hour for which he is directly or indi-
rectly paid or entitled to payment by the Employer or any
Related Employer for the performance of duties. Service
rendered at overtime or other premium rates shall be
credited at the rate of one Hour of Service for each hour
worked, regardless of the rate of compensation in effect.
These hours shall be credited to the Employee for the
Computation Period(s) during which the duties are per-
formed. An Employee who is not compensated on an hourly
basis, or for whom information regarding the number of
hours worked is not readily available, shall be credited
with the following number of Hours of Service for each
payroll period during which he completes at least one
Hour of Service:
(i) 45 Hours of Service for each weekly
payroll period;
(ii) 90 Hours of Service for each bi-
weekly payroll period;
(iii) 95 Hours of Service for each semi-
monthly payroll period; or
(iv) 190 Hours of Service for each
monthly payroll period.
Hours of Service credited to a payroll period which
includes an Anniversary Date shall be credited entirely
to the Plan Year commencing on the date following such
Anniversary Date. An Employee who is not compensated on
the basis of a regular payroll period shall be credited
with 10 Hours of Service for each day on which he
completes at least one Hour of Service.
(2) Each hour (up to a maximum of 501 hours in any
one continuous period) for which he is directly or
indirectly paid or entitled to payment by the Employer or
any Related Employer 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. In
the case of payments which are computed on the basis of
specific periods of time during which no duties are
performed, the Employee shall receive credit for Hours of
Service as if he had actually worked during such periods
of time, computed and credited as provided in Section
2.19(a)(1). In the case of all other payments, the
Employee's Hours of Service shall be computed and
credited in the manner prescribed in 29 C.F.R Sections
2530.200b-2(b) and (c), which are hereby incorporated
herein by reference.
(3) Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed
to by the Employer or any Related Employer. These hours
shall be credited to the Employee for the computation
period (or periods) to which the award, agreement or
payment pertains rather than the computation period (or
periods) during which the award, agreement or payment was
made.
(b) Notwithstanding the foregoing, no credit shall be
granted for any period with respect to which an Employee receives
payment or is entitled to payment under a plan maintained solely
for the purpose of complying with applicable worker's compensation
or disability insurance laws; or for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
(c) Service by an individual on behalf of any of the
following entities before he became an Employee shall be considered
service on behalf of the Employer for purposes of this Section
2.19, to-wit: Amperex Division of North American Phillips Corp.;
B-Scan, Inc.; Calvert Electronics, Inc.; Calvert Holding Co., Inc.;
Calvert Semi-Conductor, Inc.; Ceco Communications, Inc.; Cetron
Electronic Corporation; and National Electronics Division of Varian
Associates, Inc.
2.20 "Key Employee":
(a) Except as otherwise provided in this Section 2.20,
an Employee shall be considered a Key Employee for any Plan Year
if, at any time during the Key Employee Test Period [as defined in
Section 2.20(f)], he is or was:
(1) An officer of the Employer or any Related
Employer whose Compensation [as modified for all purposes
of this Section 2.20 in accordance with Section 2.20(g)]
exceeds 50% of the annual dollar limitation set forth in
Section 415(b)(1)(A) of the Code;
(2) A shareholder of the Employer who owns at least
.5% of the stock of the Employer or any Related Employer
and whose Compensation exceeds the annual defined
contribution dollar limitation set forth in Section
415(c)(l)(A) of the Code, unless at least 10 other
Employees whose Compensation exceeds the annual defined
contribution dollar limitation set forth in Section
415(c)(l)(A) of the Code own or owned during any Plan
Year in the Key Employee Test Period a percentage share
of the stock of the Employer which is greater than such
shareholder's percentage share;
(3) A shareholder who owns more than 5% of the
stock of the Employer; or
(4) A shareholder who owns more than 1% of the
stock of the Employer and whose Compensation for any Plan
Year in which he owns such percentage exceeds $150,000.
(b) The number of Employees classified as Key Employees
solely because they are described in Section 2.20(a)(1) shall not
exceed the greater of (1) 3 or (2) 10% of the largest number of
Employees during any of the Plan Years in the Key Employee Test
Period; provided, however, that in no event shall such number
exceed 50. If more than such number of Employees would otherwise
be classified as Key Employees by reason of being described in
Section 2.20(a)(1), the Employees classified as Key Employees by
reason of being described in Section 2.20(a)(1) shall be those
described in Section 2.20(a)(1) who had the highest Compensation
during any of the Plan Years in the Key Employee Test Period during
which they were described in Section 2.20(a)(1).
(c) For purposes of Section 2.20(a)(2), in the event
that 2 or more Employees own the same percentage share of the
Employer, the Employee who had the highest Compensation of such
Employees for the Plan Year during the Key Employee Test Period in
which his Compensation was the highest and in which he owned such
interest in the Employer for part of the Plan Year shall be treated
as owning the largest percentage share of the stock of the
Employer. If an Employee's percentage interest in the stock of the
Employer changes during a Plan Year, his interest for such Plan
Year shall be the highest percentage he held at any time during
such Plan Year.
(d) For purposes of this Section 2.20, an Employee shall
be considered to own any stock of the Employer or Related Employer
which would be attributed to him under Section 318 of the Code [as
modified by substituting "5%" for "50%" in Section 318(a)(2) of the
Code]. In the case of an Employer or Related Employer which has
issued more than one class of stock, the applicable test shall be
satisfied if the Employee's stock ownership meets the test on the
basis of either the value or the voting power of the stock. In the
case of an Employer or Related Employer which is not a corporation,
such tests shall be applied in accordance with regulations
promulgated under Section 416(i)(l)(B)(iii)(II) of the Code.
(e) Any Employee who meets any of the 4 tests set forth
in Section 2.20(a) as of any Top-Heavy Determination Date shall
continue to be a Key Employee for the remainder of the Key Employee
Test Period, commencing with the Plan Year which includes such Top-
Heavy Determination Date, whether or not he remains an Employee,
and, if such Employee dies during such Key Employee Test Period his
Beneficiaries shall be classified as Key Employees for the balance
of such Key Employee Test Period, unless such Employee is a Key
Employee solely by reason of Section 2.20(a)(1) and is subsequently
excluded from the group of officers having the highest Compensation
by reason of the limitation set forth in Section 2.20(b) in
subsequent Plan Years or solely by reason of Section 2.20(a)(2) and
is subsequently excluded from the group of the 10 Employees owning
the largest percentage shares of the stock of the Employer in
subsequent Plan Years.
(f) The term "Key Employee Test Period" for any Plan
Year shall mean the period consisting of 5 Plan Years (or, if
fewer, the total number of Plan Years during which the Plan and all
other employee plans qualified under Section 401(a) of the Code
maintained by the Employer or any Related Employer have been in
effect) ending with the Plan Year which includes the Top-Heavy
Determination Date for such Plan Year.
(g) The purpose of this Section 2.20 is to conform to
the definition of "key employee" set forth in Section 416(i)(1) of
the Code, which is incorporated herein by reference, and to the
extent that this Section 2.20 shall be inconsistent with Section
416(i)(1) of the Code, either by excluding Employees who would be
classified as "key employees" thereunder or by including Employees
who would not be so classified, the provisions of Section 416(i)
(1) of the Code shall govern and control.
2.21 "Leave of Absence": Authorized leave of absence,
sick or disability leave, service in the Armed Forces of the United
States (provided that the absence is caused by war or other
emergency or provided that the Employee is required to serve under
the laws of conscription in time of peace) or any absence with the
advance approval of the Employer or any Related Employer; provided,
however, that a period shall not be considered a Leave of Absence
unless the Employee retires or returns to work for the Employer or
any Related Employer within the time specified in his Leave of
Absence (or, in the case of a military absence, within the period
provided by law). In granting such leaves, the Employer and any
Related Employer shall treat all Employees under similar circum-
stances alike under rules uniformly and consistently applied.
2.22 "Limitation Year": The period coinciding with the
Plan Year, except that effective with the Plan Year beginning May
30, 1987, "Limitation Year" shall mean the period beginning on the
second day of the Plan Year and ending on the first day of the
following Plan Year, thus creating the following Limitation Years:
May 31, 1987 through May 28, 1988; May 29, 1988 through May 27,
1989; May 28, 1989 through May 26, 1990; May 27, 1990 through June
1, 1991; and June 2, 1991 through May 30, 1992. The limitations of
Code Section 415 shall be separately applied to the "limitation
periods" consisting of (a) May 30, 1987 and (b) May 31, 1992 to May
28, 1993, and for this purpose the dollar limitation in Section
7.6(a)(1) shall be determined by multiplying the applicable dollar
limitation for the calendar year in which such "limitation period"
ends by a fraction whose numerator is the number of months
(including any fractional parts of a month) in such "limitation
period" and the denominator of which is 12. Effective with the
Plan Year beginning May 29, 1993, "Limitation Year" shall mean the
period coinciding with the Plan Year.
2.23 "Non-Key Employee": Any Employee who for any Plan
Year is not a Key Employee.
2.24 "Normal Retirement Date": The date a Participant
attains age 65.
2.25 "Participant": Any Employee who participates in the
Plan as provided in Article III.
2.26 "Permanent Disability": The inability of a Partici-
pant to perform a substantial portion of his duties by reason of
any medically-determinable physical or mental impairment which can
be expected to be of long-continued and indefinite duration.
Permanent Disability shall be determined solely by the Administra-
tor, either at the request of the Employee or a member of his
family or at the Administrator's initiative, upon medical evidence
from a physician selected by the Administrator. A determination of
Permanent Disability pursuant to the provisions of the Plan shall
not be construed to be an admission of disability by the Employer
in regard to any other claim of disability brought by the Partici-
pant against the Employer. A Participant who is receiving
disability benefits under the Social Security Act shall be presumed
to be Permanently Disabled.
2.27 "Plan": The Richardson Electronics, Ltd. Profit-
Sharing Plan, as amended and restated herein. The term "1986 Plan"
refers to the amendment and restatement of the Richardson Electron-
ics, Ltd. Profit-Sharing Plan on February 14, 1986. The term "1987
Plan" refers to the amendment and restatement of the Richardson
Electronics, Ltd. Profit-Sharing Plan on July 1, 1987.
2.28 "Plan Year": The fiscal year adopted by the Employer
for Federal income tax purposes.
2.29 "Qualified Domestic Relations Order":
(a) Except as provided in Section 2.29(b), any order
(including a judgment, a decree or an approval of a property
settlement agreement entered by any court) which the Administrator
determines (1) is made pursuant to any state domestic relations law
(including a community property law), (2) relates to the provision
of child support, alimony payments or marital property rights of a
spouse, former spouse, child or other dependent of a Participant
(an "Alternate Payee") and (3) clearly specifies (i) the name and
last known mailing address (if any) of the Participant and the name
and mailing address of each Alternate Payee covered by the order,
(ii) the amount or percentage of the Participant's benefits to be
paid by the Plan to each Alternate Payee, or the manner in which
such amount or percentage is to be determined, (iii) the number of
payments or period to which such order applies and (iv) the
employee benefit plan to which such order applies.
(b) An order shall in no event be considered a Qualified
Domestic Relations Order if the Administrator determines that such
order (1) requires the Plan to provide benefits to Alternate
Payees, the actuarial present value of which in the aggregate is
greater than the benefits which would otherwise have been provided
to the Participant, (2) requires the Plan to pay benefits to an
Alternate Payee, which benefits are required to be paid to a
different Alternate Payee under another order previously determined
to be a Qualified Domestic Relations Order or (3) requires the Plan
to provide any type or form of benefit, or any option, not
otherwise provided under the Plan, except that a Qualified Domestic
Relations Order may require the Trustee to distribute a portion of
the Participant's Vested Account Balance prior to the time the
Participant has incurred a Termination of Employment but after the
Participant has attained the age of 50.
2.30 "Related Employer": Any trade or business (whether
or not incorporated) that is, along with the Employer, a member of
a controlled group of related entities [as defined in Sections
414(b) and (c) of the Code, as modified for purposes of Sections
7.6 and 7.7 by Section 415(h) of the Code] a member of an affiliat-
ed service group [as defined in Section 414(m) of the Code] or a
member of a group the members of which are required to be aggregat-
ed pursuant to Section 414(o) of the Code. Anything to the
contrary notwithstanding, a mere change in the identity, form or
organization of a Related Employer shall not affect its status
under the Plan or the Trust in any manner and, if the name of a
Related Employer is hereafter changed, all references herein to
such Related Employer shall be deemed to refer to such Related
Employer as it is then known.
2.31 "Richardson": Richardson Electronics, Ltd., a
Delaware corporation.
2.32 "Spouse": The person who is married to the Partic-
ipant at the time relevant to such determination except to the
extent that a Qualified Domestic Relations Order provides that a
former spouse is to be treated as the Participant's Spouse;
provided, however, that, solely for purposes of Section 9.3(c), the
person to whom a Participant is married at the time of his death
shall be considered his Spouse only if they had been married at
least one year prior to his death.
2.33 "Termination of Employment": An Employee shall be
deemed to have incurred a Termination of Employment as a result of:
(a) A retirement, a resignation or a dismissal for
any reason;
(b) A failure to return to work promptly upon the
request of the Employer or Related Employer at the end of
a layoff; or
(c) A failure to retire or return to work at the
end of a Leave of Absence.
A transfer of employment between the Employer and any Related
Employer, or between Related Employers, or a transfer from a job
category eligible to participate in the Plan to one not so eligible
or vice versa, shall not be considered to be a Termination of
Employment.
2.34 "Top-Heavy Determination Date": For any Plan Year,
the Anniversary Date of the immediately preceding Plan Year.
2.35 "Top-Heavy Year":
(a) Except as otherwise provided in Section 2.35(b)
below, a Top-Heavy Year shall be any Plan Year if, as of the Top-
Heavy Determination Date for such Plan Year, the aggregate Account
Balances of all Key Employees under the Plan exceed 60% of the
aggregate Account Balances of all Participants under the Plan.
(b) Notwithstanding Section 2.35(a), if during any Plan
Year (1) at least one Participant is a Key Employee, (2) as of the
Top-Heavy Determination Date for such Plan Year the Employer or any
Related Employer has adopted any other employee plan qualified
under Section 401(a) of the Code and (3) either (i) a Key Employee
participates in such other plan or (ii) the Plan or such other plan
has satisfied the requirements of Section 401(a)(4) or Section 410
of the Code only by treating the Plan and such other plan as a
single plan, then such Plan Year shall be considered a Top-Heavy
Year if and only if the Account Balances of all Key Employees
under the Plan and the aggregate balances in the accounts of all
Key Employees under all such other plans exceed 60% of the
aggregate balances in the accounts of all Participants under the
Plan and all such other plans.
(c) Notwithstanding Sections 2.35(a) and (b), if as of
any Top-Heavy Determination Date the Employer or any Related
Employer has adopted any other employee plan qualified under
Section 401(a) of the Code which is not a plan described in Section
2.35(b), but which plan may be considered as a single plan with the
Plan and all plans described in Section 2.35(b) without causing any
of such plans to violate the requirements of either Section
401(a)(4) or Section 410 of the Code, the Plan Year shall not be
considered a Top-Heavy Year if the Account Balances of all Key
Employees under the Plan and the aggregate balances in the accounts
of all Key Employees under all plans described in Section 2.32(b)
and all plans described in this Section 2.35(c) do not exceed 60%
of the aggregate balances in the accounts of all Participants under
all such plans.
(d) If any of the plans described in either Sections
2.35(b) or (c) are defined benefit plans, then the tests set forth
in said sections shall be applied by using the present value of all
benefits accrued under such plans (as determined by the Administra-
tor, using actuarial assumptions which are uniform for all such
plans and are reasonable in the aggregate) in lieu of the account
balances in such plans. The accrued benefits of the Non-Key
Employees under such plans shall be determined in accordance with
Section 416(g)(4)(F) of the Code. If any of such plans have a
"determination date" [as defined in Section 416(g)(4)(C) of the
Code] for purposes of determining top-heavy status which is
different from the Top-Heavy Determination Date, the account
balances (or the present value of the accrued benefits, in the case
of a defined benefit plan) in such plan shall be determined as of
the determination date for such plan which occurs in the same Plan
Year as the Top-Heavy Determination Date.
(e) For purposes of this Section 2.35, account balances
shall include (1) all contributions which the Employer or any
Related Employer has paid or is legally obligated to pay to any
employee plan as of the Top-Heavy Determination Date (including
contributions made thereafter if they are allocated as of the Top-
Heavy Determination Date) and all forfeitures allocated as of the
Top-Heavy Determination Date and (2) all distributions made to a
Participant or his Beneficiary during the Key Employee Test Period
(or, in the case of a defined benefit plan, the actuarial present
value as of the Top-Heavy Determination Date of such distribu-
tions). If any plan that was terminated within the Key Employee
Test Period would, if it had not been terminated, be a plan
described in Section 2.35(b), distributions made under such plan
shall also be taken into account. For purposes of this Section
2.32, account balances shall also include amounts which are
attributable to contributions made by the Participants (other than
deductible voluntary contributions under Section 219 of the Code)
but shall not include any rollover [as defined in Section 402(a)
(5) of the Code] or a direct transfer from the trust of any
employee plan qualified under Section 401(a) of the Code if such
plan is not maintained by the Employer or any Related Employer and
such rollover or transfer is made at the request of the Participant
after December 31, 1983.
(f) Anything to the contrary notwithstanding, if an
Employee has not performed any services for the Employer or any
Related Employer at any time during the Key Employee Test Period,
his account balance (in the case of a defined contribution plan) or
his accrued benefit (in the case of a defined benefit plan) shall
not be taken into consideration in the determination of whether the
Plan Year is a Top-Heavy Year.
(g) The purpose of this Section 2.35 is to conform to
the definition of "top-heavy plan" set forth in Section 416(g) of
the Code, which is incorporated herein by reference, and to the
extent that this Section 2.35 shall be inconsistent with Section
416(g) of the Code, either by causing any Plan Year during which
the Plan would be classified as a "top-heavy plan" not to be a Top-
Heavy Year or by causing any Plan Year during which it would not be
classified as a "top-heavy plan" to be a Top-Heavy Year, the
provisions of Section 416(g) of the Code shall govern and control.
2.36 "Trust": The trust forming a part of the Plan and
known as the Richardson Electronics, Ltd. Employees Profit-Sharing
Trust.
2.37 "Trustee": Collectively, the person or persons
(including any corporation) who shall from time to time be acting
as Trustee hereunder, and their duly appointed successors. As of
the Effective Date, the Trustees hereunder are Scott Hodes and
William G. Seils.
2.38 "Valuation Date": The Anniversary Date and each
other date during the Plan Year specified by the Administrator (in
a manner which does not discriminate in favor of Highly Compensated
Employees) as to which Accounts are adjusted pursuant to Article
VII.
2.39 "Vested Account Balance": At any date, the portion
of a Participant's Account Balance which would be nonforfeitable if
he incurred a Termination of Employment on such date, as determined
under Article VIII.
2.40 "Year of Service":
(a) Any Computation Period during which an Employee has
completed at least 1,000 Hours of Service.
(b) For purposes of Article III, as soon as an Employee
completes at least 1,000 Hours of Service during the initial
Computation Period specified in Section 2.12, he shall be credited
with a Year of Service even if fewer than 12 consecutive calendar
months have passed. If such Employee fails to complete at least
1,000 Hours of Service during the initial 12-month Computation
Period specified in Section 2.12, the second 12-month Computation
Period shall consist of the Plan Year which includes the first
anniversary of his employment or re-employment commencement date,
and the succeeding 12-month Computation Periods shall also be based
on the Plan Year.
ARTICLE III
PARTICIPATION
3.1 Eligibility To Participate
(a) Each Employee shall be eligible to participate in
the Plan, provided that he (1) has completed one Year of Service,
(2) is not a member of a collective bargaining unit in which
retirement benefits were the subject of good faith bargaining
between the Employer or any Related Employer and one or more
employee representatives, (3) is not a non-resident alien described
in Code Section 410(b)(3)(C) and (4) is not a United States citizen
employed by the Employer in a nation other than the United States
("Foreign Country") who would be subject to tax under the laws of
such Foreign Country upon receiving an allocation to his Account
pursuant to Section 6.1.
(b) Except as provided in Section 3.3, each Employee who
participated in the Plan in accordance with its terms prior to the
Effective Date shall continue as a Participant. Each other
Employee who satisfies the eligibility requirements of Section
3.1(a) shall become a Participant on the later of the Effective
Date or the Entry Date coincident with or immediately following the
date on which he satisfies such eligibility requirements, provided
that he is still employed by the Employer on such date.
(c) An Employee who has not yet completed one Year of
Service but who is otherwise eligible to participate in the Plan
may make an Elective Contribution [as defined in Section 5.1(a)]
beginning as of the first June 1, September 1, December 1 or March
1 following his hire date. An Employee who has not yet completed
one Year of Service but who is otherwise eligible to participate in
the Plan may also contribute or have contributed to the Plan an
amount described in Section 5.6. An Employee making any contribu-
tion described in the preceding two sentences, or who has a
contribution described in the preceding sentence made in his
behalf, shall thereupon be considered a Participant for all
purposes of the Plan, except that he shall not have the right to
receive Employer Profit-Sharing Contributions described in Section
4.1(a)(1) or Employer Matching Contributions described in Section
4.1(a)(3), nor shall he have the right to share in forfeiture
allocations pursuant to Section 7.4, prior to the Entry Date
specified in Section 3.1(b).
3.2 Duration of Participation; Re-employment
(a) Subject to the provisions of Sections 3.2(b) and (c)
below, an Employee shall cease to be a Participant for purposes of
Section 5.1 upon ceasing to be employed by the Employer, but shall
remain a Participant for all other purposes hereunder until such
time as his Vested Account Balance is paid to him in full in
accordance with Article IX, at which time his participation in the
Plan shall cease.
(b) Each Participant who incurs a Termination of
Employment and is re-employed after incurring a Break in Service
shall again become a Participant as of his re-employment date for
all purposes under the Plan except Sections 4.1(a)(1), 4.1(a)(3)
and 7.4, and shall again become a Participant for purposes of
Sections 4.1(a)(1), 4.1(a)(3) and 7.4 on the Entry Date coincident
with or immediately following the date on which he completes one
Year of Service following such re-employment; provided, however,
that if either (1) such Participant had a vested right to any
portion of his Account Balance (other than such balance as is
attributable to his Rollover Account and Participant Contribution
Account) when he incurred his Termination of Employment, (2) the
number of Computation Periods in such Break in Service is fewer
than the number of Years of Service completed by the Participant
prior to such Break in Service or (3) the number of Computation
Periods such Break in Service is fewer than 5, then his participa-
tion for all purposes under the Plan shall be retroactive to his
date of re-employment.
(c) Each Employee or each Participant who incurs a
Termination of Employment and is re-employed prior to incurring a
Break in Service shall be treated, for purposes of eligibility to
participate in the Plan, as though he never incurred a Termination
of Employment.
(d) An Employee's participation in the Plan shall not be
affected by the fact that he continues to be employed after his
Normal Retirement Date.
ARTICLE IV
CONTRIBUTIONS BY EMPLOYER
4.1 Amount
(a) The Administrator shall determine the aggregate
amount to be contributed by all of the Employers for each Plan
Year. Each Employer hereby agrees to contribute its portion of
such amount. Subject to Section 4.1(b) and Section 4.2, each
Employer shall contribute to the Trust each Plan Year with respect
to each Participant eligible to share in such Employer's contribu-
tion for such Plan Year pursuant to Section 6.1 an amount equal to:
(1) Such Employer's share, as defined below, of an
amount which has been determined by the Board of Direc-
tors of Richardson, in its sole discretion (the "Profit-
Sharing Contribution"). For purposes of this Section
4.1(a)(1), the term "Employer's share" shall mean the
product obtained by multiplying (i) the Profit-Sharing
Contribution for such Plan Year times (ii) a fraction,
the numerator of which is the total Compensation paid or
accrued by such Employer to all Participants for the
immediately preceding Plan Year and the denominator of
which is the total Compensation paid or accrued by all of
the Employers to all of the Participants for such Plan
Year; plus
(2) The Elective Contribution [as that term is
defined in Section 5.1(a) hereof], if any; plus
(3) Subject to Section 4.2 below, with respect to
each Participant who elects to have an Elective Contri-
bution made on his behalf, an amount equal to 50% of such
Elective Contribution (the "Matching Contribution");
provided, however, the amount of the Matching Contribu-
tion shall in no event exceed the lesser of (i) 1.5% of
said Participant's Compensation or (ii) the amount of
such Matching Contribution after adjustment pursuant to
Section 4.2; plus
(4) The Supplemental Contribution [as that term is
defined in Section 5.1(b) hereof], if any; plus
(5) Any amount required by Section 6.2.
(b) Effective with respect to Employer Profit-Sharing
Contributions made after December 31, 1992, as to Plan Years ending
on or after May 29, 1993, Section 4.1(a)(1) shall read as follows:
"(1) Such Employer's share, as defined below, of an
amount which has been determined by the Board of Direc-
tors of Richardson, in its sole discretion (the 'Profit-
Sharing Contribution'). For purposes of this Section
4.1(a)(1), the term 'Employer's share' shall mean the
product obtained by multiplying (i) the Profit-Sharing
Contribution for such Plan Year times (ii) a fraction,
the numerator of which is the total Compensation paid or
accrued by such Employer to all Participants for such
Plan Year and the denominator of which is the total
Compensation paid or accrued by all of the Employers to
all of the Participants for such Plan Year; plus"
(c) If any Employer is unable to make its full contri-
bution for any Plan Year, the remaining Employers may (but, except
to the extent required by Section 6.2 hereof, shall not be
obligated to) make all or a portion of such Employer's contribu-
tions on its behalf, subject to Section 4.1(d).
(d) The amount which an Employer shall otherwise pay
pursuant to Sections 4.1(a)(3) and (4) shall be reduced by the
balance in the Excess Contribution Account under Section 7.6(d) and
by the balance in the Excess Forfeiture Account pursuant to Section
7.6(e). The contribution for any Plan Year shall not exceed the
maximum amount deductible by the Employer for such Plan Year under
the provisions of Section 404 of the Code. The Employer's
contribution shall be in the form of cash or property (except real
property of the Employer) at its fair market value, or a combina-
tion thereof.
(e) All contributions made by the Employer under this
Plan are expressly conditioned upon such contributions being
deductible by the Employer under Section 404 of the Code, and any
amount which is subsequently determined to be nondeductible, or
which is otherwise based upon a good faith mistake of fact, shall
be returned to the Employer in accordance with Section 19.1(b).
4.2 Limitation on Matching Contributions
(a) In any Plan Year the Average Contribution Percentage
(as hereinafter defined) for Participants who are Highly Compensat-
ed Employees shall not exceed the greater of (1) the Average
Contribution Percentage for Participants who are not Highly
Compensated Employees multiplied by 1.25 or (2) the lesser of (i)
200% of the Average Contribution Percentage for Participants who
are not Highly Compensated Employees or (ii) the Average Contribu-
tion Percentage for Participants who are not Highly Compensated
Employees plus 2 percentage points. The "Average Contribution
Percentage" of a group of participants shall be a fraction
(expressed as a percentage and calculated to the nearest 1/100 of
1%) the numerator of which is an amount equal to the sum of the
Contribution Percentages (as hereinafter defined) of all of the
members of that group of Participants and the denominator of which
is the number of Participants in such group. The term "Contribu-
tion Percentage" shall mean, with respect to a Participant, the
fraction (expressed as a percentage and calculated to the nearest
1/100 of 1%) the numerator of which is an amount equal to the
Matching Contributions made on behalf of the Participant for the
Plan Year pursuant to Section 4.1(a)(3) and the denominator of
which is an amount equal to the Participant's Compensation for such
Plan Year. The attribution rules of Code Section 414(g) shall be
applied to determine the Contribution Percentage of any Participant
who is a Highly Compensated Employee.
(b) If at the end of any Plan Year, the Matching
Contributions made to the Plan pursuant to Section 4.1(a)(3) for
the Highly Compensated Employees, as a group, exceed the limita-
tions imposed by Section 4.2(a), then pursuant to the procedure set
forth below, the Contribution Percentages of certain Highly
Compensated Employees shall be reduced to the extent necessary in
order for the Plan to comply with one of the 2 tests set forth in
Section 4.2(a). The Contribution Percentage of that Highly
Compensated Employee who has the highest Contribution Percentage of
all of the Highly Compensated Employees shall be reduced to a
percentage which is equal to the Contribution Percentage of that
Highly Compensated Employee having the second highest such
Contribution Percentage. The procedure shall be continued until
the Matching Contributions made to the Plan for the Highly
Compensated Employees pursuant to Section 4.1(a)(3) no longer
exceed the limitations of Section 4.2(a). The reduction of the
Contribution Percentage of a Participant who is a Highly Compen-
sated Employee and whose Contribution Percentage is determined
under the family aggregation rules of Code Section 414(q)(6) shall
be accomplished in accordance with the regulations promulgated
under Code Section 401(m).
(c) No later than the close of the Plan Year following
the Plan Year for which an Average Contribution Percentage is
calculated, the Employer shall distribute to each Highly Compen-
sated Employee who has had his Contribution Percentage reduced
pursuant to Section 4.2(b) an amount equal to the amount of such
reduction plus the income or loss allocable thereto. Income or
loss shall be allocated in accordance with Treasury Regulation Sec-
tion 1.401(m)-1(e)(3)(ii), excluding, for Plan Years beginning
after December 31, 1992, income or loss for the period between the
end of such Plan Year and the date of distribution. If there is a
loss allocable to the amount distributable pursuant to the first
sentence of this Section 4.2(c), the distribution shall in no event
be less than the lesser of the Participant's Matching Contribution
Account or the amount contributed by the Employer on behalf of the
Participant pursuant to Section 4.1(a)(3) for the Plan Year.
(d) If in any Plan Year the Plan is subject to the
Multiple Use of the Alternative Limitation (as that term is defined
below) then, notwithstanding any other provision of either this
Section 4.2 or Section 5.2, the test set forth in Section 4.2(a)(2)
shall not be used to determine whether limitations placed by the
Section 4.2(a) have been exceeded with respect to Matching
Contributions if the test in Section 5.2(a)(2) has been used to
determine whether the limitations placed by Section 5.2(a) have
been exceeded with respect to Elective Contributions for such Plan
Year. The Administrator shall decide, in its sole and absolute
discretion, whether to apply the test set forth in Section
4.2(a)(2) to satisfy the requirements of this Section 4.2, or to
use the test set forth in Section 5.2(a)(2) to satisfy the
requirements of Section 5.2 for such Plan Year. The Plan shall be
subject to a "Multiple Use of the Alternative Limitation" in any
Plan Year in which all of the following conditions are present:
(1) At least one Highly Compensated Employee is
eligible both to have Elective Contributions made to the
Plan on his behalf pursuant to Section 5.1 and to have
Matching Contributions allocated to his Matching Contri-
butions Account for such Plan Year;
(2) The sum of the Average Deferral Percentage [as
defined in Section 5.2(b)] of the Participants who are
Highly Compensated Employees as a group, plus the Average
Contribution Percentage of the Participants who are
Highly Compensated Employees, as a group, for such Plan
Year exceeds the Aggregate Limit, as defined in Section
4.2(e);
(3) The Average Deferral Percentage of the Par-
ticipants who are Highly Compensated Employees, as a
group, exceeds the product obtained by multiplying the
Average Deferral Percentage of all Participants who are
not Highly Compensated Employees, as a group, by 125%;
and
(4) The Average Contribution Percentage of the
Participants who are Highly Compensated Employees, as a
group, exceeds the product obtained by multiplying the
Average Contribution Percentage of Participants who are
not Highly Compensated Employees, as a group, by 125%.
(e) The term "Aggregate Limit" shall mean an amount
equal to the greater of:
(1) The sum of (i) the product obtained by multi-
plying 1.25 times the Relevant Average Deferral Per-
centage (as that term is defined below) or the Relevant
Average Contribution Percentage (as that term is defined
below), and (ii) 2 percentage points plus the lesser of
the relevant Average Deferral Percentage or the Relevant
Average Contribution Percentage. In no event, however,
shall this amount exceed twice the lesser of the Relevant
Average Deferral Percentage or the Relevant Average
Contribution Percentage; or
(2) The sum of (i) 1.25 times the lesser of the
Relevant Average Deferral Percentage or the Relevant
Average Contribution Percentage, and (ii) 2 percentage
points plus the greater of the Relevant Average Deferral
Percentage or the Relevant Average Contribution Percent-
age. In no event, however, shall this amount exceed
twice the greater of the Relevant Average Deferral
Percentage or the Relevant Average Contribution Percent-
age.
For purposes of this Section 4.2(e), the term "Relevant Average
Deferral Percentage" shall mean the Average Deferral Percentage of
the group of Participants who are not Highly Compensated Employees,
and the term "Relevant Average Contribution Percentage" shall mean
the Average Contribution Percentage of the group of Participants
who are not Highly Compensated Employees.
4.3 Time for Payment
(a) All contributions by the Employer, other than
Elective Contributions made pursuant to Section 4.1(a)(2), shall be
delivered to the Trustee not later than the date fixed by law for
the filing of the Employer's Federal income tax return for the Plan
Year which includes the Anniversary Date as of which such contribu-
tion is to be allocated (including any extensions of time granted
by the Internal Revenue Service for the filing of such return).
(b) All Elective Contributions made pursuant to Section
4.1(a)(2) shall be collected by the Employer and remitted to the
Trustee on a regular basis, but not less frequently than monthly,
and until so remitted shall constitute a trust fund in the hands of
the Employer.
4.4 Binding Determination by Administrator
The determination of the Administrator as to the amount
to be contributed by an Employer hereunder shall in all respects be
final, binding and conclusive upon all persons or parties claiming
any rights either under the Plan or the Trust.
ARTICLE V
ELECTIVE, SUPPLEMENTAL AND ROLLOVER CONTRIBUTIONS
5.1 Manner and Amount of Elective Contributions
(a) Each Participant may elect to defer under the Plan
Compensation which would otherwise be payable to him during the
calendar year and to have his Employer make contributions to the
Trust on his behalf by entering into an Elective Contribution
Agreement at the time and in the manner described below at Section
5.4. The amount which a Participant may elect to have the Employer
contribute to the Plan on his behalf (the "Elective Contribution")
shall, however, be expressed as a percentage of his Compensation
(in multiples of one percentage point each) and shall not exceed an
amount equal to the lesser of:
(1) 15% of his Compensation for such calendar year;
or
(2) $7,000, as adjusted to take into account any
cost-of-living increase provided for under Code Section
402(g) as may then be in effect;
provided, however, that such contribution shall also be subject to
the limitations set forth at Section 5.2 hereof. In the event that
any Participant has a fiscal year other than a calendar year, this
Section 5.1(a) shall be applied by substituting the phase "taxable
year" for "calendar year."
(b) In addition, the Employer shall have the right to
contribute an amount for a Plan Year to be allocated among all
Participants who are not Highly Compensated Employees in proportion
to their Compensation for such Plan Year, which will cause the
requirements of Sections 4.2(a) or 5.2(b) to be satisfied ("Supple-
mental Contribution").
(c) All elections pursuant to this Section 5.1 shall be
irrevocable after such amounts have been contributed to the Trust.
(d) Any amounts with respect to which the Participant
has made an election pursuant to Section 5.1(a) shall be deducted
from the wages or other Compensation payable to the Participant in
any manner which is acceptable to the Administrator, including
payroll deductions authorized by the Participant.
5.2 Limitation on Elective Contributions
(a) Subject to the additional limitations set forth in
Section 4.2(e), in any Plan Year the Average Deferral Percentage
(as hereinafter defined) for Participants who are Highly Compen-
sated Employees shall not exceed the greater of (1) the Average
Deferral Percentage for Participants who are not Highly Compensated
Employees multiplied by 1.25 or (2) the lesser of (i) 200% of the
Average Deferral Percentage for Participants who are not Highly
Compensated Employees or (ii) the Average Deferral Percentage for
Participants who are not Highly Compensated Employees plus 2
percentage points. The "Average Deferral Percentage" of a group of
Participants shall be a fraction (expressed as a percentage
calculated to the nearest 1/100 of 1%), the numerator of which is
an amount equal to the sum of the Deferral Percentages (as
hereinafter defined) of all of the members of that group of
Participants and the denominator of which is the number of
Participants in such group. The term "Deferral Percentage" shall
mean, with respect to a Participant, the fraction (expressed as a
percentage and calculated to the nearest 1/100 of 1%) of the
numerator of which is an amount equal to the Elective Contributions
made on behalf of a Participant for the Plan Year pursuant to
Sections 5.1(a) and (b) and the denominator of which is an amount
equal to the Participant's Compensation for such Plan Year.
(b) If at the end of any Plan Year the Elective
Contributions made to the Plan pursuant to Section 5.1 on behalf of
the Highly Compensated Employees, as a group, exceed the limita-
tions imposed by Section 5.2(a), then, pursuant to the procedure
set forth below, the Deferral Percentages of certain Highly
Compensated Employees shall be reduced to the extent necessary in
order for the Plan to comply with one of the 2 tests set forth in
Section 5.2(a). The Deferral Percentage of that Highly Compensated
Employee who has the highest Deferral Percentage of all the Highly
Compensated Employees shall be reduced to a percentage which is
equal to the Deferral Percentage of that Highly Compensated
Employee having the second highest such Deferral Percentage. The
procedure shall be continued until the Elective Contributions made
to the Plan by the Highly Compensated Employees pursuant to Section
5.1 no longer exceed the limitations of Section 5.2(a). The
reduction of the Deferral Percentage of a Participant who is a
Highly Compensated Employee and whose Deferral Percentage is
determined under the family aggregation rules of Code Section
414(q)(6) shall be accomplished in accordance with the regulations
promulgated under Code Section 401(k).
(c) No later than the close of the Plan Year following
the Plan Year for which an Average Deferral Percentage is calcu-
lated, the Employer shall distribute to each Highly Compensated
Employee who has had his Deferral Percentage reduced pursuant to
Section 5.2(c) an amount equal to the amount of such reduction plus
the income or loss allocable thereto. Income or loss shall be
allocated in accordance with Treasury Regulation Section 1.401(k)-
1(f)(4)(ii), excluding, for Plan Years beginning after December 31,
1992, income or loss for the period between the end of such Plan
Year and the date of distribution. If there is a loss allocable to
the amount distributable pursuant to the first sentence of this
Section 5.2(c), the distribution shall in no event be less than the
lesser of the Participant's Elective Contribution Account or the
amount contributed by the Participant pursuant to Section 5.1(a)
for such Plan Year.
5.3 Excess Elective Contributions
(a) No later than the first April 15 following the close
of a Participant's taxable year, he may notify the Administrator of
the amount by which the limitation in Section 5.1(a)(2) was
exceeded for such taxable year. A Participant shall be deemed to
have notified the Plan of such amount to the extent his Elective
Contributions under this Plan, and any comparable contributions by
him under other plans of the Employer, exceed such limitation. In
the event such limitation is exceeded with respect to a Partici-
pant, the Administrator shall direct the Trustee to distribute the
excess amount, and any income allocable to such amount, to such
Participant not later than the first April 15 following the close
of his taxable year. If there is a loss allocable to such excess
amount, the distribution shall in no event be less than the lesser
of the Participant's Elective Contribution Account or the amount
contributed by the Participant pursuant to Section 5.1(a) for such
taxable year. Income or loss shall be allocated to such excess
amount in accordance with Regulation Section 1.402(g)-1(e)(5),
excluding, for Plan Years beginning after December 31, 1992, income
or loss for the period between the end of such taxable year and the
date of distribution.
(b) In the event that a Participant is also a par-
ticipant in (1) another qualified cash-or-deferred arrangement [as
defined in Code Section 401(k)], (2) a simplified employee pension
[as defined in Code Section 408(k)] or (3) a salary reduction
arrangement [within the meaning of Code Section 3121(a)(5)(D)] and
the elective deferrals, as defined in Code Section 402(g)(3), made
under such other arrangement(s) and this Plan cumulatively exceed
the dollar limitation in Section 5.1(a)(2) for such Participant's
taxable year, the Participant may, not later than March 1 following
the close of his taxable year, notify the Administrator in writing
of such excess and request that his contributions pursuant to
Section 5.1(a) under this Plan be reduced by an amount specified by
the Participant. Such amount may then be distributed in the same
manner as provided in Section 5.3(a).
5.4 Elective Contribution Agreement
(a) Except as provided in Section 5.4(b), any Elective
Contribution Agreement entered into by a Participant pursuant to
Section 5.1, and any amendment or revocation of such an agreement,
shall be in writing and shall be signed by him. Any Elective
Contribution Agreement, and any amendment or revocation of an
Elective Contribution Agreement, shall be effective as of the first
June 1, September 1, December 1, or March 1 following the receipt
by the Administrator of such Elective Contribution Agreement or
amendment thereto.
(b) The Administrator may unilaterally amend or revoke
any Elective Contribution Agreement at any time if it determines
that such amendment or revocation is necessary to ensure that the
Annual Additions to the Accounts of a Participant do not exceed the
limitations set forth at Sections 5.1, 5.2 and 7.6 hereof.
(e) Any Elective Contribution, revocation, or amendment
shall be made in accordance with the uniform and nondiscriminatory
rules established by the Administrator.
5.5 Voluntary Contributions
Except as set forth in Sections 5.1 and 5.6, no Partic-
ipant shall be required or permitted to make any contributions to
the Plan.
5.6 Rollover Contributions
Any Participant, with the Administrator's prior consent,
may contribute cash or other property to the Trust if such
contribution:
(a) Constitutes a rollover amount [as described in
Code Section 402(a)(5)] from another employee plan
qualified under Section 401(a) of the Code or constitutes
a rollover contribution described in Code Section
408(d)(3)(A)(ii); or
(b) Is a direct transfer from the trustee of
another employee trust exempt from tax under Code Section
501(a), provided that such trust forms part of an
employee plan qualified under Code Section 401(a) and
provided further that Code Section 401(a)(11) does not
apply to such plan.
Effective January 1, 1993, Clause (a) of the preceding sentence
shall read as follows:
"(a) Constitutes an eligible rollover distribution
[as defined in Code Section 402(c)] from another employee
plan qualified under Code Section 401(a) or constitutes
a rollover contribution described in Code Section
408(d)(3)(A)(ii); or"
The Administrator may require a Participant to demonstrate that
such a contribution qualifies under this Section 5.6 prior to
directing the Trustee to accept such contribution.
ARTICLE VI
ALLOCATION OF EMPLOYER
CONTRIBUTIONS
6.1 Manner of Allocation
(a) All contributions made by an Employer pursuant to
Section 4.l(a)(1) for any Plan Year, including the Employer
contribution pursuant to Section 4.l(a)(1) made in 1992 for the
Plan Year ending May 29, 1993, shall be allocated among the
Accounts of (1) Participants who are Employees of such Employer on
the last work day of the immediately preceding Plan Year (including
Participants who incurred a Termination of Employment on such day
and who are credited with a Year of Service for such immediately
preceding Plan Year), (2) Participants who retired on or after
their Normal Retirement Date during such immediately preceding Plan
Year and (3) Participants who terminated employment during such
immediately preceding Plan Year due to death, Permanent Disability,
or involuntary Termination of Employment (other than Termination of
Employment for cause) and shall be allocated among the Employer
Contribution Accounts of such Participants in the proportion that
the Compensation paid or accrued to each such Participant during
such immediately preceding Plan Year bears to the Compensation paid
or accrued to all such Participants during such immediately
preceding Plan Year. Effective with respect to contributions
pursuant to Section 4.1(a)(1) made after December 31, 1992 as to
Plan Years ending on or after May 29, 1993, the preceding sentence
shall read as follows:
"All contributions made by an Employer pursuant to
Section 4.l(a)(1) for any Plan Year shall be allocated
among the Accounts of (1) Participants who are Employees
of such Employer on the last work day of such Plan Year
(including Participants who incurred a Termination of
Employment on such day and who are credited with a Year
of Service for such Plan Year), (2) Participants who
retired on or after their Normal Retirement Date during
such Plan Year and (3) Participants who terminated
employment during such Plan Year due to death, Permanent
Disability, or involuntary Termination of Employment
(other than Termination of Employment for cause) and
shall be allocated among the Employer Contribution
Accounts of such Participants in the proportion that the
Compensation paid or accrued to each such Participant
during such Plan Year bears to the Compensation paid or
accrued to all such Participants during such Plan Year."
(b) All contributions made by an Employer pursuant to
Sections 4.1(a)(3) and (4) for any Plan Year shall be allocated
among the Accounts of (1) Participants who are Employees of such
Employer on the last work day of such Plan Year (including
Participants who incurred a Termination of Employment on such date)
and who are credited with a Year of Service for such Plan Year, (2)
Participants who retired on or after their Normal Retirement Date
during such Plan Year and (3) Participants who terminated employ-
ment during such Plan Year due to death, Permanent Disability or
involuntary Termination of Employment (other than a Termination of
Employment for cause). The amounts contributed pursuant to
Sections 4.1(a)(3) and (4) shall be allocated among the Matching
Contribution Accounts and Supplemental Contribution Accounts,
respectively, of the Participants entitled to such contributions in
proportion to the amounts determined under such sections for each
such Participant.
(c) Elective Contributions made pursuant to Section
4.1(a)(2) shall be allocated to the respective Elective Contri-
bution Accounts of the electing Participants.
(d) Anything to the contrary notwithstanding, the
allocation of the Employer's contributions shall be subject to the
limitations set forth in Sections 7.6 and 7.7, and, in any Top-
Heavy Year, the requirements of Section 6.2.
(e) For purposes of Sections 6.1(a) and 7.4, there shall
be included in the Compensation of a Participant who commenced
participation in the Plan during a Plan Year the portion of his
Compensation paid or accrued prior to the Entry Date on which he
became a Participant.
6.2 Allocations in Top-Heavy Years
(a) Anything to the contrary notwithstanding, for any
Plan Year which is a Top-Heavy Year, the aggregate allocation of
the Employer's contribution to the Company Contribution Accounts
(as hereinafter defined) of each Non-Key Employee who is a
Participant (including those who are employed by the Employer on
the last work day of such Plan Year but who are not credited with
a Year of Service for such Plan Year), plus the amount, if any,
allocated to his Elective Contribution Account pursuant to Article
V for such Plan Year, shall not be less than 3% of such Non-Key
Employee's Compensation for such Plan Year. For purposes of this
Section 6.2, the term "Company Contribution Accounts" shall be
defined as being (1) the Supplemental Contribution Account, (2) the
Matching Contribution Account, and (3) the Employer Contribution
Account.
(b) If, in any Top-Heavy Year, the Key Employee
Percentage (as hereinafter defined) for each Key Employee who is a
Participant is less than 3%, the highest Key Employee Percentage
shall be substituted for 3% in Section 6.2(a) unless a defined
benefit plan [as defined in Section 414(j) of the Code] which is
described in Section 2.35(d) must be combined with the Plan in
order to satisfy the requirements of Section 401(a) or Section 410
of the Code. For purposes of this Section 6.2, the "Key Employee
Percentage" for each Key Employee shall be the aggregate amount of
the Employer's contribution allocated to such Key Employee's
Company Contribution Accounts, plus the amount, if any, allocated
to his Elective Contribution Account pursuant to Article V, for
such Plan Year (taking into account adjustments pursuant to this
Section 6.2) as a percentage of such Key Employee's Compensation.
(c) In the event that the allocation of the Employer's
contribution to any Non-Key Employee under Section 6.1 in a Top-
Heavy Year would otherwise violate the provisions of this Section
6.2, the aggregate amount allocated to the Company Contribution
Accounts of the Key Employees shall be reallocated (in proportion
to the amount otherwise allocated to each Key Employee) to the
Company Contribution Accounts of the Non-Key Employees (in
proportion to the difference between the amount otherwise allocated
to each Non-Key Employee and the amount required to be allocated
under this Section 6.2) until the requirements of this Section 6.2
are satisfied.
(d) In the event that a Non-Key Employee is a partici-
pant in any other defined contribution plan [as defined in Section
414(i) of the Code] maintained by the Employer or any Related
Employer, the amount required to be allocated to such Non-Key
Employee under this Section 6.2 shall be reduced by the aggregate
amount allocated to the Non-Key Employee's accounts under all such
other plans.
(e) In the event that a Non-Key Employee is a partici-
pant in any defined benefit plan [as defined in Section 414(j) of
the Code] maintained by the Employer or any Related Employer which
is a "top-heavy plan" (as defined in Section 416(g) of the Code},
then, if the accrued benefit of such plan satisfies the require-
ments of Section 416(c)(1) of the Code [taking into account the
modifications required by Section 416(h)(2)(A)(ii) of the Code if
Section 6.2(e) applies], then Section 6.2(a) shall not apply to
such Non-Key Employee. If such accrued benefit does not satisfy
such requirements, then "5%" shall be substituted for "3%" in
Section 6.2(a) with respect to such Non-Key Employee, and Section
6.2(b) shall not apply to such Non-Key Employee.
(f) If Section 7.7(c) applies for any Plan Year, then
"4%" shall be substituted for "3%" in Section 6.2(a), and "7.5%"
shall be substituted for "5%" in Section 6.2(e).
(g) For purposes of this Section 6.2, contributions by
the Employer shall include forfeiture allocations.
6.3 Administrator to Notify Trustee
As soon as practicable after the close of each Plan Year,
the Administrator shall furnish the Trustee with a statement
showing allocation of contributions among the Participants for such
Plan Year.
ARTICLE VII
ACCOUNTS OF PARTICIPANTS
7.1 Separate Accounts
The Administrator shall create and maintain adequate
records to disclose the interest in the Trust of each Participant
(or Beneficiary of a deceased Participant). For accounting
purposes, a separate Account shall be maintained for each Partici-
pant, reflecting his proportionate share of all contributions,
forfeitures, net increases or decreases in the value of the Trust
assets and distributions to the Participant (or his Beneficiary).
Credits and charges shall be made to such Accounts in the manner
described herein. The maintenance of such separate Accounts shall
not require the segregation of any assets from any other assets
held in the Trust.
7.2 Adjustments to Accounts
(a) As of each Valuation Date, the Trustee shall:
(1) First, charge to the proper Accounts all
payments or distributions made from the Accounts since
the immediately preceding Valuation Date.
(2) Second, adjust the Account Balances upward or
downward, on a proportional basis, according to the net
gain or loss of the Trust assets from investments (as
reflected by interest payments, dividends, realized and
unrealized gains and losses on securities and other
investment transactions) and from the payment of expens-
es, so that the aggregate Account Balances equal the fair
market value, as determined by the Trustee, of the Trust
assets on such Valuation Date. The adjustments required
by the preceding sentence shall be determined separately
with respect to each of the Investment Funds established
pursuant to Section 16.1(d). For purposes of this
Section 7.2(a)(2), Account Balances shall not include any
asset of an Account the gain or loss from which is,
pursuant to Article XIV, allocated to a specific Partici-
pant's Account. All gain or loss (whether realized or
unrealized) attributable to an Account described in the
preceding sentence shall be allocated directly to such
Account, and the fair market value of the balance in all
such Accounts, after such allocation (or, in the case of
an asset allocated to a specific Participant's Account,
the fair market value of such asset) shall be subtracted
from the fair market value of the Trust's assets (and, if
applicable, from the Account Balance to which such asset
is allocated), prior to the adjustment set forth herein.
(3) Third, if such Valuation Date is an Anniversary
Date, allocate and credit the balances, if any, in the
Excess Contribution Account and the Excess Forfeiture
Account in accordance with Sections 7.6(d) and (e).
(4) Fourth, if such Valuation Date is an Anniversa-
ry Date, allocate and credit the Employer contributions
in accordance with Section 7.3 and forfeitures, if any,
in accordance with Section 7.4, in either case except to
the extent modified by Sections 7.6, 7.7 and 6.2.
(5) Fifth, allocate and credit any rollover
contributions made by a Participant that are to be
credited as of that date in accordance with Section 7.5.
(b) Every adjustment made pursuant to Sections 7.2(a)(3)
and (4) shall be considered as having been made on the Anniversary
Date of the applicable Plan Year regardless of the dates of actual
entries or receipt by the Trustee of the contributions made by the
Employer for such Plan Year; provided, however, that Employer
contributions pursuant to Section 4.1(a)(1) for the Plan Years
ending in 1988 through 1992, inclusive, as well as the Employer
contribution made in 1992 for the Plan Year ended May 29, 1993,
shall be considered as having been made as of the first day of the
applicable Plan Year regardless of the dates of actual entries or
receipt by the Trustee of such contributions, and provided further
that Elective Contributions pursuant to Section 5.1 which are
attributable to Compensation for a particular Plan Year and which
are received by the Trustee within 30 days following the Anniversa-
ry Date for such Plan year shall be allocated as of such Anniversa-
ry Date.
(c) The Trustee's determination as to the value of the
assets of the Trust and the charges or credits to the Accounts of
the Participants shall be conclusive and binding on all persons.
For purposes of allocating the net gain or loss of the Trust assets
from investments and from the payment of expenses among the
Elective Contribution Account Balances of Participants pursuant to
Section 7.2(a)(2) as of any Valuation Date, the Trustee may make
appropriate adjustments to such Elective Contribution Account
Balances so that the amount of net gain or loss which is allocated
reasonably reflects Elective Contributions credited to such
Elective Contribution Accounts since the preceding Valuation Date.
7.3 Crediting of Employer Contributions
(a) Each Participant's Employer Contribution Account
shall be credited with that portion of the Employer's contribution
for the current Plan Year to which such Participant is entitled,
pursuant to Sections 6.1(a) and 6.2.
(b) Each Participant's Elective Contribution Account
shall be credited with all elective contributions made on his
behalf during such Plan Year (or within 30 days after the Anni-
versary Date of such Plan Year) pursuant to Section 6.1(c).
(c) Each Participant's Matching Contribution Account
shall be credited with all matching contributions made on his
behalf during such Plan Year (or within 30 days after the Anni-
versary Date of such Plan Year) pursuant to Section 6.1(b).
(d) Each Participant's Supplemental Contribution Account
shall be credited with all Supplemental Contributions made on his
behalf during or for such Plan Year pursuant to Section 6.1(b).
7.4 Crediting of Forfeitures
Forfeitures, if any, occurring during the Plan Year
pursuant to Section 8.5 and allocated from the Forfeiture Suspense
Account, together with any amounts allocated from the Excess
Forfeiture Account pursuant to Section 7.6(e), shall be allocated
for the benefit of (a) Participants who are Employees on the last
work day of such Plan Year (including Participants who incurred a
Termination of Employment on such day) and who are credited with a
Year of Service during such Plan Year, (b) Participants who retired
on or after their Normal Retirement Date during such Plan Year and
(c) Participants who terminated employment during such Plan Year
due to death, Permanent Disability or involuntary Termination of
Employment (other than Termination of Employment for cause) and
shall be allocated among the Employer Contribution Accounts of such
Participants in the proportion that the Compensation paid or
accrued to each such Participant during such Plan Year bears to the
Compensation paid or accrued to all such Participants during such
Plan Year.
7.5 Crediting of Rollover Contributions
Each Participant's Rollover Contribution Account shall be
credited with all contributions made by him, or on his behalf,
pursuant to Section 5.6.
7.6 Limitation on Allocations
(a) Notwithstanding any other provision of the Plan, the
Annual Additions with respect to any Participant for any Limitation
Year shall not exceed an amount equal to the lesser of (1) $30,000,
or such higher amount as may be permitted at the relevant time
under applicable law, or (2) 25% of the Compensation paid to the
Participant by the Employer (or any Related Employer) during such
year. An amount credited to a Participant's Account in order to
correct an error made in a previous Limitation Year shall be
treated for purposes of this Section 7.6(a) as having been credited
to such Account in the Limitation Year to which the error relates.
(b) If the allocation of the Employer's contribution to
a Participant's Employer Contribution Account in a particular
Limitation Year would cause the limitations of Section 7.6(a) to be
exceeded with respect to such Participant, the excess contribution
shall, subject to the limitations of Section 7.6(a), be reallocated
among the Employer Contribution Accounts of all other Participants
eligible to share in the Employer's contribution for the Plan Year
ending in or coinciding with such Limitation Year, in proportion to
their Compensation for such Plan Year. If, following such
reallocation, there remains an excess portion of the Employer's
contribution which cannot be allocated to the Employer Contribution
Account of any eligible Participant without exceeding the limita-
tions of Section 7.6(a), such excess portion shall be placed in a
suspense account, designated the "Excess Contribution Account."
(c) If, following the allocation of the Employer's
contribution for a particular Plan Year [including all realloca-
tions required pursuant to Section 7.6(b)], the allocation of
forfeitures to a Participant's Employer Contribution Account would
cause the limitations of Section 7.6(a) to be exceeded with respect
to such Participant, the excess forfeiture shall, subject to the
limitations of Section 7.6(a), be reallocated among the Employer
Contribution Accounts of all other Participants eligible to share
in forfeitures for such Plan Year, in accordance with Section 7.4.
If, following such reallocation, there remains an excess portion of
the forfeitures which cannot be allocated to the Employer Contribu-
tion Account of any eligible Participant without exceeding the
limitations of Section 7.6(a), such excess portion shall be placed
in a suspense account, designated the "Excess Forfeiture Account."
(d) As of the Anniversary Date for a Plan Year, the
balance in the Excess Contribution Account shall first be applied
to reduce the Employer's contribution under Sections 4.1(a)(3) and
(4). The balance, if any, remaining in the Excess Contribution
Account shall be included in the Employer's contribution for such
Plan Year for purposes of Section 6.1. Section 7.6(b) shall apply
to any amount which cannot be allocated pursuant to the preceding
sentences.
(e) As of the Anniversary Date for a Plan Year, the
balance in the Excess Forfeiture Account shall first be applied to
reduce the Employer's contribution under Sections 4.1(a)(3) and
(4), after the application of Section 7.6(d). Any remaining
balance in such Excess Forfeiture Account shall be allocated as a
forfeiture under Section 7.4. Section 7.6(c) shall apply to any
amount which cannot be allocated pursuant to the preceding
sentences.
(f) For purposes of Section 7.6(a)(2) and Section 7.7,
"Compensation" shall have the meaning set forth in Section 2.11;
provided, however, that notwithstanding any provision of Section
2.11, for purposes of Section 7.6(a)(2) Compensation shall not
include: any contributions made by the Employer or any Related
Employer to this Plan or any other plan qualified under Section
401(a) of the Code to the extent excludable from the Employee's
income, or any distributions from this Plan or any such qualified
plan; contributions made to any simplified employee pension plan
described in Section 408(k) of the Code, to the extent deductible
by the Employee; amounts included in the Employee's income under
Section 83 of the Code [other than by reason of an election under
Section 83(b)]; amounts realized from the sale, exchange or other
disposition of stock acquired upon exercise of a qualified stock
option; or other amounts which receive special tax benefits under
the Code, such as contributions to a health or accident plan which
are excludable from the Employee's income or contributions towards
the purchase of an annuity contract described in Section 403(b) of
the Code (whether or not excludable from the Employee's income).
Notwithstanding the foregoing, Compensation shall include any
amounts deferred under a nonqualified, unfunded plan of deferred
compensation in the Plan Year received by the Employee. If so
elected by the Administrator pursuant to Treasury Regulations
1.415-2(d)(5), items of compensation shall be included in Compensa-
tion for purposes of this Section 7.6 and Section 7.7 in the
Limitation Year in which they are accrued by the Employer or a
Related Employer rather than the Limitation Year in which they are
received by or made available to the Participant, provided that the
making or revocation of such an election shall not have the effect
of causing any such item to be included in Compensation for more
than one Limitation Year.
(g) The Administrator of this Plan shall co-ordinate the
application of this Section 7.6 with the application of the
corresponding provisions of the instrument establishing the
Richardson Electronics, Ltd. Employees Stock Ownership Plan (the
"ESOP") by the administrator of the ESOP in circumstances where the
limitations under Section 7.6(a) and the corresponding provisions
of the instrument establishing the ESOP would be exceeded, so as to
determine under which of the 2 plans (or both plans, if such
administrators so determine) the adjustments required by Sections
7.6(b) and (c) and the corresponding provisions of the instrument
establishing the ESOP shall be made.
7.7 Combined Plan Limitation
(a) Anything to the contrary notwithstanding, if during
any Limitation Year a Participant also participates in a "defined
benefit plan" [as defined in Section 414(j) of the Code] maintained
by the Employer or any Related Employer, the otherwise permissible
Annual Addition on behalf of any Participant under the Plan may be
further reduced to the extent necessary, as determined by the
Administrator in its sole discretion, to comply with the additional
limitations set forth in Sections 7.7(b) and (c).
(b) In the event that a Participant also participates in
a defined benefit plan as described in Section 7.7(a), the sum of
the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction (as hereafter defined) for any Limitation Year shall not
exceed 1.0. For purposes of this Section 7.7, the "Defined Benefit
Plan Fraction" for any Limitation Year is a fraction, the numerator
of which is the Participant's projected annual benefit under the
defined benefit plan (determined as of the close of its plan year)
and the denominator of which is the lesser of: (1) the product of
1.25 multiplied by the maximum dollar limitation in effect under
Section 415(b)(l)(A) of the Code for such Limitation Year, or (2)
the product of 1.4 multiplied by the amount which may be taken into
account under Section 415(b)(l)(B) of the Code for such Limitation
Year. The "Defined Contribution Plan Fraction" for any Limitation
Year is a fraction, the numerator of which is the sum of the annual
additions to the Participant's Account (as determined under Section
7.6) as of the close of the Limitation Year and the denominator of
which is the sum of the lesser of the following amounts determined
for such Limitation Year and each prior Year of Service [assuming,
for this purpose, that Section 415(c) of the Code had been in
effect during such prior Years of Service]: (1) the product of 1.25
multiplied by the maximum dollar limitation in effect under Section
415(c)(l)(A) of the Code for such Year (determined without regard
to Section 415(c) (6) of the Code), or (2) the product of 1.4
multiplied by the maximum amount which may be taken into account
under Section 415(c)(1)(B) of the Code for such Limitation Year.
(c) Notwithstanding the foregoing, "1.0" shall be
substituted for "1.25" wherever it appears in Section 7.7(b) for
any Plan Year in or coinciding with a Limitation Year which is a
Top-Heavy Year, except as hereinafter provided. If as a result of
such substitution the amount credited to any Employee's Account
would exceed the limitations of this Section 7.7, then such
substitution shall not be made and the allocations to Non-Key
Employees shall be revised in accordance with Section 6.2(f),
unless such Plan Year would still be a Top-Heavy Year if "90%" were
substituted for "60%" in all provisions of Section 2.35.
(d) For purposes of this Section 7.7, all defined
benefit plans of the Employer or any Related Employer, whether or
not terminated, are to be treated as one defined benefit plan, and
all defined contribution plans of the Employer or any Related
Employer, whether or not terminated, are to be treated as one
defined contribution plan. The extent to which the annual
allocations made under this Plan shall be reduced as compared with
the extent to which the annual benefit under a defined benefit plan
shall be reduced in order to achieve compliance with the limita-
tions of Sections 415 and 416 of the Code shall be determined by
the Administrator in such a manner so as to maximize the aggregate
benefits payable to such Participant. If such reduction is under
this Plan the Administrator shall advise affected Participants of
any additional limitation on their annual allocations required by
this Section 7.7(d).
(e) The provisions of this Section 7.7 are intended to
comply with the provisions of Section 415 of the Code, as modified
by Section 416 of the Code, so that the maximum benefits provided
by the Employer or any Related Employer shall be exactly equal to
the maximum amounts allowed under the Code. If there is any
inconsistency between this Section 7.7 and the provisions of
Section 415 of the Code, as modified by Section 416 of the Code,
such inconsistency shall be resolved in such a way so as to give
full effect to the provisions of the Code.
7.8 Correction of Error
In the event of an error in the adjustment of a Parti-
cipant's Account, the Administrator, in its sole discretion, may
correct such error either by crediting or charging the adjustment
required to make such correction to or against the income and
expenses of the Trust for the Plan Year in which the correction is
made or the Employer may make an additional contribution to permit
the correction of the error. Except as provided in this Section
7.8, the Accounts of other Participants shall not be readjusted on
account of such error.
ARTICLE VIII
VESTING OF INTEREST IN TRUST
8.1 Normal Retirement
The Vested Account Balance of a Participant who retires
on or after his Normal Retirement Date shall be 100% of his Account
Balance.
8.2 Disability Retirement
The Vested Account Balance of a Participant who retires
prior to his Normal Retirement Date because of a Permanent
Disability shall be 100% of his Account Balance.
8.3 Death
The Vested Account Balance of a Participant who dies
prior to incurring a Termination of Employment shall be 100% of his
Account Balance.
8.4 Other Termination of Employment
Upon a Participant's Termination of Employment prior to
his Normal Retirement Date for any reason other than death or
Permanent Disability, such Participant's Vested Account Balance
shall be the sum of
(a) 100% of (1) his Participant Contribution
Account Balance, (2) his Elective Contribution Account
Balance, (3) his Supplemental Contribution Account
Balance and (4) his Pre-Break Account Balance; plus
(b) A percentage of his Employer Contribution
Account Balance and his Matching Contribution Account
Balance based upon the number of completed Years of
Service according to the following schedule:
Completed Years of Service Vested Percentage
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
8.5 Treatment of Forfeited Amounts; Reinstatement
(a) The excess of a Participant's Account Balance over
his Vested Account Balance shall be transferred from such Parti-
cipant's Employer Contribution Account to his Forfeiture Suspense
Account as of the date on which such Participant incurs a Break in
Service, and shall be forfeited on the date on which such Partici-
pant incurs a Break in Service consisting of 5 Computation Periods.
(b) If a Participant returns to the employment of the
Employer or any Related Employer before incurring a Break in
Service consisting of at least 5 Computation Periods, any amount
transferred to the Forfeiture Suspense Account from such Partici-
pant's Employer Contribution Account pursuant to Section 8.5(a)
shall be restored to the Participant's Employer Contribution
Account.
8.6 Computation of Years of Service
All Years of Service with the Employer or any Related
Employer (including the Computation Period in which a Termination
of Employment occurs, if the Participant completes 1,000 Hours of
Service in such Computation Period) shall be taken into account in
computing Years of Service for purposes of this Article VIII,
except that:
(a) If an Employee incurs a Break in Service, Years
of Service before such Break in Service shall be disre-
garded until he has completed one Year of Service after
his re-employment by the Employer or any Related Employ-
er.
(b) If a Participant who does not have a nonfor-
feitable right to any portion of his Account Balance
(other than such balance as is attributable to his
Rollover Account and his Participant Contribution
Account) incurs a Break in Service consisting of at least
5 Computation Periods, Years of Service before such Break
in Service shall be disregarded if the number of Computa-
tion Periods in such Break in Service equals or exceeds
the aggregate number of Years of Service completed prior
to such Break in Service.
(c) In any Computation Period during which a
Participant completes less than 1,000 Hours of Service
but does not incur a Break in Service, he shall not
receive credit for a Year of Service, but shall continue
to be a Participant, shall be credited with earnings of
the Trust and shall remain in his present position on the
vesting schedule in Section 8.4 without advancement.
8.7 Vesting on Termination of Trust or Termination
of Employer's Agreement to Contribute
The Vested Account Balance of each Participant shall be
100% of such Participant's Account Balance in the event that (a)
the Plan is terminated or partially terminated, (b) the Employer
shall permanently discontinue contributions to the Trust or (c) the
Employer's agreement to make contributions to the Trust shall be
permanently or partially terminated, whether by withdrawal from the
Plan, by amendment to the Plan or by bankruptcy, liquidation or
discontinuance of the business of such Employer, or by merger,
consolidation or reorganization of such Employer without the
adoption of this Plan within 180 days thereafter by such merged,
consolidated or reorganized corporation, or by operation of law or
otherwise. If the Plan is partially terminated, the provisions of
this Section 8.7 shall apply only to Participants affected by the
partial termination.
8.8 Vesting Following Plan Amendment
In the event that any amendment is adopted to the Plan
which affects, directly or indirectly:
(a) The Vested Account Balance of each Participant
shall not, as a result of such amendment, be less than it
would have been had the Participant incurred a Termina-
tion of Employment on the day immediately preceding the
day such amendment was adopted; and
(b) The Vested Account Balance of a Participant
who, on the day the amendment is adopted, had completed
at least 3 Years of Service shall thereafter be equal to
the greater of the amount determined under the Plan as so
amended or the amount determined under the Plan without
regard to such amendment.
8.9 Vesting Following Partial Distributions
(a) If a Participant receives a distribution of all or
a portion of his Employer Contribution Account Balance at a time
when it is possible for him to increase the vested percentage of
his Employer Contribution Account (including a Participant who
received a distribution upon incurring a Termination of Employment
who returns to the employment of the Employer or any Related
Employer before incurring a Break in Service consisting of at least
5 Computation Periods), then such Participant's Vested Account
Balance at any time after he is re-employed shall be determined by
(1) increasing the Participant's Employer Contribution Account
Balance at such time by the amount of the Adjusted Distribution (as
hereinafter defined), (2) then multiplying the Employer Contribu-
tion Account Balance (as so increased) by the relevant vesting
percentage under Section 8.4 and (3) then subtracting the amount of
such distribution from the product obtained. For purposes of this
Section 8.9(a), the "Adjusted Distribution" shall be an amount
equal to the product obtained by multiplying the amount of the
distribution by a fraction, the numerator of which is the
Participants' Account Balance at the time the formula is applied
and the denominator of which is the Account Balance immediately
following the distribution (without regard to forfeitures).
(b) If a Participant returns to the employment of the
Employer or any Related Employer after incurring a Break in Service
consisting of at least 5 Computation Periods, and such Participant
did not receive payment of the full amount of his Vested Account
Balance, his Vested Account Balance remaining unpaid shall be
placed in a separate Pre-Break Account for the Participant. Such
Pre-Break Account shall be treated in the same manner as the
Employer Contribution Account of the Participant, except that it
shall not be credited with the Employer's contributions and such
Participant shall be 100% vested in such Pre-Break Account.
8.10 Participant Contribution Accounts and
Rollover Accounts
All Participant's Participant Contribution Account
Balances and Rollover Account Balances shall be 100% vested at all
times.
ARTICLE IX
DISTRIBUTIONS AND WITHDRAWALS
9.1 Benefit Commencement Date
(a) Except as provided in Section 9.1(b), unless a
Participant requests a later date, his Benefit Commencement Date
shall not be later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs:
(1) His Normal Retirement Date;
(2) The 10th anniversary of the Entry Date on which
he commenced participation in the Plan; or
(3) His Termination of Employment;
provided, however, that a Participant who has incurred a Termina-
tion of Employment may request an earlier Benefit Commencement
Date.
(b) Except as provided in Section 9.8, a Participant's
Benefit Commencement Date shall not be later than the April l of
the calendar year following the calendar year determined below:
(1) In the case of a Participant not described in
any other clause of this Section 9.1(b), the calendar
year in which he attains the age of 70-1/2.
(2) In the case of a Participant who attained the
age of 70-1/2 prior to January 1, 1988, and who was not
described in Section 2.20(a)(3) during the Plan Year
which included the last day of the calendar year in which
he attained the age of 66-1/2 or any subsequent Plan
Year, the later of (i) the calendar year in which he
attains the age of 70-1/2 or (ii) the calendar year in
which he retires.
(3) In the case of a Participant who attained the
age of 70-1/2 prior to January 1, 1988, and who was
described in Section 2.20(a)(3) during the Plan Year
which included the last day of the calendar year in which
he attained the age of 66-1/2 or a subsequent Plan Year,
the later of (i) the calendar year in which he attains
the age of 70-1/2 or (ii) the earlier of the calendar
year in which he retires or the calendar year which
includes the last day of the Plan Year in which he was
first described in Section 2.20(a)(3).
(4) In the case of a Participant who attained the
age of 70-1/2 during the calendar year 1988, who was not
described in Section 2.20(a)(3) during the Plan Year
which includes the last day of the calendar year in which
he attained the age of 66-1/2 or any subsequent Plan
Year, and who is still alive on January 1, 1989, the
calendar year 1989.
The provisions of this Section 9.1(b) shall apply to all Partici-
pants whose Account Balances were not completely distributed prior
to January 1, 1985, subject, however, to the transitional rules set
forth in Proposed Treasury Regulations Section 1.401(a)(9)-1, Part
I, which are hereby incorporated herein.
(c) The Benefit Commencement Date of a Participant whose
Vested Account Balance exceeds $3,500 shall not be earlier than his
Normal Retirement Date unless the Participant consents in writing
to an earlier date. A Participant who requests, in writing, the
distribution of his Vested Account Balance prior to his Normal
Retirement Date shall be considered to have consented to such
distributions. If the value of a Participant's Vested Account
Balance, determined at the time of a distribution to him, Exceeds
$3,500, then such value at any subsequent time shall be deemed to
exceed $3,500.
(d) The date upon which the payment of a deceased
Participant's Vested Account Balance to his Beneficiary commences
shall be determined under Section 9.3.
9.2 Payment to Participants
(a) Each Participant who does not elect to receive
installment payments under Section 9.2(b) shall receive a single
lump sum payment on his Benefit Commencement Date equal to his
Vested Account Balance on such date.
(b) Any Participant whose Vested Account Balance on his
Benefit Commencement Date exceeds $3,500 may elect to receive his
Vested Account Balance in a series of annual installments deter-
mined in accordance with Section 9.6 commencing with his Benefit
Commencement Date. The first such installment shall be paid for
the calendar year which is not later than the calendar year
specified in the applicable clause of Section 9.1(b). An election
pursuant to this Section 9.2(b) may be made or revoked at any time
prior to the Benefit Commencement Date in accordance with rules
established by the Administrator. After installment payments have
commenced, a Participant may revoke his election, in which event
his full remaining Vested Account Balance shall be distributed to
him in a single lump sum as soon as practicable, but in no event
later than the date upon which the next installment payment would
have been required to have been made.
9.3 Payment to Beneficiaries
(a) If a Participant dies after his Benefit Commencement
Date but before his Vested Account Balance has been distributed in
full, all remaining payments which would have been made to the
Participant shall be made instead at the same time and in the same
amounts to his Beneficiaries; provided, however, that either the
Participant prior to his death, or all Beneficiaries following his
death, may elect to have the remaining Vested Account Balance
distributed in a single lump sum payment, subject to the provisions
of Section 9.3(c).
(b) If a Participant dies prior to his Benefit Com-
mencement Date (whether or not still employed by the Employer),
his Vested Account Balance shall be paid to his Beneficiaries as
follows:
(1) If neither the Participant nor his Beneficia-
ries elect installment payments under Section 9.3(b)(2),
then the Participant's Vested Account Balance shall be
distributed to his Beneficiaries in a single lump sum
payment as soon as practicable, but in no event later
than December 31 of the calendar year that includes the
fifth anniversary of the Participant's death.
(2) Either the Participant prior to his death or a
Beneficiary after his death may elect to have such
Beneficiary's share of the Participant's remaining Vested
Account Balance distributed in a series of annual
installments determined in accordance with Section 9.6
provided that such share exceeds $3,500. The first such
installment shall be paid for the calendar year which is
not later than the calendar year which includes the first
anniversary of the Participant's death; provided that, if
the Beneficiary is the Participant's surviving Spouse, it
shall be not later than the calendar year in which the
Participant would have attained the age of 70-1/2. If
the Participant's surviving Spouse dies before install-
ment payments commence, the provisions of this Section
9.3(b)(2) shall apply to the Spouse's share of the Vested
Account Balance as if the Spouse had been the Partici-
pant, except that, if the Spouse had remarried after the
Participant's death, the foregoing proviso shall not
apply to the Spouse's surviving spouse. An election
pursuant to this Section 9.3(b)(2) may be made or revoked
at any time prior to the December 31 of the calendar year
for which the first installment is required to be paid
pursuant to this Section 9.3(b)(2) or, if earlier,
December 31 of the calendar year which includes the fifth
anniversary of the Participant's death, and after such
date shall be irrevocable.
(c) Any election and any revocation of any election made
under this Section 9.3 shall be in accordance with rules estab-
lished by, and shall be subject to the approval of, the Administra-
tor; provided that any election which has the effect of causing any
portion of the Vested Account Balance to be paid to any Beneficiary
other than the surviving Spouse of the Participant, shall be
effective only if (1) such election identifies the designated
Beneficiary, and is consented to, in writing, by the Spouse and the
Spouse's signature is witnessed either by a representative
designated by the Administrator or by a notary public, or (2) it is
established, to the satisfaction of the Administrator, that the
Participant had no surviving Spouse, or that the consent of the
Spouse cannot be obtained because the Spouse cannot be located or
because of such other circumstances as may be specified in
regulations promulgated under Section 417(a)(2)(B) of the Code.
The Spouse's consent, if given, shall be irrevocable, but shall not
be binding upon any future Spouse. Such election may be revoked by
the Participant at any time prior to his Benefit Commencement Date
without the Spouse's consent, but any change in such election
(including any change in the Beneficiary specified therein) shall
require the Spouse's consent as set forth above.
(d) Anything else in this Section 9.3 to the contrary
notwithstanding, if a Participant's Beneficiary is his estate
pursuant to Section 10.2, his Vested Account Balance shall be paid
to his estate in a single lump sum.
9.4 Extent of Further Participation in Trust
(a) Upon the distribution of the full amount of a
Participant's Vested Account Balance in a lump sum pursuant to the
provisions of Sections 9.2(a) or 9.3(b)(1), such Participant (and
his Beneficiaries) shall cease to have any interest in the Trust
and all obligations hereunder of the Trustee and the Employer or
any Related Employer to them shall cease.
(b) The Account of a Participant who dies or incurs a
Termination of Employment shall continue to share in all alloca-
tions of gains and losses of the Trust pursuant to Section 7.2
until it is completely distributed.
9.5 Payment to Persons Under Legal Disability
In the event that any amount hereunder shall become
payable to a minor or to a person under legal or other disability
who, in the opinion of the Administrator, is unable to administer
such distribution, such amount may be paid to any person(s) the
Administrator deems best for the maintenance, care, support and
education of such minor or disabled person, including, in the case
of minors, to a custodian under a Uniform Transfers to Minors Act
or a Uniform Gifts to Minors Act. Any such payment in accordance
with the provisions of this Section 9.5 shall be a complete
discharge of any liability for the making of such payment under the
provisions of the Plan, and no fiduciary under the Plan shall be
under any duty to see to the application of any such payment.
9.6 Payment in Installments
(a) If a Participant or Beneficiary elects to have an
Account distributed in annual installments pursuant to Section
9.2(b) or 9.3(b)(2), the installment for each calendar year shall
be paid not later than December 31 of such calendar year. Not-
withstanding the foregoing, if the first calendar year for which an
installment payment is to be made pursuant to Section 9.2(b) is the
calendar year specified under the applicable clause of Section
9.1(c), payment of such installment may be deferred until not later
than the date set forth in Section 9.1(c), but such deferral shall
not affect the date by which the installment for the next succeed-
ing year must be paid.
(b) The amount of the installment payment for any
calendar year shall be equal to the Vested Account Balance as of
the Anniversary Date which occurs in the immediately preceding
calendar year, divided by the divisor determined under Section 9.6
(c). For purposes of determining the amount of the installment
payment, the Vested Account Balance shall include all income,
expenses, gains, losses, contributions and forfeitures allocated as
of such Anniversary Date, and shall be reduced by distributions
made after the Anniversary Date only (1) if the Anniversary Date is
other than a December 31 and such distributions are made on or
before December 31 of the calendar year in which the Anniversary
Date occurs, or (2) to the extent that, as permitted by the second
sentence of Section 9.6(a), a portion of the first installment
payment required under Section 9.2(b) is paid after the end of the
calendar year for which such installment is required. To the
extent that any amount is distributed for any calendar year in
excess of the installment payment required for such calendar year,
such excess shall not reduce the amount of the installment payment
required for any subsequent year.
(c) The divisor used to determine the amount of each
installment payment shall be determined as follows:
(1) Unless the person making the election elects to
redetermine life expectancies each year in accordance
with Section 9.6(c)(2), the divisor for the first year
for which an installment payment is to be made (hereinaf-
ter the "initial divisor") shall be a number specified by
the person making the election, and the divisor for each
succeeding year shall be equal to the divisor for the
immediately preceding year reduced by one. If the first
year for which an installment payment will be made is the
latest calendar year for which installment payments are
allowed to commence pursuant to Section 9.2(b) or Section
9.2(c)(2), the initial divisor shall not be greater than,
in the case of installments payable under Section 9.2(b),
the life expectancy of the Participant (or, if applica-
ble, the joint and last survivor life expectancy of the
Participant and Beneficiary) or, in the case of install-
ments payable under Section 9.3(b)(2), the life expectan-
cy of the Beneficiary, determined as of the Participant's
and/or Beneficiary's birthday which occurs in such
calendar year. If installments commence in a calendar
year earlier than the latest calendar year for which they
are required to begin, the initial divisor shall not be
greater than the maximum initial divisor as set forth in
the preceding sentence, increased by one for each
calendar year prior to the latest year for which install-
ments are required to begin. If the person making the
election fails to specify the initial divisor, or
specifies an improper initial divisor, the initial
divisor shall be the largest initial divisor that the
person making the election could have specified.
(2) If the person electing to receive installments
is either the Participant or the Participant's Spouse,
such person may also elect to redetermine the life
expectancy of the Participant, the Participant's Spouse,
or both, on an annual basis. Such election may be made
or revoked, in writing, at any time prior to the time at
which the first installment is required to be paid
pursuant to Section 9.2(b) or Section 9.3(b)(2).
Thereafter, such election or failure to elect shall be
irrevocable. If such election is made, then the divisor
for each year for installments payable pursuant to
Section 9.2(b) shall be the remaining life expectancy of
the Participant (or, if applicable, the remaining joint
and last survivor life expectancy of the Participant and
his Beneficiary) determined as of their respective
birthdays attained in such year; provided, however, that
if the Participant's Beneficiary is other than the
Participant's Spouse, or if the Participant has not
elected to redetermine his Spouse's life expectancy, then
the divisor shall be determined in accordance with
Proposed Treasury Regulations Section 1.401(a)(9)-1, Q&A
E-8(b). The divisor for each year for installments
payable to the Participant's surviving Spouse under
Section 9.3(b)(2) shall be the remaining life expectancy
of the surviving Spouse as of his birthday attained in
such year.
(3) For all purposes of this Section 9.6, life
expectancies shall be determined in accordance with the
expected return multiplies set forth in Tables V and VI
of Treasury Regulations Section 1.72-9 as in effect at
the time the life expectancy is being determined.
(4) Anything else contained herein to the contrary
notwithstanding, the divisor for any year shall not be
less than the divisor required by the minimum distribu-
tion incidental benefit requirement as set forth in
Proposed Treasury Regulations Section 1.401(a)(9)-2, Q&A
4.
(d) Installments may be paid at regular intervals of
less than a year, provided that the total amount paid in any year
shall not be less than the annual installment required for such
year pursuant to this Section 9.6.
9.7 Withdrawals of 1986 Plan Voluntary Contributions
(a) Upon written application to the Administrator, a
Participant's voluntary contributions which were made pursuant to
Section 5.1 of the 1986 Plan may be withdrawn by him from his
Participant Contribution Account. The Trustee may require up to 30
days prior written notice for the purpose of honoring such
withdrawals. A Participant shall be entitled to only one withdraw-
al during each Plan Year. Anything to the contrary notwithstand-
ing, in the event that a Participant has obtained a loan from the
Plan, as permitted pursuant to Section 14.3, which took into
consideration, for purposes of determining the amount of such loan,
his Participant Contribution Account Balance, such Participant
shall not be permitted to withdraw any voluntary contributions
previously made by him until such loan is repaid in full.
(b) Earnings or gains, whether realized or unrealized,
on contributions made by a Participant pursuant to Article V of the
1986 Plan, and contributions made by or on behalf of a Participant
pursuant to Section 5.6 above (including all earnings or gains,
whether realized or unrealized thereon) may not be withdrawn until
a Participant's death or Termination of Employment.
9.8 Election of Pre-TEFRA Distribution
Anything in this Article IX to the contrary notwith-
standing, if any Participant has delivered to the Administrator, on
or before December 31, 1983, an election as to the form in which
his Vested Account Balance is to be distributed, which election is
qualified under Section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982, and if such election has not been
revoked, the distribution of the Participant's Vested Account
Balance shall be made in accordance with the express terms of such
election. In the event such an election is revoked after the date
by which distributions from the Plan would otherwise be required by
Section 401(a)(9) to commence, the provisions of Treasury regula-
tions Section 1.401(a)(9)-1, Q&A J-4 shall apply.
9.9 Hardship Withdrawals
(a) In the event of hardship, a Participant may withdraw
the Elective Contributions credited to his Elective Contribution
Account (but not the earnings or gains thereon); provided, however,
that a Participant shall be required to have withdrawn the entire
portion of the amount, if any, permitted under Section 9.7 to him
before he may make any withdrawal pursuant to this Section 9.9. A
distribution is made on account of hardship only if the distribu-
tion is made on account of an immediate and heavy financial need of
the Participant and is necessary to satisfy such need. The amount
of any distribution made pursuant to this Section 9.9 may not
exceed the amount required to meet the immediate and heavy
financial need created by the hardship and the amount distributed
may not be reasonably available to the Participant from other
sources. The form of any hardship withdrawal shall be determined
pursuant to Section 9.2.
(b) For purposes of this Section 9.9, an immediate and
heavy financial need will be presumed to be present only if the
distribution is for:
(1) Expenses for medical care described in Code
Section 213(d) incurred by the Participant, the Parti-
cipant's Spouse, or any "dependent" (as that term if
defined in Code Section 152) of the Participant or
necessary for these persons to obtain medical care
described in Code Section 213(d);
(2) Costs directly related to the purchase (ex-
cluding mortgage payments) of a principal residence for
the Participant;
(3) Payment of tuition and related educational fees
for the next 12 months of post-secondary education for
the Participant, his Spouse, children, dependents (as
defined in Code Section 152); or
(4) Payments necessary to prevent the eviction of
the Participant from his principal residence or fore-
closure on the mortgage of the employee's principal
residence.
(c) For purposes of this Section 9.9, distribution will
not be deemed to be necessary to satisfy the immediate and heavy
financial needs of the Participant unless the Participant repre-
sents in writing to the Administrator that such needs cannot be
relieved:
(1) Through reimbursement or compensation by insur-
ance or otherwise;
(2) By the reasonable liquidation of the Partici-
pant's assets (including the assets of his spouse and
minor children that are reasonably available to the
Participant).
(3) By cessation of Elective Contributions; or
(4) By other distributions or nontaxable (at the
time of the loan) loans from other qualified retirement
plans maintained by the Employer, any Related Employer,
by an other person who has employed the Participant, or
by borrowing from commercial sources on commercially
reasonable terms.
(d) In the event that a Participant receives a hardship
distribution from the Plan pursuant to this Section 9.9, the
Participant's election pursuant to Sections 5.1 and 5.4 shall
automatically and immediately terminate and the Participant shall
not be eligible to make a new election thereunder for 12 months
after receipt of the hardship distribution. In the event that a
Participant receives a distribution from his Elective Contribution
Account under the Plan pursuant to this Section 9.9 (or under any
other plan maintained by the Employer or any Related Employer) the
Participant's Elective Contributions for his next taxable year
shall be limited to an amount equal to the excess, if any, of the
applicable limit under Code Section 402(g) minus the amount of the
Elective Contribution which the Participation made in the Plan Year
in which the hardship distribution occurred.
9.10 Compliance with Regulations
The provisions of this Article IX are intended to comply
with the minimum distribution requirements of Section 401(a)(9) of
the Code and of Proposed Treasury Regulations Section 1.401(a)(9)-1
promulgated thereunder, including the incidental death benefit
requirement as set forth in Proposed Treasury Regulations Section
1.401(a)(9)-2. Anything else contained in this Agreement to the
contrary notwithstanding, all distributions shall be made in
accordance with Section 401(a)(9) and said Regulations, which shall
override any provisions of this Agreement which are inconsistent
therewith. Upon the promulgation of final Treasury Regulations
replacing Proposed Treasury Regulations Section 1.401(a)(9)-1 and
- - -2, the provisions of this Article IX shall be construed by
reference to such final Treasury Regulations and shall be imple-
mented accordingly.
9.11 Direct Rollovers
(a) This Section 9.11 applies to distributions made on
or after January 1, 1993.
(b) Notwithstanding any other provision of the Plan to
the contrary which would otherwise limit the election of a
Distributee (as hereinafter defined) under this Section 9.11, a
Distributee may elect, at the time and in the manner permitted by
the Administrator, to have any portion of an Eligible Rollover
Distribution (as hereinafter defined) paid directly to an Eligible
Retirement Plan (as hereinafter defined) specified by the Distribu-
tee in a Direct Rollover (as hereinafter defined).
(c) For purposes of this Section 9.11, the following
terms shall have the meanings indicated:
(1) "Direct Rollover": A payment by the Plan to the
Eligible Retirement Plan specified by a Distributee.
(2) "Distributee": A Participant who is an Employee
or former Employee. In addition, (i) such a Partici-
pant'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, and (ii) the surviving
spouse of a deceased Participant who was an Employee or
former Employee, are Distributees with regard to the
interest of such spouse or former spouse in the Plan.
(3) "Eligible Retirement Plan": An individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust de-
scribed in Section 401(a) of the Code, which accepts a
Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to a
Distributee who is surviving spouse, an "Eligible
Retirement Plan" means an individual retirement account
or individual retirement annuity.
(4) "Eligible Rollover Distribution": Any distri-
bution of all or any portion of the balance to the credit
of the Distributee under the Plan, except that an
Eligible Rollover Distribution shall not include: (i)
any distribution which is one of a series of substantial-
ly equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectan-
cies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of 10 years or
more; (ii) any distribution to the extent such distribu-
tion is required under Section 401(a)(9) of the Code; and
(iii) the portion of any distribution which is not
includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with
respect to Employer securities). The enumeration in the
preceding sentence of any form of payment shall not imply
that any person has the right to receive benefits under
the Plan in such form unless otherwise specifically
provided under the Plan.
9.12 Withdrawals Due to Permanent Disability
In the event a Participant becomes Permanently Disabled,
but has not yet incurred a Termination of Employment, he or his
legal representative may withdraw all or a portion of his Vested
Account Balance. The form of any such withdrawal shall be
determined pursuant to Section 9.2.
ARTICLE X
DESIGNATION OF BENEFICIARIES
10.1 Participants to Name Beneficiaries
Each Participant may file with the Administrator, in such
form as the Administrator shall from time to time require, a
written designation of a Beneficiary or Beneficiaries (including
contingent or successive Beneficiaries) who shall be entitled to
receive any benefits which may become payable upon the Partici-
pant's death. If more than one Beneficiary is designated, such
designation shall also specify the manner in which payments are to
be divided. In the absence of such designation, all payments shall
be divided per capita, or, if the Beneficiaries are the Partici-
pant's descendants, per stirpes. The Beneficiaries may be changed
at any time or times by the filing of a new designation with the
Administrator, without the necessity of obtaining the written
consent of any Beneficiary, subject to the rights of the Partici-
pant's Spouse under Section 9.3(c). No designation of a Beneficia-
ry or change thereof shall be effective until it has been received
by the Administrator. The Administrator shall be entitled to rely
upon the last designation filed by the Participant prior to his
death. The Trustee may require such proof of death or evidence of
the right of a person to receive payment of a deceased Partici-
pant's benefits as the Trustee may deem to be desirable.
10.2 No Beneficiary Designated; Death of Beneficiary
If a Participant dies without having a Beneficiary
designation in force, or if at the time of the Participant's death
(or the date on which a subsequent installment payment is due) all
designated Beneficiaries have died or are no longer in existence
(in the case of Beneficiaries who are not individuals), payment
shall be made to the deceased Participant's surviving Spouse; or
if there is no surviving Spouse (or if the surviving Spouse dies
before a subsequent installment payment is due), to the deceased
Participant's descendants (including adopted descendants), per
stirpes; or if there are no living descendants, to the deceased
Participant's estate.
10.3 No Liability for Payment to Beneficiaries
The Administrator shall determine the identity of
Beneficiaries, and in so doing, may act upon such information as,
on reasonable inquiry, it may deem reliable with respect to
heirship, relationship, survivorship, or any other fact relative to
the distributes; and the Trustee and Administrator shall be
indemnified and saved harmless by the Employer with respect to all
payments required to be made hereunder, if made in good faith and
without actual notice or knowledge of the changed condition or
status of any person receiving payments. The Administrator may
rely on any list or notice furnished by the Employer or any Related
Employer as to the facts, the occurrence of any events, or the
existence of any situation, and shall not be bound to inquire as to
the basis of any such decision, list, or notice, and shall be
indemnified and saved harmless by the Employer for any action taken
or suffered to be taken by him in reliance thereon. In the event
any question or dispute shall arise as to the proper person or
persons to whom any payment shall be made, the Trustee may withhold
such payment until a determination of such question or dispute
shall have been made, or until the Trustee shall have been
adequately indemnified against loss to his satisfaction. In
consideration of being permitted to designate his Beneficiaries,
the Participant hereby waives, for himself and all persons claiming
by or through him, any claim against the Committee, the Administra-
tor, the Trustee and the Employer or any Related Employer as a
result of any determination made in good faith as to the persons
entitled to receive any distribution of the Participant's Vested
Account Balance.
10.4 Qualified Domestic Relations Orders
To the extent provided in any Qualified Domestic
Relations Order, and subject to the provisions of Section 19.4(b)
the person or persons named therein shall be considered the
Participant's Beneficiary.
ARTICLE XI
FIDUCIARY CAPACITY AND RESPONSIBILITY
11.1 General Fiduciary Standard of Conduct
Each fiduciary under this Agreement shall discharge his
duties hereunder solely in the interest of the Participants and
their Beneficiaries and for the exclusive purpose of providing
benefits to the Participants and their Beneficiaries and defraying
the reasonable expenses of administering the Plan and the Trust.
Each fiduciary shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
man, 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, in accordance with the documents and instruments
governing the Plan and the Trust, insofar as such documents and
instruments are consistent with this standard.
11.2 Allocation of Responsibility Among Fiduciaries
(a) The fiduciaries shall have only those specific
powers, duties, responsibilities and obligations as are specifi-
cally given to them under this Agreement. The Employer shall have
the sole responsibility for making the contributions provided for
under Article IV, and to amend or terminate, in whole or in part,
the Plan and the Trust. The Committee shall have the sole
responsibility for assisting the Administrator in the administra-
tion of the Plan, which responsibility is specifically described in
the Plan. The Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held
under the Trust (unless otherwise managed by an investment
manager), all as specifically provided in this Agreement. Each
fiduciary warrants that any directions given, information furnished
or action taken by him shall be in accordance with the provisions
of the Plan or the Trust authorizing or providing for such
direction, information or action. Each fiduciary may rely upon any
such direction, information or action of another fiduciary as being
proper under the Plan and the Trust, and is not required to inquire
into the propriety of any such direction, information or action.
No fiduciary guarantees the Trust in any manner against investment
loss or depreciation in asset value. The Administrator, the
members of the Committee, the Trustee and the investment manager,
if any, shall each be a "named fiduciary" as defined in Section
402(a)(2) of ERISA. The Administrator may appoint such other named
fiduciaries as it may determine are necessary or appropriate for
the administration of the Plan.
(b) A fiduciary shall not be liable for the acts or
omissions of another fiduciary unless (1) the fiduciary knowingly
participates in, or knowingly attempts to conceal the act or
omission of, another fiduciary and knows the act or omission is a
breach of a fiduciary responsibility by the other fiduciary; or (2)
the fiduciary has knowledge of a breach by the other fiduciary and
shall not make reasonable efforts to remedy the breach; or (3) the
fiduciary's breach of his own fiduciary responsibility permits the
other fiduciary to commit a breach.
(c) At such time as there shall be more than one Trustee
acting hereunder, the Trustees shall jointly manage and control the
assets of the Trust unless they shall allocate specific
responsibilities, obligations and duties among themselves. If the
Trustees shall make such an allocation, then the specified Trustee
shall be responsible for the duties allocated to him and the other
Trustee shall not be liable for any breach of fiduciary
responsibility for the duties allocated except as set forth in
Section 11.2(b).
11.3 Administrator
(a) Richardson, or such person as it shall designate
pursuant to Section 11.3(b), shall serve as the Administrator of
the Plan. The Administrator shall be the "plan administrator" as
defined in Section 414(g) of the Code, and the "administrator" as
defined in Section 3(16)(A) of ERISA. The Administrator shall have
the duty to file such plan descriptions and annual reports as may
be required by ERISA or similar legislation and shall be designated
to accept service of legal process and any other notices for the
Plan. The Administrator shall also furnish each Participant with
a summary plan description and provide each Participant with a
statement of his Account Balance and his Vested Account Balance as
of each Anniversary Date.
(b) Richardson shall have the authority to appoint
another corporation or one or more persons to serve as the
Administrator hereunder, in which event such corporation or person
(or persons) shall exercise all of the powers, duties, responsibil-
ities and obligations of the Administrator hereunder.
11.4 Powers and Duties of Administrator
The Administrator shall have all necessary power to
accomplish its duties under the Plan in its discretion, including
without limitation the power to:
(a) Construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner
and time of payment of any benefits hereunder (which
determinations shall, in the absence of abuse of discre-
tion, be binding upon all parties);
(b) Prescribe procedures to be followed by Par-
ticipants or Beneficiaries filing applications for
benefits;
(c) Assist any Participant regarding any rights,
benefits or elections available under the Plan;
(d) Adopt reasonable procedures for determining
whether any order, judgment or decree constitutes a
Qualified Domestic Relations Order, and notify the
Participant and all alternate payees affected or their
designated representatives as to the results of its
determinations;
(e) Determine whether to permit assets of the Trust
to be used for loans to Participants and/or the purchase
of insurance on the lives of Participants pursuant to
Sections 14.3 and 14.4, and, if such use is to be
permitted, adopt reasonable procedures to implement such
determination and give all instructions to the Trustee
relating thereto;
(f) Direct the Trustee with respect to the amount
and type of benefits to which any Participant or Bene-
ficiary shall be entitled hereunder and with respect to
other disbursements from the Trust;
(g) Receive from the Employer and from Participants
such information as shall be necessary for the proper
administration of the Plan;
(h) Maintain all the necessary records for the
administration of the Plan;
(i) Receive, review and keep on file (as it deems
convenient and proper) reports of benefit payments made
by the Trustee and reports of disbursements for expenses
directed by it;
(j) Make, or instruct the Trustee to make, equi-
table adjustments for any mistakes or errors made in the
administration of the Plan; and
(k) Do all other acts which the Administrator deems
necessary or proper to accomplish and implement its
responsibilities under the Plan.
11.5 Claims Procedure
(a) A Participant or Beneficiary, or an authorized
representative acting on his behalf (hereinafter called the
"Claimant"), may notify the Administrator of a claim for benefits
under the Plan. Such notice shall be in writing and may be in any
form provided by or acceptable to the Administrator and shall set
forth the basis of such claim and shall authorize the Administrator
to conduct such examinations as may be necessary to determine the
validity of the claim and to take such steps as may be necessary to
facilitate the payment of any benefits to which the claimant may be
entitled under the terms of the Plan. A Claimant shall have no
right to seek review of a denial of benefits, or to bring any
action in any court to enforce a claim for benefits prior to his
filing a claim for benefits and exhausting his rights to review
under this Section 11.5.
(b) When a claim for benefits has been filed properly,
such claim for benefits shall be evaluated and the Claimant shall
be notified of the approval or the denial within 90 days after the
receipt of such claim unless special circumstances require an
extension of time for processing the claim. If such an extension
of time for processing is required, written notice of the extension
shall be furnished to the Claimant prior to the termination of the
initial 90-day period which shall specify the special circumstances
requiring an extension and the date by which a final decision will
be reached (which date shall not be later than 180 days after the
date on which the claim was filed). A Claimant shall be given a
written notice in which the Claimant shall be advised as to whether
the claim is granted or denied, in whole or in part. If a claim is
denied, in whole or in part, the Claimant shall be given written
notice which shall contain (1) the specific reasons for the denial,
(2) references to pertinent plan provisions upon which the denial
is based, (3) a description of any additional material or informa-
tion necessary to perfect the claim and an explanation of why such
material or information is necessary and (4) the Claimant's rights
to seek review of the denial.
(c) If a claim is denied, in whole or in part, the
Claimant shall have the right to request that the Administrator
review the denial, provided that the Claimant files a written
request for review with the Administrator within 60 days after the
date on which the Claimant received written notification of the
denial. A Claimant (or his duly authorized representative) may
review pertinent documents and submit issues and comments in
writing to the Administrator. Within 60 days after a request for
review is received, the review shall be made and the Claimant shall
be advised in writing of the decision on review, unless special
circumstances require an extension of time for processing the
review, in which case the Claimant shall be given a written
notification within such initial 60-day period specifying the
reasons for the extension and when such review shall be completed
(provided that such review shall be completed within 120 days after
the date on which the request for review was filed). The decision
on review shall be forwarded to the Claimant in writing and shall
include specific reasons for the decision and references to plan
provisions upon which the decision is based. A decision on review
shall be final and binding on all persons for all purposes. If a
Claimant shall fail to file a request for review in accordance with
the procedures described in this Section 11.5, such Claimant shall
have no right to review and shall have no right to bring action in
any court and the denial of the claim shall become final and
binding on all persons for all purposes.
11.6 Indemnification by Employer
The Employer shall indemnify the members of the Commit-
tee, the Administrator and each Trustee for, and hold them harmless
from and against, any and all liabilities, losses, costs or
expenses (including reasonable attorneys fees) of whatsoever kind
and nature which may be imposed on, incurred by or asserted against
them at any time by reason of their service under the Plan or the
Trust as long as they did not act dishonestly or engage in willful
misconduct or gross negligence in their official capacities
hereunder.
11.7 Service in Multiple Capacities
Any person may serve in more than one fiduciary capacity
hereunder, including but not limited to service both as a member of
the Committee and as a Trustee.
ARTICLE XII
THE COMMITTEE
12.1 Appointment and Membership
The Administrator may, but shall not be obligated to,
appoint a Committee to assist it in its administration of the Plan.
If a Committee is appointed, it shall consist of such number of
members as the Administrator shall determine, who shall be
appointed by and serve at the pleasure of the Administrator. The
Administrator may delegate to the Committee any of its specific
duties, rights and authorities under the Plan, or may delegate the
Committee general authority to administer the Plan, in which event
this Agreement shall be construed as though the term "Committee"
were substituted for "Administrator" wherever the latter appears
other than in this Article XII; provided that neither the Committee
nor any member of the Committee shall be deemed to be the
Administrator pursuant to Section 11.3(a) unless the Committee or
such member is specifically so designated.
12.2 Compensation and Expenses
The members of the Committee shall serve without
compensation for their services hereunder. All expenses of the
Committee, including expenses incurred in the hiring of consul-
tants, advisors, investment managers, attorneys and accountants,
shall be paid by the Employer to the extent that such expenses are
not paid out of the Trust.
11.3 Committee Procedures and Actions
(a) The Committee shall act by a majority of its members
at the time in office and such action may be taken either by vote
at a meeting or in writing without a meeting.
(b) The Committee may adopt such by-laws, rules and
regulations as it deems necessary, desirable or appropriate for the
conduct of its affairs. All rules and decisions of the Committee
shall be uniformly and consistently applied to all Participants and
Beneficiaries in similar circumstances. When making a determina-
tion or calculation, the Committee shall be entitled to rely upon
information furnished 'by a Participant or Beneficiary, the
Employer or any Related Employer, the Administrator or the Trustee,
and shall have no duty or responsibility to verify such informa-
tion.
(c) The Committee may authorize any one or more of its
members to execute any instrument or document on its behalf.
(d) The Committee shall periodically (but no less
frequently than annually) consult with the Trustee (or any
investment manager) with regard to the investment policy of the
Plan and the methods to be used to carry out the Plan's objectives.
12.4 Resignation or Removal of Committee Member
(a) Any member of the Committee may resign from office
at any time by notifying the Administrator, the other members of
the Committee and the Trustee in writing, at least 10 days in
advance, of such resignation; provided, however, that such notice
may, at the option of the parties, be waived.
(b) Any member of the Committee may be removed from
office by the Administrator at any time, with or without cause.
Such removal shall be effectuated by the tendering to such member,
the other members of the Committee and the Trustee of a written
notice of removal, to take effect on the date specified therein;
provided, however, that such notice may, at the option of the
parties, be waived. A member of the Committee who is a Participant
shall automatically be removed from the Committee upon his
retirement, Permanent Disability or Termination of Employment.
(c) Upon such resignation or removal of a member of the
Committee, or upon his death, the Administrator shall promptly
appoint a successor member of the Committee, who may be any
individual, whether or not a Participant, and shall give prompt
written notice thereof to the other members of the Committee and
the Trustee. In the event of the failure of the Administrator to
appoint such successor by the effective date of such resignation or
removal, or within 10 days after such death, the remaining members
of the Committee may appoint such successor.
(d) Each successor member of the Committee shall have
all the powers, duties, responsibilities and obligations conferred
by the Plan as if originally named to the Committee. No successor
member of the Committee shall be personally liable for any act or
failure to act of his predecessor or have any duty to review the
actions of his predecessor.
12.5 Committee/Administrator Decisions Final
The Committee and the Administrator have discretionary
authority to determine matters within their jurisdiction and the
decisions of the Committee and of the Administrator in matters
within its jurisdiction shall be final, binding and conclusive upon
the Employer and the Trustee and upon each Employee, Participant,
former Participant, Beneficiary and every other person or party
interested or concerned.
ARTICLE XIII
THE TRUSTEE
13.1 Creation and Acceptance of Trust
The Trustee, by joining in the execution of this
Agreement, agrees to act in accordance with the express provisions,
terms and conditions hereof.
13.2 Appointment of Trustee
The Trustee shall be appointed by and shall serve at the
pleasure of the Administrator.
13.3 Trustee Capacity
The Trustee may be a bank, trust company or any other
corporation possessing trust powers under applicable federal or
state law, or one or more individuals, or any combination thereof.
13.4 Compensation, Expenses and Taxes
The Trustee shall receive such reasonable compensation as
may be from time to time determined by agreement with the Adminis-
trator, except that a Trustee who is an Employee shall serve
without compensation for his services hereunder. The Trustee, in
performing his duties under the Trust, may employ counsel,
accountants and any other agents as he shall deem advisable. The
Trustee may employ other fiduciaries or investment managers only
after securing the written approval of, or written directions from,
the Administrator. The compensation of the Trustee, if any, and
all expenses incurred by the Trustee in the administration of the
Trust, including but not limited to the compensation of counsel,
accountants, investment managers, other agents or fiduciaries,
shall be paid by the Employer to the extent that such expenses are
not paid out of the Trust. All taxes that may be levied or
assessed under existing or future laws upon, or in respect to, the
Trust, its assets or the income therefrom shall be a charge upon
the Trust, to the extent not paid directly by the Employer, and the
Trustee may pay such sum or sums as may be required to satisfy any
such tax obligation.
13.5 Trustee Procedures and Actions
(a) If the Trustee is more than one individual, the
Trustee shall act by majority rule and such action may be taken
either by a vote at a meeting or in writing without a meeting.
(b) The Trustee shall keep a record of all decisions and
forward all necessary communications to the Administrator, the
Committee and any investment manager. All data, records, documents
and papers pertaining to the Trustee's management of the Trust
shall be retained by him.
(c) If the Trustee is more than one individual, any one
or more of such individuals may be authorized to execute any
instrument or document on behalf of the Trustee, in which event the
Trustee shall notify the Administrator and the Committee and any
investment manager of such action and the name or names of those so
designated. The Administrator, the Committee and the investment
manager shall thereafter accept and rely conclusively upon any
instrument or document executed by such authorized Trustee as
representing action by the Trustee until the Trustee shall file
with the Administrator, the Committee and the investment manager a
written revocation of such designation.
(d) Any act performed by any authorized Trustee shall
have the same force and effect as if the act had been performed by
all of the Trustees. Any person, corporation or other entity may
deal with any Trustee and may accept the signature of any Trustee
in the same manner and with the same force and effect as if the
individual were the sole Trustee. No person receiving such
documents or written instructions and acting in good faith and in
reliance thereon shall be obliged to ascertain the validity of such
action under the terms of this Agreement.
13.6 Resignation or Removal of Trustee
(a) Any Trustee may resign at any time by notifying the
Administrator in writing, at least 10 days in advance, of such
resignation; provided, however, that such notice may, at the option
of the parties, be waived.
(b) Any Trustee may be removed from office by the
Administrator at any time, with or without cause. Such removal
shall be effectuated by the tendering to the Trustee of a written
notice of removal, to take effect on the date specified therein;
provided, however, that such notice may, at the option of the
parties, be waived. A Trustee who is a Participant shall be
removed automatically as Trustee upon his retirement, Permanent
Disability or Termination of Employment.
(c) In the case of the resignation or removal of a
Trustee, the resigned or removed Trustee shall have the right to a
settlement of his account, which, at the option of said Trustee,
may be made either:
(1) By judicial settlement in an action instituted
by said Trustee in a court of competent jurisdiction; or
(2) By written agreement of settlement between said
Trustee and the Administrator.
(d) If a settlement of the Trustee's final account is
made by judicial settlement, the necessary parties to any such
accounting, litigation or other proceeding shall include only the
Trustee, the Administrator and the Committee, and the settlement or
judgment in any such case in which the Administrator and the
Committee are duly served or cited shall be binding upon the
Participants and their Beneficiaries, and upon all persons claiming
by, through or under them.
(e) After the settlement, if any, of the resigned or
removed Trustee's account, said Trustee shall promptly transfer and
deliver the assets of the Trust to the successor Trustee, after
reserving such reasonable amount as he shall deem necessary to
provide for his expenses in connection with the settlement of his
account or otherwise and any sum chargeable against the Trust for
which he may be liable. The balance, if any, of the reserve
remaining after the payment of such sums shall be paid over to the
successor Trustee. Within 30 days, the resigned or removed Trustee
shall furnish to the Administrator and the successor Trustee an
account of his administration of the Trust from the date of his
last account.
(f) Upon the resignation, removal, death or dissolution
of a Trustee, the Administrator may (and, if as a result there
would be no remaining Trustee, shall) appoint a successor Trustee.
In the event of the failure of the Administrator to appoint such
successor Trustee by the effective date of such resignation or
removal, or within 10 days after such death, the remaining Trustee
may appoint such successor. The successor Trustee must signify his
acceptance as a fiduciary in writing and agree to act in accordance
with the provisions of this Trust.
(g) Each successor Trustee shall succeed to the title of
the assets in the Trust which are vested in his predecessor without
the signing or filing of any further instrument. Any resigning or
removed Trustee shall execute all documents and do all acts
necessary to vest such title of record in any successor Trustee.
(h) Each successor Trustee shall have all the powers,
duties, responsibilities and obligations conferred by the Trust as
if originally named as Trustee. No successor Trustee shall be
personally liable for any act or failure to act of a predecessor
Trustee in the administration of the Trust or have any duty to
review the actions or accounting of any predecessor Trustee.
13.7 Powers and Duties of Trustee
(a) The powers and duties of the Trustee shall be in
accordance with the provisions of the Trust and no other or further
powers or duties shall be imposed or implied by the Administrator
without the Trustee's consent thereto.
(b) The Trustee shall be responsible for the safekeeping
and administration of the assets of the Trust Fund in accordance
with the provisions of the Trust. The Trustee shall have no duty
to require that any contributions be made or to determine whether
contributions delivered by the Employer to the Trustee comply with
the provisions of the Plan.
(c) If at any time there shall be a dispute as to the
person to whom payment or delivery of monies or property should be
made by the Trustee, or regarding any action to be taken by the
Trustee, the Trustee may postpone such payment, delivery or action,
retaining the funds or property involved, until such dispute shall
have been resolved in a court of competent jurisdiction or the
Trustee shall have been indemnified to his satisfaction or until he
has received written direction from the Administrator.
13.8 Accounting
(a) The Trustee shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other
transactions hereunder. All accounts, books and records relating
to such transactions shall be open to inspection and audit at all
reasonable times by any person designated by the Administrator.
Within 120 days following the close of each Plan Year, the Trustee
shall file with the Administrator a written account setting forth
all investments, receipts, disbursements and other transactions
effected by him during such Plan Year and setting forth the current
value of the Trust assets. Upon the expiration of 30 days from the
date of filing of such annual or other account, the Trustee shall
be forever released and discharged from all liability and account-
ability to anyone with respect to the propriety of his acts and
transactions shown in such account, except with respect to any such
acts or transactions as to which the Administrator shall file with
the Trustee written objections within such 30-day period. The
approval of any accounting, act or procedure by the Administrator
shall fully discharge the Trustee with respect thereto.
(b) The Trustee shall use the accrual method of
accounting as to Plan Years beginning prior to May 27, 1989 and as
to Plan Years beginning after June 1, 1991. For the Plan Years
beginning May 27, 1989, May 26, 1990 and June 1, 1991, the Trustee
shall use the modified cash method of accounting.
13.9 Controversies
In the event that any controversy shall arise between the
Trustee and any other person, including without limitation the
Committee, the Employer or any Related Employer, the Administrator
or any Participant or Beneficiary, with respect to the interpreta-
tion of the Plan or the duties of the Trustee or any other
fiduciary, the Trustee may require that the issue be decided by a
court of competent jurisdiction, and pending such determination the
Trustee shall not be obligated to take any other action in
connection with the matter involved in the controversy.
13.10 Legal Actions
The Trustee shall have the power, but at no time the
obligation, to institute any legal action or to become a party to
any legal action until he shall have been indemnified to his
satisfaction by the Employer for any fees, costs and expenses to be
incurred in connection with the litigation.
13.11 Supplemental Trusts
If the Employer shall adopt or establish one or more
other trusts certified by the Employer as being qualified as an
"exempt organization" as defined in Section 501 of the Code for the
purpose of implementing the Plan ("Supplemental Trusts") and shall
so notify the Trustee in writing, then the Trustee:
(a) Shall transfer and pay over to the trustee of
any such other trust such cash and other property as the
Employer, with the written consent of the Administrator,
shall from time to time direct in writing;
(b) Shall receive and hold as a part of the
Supplemental Trust assets such cash and other property as
may from time to time be delivered to it by the trustee
of any such other trust; and
(c) May, in determining its proposed investments
and sales for the purpose of achieving adequate diver-
sification, take into consideration the nature and value
of the assets held by such other trust or trusts to the
extent reported to it by the trustee or trustees thereof
or by the employer. For the purposes of this Section
13.11(c), an insurance contract issued for the purposes
of funding benefits under the Plan shall be considered to
be a trust established for the purpose of implementing
the Plan.
ARTICLE XIV
INVESTMENT OF TRUST ASSETS
14.1 Pooled Investment Fund
The assets of the Trust shall be invested and reinvested
by the Trustee (or a duly appointed investment manager) as a pooled
investment fund, except as may otherwise be provided hereunder.
14.2 Investment Powers
The Trustee shall have full discretion, power and
authority to invest and manage the assets of the Trust, except with
respect to any assets under the control or direction of any duly
appointed investment manager and except as provided in Article XVI.
Subject to and in accordance with the provisions of ERISA, the
Trustee shall have all the rights and powers conferred by law
generally, including but not limited to the rights and powers,
which he may or may not wish to exercise, to:
(a) Invest all or any portion of the Trust in any
combination of common or preferred stocks, interests or
shares in common stock funds, mutual funds, money market
funds, open-end or closed-end funds or trusts, voting
trust certificates, beneficial interests in land trusts,
real estate investment trusts or savings and loan or
building and loan associations, United States retirement
plan bonds, corporate bonds, debentures, convertible
debentures, commercial paper, U.S. Treasury bills, notes
or bonds, improved or unimproved real estate situated in
the United States, insurance contracts, mortgages, notes,
interests in limited or general partnerships or joint
ventures or other property of any kind, real or personal,
as a prudent man would do under like circumstances with
due regard for the purposes of the Plan, provided that
any investment made or retained by the Trustee in good
faith must be a kind constituting a diversification
considered by law suitable for trust investments;
(b) Retain in cash so much of the Trust as he may
deem advisable to satisfy the liquidity needs of the Plan
and deposit any cash held in the Trust in a bank account
in the name of the Trust without liability for the
highest rate of interest available, including, if a bank
is acting as Trustee, specific authority to invest in the
bank deposits of the Trustee;
(c) Cause all or any portion of the Trust assets to
be invested in a common or group trust fund established
and maintained for the collective investment of fiduciary
funds, including a common trust fund described in Section
584 of the Code or a group trust which is a qualified
trust under Section 401(a) of the Code and exempt from
income tax under Section 501(a) of the Code, in which
event the Declaration of Trust creating such common or
group trust fund, as it may be amended from time to time,
shall be incorporated into this Agreement by reference
and made a part hereof;
(d) Manage, control, purchase, sell at public or
private sale, contract to purchase or sell, grant options
to purchase or sell, convey, exchange, petition, divide,
subdivide, transfer, abandon, improve, repair, insure,
lease for any term even though commencing in the future
or extending beyond the term of the Trust, and otherwise
deal with the Trust property, real or personal, on such
terms and conditions as the Trustee shall decide, and to
purchase and carry insurance in such amount against such
hazards as the Trustee may deem advisable;
(e) Compromise, contest, prosecute or abandon
claims in favor of or against the Trust, and to insti-
tute, compromise and defend actions and proceedings;
(f) Employ agents, attorneys and proxies and to
delegate to them such powers as the Trustee considers
desirable;
(g) Open and maintain one or more savings accounts
or checking accounts and rent one or more safe deposit
boxes or vaults with any bank, trust company, safe
deposit box company, savings and loan association or
building and loan association, public or private,
wherever located, even if, in the case of a bank or trust
company, such bank or trust company shall be acting as
Trustee;
(h) Credit and distribute the Trust as directed by
the Administrator; provided, however, that the Trustee
shall be accountable only to the Administrator for any
payment or distribution made by him in good faith on the
order or direction of the Administrator;
(i) Hold any securities or other property in the
name of the Trustee or his nominee, or retain the
investment in unregistered form or in a form permitting
transfer by delivery only, or in another form as he may
deem best, with or without disclosing the Trust rela-
tionship; provided, however, that the books and records
of the Trustee shall at all times indicate the actual
ownership thereof, and further provided, however, that
except as authorized by regulations issued by the
Secretary of Labor, the indicia of ownership of the
assets of the Trust shall not be maintained outside the
jurisdiction of the district courts of the United States;
(j) Retain any funds or property subject to any
dispute without liability for the payment of interest,
and decline to make payment or delivery of the funds or
property until final adjudication is made by a court of
competent jurisdiction;
(k) Vote any stock, bonds or other securities of
any corporation or other issuer at any time held in the
Trust; otherwise consent to or request any action on the
part of any such corporation or other issuer; give
general or special proxies or powers of attorney, without
power of substitution; participate in any reorganization,
recapitalization, consolidation, merger or similar
transaction with respect to such securities in any voting
trusts, or with any protective or like committee, or with
the Trustee, or with the depositories designated thereby;
exercise any subscription rights and conversion privileg-
es; and generally do all such acts, execute all such
instruments, take all such proceedings and exercise all
such rights, powers and privileges with respect to the
stock or other securities or property constituting the
Trust as if the Trustee were the absolute owner thereof;
(l) If instructed by the Administrator, loan money
to a Participant pursuant to Section 14.3 and/or invest
the assets of a Participant's Account in insurance
policies on a Participant's life pursuant to Section
14.4;
(m) Collect and receive any and all monies and
other property due hereunder and to give full discharge
and release therefor; settle, compromise or submit to
arbitration any claims, debts or damages due to or owing
to or from the Trust; commence or defend suits or legal
proceedings wherever, in his judgment, any interest of
the Trust requires it; and represent the Trust in law or
equity or before any other body or tribunal;
(n) Make, execute, acknowledge and deliver any and
all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted;
(o) Require, before making any payment, such
releases, amenities or other documents from the payee or
any releases or other documents from any lawful taxing
authority or governmental body, department or agency as
he may consider necessary for his protection without any
liability for payment of interest on funds retained by
him pending receipt by him of such releases, indemnities
or other documents;
(p) Abandon any property, real or personal, which
the Trustee shall deem to be worthless or not of suffi-
cient value to warrant keeping, protecting or maintain-
ing; to abstain from the payment of installments due on
purchase contracts or mortgages, taxes, rents, assess-
ments, repairs and maintenance with respect to any such
property; to permit any such property to be lost by
foreclosure, tax sale or other proceedings; to convey any
such property for a nominal consideration or without
consideration; to permit the expiration of any renewal,
sale, exchange or purchase option with respect to any
property or lease thereof;
(q) Buy, to sell, to spread, to exercise, to allow
to lapse or to deliver upon assignment, any option,
including, but not limited to options on stocks, bonds,
notes, mortgages, commodities or any other obligation
written or purchased on any exchange or recognized stock
option market and to borrow stock in order to deliver
upon assignment;
(r) Do all acts, whether or not expressly autho-
rized, which the Trustee in the exercise of his fiduciary
responsibility may deem necessary or desirable for the
protection of the Trust and the assets thereof; and
(s) Assume, until advised to the contrary, that the
Plan and the Trust is qualified under Section 401(a) of
the Code and is entitled to a tax exemption under Section
501(a) of the Code.
14.3 Loans to Participants
(a) If the Administrator determines, in its sole
discretion, to permit loans to Participants, it shall specify a
form of written loan application. After receiving and reviewing a
Participant's application for a loan and such other material as may
reasonably be required, the Administrator may, in its sole
discretion, direct the Trustee to make a loan to a Participant.
Any borrowing by a Participant shall not affect his participation
in the Plan. Loans shall be made available to all Participants on
a reasonably equivalent basis, and shall not be made available to
Highly Compensated Employees in an amount greater than that which
is made available to other Participants.
(b) Each Participant may borrow not more than the lesser
of (1) $50,000 reduced by the excess, if any, of (i) the highest
outstanding balance of loans made to the Participant from the Plan
during the one-year period ending on the day before the date on
which such loan was made, over (ii) the outstanding balance of
loans made to the Participant from the Plan on the date on which
such loan was made, or (2) 50% of his Vested Account Balance. In
determining if these limitations have been exceeded, all loans
previously made to a Participant from the Plan (or from any other
employee plan qualified under Section 401(a) of the Code maintained
by the Employer or any Related Employer) shall be taken into
consideration, to the extent of the highest outstanding balances of
such loans during the one-year period ending on the date on which
the loan from this Plan is made.
(c) Anything to the contrary notwithstanding, all loans
from the Plan shall be deemed to be a directed investment of the
Participant's Account. For purposes of determining the annual
value of the assets of the Trust, the amount of any loan to a
Participant shall be valued separately from the other assets of the
Trust as provided in Section 7.2(a)(2), although any loan shall be
considered at all times to be part of a Participant's Account for
all other purposes of the Plan.
(d) All loans from the Plan shall be at a reasonable
rate of interest as determined from time to time by the Adminis-
trator. All interest paid by a Participant on a loan shall be
credited directly to his Account.
(e) All loans shall be evidenced by a written promissory
note executed by the Participant which shall contain the terms of
repayment. As security for a loan, the Participant shall execute
an irrevocable pledge and assignment to the Trustee of 50% of his
entire right, title and interest in and to his Account.
(f) All loans shall be repaid by the Participant in such
manner and upon such terms as shall be elected by the Participant
and approved by the Administrator in accordance with guidelines
established from time to time by the Administrator; provided,
however, that any repayment terms shall be subject to the following
guidelines:
(1) Any loan [other than a loan described in
Section 14.3(f)(2)] shall be required, by its terms, to
be repaid by the Participant within 5 years.
(2) Any loan which is used by the Participant to
acquire any dwelling unit which within a reasonable time
is to be used (determined at the time the loan is made)
as the principal residence of the Participant shall be
required, by its terms, to be repaid by the Participant
within a period of time as determined by the Administra-
tor, which period may exceed 5 years.
(3) Any loan shall be required, by its terms, to be
amortized in level payments, made not less frequently
than quarterly, over the term of the loan. Such amorti-
zation may be made by level payments of combined interest
and principal, or by equal payments of principal with
interest actually earned.
(g) The Administrator shall have the authority to adopt
such rules and procedures as may be necessary in its sole discre-
tion to implement the provisions contained in this Section 14.3,
provided that such rules and procedures are not inconsistent with
the provisions of ERISA. The Administrator may, it its sole
discretion and in a non-discriminatory manner, suspend or terminate
the making of loans at any time.
14.4 Insurance Policies
The Administrator may in its sole discretion authorize
the Trustee to invest any portion or all of the Trust in the
purchase of group or individual whole life insurance, retirement
income or endowment policies issued on the respective lives of and
for the benefit of each Participant, or in any combination of such
policies, subject to the following conditions:
(a) Premiums attributable to any such policy shall
be charged against the Account of the Participant on
whose life such contract is purchased and shall consti-
tute an investment of such Account for purposes of
Section 7.2(a)(2), and dividends paid on any such
contract shall be credited to the Account of the Par-
ticipant on whose life the contract is purchased.
(b) Each Participant must consent to the issuance
of the policy on his life.
(c) The aggregate premiums paid for life insurance
with respect to any Participant shall not at any time 49%
with respect to premiums paid for whole life insurance,
or 25% with respect to premiums paid for term life
insurance of the aggregate contributions by the Employer
which have been allocated to his Employer Contribution
Account.
(d) The Administrator shall have the authority to
adopt such rules and procedures as may be necessary in
its sole discretion to implement the provisions contained
in this Section 14.4, provided that such rules and
procedures are not inconsistent with the provisions of
ERISA.
14.5 Investment in Qualifying Employer Securities
Anything to the contrary notwithstanding, the Trustee
shall have full power and authority to utilize all or any portion
of the assets of the Trust Fund for the acquisition and holding of
"qualifying employer securities." For purposes of this Section
14.5, qualifying employer securities shall mean both the common
stock, par value $.05 per share of Richardson and the Class B
common stock, par value $.05 per share of Richardson.
ARTICLE XV
INVESTMENT MANAGER
15.1 Appointment of Investment Manager
(a) Anything to the contrary notwithstanding, the
Administrator may, by written notice, direct the segregation of all
or any portion of the Trust into a separate investment account and,
in such event, may appoint an investment manager to direct the
investment and re-investment of any such segregated investment
account pursuant to this Article XV. This appointment shall be
evidenced and accepted in writing, an executed copy of which must
be retained by the Administrator.
(b) No person shall be appointed as an investment
manager unless such person is a bank, savings and loan, insurance
company or investment adviser currently registered and in good
standing under the Investment Advisers Act of 1940.
15.2 Acceptance of Appointment
Upon an investment manager s appointment, he shall
acknowledge, in a written investment agreement with the Adminis-
trator, that he (a) has accepted such appointment and has received
a copy of the Agreement, (b) has undertaken a fiduciary responsi-
bility and (c) will act as an investment manager.
15.3 Notice to Trustee
Upon the investment manager's appointment, the Adminis-
trator shall deliver to the Trustee a copy of the instrument
appointing the investment manager and evidencing his acceptance of
such appointment, an acknowledgement by the investment manager that
it is a fiduciary, and a certificate, if applicable, evidencing the
investment manager's qualification under Section 15.1(b), as
amended. The Trustee shall be fully protected in relying upon such
instruments and certificate until otherwise notified in writing by
the Administrator.
15.4 Investment Authority
The Trustee shall follow the directions of the investment
manager regarding the investment and re-investment of the Trust, or
such portion thereof as shall be under management by the investment
manager, and shall exercise the investment powers set forth in
Section 14.2 and vote any securities held as directed by the
investment manager. The Trustee shall be under no duty or
obligation to review any investment to be acquired, held or
disposed of pursuant to such directions nor to make any recommen-
dations with respect to the disposition or continued retention of
any such investment or the exercise or non-exercise of the
investment powers set forth in Section 14.2. The Trustee shall
have no liability or responsibility for acting or not acting
pursuant to the direction of, or failing to act in the absence of
any direction from, the investment manager, unless the Trustee
knows that by such action or failure to act he would be himself
committing or participating in a breach of fiduciary duty by the
investment manager. The Employer shall indemnify the Trustee and
hold him harmless from and against any such claim or liability
which may be asserted against the Trustee by reason of his acting
or not acting pursuant to any direction from the investment manager
or failing to act in the absence of any such direction.
15.5 Resignation or Removal of Investment Manager
In the event that an investment manager should resign or
be removed by the Administrator, the Trustee shall manage the
investment of the Trust pursuant to Article XIV unless and until he
shall be notified of the appointment of another investment manager
with respect thereto, as provided in Section 15.1.
15.6 Accounts
The accounts, books and records of the Trustee shall
reflect the segregation, pursuant to the provisions of Section
15.1, of any portion of the Trust in a separate investment account,
but such investment account shall be considered part of the Trust
Fund for all purposes of this Agreement, including specifically
Section 7.2(a)(2).
ARTICLE XVI
INVESTMENT FUNDS
16.1 Directed Investments
(a) The Trustee shall segregate all of the Accounts of
each Participant in order to enable such Participant to direct the
investment of such accounts in accordance with Section 404(c) of
ERISA. The Trustee's responsibility with respect to the invest-
ments credited to such Accounts shall be limited to holding title
to such investments and complying with the instructions of such
Participant, and neither the Trustee, the Administrator the
Committee, any investment manager, nor any other fiduciary of the
Plan or Trust shall have any liability or responsibility whatsoever
for any loss, or by reason of any breach, that results from such
Participant's direction of the investments of his Account.
(b) The Administrator shall have the authority to
establish reasonable and non-discriminatory rules regarding the
direction of investments of Participants, and may either permit
Participants, on a non-discriminatory basis, to elect to direct the
investment of their Accounts, or require all Participants to do so.
All such rules shall comply in all respects with regulations issued
pursuant to the Department of Labor under Section 404(c) of ERISA.
(c) The Trustee shall be responsible for investing the
Forfeiture Suspense Account, the Excess Contributions Account and
the Excess Forfeitures Account.
(d) The Administrator shall have the power to specify
the investment funds (the "Investment Funds") from which a
Participant may direct the investment of his Account to the extent
permitted or required under this Section 16.1.
16.2 Investment Elections
Until such time, if ever, as they are modified by the
Administrator pursuant to Section 16.4 below, the following rules
shall govern the investment elections (the "Investment Elections"
or "Elections") made by Participants.
(a) Each Participant may make an Investment
Election with regard to the contributions to be made on
his behalf by the Employer. Such Investment Election
shall be in writing, be filed with the Administrator, and
shall direct that such contributions (in 10% increments),
be allocated to and invested in one or more of the
Investment Funds.
(b) A Participant may change his Investment
Election not more frequently than once each calendar
month. Once made an Investment Election shall continue
in effect for all future contributions until such
Election is changed or revoked by a subsequent Election
of the Participant made in a proper and timely fashion
according to the procedures established by the Adminis-
trator for this purpose.
16.3 Transfers Between Investment Funds
Subject to any restrictions on the transfer from or to a
particular Investment Fund which may be established by the
Investment Fund itself, by the Trustee or which are contained in
Section 16.2, as such restrictions may be modified from time to
time, each Participant may elect, not more frequently than once
each calendar month, to transfer all or any portion of the amounts
credited to his Accounts under an Investment Fund to his Accounts
under any other Investment Fund.
16.4 Authority to Revise Election Procedures
The Administrator shall have the sole responsibility for
and complete discretion in establishing and, if it deems it
necessary, amending the rules and procedures governing the time and
manner in which Participants may make, modify or revoke any
investment election pursuant to Sections 16.2 and 16.3. The
discretion of the Administrator in which regard shall only be
limited by the general requirement that such discretion be
exercised in a non-discriminatory manner.
ARTICLE XVII
AMENDMENT
17.1 Right to Amend
The Employer shall have the right at any time or times to
amend this Agreement, in whole or in part.
17.2 Retroactivity of Amendments
No amendment to this Agreement may be made effective
retroactively to a date prior to the beginning of the Plan Year in
which it is adopted, except amendments which are necessary to
establish or maintain, without interruption, the qualification of
the Agreement for tax exemption under the provisions of the Code.
17.3 Limitations On Right To Amend
No amendment shall be made to this Agreement which shall:
(a) Directly or indirectly operate to give the
Employer or any Related Employer any interest in the
Trust or to deprive any Participant or Beneficiary of his
interest in the Trust, or cause any part of the income or
corpus of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of the
Participants or their Beneficiaries, except as provided
in Section 19.1;
(b) Increase the powers, duties, responsibilities
or obligations of the Trustee without his written
consent; or
(c) Eliminate an optional form of benefit or
eliminate or reduce an "early retirement benefit" or a
"retirement-type subsidy" [as defined in Section
411(d)(6)(B) of the Code].
ARTICLE XVIII
ADOPTION, WITHDRAWAL AND TERMINATION
18.1 Adoption of Agreement
(a) With the written consent of the Administrator, any
other corporation, including a Related Employer, may adopt this
Agreement for the exclusive benefit of its eligible employees by
appropriate resolution, which shall specify the effective date of
such adoption and which may contain such changes and variations in
the Plan and Trust as the Administrator shall approve, and by
agreeing to be bound by the terms of this Agreement.
(b) Each participating Employer shall pay a propor-
tionate part of the expenses incurred in the administration of the
Plan and the Trust to the extent that such expenses are not paid
directly out of the Trust.
18.2 Withdrawal from Plan
A participating Employer may withdraw from the Plan by
giving written notice to the Administrator and the Trustee, which
notice shall specify the effective date of the withdrawal, which,
unless such requirement is waived by the Administrator, shall not
be less than 30 days after such notice is given. If the date of
withdrawal is not an Anniversary Date, the Trustee shall value all
Trust assets as of the effective date of the withdrawal in the
manner provided in Section 7.2 as if such date were an Anniversary
Date, but shall not allocate the participating Employers' contribu-
tion. The withdrawal by an Employer shall be treated as a
termination of the Plan with respect to Participants employed by
the withdrawing Employer (unless the Plan is adopted by a successor
to the business of such Employee), and such Participants shall be
100% vested in their Account Balance as of the date of withdrawal,
and such Account Balance shall be valued as of such date and
distributed as provided in Article IX.
18.3 Termination
(a) The Agreement may be terminated at any time by
Richardson.
(b) Upon termination of the Plan and Trust, the
Administrator shall direct the Trustee to value the Trust in
accordance with Section 7.2 and to distribute in accordance with
the terms of the Plan all assets remaining in the Trust (after
payment or reserving funds for payment of any fees, taxes and
expenses properly chargeable against the Trust) to the Participants
in accordance with the value of the credits standing to each
Participant's Accounts as of the date of such termination, in cash
or in kind valued at fair market at the date of distribution, in
such manner as the Trustee shall determine.
(c) In the event of the sale by an Employer of sub-
stantially all of its assets and business, the successor to the
Employer shall be substituted for and shall exercise and have all
the rights and obligations of the Employer hereunder upon the
filing, in writing, of its election to do so with the Trustee.
ARTICLE XIX
MISCELLANEOUS
19.1 No Reversion to Employer
No part of the corpus or income of the Trust shall revert
to the Employer or any Related Employer or be used for, or diverted
to, purposes other than for the exclusive benefit of the Partici-
pants and their Beneficiaries; provided, however, that:
(a) Any balance remaining in the Excess Contribu-
tion Account or the Excess Forfeiture Account (as defined
in Section 7.6) at the time the Plan is terminated, and
which cannot be allocated in the final Plan Year of the
Plan without violating the limitations of Sections 7.6 or
7.7, shall be returned to the Employer (and, in the event
that there is more than one participating Employer, such
reversion shall be in the proportion that the aggregate
contributions made by each such Employer in all Plan
Years with respect to which amounts were credited to
either of such accounts bears to the aggregate contribu-
tions made by all participating Employers in all such
Plan Years); and
(b) In the event that any portion of a contribution
is made by the Employer to the Plan because of either a
good faith mistake of fact or a good faith mistake in
determining that such contribution is deductible under
Section 401 of the Code, the Trustee shall return to the
Employer, upon written notice thereof, an amount equal to
the portion of such contribution which would not have
been made but for such mistake of fact, or which is
determined to be non-deductible, as the case may be,
subject to the following conditions and limitations. No
amount shall be returned to the Employer pursuant to this
Section 19.1(b) unless such amount is returned not later
than one year after the date on which the contribution
was made in the case of a contribution based on a mistake
of fact was made, or the date on which the deduction is
disallowed in case of a contribution mistakenly believed
to be deductible. For purposes of the preceding sen-
tence, a deduction shall be considered to be disallowed
on either (1) the day on which the Employer voluntarily
files an amended federal income tax return correcting the
error; (2) the day on which the Internal Revenue Service
issues a statutory notice of deficiency, notice of final
partnership or S corporation administrative adjustment,
or other determination from which no further administra-
tive appeal is possible, which notice is based in whole
or part upon disallowance of such deduction, provided
that, if applicable, no person files a timely petition
for judicial review of such determination; or (3) if such
a petition for judicial review is filed, the day on which
a final judgment is entered dismissing such petition or
upholding the disallowance of such deduction from which
judgment no further appeal is possible, or as to which
the time for filing an appeal expires. The amount
returned to the Employer shall not include any earnings
attributable to the erroneous contribution, but shall be
reduced by any losses attributable thereto. Notwith-
standing the provisions of Article VIII, an erroneous
contribution may be returned in accordance with this
Section 19.1(b) after such contribution has been allocat-
ed and credited to the Participants' Accounts, in which
event the amount so returned shall be charged to the
Accounts in the same proportion that the contribution was
originally allocated; provided, however, that in no event
shall the Account Balance of any Participant be reduced
as a result of the return of an erroneous contribution to
less than it would have been had the erroneous contri-
bution not been made, and the amount returned to the
Employer shall be reduced to the extent necessary to
avoid such a reduction.
19.2 Evidence of Action; Necessary Parties
(a) Evidence required of anyone under this Agreement may
be by certificate, affidavit, endorsement or any other written
instrument which the person acting in reliance thereon believes to
be pertinent, reliable and genuine, and to have been signed, made
or presented by the proper and duly authorized party or parties.
(b) Necessary parties to any accounting, litigation or
other proceedings shall include only the Trustee and the Employer,
and the settlement or judgment in any such case in which the
Employer is duly served or cited shall be binding upon all persons
entitled to benefits under the Plan, the estate of any such person,
and upon all persons claiming by, through or under them.
19.3 Rights of Participants Limited
Neither the adoption of the Plan nor anything contained
in the Plan or the Trust shall be construed as giving any Partic-
ipant, Beneficiary or Employee any equity or other interest in the
assets, business or affairs of the Employer or any Related
Employer, or the right to complain about any action taken by the
officers, directors or stockholders of, or about any policy adopted
or pursued by, the Employer or any Related Employer, or the right
to examine the books and records of the Employer or any Related
Employer, or as giving any Employee the right to be retained in the
service of the Employer or any Related Employer, and all Employees
shall remain subject to discharge to the same extent as if the Plan
and the Trust had never been executed. Prior to the time that
distributions are made in conformity with the provisions of the
Plan, neither the Participants, nor their spouses, Beneficiaries,
heirs-at-law, or legal representatives shall receive cash or any
other thing of current exchangeable value from the Employer or any
Related Employer or the Trustee as a result of the Trust.
19.4 Assignment and Alienation
(a) No payment to any person under any of the provisions
of the Plan or the Trust, nor the right to receive such payment or
payments, nor any interest in the Trust, shall be subject to
assignment, alienation, transfer or anticipation, either by the
voluntary or involuntary act of any Participant or Beneficiary or
by operation of law, nor, except for the repayment of loans to
Participants authorized under Section 14.3 and payments pursuant to
a Qualified Domestic Relations Order in accordance with Section
19.4(b), shall such payment or right or interest be subject to the
demands or claims of any creditor of such person, nor be liable in
any way for such person's debts, obligations or liabilities.
(b) Upon receiving any order, judgment or decree which
may be a Qualified Domestic Relations Order, the Administrator
shall promptly notify the Participant involved and any Alternate
Payee [as defined in Section 2.24(a)] who may be affected by such
order or their designated representatives of the receipt of the
order and of the Plan's procedure for determining whether the order
is a Qualified Domestic Relations Order, and shall proceed to
determine whether the order is a Qualified Domestic Relations
Order. During the period during which it is being determined
whether such order is a Qualified Domestic Relations Order, any
payments which would, under such order, be payable to an Alternate
Payee, shall be placed in a separate account in the Trust. If,
within 18 months after receipt of such order, the Administrator
determines that such order is a Qualified Domestic Relations Order,
the amount of such separate account, with any earnings thereon,
shall be paid to the Alternate Payees as provided in such order.
If the status of such order has not been established within such
18-month period, or if it is determined that the order is not a
Qualified Domestic Relations Order, the amount of such separate
account shall be paid to the Participant, or, if it would not
otherwise have been payable currently, shall be restored to the
Participant's Account. Any determination made more than 18 months
after the receipt of such order that such order is a Qualified
Domestic Relations Order shall be applied prospectively only.
(c) In the event that any Participant's benefits are
garnished or attached by order of any court, the Trustee may bring
an action for a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to
be paid by the Trust. During the pendency of said action, any
benefits that become payable shall be paid into the court as they
become payable, to be distributed by the court to the recipient it
deems proper at the close of said action.
19.5 Missing Participants or Beneficiaries
(a) Each Participant shall file with the Employer, in
writing, his post office address, the post office address of each
of his Beneficiaries, and each change of post office address. Any
communication, statement or notice addressed to Participant or
Beneficiary with postage prepaid at his last post office address
filed with the Employer, or if no address is filed with the
Employer, then at his last post office address as shown on the
Employer's records, will be binding on the Participant and his
Beneficiary for all purposes of the Plan. Neither the Trustee nor
the Administrator is required to search for or locate Participant
or Beneficiary.
(b) If the Administrator or Trustee shall send by
registered or certified mail, postage prepaid, to the last known
address of a Participant or Beneficiary, a notification that he is
entitled to a distribution hereunder and if either (1) such
notification is returned because the addressee cannot be located at
such address and neither the Employer nor the Trustee shall have
any knowledge of such Participant's or Beneficiary's whereabouts
within 3 years from the date such notification was mailed, or (2)
within 3 years after such notification was mailed to such Partici-
pant or Beneficiary, he does not respond thereto by informing the
Trustee of his whereabouts, then, upon the Anniversary Date
coincident with or immediately following the third anniversary of
the mailing of said notification, the then undistributed Account
Balance of such Participant or Beneficiary shall be paid to the
person or persons who would have been entitled to take in the event
of the death of the Participant or Beneficiary whose whereabouts is
unknown, assuming that such death had occurred on the Anniversary
Date immediately succeeding the third anniversary of the mailing of
said notification.
(c) If any check in payment of a benefit hereunder which
has been mailed by regular United States mail to the last address
of the payee furnished the Trustee by the Administrator is returned
unclaimed, the Trustee shall notify the Administrator and shall
discontinue further payments to such payee until it receives the
further instructions of the Administrator.
19.6 Merger and Consolidation of Plan
In the case of any merger or consolidation with, or
transfer of assets and liabilities to, any other employee plan
qualified under Section 401(a) of the Code, provisions shall be
made so that each Participant in the Plan on the date thereof would
receive a benefit immediately after the merger, consolidation or
transfer (if the other employee plan terminated on that date) which
is equal to or greater than the benefit he would have been entitled
to receive immediately prior to the merger, consolidation or
transfer (if the Plan had then terminated).
19.7 Severability of Agreement
In case any provision of this Agreement shall be held
illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining provisions, but shall be fully
severable and this Agreement shall be construed and enforced as if
said illegal or invalid provision had never been inserted herein.
19.8 Applicable Law
This Agreement shall be construed and enforced and the
Trust shall be administered in accordance with the laws of the
State of Illinois, to the extent that such laws are not preempted
by the laws of the United States of America.
IN WITNESS WHEREOF, Richardson has caused this Agreement to be
executed, and each Trustee has hereunto set his respective hand and
seal, all as of the date and year first written above.
RICHARDSON ELECTRONICS, LTD.
By: /s/ Joseph C. Grill
Title: Vice President, Human Resources
TRUSTEES:
/s/Scott Hodes
/s/William G. Seils
RICHARDSON ELECTRONICS, LTD.
EMPLOYEES STOCK OWNERSHIP PLAN
As Amended and Restated
Effective June 1, 1989<PAGE>
TABLE OF CONTENTS
ARTICLE I--TITLES AND PURPOSE. . . . . . . . . . . . . . . . 2
1.1 Titles . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Exclusive Benefit. . . . . . . . . . . . . . . . . . . 2
1.4 Status of Plan . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II--DEFINITIONS. . . . . . . . . . . . . . . . . . . 3
2.1 Account. . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Account Balance. . . . . . . . . . . . . . . . . . . . 3
2.3 Administrator. . . . . . . . . . . . . . . . . . . . . 3
2.4 Anniversary Date . . . . . . . . . . . . . . . . . . . 3
2.5 Annual Addition. . . . . . . . . . . . . . . . . . . . 4
2.6 Beneficiary. . . . . . . . . . . . . . . . . . . . . . 4
2.7 Benefit Commencement Date. . . . . . . . . . . . . . . 4
2.8 Break in Service . . . . . . . . . . . . . . . . . . . 4
2.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 Committee. . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Compensation . . . . . . . . . . . . . . . . . . . . . 5
2.12 Computation Period . . . . . . . . . . . . . . . . . . 6
2.13 Effective Date . . . . . . . . . . . . . . . . . . . . 6
2.14 Employee . . . . . . . . . . . . . . . . . . . . . . . 6
2.15 Employer . . . . . . . . . . . . . . . . . . . . . . . 6
2.16 Entry Date . . . . . . . . . . . . . . . . . . . . . . 7
2.17 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Hour of Service. . . . . . . . . . . . . . . . . . . . 7
2.19 Key Employee . . . . . . . . . . . . . . . . . . . . . 8
2.20 Leave of Absence . . . . . . . . . . . . . . . . . . . 10
2.21 Limitation Year. . . . . . . . . . . . . . . . . . . . 11
2.22 Non-Key Employee . . . . . . . . . . . . . . . . . . . 11
2.23 Normal Retirement Date . . . . . . . . . . . . . . . . 11
2.24 Participant. . . . . . . . . . . . . . . . . . . . . . 11
2.25 Permanent Disability . . . . . . . . . . . . . . . . . 11
2.26 Plan . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.27 Plan Year. . . . . . . . . . . . . . . . . . . . . . . 12
2.28 Qualified Domestic Relations Order . . . . . . . . . . 12
2.29 Related Employer . . . . . . . . . . . . . . . . . . . 12
2.30 Richardson . . . . . . . . . . . . . . . . . . . . . . 12
2.31 Spouse . . . . . . . . . . . . . . . . . . . . . . . . 13
2.32 Stock. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.33 Termination of Employment. . . . . . . . . . . . . . . 13
2.34 Top-Heavy Determination Date . . . . . . . . . . . . . 14
2.35 Top-Heavy Year . . . . . . . . . . . . . . . . . . . . 14
2.36 Trust. . . . . . . . . . . . . . . . . . . . . . . . . 16
2.37 Trust Agreement. . . . . . . . . . . . . . . . . . . . 16
2.38 Trustee or Trustees. . . . . . . . . . . . . . . . . . 16
2.39 Valuation Date . . . . . . . . . . . . . . . . . . . . 16
2.40 Vested Account Balance . . . . . . . . . . . . . . . . 16
2.41 Year of Service. . . . . . . . . . . . . . . . . . . . 16
ARTICLE III--PARTICIPATION . . . . . . . . . . . . . . . . . 17
3.1 Eligibility To Participate . . . . . . . . . . . . . . 17
3.2 Duration of Participation; Re-Employment . . . . . . . 17
ARTICLE IV--CONTRIBUTIONS BY EMPLOYER. . . . . . . . . . . . 19
4.1 Amount . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Time for Payment . . . . . . . . . . . . . . . . . . . 20
ARTICLE V--CONTRIBUTIONS BY PARTICIPANTS . . . . . . . . . . 21
5.1 Contributions by Participants. . . . . . . . . . . . . 21
ARTICLE VI--ALLOCATION OF EMPLOYER CONTRIBUTIONS . . . . . . 22
6.1 Manner of Allocation . . . . . . . . . . . . . . . . . 22
6.2 Allocations in Top-Heavy Years . . . . . . . . . . . . 23
6.3 Administrator to Notify Trustee. . . . . . . . . . . . 24
ARTICLE VII--ACCOUNTS OF PARTICIPANTS. . . . . . . . . . . . 25
7.1 Separate Accounts. . . . . . . . . . . . . . . . . . . 25
7.2 Adjustments to Accounts. . . . . . . . . . . . . . . . 25
7.3 Crediting of Employer Contributions. . . . . . . . . . 26
7.4 Crediting of Forfeitures . . . . . . . . . . . . . . . 26
7.5 Limitation on Allocations. . . . . . . . . . . . . . . 26
7.6 Combined Plan Limitation . . . . . . . . . . . . . . . 29
7.7 Correction of Error. . . . . . . . . . . . . . . . . . 30
7.8 Transfer Accounts. . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII--VESTING OF INTEREST IN TRUST . . . . . . . . . 32
8.1 Normal Retirement. . . . . . . . . . . . . . . . . . . 32
8.2 Disability Retirement. . . . . . . . . . . . . . . . . 32
8.3 Death. . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Other Termination of Employment. . . . . . . . . . . . 32
8.5 Treatment of Forfeited Amounts; Reinstatement. . . . . 33
8.6 Computation of Years of Service. . . . . . . . . . . . 33
8.7 Vesting on Termination of Trust or of Employer's
Agreement to Contribute. . . . . . . . . . . . . . . 34
8.8 Vesting Following Plan Amendment . . . . . . . . . . . 34
8.9 Vesting Following Partial Distributions. . . . . . . . 34
ARTICLE IX--PAYMENT OF VESTED ACCOUNT BALANCES . . . . . . . 36
9.1 Benefit Commencement Date. . . . . . . . . . . . . . . 36
9.2 Payment to Participants. . . . . . . . . . . . . . . . 37
9.3 Payment to Beneficiaries . . . . . . . . . . . . . . . 38
9.4 Extent of Further Participation in Trust . . . . . . . 40
9.5 Payment to Persons Under Legal Disability. . . . . . . 40
9.6 Payment in Installments. . . . . . . . . . . . . . . . 41
9.7 Compliance with Regulations. . . . . . . . . . . . . . 43
9.8 Distributions of Stock and Dividends . . . . . . . . . 43
9.9 Right of First Refusal and Options on Stock. . . . . . 44
9.10 Direct Rollovers . . . . . . . . . . . . . . . . . . . 45
9.11 Withdrawals Due to Permanent Disability. . . . . . . . 46
ARTICLE X--DESIGNATION OF BENEFICIARIES. . . . . . . . . . . 47
10.1 Participants to Name Beneficiaries . . . . . . . . . . 47
10.2 No Beneficiary Designated; Death of Beneficiary. . . . 47
10.3 No Liability for Payment to Beneficiaries. . . . . . . 47
10.4 Qualified Domestic Relations Orders. . . . . . . . . . 48
ARTICLE XI--FIDUCIARY CAPACITY AND RESPONSIBILITY. . . . . . 49
11.1 General Fiduciary Standard of Conduct. . . . . . . . . 49
11.2 Allocation of Responsibility Among Fiduciaries . . . . 49
11.3 Administrator. . . . . . . . . . . . . . . . . . . . . 50
11.4 Powers and Duties of Administrator . . . . . . . . . . 50
11.5 Claims Procedure . . . . . . . . . . . . . . . . . . . 51
11.6 Indemnification by Employer. . . . . . . . . . . . . . 52
11.7 Service in Multiple Capacities . . . . . . . . . . . . 53
11.8 Voting of Stock by Participants and Beneficiaries. . . 53
ARTICLE XII--THE COMMITTEE . . . . . . . . . . . . . . . . . 54
12.1 Appointment and Membership . . . . . . . . . . . . . . 54
12.2 Compensation and Expenses. . . . . . . . . . . . . . . 54
12.3 Committee Procedures and Actions . . . . . . . . . . . 54
12.4 Resignation or Removal of Committee Member . . . . . . 55
12.5 Committee/Administrator Decisions Final. . . . . . . . 55
ARTICLE XIII--THE TRUST. . . . . . . . . . . . . . . . . . . 56
13.1 Trust Agreement. . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIV--LOANS TO PARTICIPANTS; LOANS TO
ACQUIRE STOCK; DIRECTED INVESTMENTS. . . . . . . . . . . . 57
14.1 Loans to Participants. . . . . . . . . . . . . . . . . 57
14.2 Loans to Acquire Stock . . . . . . . . . . . . . . . . 58
14.3 Directed Investments . . . . . . . . . . . . . . . . . 59
ARTICLE XV--AMENDMENT. . . . . . . . . . . . . . . . . . . . 62
15.1 Right to Amend . . . . . . . . . . . . . . . . . . . . 62
15.2 Retroactivity of Amendments. . . . . . . . . . . . . . 62
15.3 Limitations on Right to Amend. . . . . . . . . . . . . 62
ARTICLE XVI--ADOPTION, WITHDRAWAL AND TERMINATION. . . . . . 63
16.1 Adoption of Plan . . . . . . . . . . . . . . . . . . . 63
16.2 Withdrawal from Plan . . . . . . . . . . . . . . . . . 63
16.3 Termination. . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XVII--MISCELLANEOUS. . . . . . . . . . . . . . . . . 65
17.1 No Reversion to Employer . . . . . . . . . . . . . . . 65
17.2 Evidence of Action by Necessary Parties. . . . . . . . 66
17.3 Rights of Participants Limited . . . . . . . . . . . . 66
17.4 Assignment and Alienation. . . . . . . . . . . . . . . 67
17.5 Missing Participants or Beneficiaries. . . . . . . . . 68
17.6 Merger and Consolidation of Plan . . . . . . . . . . . 68
17.7 Severability . . . . . . . . . . . . . . . . . . . . . 69
17.8 Applicable Law . . . . . . . . . . . . . . . . . . . . 69
17.9 Method of Accounting . . . . . . . . . . . . . . . . . 69<PAGE>
THIS PLAN, executed at LaFox, Illinois, this 14th day
of July, 1994 by RICHARDSON ELECTRONICS, LTD., a corporation
organized and existing under the laws of the State of Delaware
("Richardson").
W I T N E S S E T H:
WHEREAS, effective as of June 1, 1987, Richardson
adopted the Richardson Electronics, Ltd. and Subsidiaries
Employees Stock Ownership Plan and Trust (the "Plan"), a stock
bonus plan qualified under Section 401(a) of the Internal Revenue
Code of 1986 (the "Code") and entitled to tax exemption under
Section 501(a) of the Code and an employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code, with
William G. Seils and Scott Hodes, as Trustees; and
WHEREAS, Richardson has reserved the right to amend the
Plan at any time and has amended the Plan on December 21, 1988,
January 17, 1989 and May 30, 1990; and
WHEREAS, on February 23, 1990 Marine Midland Bank, N.A.
replaced Messrs. Hodes and Seils as Trustee of the trust forming
a part of the Plan, pursuant to a Trust Agreement by and between
said bank and Richardson and dated February 23, 1990; and
WHEREAS, as Richardson now desires further to amend the
Plan order to incorporate all amendments required in order to
comply with the applicable provisions of the Tax Reform Act of
1986, other applicable legislation and applicable regulations and
rulings thereunder.
NOW, THEREFORE, the Plan is hereby restated effective
June 1, 1989 (except as otherwise stated herein) to read as
follows:
ARTICLE I
TITLES AND PURPOSE
1.1 Titles
The Plan shall be known as the RICHARDSON ELECTRONICS,
LTD. EMPLOYEES STOCK OWNERSHIP PLAN.
1.2 Purpose
The purpose of the Plan is to establish a retirement
fund out of the profits of the Employer which will help to
provide for the future security of the Participants.
1.3 Exclusive Benefit
The Trust shall be for the exclusive benefit of the
Participants and their Beneficiaries. In no event shall the
income or principal of the Trust be paid or revert to the
Employer or any Related Employer, except as otherwise provided in
Section 17.1.
1.4 Status of Plan
The Plan is intended to continue to be a stock bonus
plan qualified under Section 401(a) of the Code which is an
employee stock ownership plan within the meaning of Code Section
4975(e)(7).
ARTICLE II
DEFINITIONS
When used herein, the following words and terms shall
have the respective meanings hereinafter set forth, unless a
different meaning is clearly required by the context. Whenever
appropriate, words used in the singular shall be deemed to
include the plural, and vice versa, and the masculine gender
shall be deemed to include the feminine and neuter genders,
unless a different meaning is clearly required by the context.
2.1 "Account": Collectively, all of the following
separate accounts maintained under the Plan for the benefit of a
Participant, including all adjustments thereto under Article VII,
unless a specific reference is made to one of such separate
accounts:
(a) The separate Employer Contribution Account
maintained for each Participant for the purpose of
recording his share of the contributions made by the
Employer and forfeitures;
(b) In the case of a Participant who is re-
employed after incurring a Break in Service, the separate
Pre-Break Account, if any, required to be maintained
under Section 8.9(b); and
(c) In the case of a Participant for whom a
Transfer Account is being maintained under Section 7.8
for the purpose of recording his share of the assets
transferred from the Richardson Electronics, Ltd.
Employees Profit-Sharing Plan, such Transfer Account.
The term "Account" shall not, unless otherwise specifically
provided herein, include the Excess Contribution Account, if any,
or the Excess Forfeiture Account, if any, established pursuant to
Section 7.5, or the Suspense Account, if any, established
pursuant to Section 14.2(c).
2.2 "Account Balance": The total amount held for the
benefit of a Participant in his Account (or in the specific
separate account referred to), as determined on the immediately
preceding Anniversary Date in accordance with the provisions of
Article VII.
2.3 "Administrator": The person administering the
Plan pursuant to Section 11.3.
2.4 "Anniversary Date": The last day of each Plan
Year.
2.5 "Annual Addition:" With respect to a Participant
for any Limitation Year, the sum of (a) Employer contributions
allocated on behalf of such Participant for such Limitation Year
under the Plan and under any other qualified defined contribution
plan maintained by the Employer; (b) forfeitures, if any,
allocated on behalf of such Participant for such Limitation Year
under any such qualified defined contribution plan; (c) such
Participant's voluntary non-deductible contributions under any
qualified plan of the Employer for such Limitation Year; (d)
amounts allocated on behalf of such Participant for such
Limitation Year to an individual medical account, as defined in
Section 415(1)(2) of the Code, which is part of a pension or
annuity plan maintained by the Employer; and (e) amounts derived
from contributions paid or accrued after December 31, 1985, in
taxable years ending after said date, which are attributable to
post-retirement medical benefits allocated for such Limitation
Year to the separate account of such Participant under a welfare
fund, as defined in Section 419(e) of the Code, maintained by the
Employer, if he is a Key Employee for such year. For purposes of
this Section 2.5, "Employer" shall include any Related Employer.
2.6 "Beneficiary": Any person (natural or otherwise)
entitled to receive any benefits which may become payable upon or
after a Participant's death.
2.7 "Benefit Commencement Date": The date on which
the payment of a Participant's Vested Account Balance commences,
as determined in accordance with the provisions of Section 9.1.
2.8 "Break in Service":
(a) Except as otherwise provided under Section
2.8(b), one or more consecutive Computation Periods during each
of which an Employee has not completed more than 500 Hours of
Service. For eligibility purposes, an Employee shall not incur a
Break in Service solely because he fails to complete more than
500 Hours of Service during the Computation Period beginning on
his hire date.
(b) Notwithstanding Section 2.8(a), a Computation
Period beginning in 1985 or thereafter shall not be included in a
Break in Service if the sum of the Employee's Hours of Service
completed during such Computation Period plus the Employee's
"Childbirth Leave Hours" (as hereafter defined) attributable to
such Computation Period exceeds 500. For purposes of this
Section 2.8(b), an Employee's Childbirth Leave Hours shall be the
number of Hours of Service (but not in excess of 501 for any one
continuous period of absence) which the Employee would have
completed but for the fact that the Employee is absent from the
employment of the Employer and all Related Employers for a period
commencing on or after the first day of the Computation Period
beginning in 1985 (1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee, (3) by
reason of the placement of a child with the Employee in
connection with the adoption of such child by the, Employee or
(4) for purposes of caring for such child for period beginning
immediately following such birth or placement; provided, however,
that in the case of any Employee with respect to
whom it is not possible to determine the number of Hours of
Service which such Employee would have completed but for such
absence, such Employee shall be credited with 8 Childbirth Leave
Hours for each work day of such absence; and provided further,
that an hour which is considered an Hour of Service under Section
2.18(b) shall not also be considered a Childbirth Leave Hour.
All Childbirth Leave Hours for any period of absence shall be
attributed to the Computation Period during which such period of
absence begins if the result of such attribution is to prevent
such Computation Period from being considered a Break in Service;
otherwise, all Childbirth Leave Hours shall be attributed to the
immediately following Computation Period. The Administrator
shall adopt regulations under which an Employee may be required
to furnish reasonable information on a timely basis establishing
the number of Childbirth Leave Hours to which such Employee is
entitled with respect to any period of absence from employment,
and any Employee who fails to furnish such information with
respect to any period of absence shall not be credited with any
Childbirth Leave Hours for such period of absence.
(c) Notwithstanding Section 2.8(a), a Computation
Period shall not be included in a Break in Service if the
Employee would have completed at least 500 Hours of Service but
for a period of absence due to layoff (for not more than 6
months), jury duty or Leave of Absence, other than a period of
absence described in Section 2.8(b).
2.9 "Code": The Internal Revenue Code of 1986, as now
in effect or as hereafter amended, and any regulation issued
pursuant thereto by the Internal Revenue Service. Whenever any
provision of the Code is renumbered or otherwise amended, this
Plan shall, to the extent possible, be construed by reference to
the successor to such provision.
2.10 "Committee": The committee established pursuant
to the provisions of Article XII to assist the Administrator in
the administration of the Plan.
2.11 "Compensation":
(a) Except as otherwise provided in this Section
2.11, the term "Compensation" shall mean wages, within the
meaning of Section 3401(a) of the Code, and all other payments of
compensation paid to a Participant by the Employer (during the
course of the Employer's trade or business) during a Plan Year
for services rendered by him as an Employee for which the
Employer is required to furnish the Employee a written statement
under Sections 6041(d) and 6051(a)(3) of the Code, determined
without regard to any rules under Section 3401(a) which limit the
remuneration included in wages based upon the nature or location
of the employment or the services performed [such as the
exception for agricultural labor in Section 3401(a)(2)]. Except
as provided in Section 6.1(e), in the case of an individual who
was a Participant for a period consisting of less than the entire
Plan Year, his Compensation shall be deemed to include only the
taxable remuneration paid to him for the period while he was a
Participant. The Compensation of each Participant taken into
account for any Plan Year shall not exceed $200,000 (subject to
cost-of-living adjustments prescribed by the Secretary
of the Treasury), except that effective for Plan Years beginning
after December 31, 1993 the Compensation of each Participant
taken into account for any Plan Year shall not exceed $150,000
(subject to cost-of-living adjustments prescribed by the
Secretary of the Treasury). In connection with determining the
Compensation of a Participant for purposes of the limitation in
the preceding sentence, the family aggregation rules in Section
414(q)(6) of the Code shall apply, except that in applying such
rules with respect to a particular 12-month period, the term
"family" shall include only the spouse of a Participant and any
lineal descendants of such Participant who have not attained the
age of 19 before the close of such period.
(b) Except for purposes of Sections 7.5 and 7.6,
notwithstanding the provisions of Section 2.11(a), there shall be
included in Compensation any amount contributed by the Employer
or
a Related Employer pursuant to a salary reduction agreement with
the Employee and excluded from his gross income under Sections
125,
402(e)(3), 402(h) or 403(b) of the Code.
2.12 "Computation Period": For eligibility purposes,
the Computation Period is the 12-month period beginning on an
Employee's employment date or re-employment date, subject to
Sections 2.40 and 3.2(b) and (c). For all other purposes under
the
Plan, including without limitation vesting, the Computation
Period
is the Plan Year.
2.13 "Effective Date": June 1, 1989 (except as
otherwise set forth herein).
2.14 "Employee": Any person employed by and receiving
Compensation from the Employer or any Related Employer (or who
would be receiving such remuneration except for a Leave of
Absence). The term "Employee" shall not include any person who
is
a "leased employee" within the meaning of Code Section 414(n)(2).
2.15 "Employer": Richardson and any successor to it.
The term "Employer" shall also include any corporation or other
unincorporated business organization which adopts the Plan for
the
exclusive benefit of its Employees pursuant to the provisions of
Section 16.1. Anything to the contrary notwithstanding, a mere
change in the identity, form or organization of the Employer
shall
not affect its status under the Plan or the Trust in any manner.
2.16 "Entry Date": November 30 of each Plan Year and
the last day of each Plan Year.
2.17 "ERISA": The Employee Retirement Income Security
Act of 1974, as now in effect or as hereafter amended, and any
regulation issued pursuant thereto by the Internal Revenue
Service,
the Department of Labor or the Pension Benefit Guaranty
Corporation. Whenever any provision of ERISA is renumbered or
otherwise amended, this Plan shall, to the extent possible, be
construed by reference to the successor to such provision.
2.18 "Hour of Service":
(a) Each Employee shall be credited with an Hour of
Service for:
(1) Each hour for which he is directly or indi-
rectly paid or entitled to payment by the Employer or any
Related Employer for the performance of duties. Service
rendered at overtime or other premium rates shall be
credited at the rate of one Hour of Service for each hour
worked, regardless of the rate of compensation in effect.
These hours shall be credited to the Employee for the
Computation Period(s) during which the duties are per-
formed. An Employee who is not compensated on an hourly
basis, or for whom information regarding the number of
hours worked is not readily available, shall be credited
with the following number of Hours of Service for each
payroll period during which he completes at least one
Hour of Service:
(i) 45 Hours of Service for each
weekly payroll period;
(ii) 90 Hours of Service for each
bi-weekly payroll period;
(iii) 95 Hours of Service for each semi-
monthly payroll period; or
(iv) 190 Hours of Service for each
monthly payroll period.
Hours of Service credited to a payroll period which
includes an Anniversary Date shall be credited entirely
to the Plan Year commencing on the date following such
Anniversary Date. An Employee who is not compensated on
the basis of a regular payroll period shall be credited
with 10 Hours of Service for each day on which he
completes at least one Hour of Service.
(2) Each hour (up to a maximum of 501 hours in
any one continuous period) for which he is directly or
indirectly paid or entitled to payment by the Employer or
any Related Employer 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. In
the case of payments which are computed on the basis of
specific periods of time during which no duties are
performed, the Employee shall receive credit for Hours of
Service as if he had actually worked during such periods
of time, computed and credited as provided in Section
2.19(a)(1). In the case of all other payments, the
Employee's Hours of Service shall be computed and
credited in the manner prescribed in 29 C.F.R Sections
2530.200b-2(b) and (c), which are hereby incorporated
herein by reference.
(3) Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed
to by the Employer or any Related Employer. These hours
shall be credited to the Employee for the computation
period (or periods) to which the award, agreement or
payment pertains rather than the computation period (or
periods) during which the award, agreement or payment was
made.
(b) Notwithstanding the foregoing, no credit shall be
granted for any period with respect to which an Employee receives
payment or is entitled to payment under a plan maintained solely
for the purpose of complying with applicable worker's
compensation
or disability insurance laws; or for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
(c) Service by an individual on behalf of any of the
following entities before he became an Employee shall be
considered
service on behalf of the Employer for purposes of this Section
2.19, to-wit: Amperex Division of North American Phillips Corp.;
B-Scan, Inc.; Calvert Electronics, Inc.; Calvert Holding Co.,
Inc.;
Calvert Semi-Conductor, Inc.; Ceco Communications, Inc.; Cetron
Electronic Corporation; and National Electronics Division of
Varian
Associates, Inc.
2.19 "Key Employee":
(a) Except as otherwise provided in this Section
2.19,
an Employee shall be considered a Key Employee for any Plan Year
if, at any time during the Key Employee Test Period [as defined
in
Section 2.19(f)], he is or was:
(1) An officer of the Employer or any Related
Employer whose Compensation [as modified for all purposes
of this Section 2.19 in accordance with Section 2.19(g)]
exceeds 50% of the annual dollar limitation set forth in
Section 415(b)(1)(A) of the Code;
(2) A shareholder of the Employer who owns at
least .5% of the stock of the Employer or any Related
Employer and whose Compensation exceeds the annual
defined contribution dollar limitation set forth in
Section 415(c)(l)(A) of the Code, unless at least 10
other Employees whose Compensation exceeds the annual
defined contribution dollar limitation set forth in
Section 415(c)(l)(A) of the Code own or owned during any
Plan Year in the Key Employee Test Period a percentage
share of the stock of the Employer which is greater than
such shareholder's percentage share;
(3) A shareholder who owns more than 5% of the
stock of the Employer; or
(4) A shareholder who owns more than 1% of the
stock of the Employer and whose Compensation for any Plan
Year in which he owns such percentage exceeds $150,000.
(b) The number of Employees classified as Key
Employees
solely because they are described in Section 2.19(a)(1) shall not
exceed the greater of (1) 3 or (2) 10% of the largest number of
Employees during any of the Plan Years in the Key Employee Test
Period; provided, however, that in no event shall such number
exceed 50. If more than such number of Employees would otherwise
be classified as Key Employees by reason of being described in
Section 2.19(a)(1), the Employees classified as Key Employees by
reason of being described in Section 2.19(a)(1) shall be those
described in Section 2.19(a)(1) who had the highest Compensation
during any of the Plan Years in the Key Employee Test Period
during
which they were described in Section 2.19(a)(1).
(c) For purposes of Section 2.19(a)(2), in the event
that 2 or more Employees own the same percentage share of the
Employer, the Employee who had the highest Compensation of such
Employees for the Plan Year during the Key Employee Test Period
in
which his Compensation was the highest and in which he owned such
interest in the Employer for part of the Plan Year shall be
treated
as owning the largest percentage share of the stock of the
Employer. If an Employee's percentage interest in the stock of
the
Employer changes during a Plan Year, his interest for such Plan
Year shall be the highest percentage he held at any time during
such Plan Year.
(d) For purposes of this Section 2.19, an Employee
shall be considered to own any stock of the Employer or Related
Employer which would be attributed to him under Section 318 of
the
Code [as modified by substituting "5%" for "50%" in Section
318(a)(2) of the Code]. In the case of an Employer or Related
Employer which has issued more than one class of stock, the
applicable test shall be satisfied if the Employee's stock
ownership meets the test on the basis of either the value or the
voting power of the stock. In the case of an Employer or Related
Employer which is not a corporation, such tests shall be applied
in
accordance with regulations promulgated under Section
416(i)(l)(B)(iii)(II) of the Code.
(e) Any Employee who meets any of the 4 tests set
forth
in Section 2.19(a) as of any Top-Heavy Determination Date shall
continue to be a Key Employee for the remainder of the Key
Employee
Test Period, commencing with the Plan Year which includes such
Top-
Heavy Determination Date, whether or not he remains an Employee,
and, if such Employee dies during such Key Employee Test Period
his
Beneficiaries shall be classified as Key Employees for the
balance
of such Key Employee Test Period, unless such Employee is a Key
Employee solely by reason of Section 2.19(a)(1) and is
subsequently
excluded from the group of officers having the highest
Compensation
by reason of the limitation set forth in Section 2.19(b) in
subsequent Plan Years or solely by reason of Section 2.19(a)(2)
and
is subsequently excluded from the group of the 10 Employees
owning
the largest percentage shares of the stock of the Employer in
subsequent Plan Years.
(f) The term "Key Employee Test Period" for any Plan
Year shall mean the period consisting of 5 Plan Years (or, if
fewer, the total number of Plan Years during which the Plan and
all
other employee plans qualified under Section 401(a) of the Code
maintained by the Employer or any Related Employer have been in
effect) ending with the Plan Year which includes the Top-Heavy
Determination Date for such Plan Year.
(g) The purpose of this Section 2.19 is to conform to
the definition of "key employee" set forth in Section 416(i)(1)
of
the Code, which is incorporated herein by reference, and to the
extent that this Section 2.19 shall be inconsistent with Section
416(i)(1) of the Code, either by excluding Employees who would be
classified as "key employees" thereunder or by including
Employees
who would not be so classified, the provisions of Section 416(i)
(1) of the Code shall govern and control.
2.20 "Leave of Absence": Authorized leave of absence,
sick or disability leave, service in the Armed Forces of the
United
States (provided that the absence is caused by war or other
emergency or provided that the Employee is required to serve
under
the laws of conscription in time of peace) or any absence with
the
advance approval of the Employer or any Related Employer;
provided,
however, that the Employee retires or returns to work for the
Employer or any Related Employer within the time specified in his
Leave of Absence (or, in the case of a military absence, within
the
period provided by law). In granting such leaves, the Employer
and
any Related Employer shall treat all Employees under similar
circumstances alike under rules uniformly and consistently
applied.
2.21 "Limitation Year": The period coinciding with the
Plan Year, except that effective with the Plan Year beginning May
30, 1987, "Limitation Year" shall mean the period beginning on
the
second day of the Plan Year and ending on the first day of the
following Plan Year, thus creating the following Limitation
Years:
May 31, 1987 through May 28, 1988; May 29, 1988 through May 27,
1989; May 28, 1989 through May 26, 1990; May 27, 1990 through
June
1, 1991; and June 2, 1991 through May 30, 1992. The limitations
of
Code Section 415 shall be separately applied to the "limitation
periods" consisting of (a) May 30, 1987 and (b) May 31, 1992 to
May
28, 1993, and for this purpose the dollar limitation in Section
7.5(a)(1) shall be determined by multiplying the applicable
dollar
limitation for the calendar year in which such "limitation
period"
ends by a fraction whose numerator is the number of months
(including any fractional parts of a month) in such "limitation
period" and the denominator of which is 12. Effective with the
Plan Year beginning May 29, 1993, "Limitation Year" shall mean
the
period coinciding with the Plan Year.
2.22 "Non-Key Employee": Any Employee who for any
Plan
Year is not a Key Employee.
2.23 "Normal Retirement Date": The date a Participant
attains age 65.
2.24 "Participant": Any Employee who participates in
the Plan as provided in Article III.
2.25 "Permanent Disability": The inability of a
Participant to perform a substantial portion of his duties by
reason of any medically determinable physical or mental
impairment
which can be expected to be of long-continued and indefinite
duration. Permanent Disability shall be determined solely by the
Administrator upon medical evidence from a physician selected by
the Administrator. A determination of Permanent Disability
pursuant
to the provisions of the Plan shall not be construed to be an
admission of disability by the Employer in regard to any other
claim of disability brought by the Participant against the
Employer. A Participant who is receiving disability benefits
under
the Social Security Act shall be presumed to be Permanently
Disabled.
2.26 "Plan": The Richardson Electronics, Ltd.
Employee
Stock Ownership Plan, as amended and restated herein.
2.27 "Plan Year": The fiscal year adopted by the
Employer for Federal income tax purposes.
2.28 "Qualified Domestic Relations Order":
(a) Except as provided in Section 2.28(b), any order
(including a judgment, a decree or an approval of a property
settlement agreement entered by any court) which the
Administrator
determines (1) is made pursuant to any state domestic relations
law
(including a community property law), (2) relates to the
provision
of child support, alimony payments or marital property rights of
a
spouse, former spouse, child or other dependent of a Participant
(an "Alternate Payee") and (3) clearly specifies (i) the name and
last known mailing address (if any) of the Participant and the
name
and mailing address of each Alternate Payee covered by the order,
(ii) the amount or percentage of the Participant's benefits to be
paid by the Plan to each Alternate Payee, or the manner in which
such amount or percentage is to be determined, (iii) the number
of
payments or period to which such order applies and (iv) the
employee benefit plan to which such order applies.
(b) An order shall in no event be considered a Quali-
fied Domestic Relations Order if the Administrator determines
that
such order (1) requires the Plan to provide benefits to Alternate
Payees, the actuarial present value of which in the aggregate is
greater than the benefits which would otherwise have been
provided
to the Participant, (2) requires the Plan to pay benefits to an
Alternate Payee, which benefits are required to be paid to a
different Alternate Payee under another order previously
determined
to be a Qualified Domestic Relations Order or (3) requires the
Plan
to provide any type or form of benefit, or any option, not
otherwise provided under the Plan, except that a Qualified
Domestic
Relations Order may require the Trustee to distribute a portion
of
the Participant's Vested Account Balance prior to the time the
Participant has incurred a Termination of Employment but after
the
Participant has attained the age of 50.
2.29 "Related Employer": Any trade or business
(whether
or not incorporated) that is, along with the Employer, a member
of
a controlled group of related entities [as defined in Sections
414(b) and (c) of the Code, as modified for purposes of Sections
7.5 and 7.6 by Section 415(h) of the Code] or a member of an
affiliated service group [as defined in Section 414(m) of the
Code]. Anything to the contrary notwithstanding, a mere change
in
the identity, form or organization of a Related Employer shall
not
affect its status under the Plan or the Trust in any manner and,
if
the corporate name of a Related Employer is hereafter changed,
all
references herein to such Related Employer shall be deemed to
refer
to such Related Employer as it is then known.
2.30 "Richardson": Richardson Electronics, Ltd., a
Delaware corporation.
2.31 "Spouse": The person who is married to the
Partic-
ipant at the time relevant to such determination except to the
extent that a Qualified Domestic Relations Order provides that a
former spouse is to be treated as the Participant's Spouse;
provided, however, that, solely for purposes of Section 9.3(c),
the
person to whom a Participant is married at the time of his death
shall be considered his Spouse only if they had been married at
least one year prior to his death.
2.32 "Stock": Capital stock issued by the Employer [or
by a corporation which is a member of the same "controlled group"
(as defined in Section 409(1)(4) of the Code) of the Employer]
and
which is either:
(a) Common stock which is readily tradable on an
established securities market; or
(b) If no such corporation has common stock out-
standing which is readily tradable on an established
securities market, common stock which has a combination
of voting power and dividend rights equal to or in excess
of that class of common stock of any such corporation
which has the greatest voting power and that class of
common stock of any such corporation which has the
greatest dividend rights; or
(c) Preferred stock which is noncallable and
which is convertible at any time into common stock
described in either Sections 2.32(a) or (b) at a
conversion price which is reasonable (at the time such
stock is acquired by the Trust). To the extent provided
in regulations issued under Section 409(l)(3) of the
Code, preferred stock shall be treated as noncallable if
after the call there will be a reasonable opportunity for
such a conversion.
2.33 "Termination of Employment": An Employee shall
be
deemed to have incurred a Termination of Employment as a result
of:
(a) A retirement, a resignation or a dismissal
for any reason;
(b) A failure to return to work promptly upon the
request of the Employer or Related Employer at the end of
a layoff; or
(c) A failure to retire or return to work at the
end of a Leave of Absence.
A transfer of employment between the Employer and any Related
Employer, or between Related Employers, or a transfer from a job
category eligible to participate in the Plan to one not so
eligible
or vice versa, shall not be considered to be a Termination of
Employment.
2.34 "Top-Heavy Determination Date": For any Plan
Year,
the Anniversary Date of the immediately preceding Plan Year.
2.35 "Top-Heavy Year":
(a) Except as otherwise provided in Section 2.35(b)
below, a Top-Heavy Year shall be any Plan Year if, as of the Top-
Heavy Determination Date for such Plan Year, the aggregate
Account
Balances of all Key Employees under the Plan exceed 60% of the
aggregate Account Balances of all Participants under the Plan.
(b) Notwithstanding Section 2.35(a), if during any
Plan
Year (1) at least one Participant is a Key Employee, (2) as of
the
Top-Heavy Determination Date for such Plan Year the Employer or
any
Related Employer has adopted any other employee plan qualified
under Section 401(a) of the Code and (3) either (i) a Key
Employee
participates in such other plan or (ii) the Plan or such other
plan
has satisfied the requirements of Section 401(a)(4) or Section
410
of the Code only by treating the Plan and such other plan as a
single plan, then such Plan Year shall be considered a Top-Heavy
Year if and only if the Account Balances of all Key Employees
under the Plan and the aggregate balances in the accounts of all
Key Employees under all such other plans exceed 60% of the
aggregate balances in the accounts of all Participants under the
Plan and all such other plans.
(c) Notwithstanding Sections 2.35(a) and (b), if as
of
any Top-Heavy Determination Date the Employer or any Related
Employer has adopted any other employee plan qualified under
Section 401(a) of the Code which is not a plan described in
Section
2.35(b), but which plan may be considered as a single plan with
the
Plan and all plans described in Section 2.35(b) without causing
any
of such plans to violate the requirements of either Section
401(a)(4) or Section 410 of the Code, the Plan Year shall not be
considered a Top-Heavy Year if the Account Balances of all Key
Employees under the Plan and the aggregate balances in the
accounts
of all Key Employees under all plans described in Section 2.32(b)
and all plans described in this Section 2.35(c) do not exceed 60%
of the aggregate balances in the accounts of all Participants
under
all such plans.
(d) If any of the plans described in either Sections
2.35(b) or (c) are defined benefit plans, then the tests set
forth
in said sections shall be applied by using the present value of
all
benefits accrued under such plans (as determined by the
Administra-
tor, using actuarial assumptions which are uniform for all such
plans and are reasonable in the aggregate) in lieu of the account
balances in such plans. The accrued benefits of the Non-Key
Employees under such plans shall be determined in accordance with
Section 416(g)(4)(F) of the Code. If any of such plans have a
"determination date" [as defined in Section 416(g)(4)(C) of the
Code] for purposes of determining top-heavy status which is
different from the Top-Heavy Determination Date, the account
balances (or the present value of the accrued benefits, in the
case
of a defined benefit plan) in such plan shall be determined as of
the determination date for such plan which occurs in the same
Plan
Year as the Top-Heavy Determination Date.
(e) For purposes of this Section 2.35, account
balances
shall include (1) all contributions which the Employer or any
Related Employer has paid or is legally obligated to pay to any
employee plan as of the Top-Heavy Determination Date (including
contributions made thereafter if they are allocated as of the
Top-
Heavy Determination Date) and all forfeitures allocated as of the
Top-Heavy Determination Date and (2) all distributions made to a
Participant or his Beneficiary during the Key Employee Test
Period
(or, in the case of a defined benefit plan, the actuarial present
value as of the Top-Heavy Determination Date of such distribu-
tions). If any plan that was terminated within the Key Employee
Test Period would, if it had not been terminated, be a plan
described in Section 2.35(b), distributions made under such plan
shall also be taken into account. For purposes of this Section
2.32, account balances shall also include amounts which are
attributable to contributions made by the Participants (other
than
deductible voluntary contributions under Section 219 of the Code)
but shall not include any rollover [as defined in Section 402(a)
(5) of the Code] or a direct transfer from the trust of any
employee plan qualified under Section 401(a) of the Code if such
plan is not maintained by the Employer or any Related Employer
and
such rollover or transfer is made at the request of the
Participant
after December 31, 1983.
(f) Anything to the contrary notwithstanding, if an
Employee has not performed any services for the Employer or any
Related Employer at any time during the Key Employee Test Period,
his account balance (in the case of a defined contribution plan)
or
his accrued benefit (in the case of a defined benefit plan) shall
not be taken into consideration in the determination of whether
the
Plan Year is a Top-Heavy Year.
(g) The purpose of this Section 2.35 is to conform to
the definition of "top-heavy plan" set forth in Section 416(g) of
the Code, which is incorporated herein by reference, and to the
extent that this Section 2.35 shall be inconsistent with Section
416(g) of the Code, either by causing any Plan Year during which
the Plan would be classified as a "top-heavy plan" not to be a
Top-
Heavy Year or by causing any Plan Year during which it would not
be
classified as a "top-heavy plan" to be a Top-Heavy Year, the
provisions of Section 416(g) of the Code shall govern and
control.
2.36 "Trust": The trust forming a part of the Plan
and
known as the Richardson Electronics, Ltd. Employees Stock
Ownership
Trust.
2.37 "Trust Agreement":
(a) With respect to the period June 1, 1989 to
February 23, 1990, the agreement dated July 17, 1987 by
and among Richardson and Scott Hodes and William G.
Seils, as Trustees.
(b) Effective February 23, 1990, the agreement
dated such date by and between Richardson and Marine
Midland Bank, N.A.
2.38 "Trustee" or "Trustees": The person or persons
who
shall from time to time be acting as the Trustee under the Trust
Agreement and their duly appointed successors.
2.39 "Valuation Date": The Anniversary Date and each
other date during the Plan Year specified by the Administrator
[in
a manner which does not discriminate in favor of Participants who
are "highly compensated employees," as defined in Section 414(q)
of
the Code] as to which Accounts are adjusted pursuant to Article
VII.
2.40 "Vested Account Balance": At any date, the
portion
of a Participant's Account Balance which would be nonforfeitable
if
the Participant incurred a Termination of Employment on such
date,
as determined under Article VIII.
2.41 "Year of Service":
(a) Any Computation Period during which an Employee
has
completed at least 1,000 Hours of Service.
(b) For purposes of Article III, as soon as an
Employee
completes at least 1,000 Hours of Service during the initial
Computation Period specified in Section 2.12, he shall be
credited
with a Year of Service even if fewer than 12 consecutive calendar
months have passed. If such Employee fails to complete at least
1,000 Hours of Service during the initial 12-month Computation
Period specified in Section 2.12, the second 12-month Computation
Period shall consist of the Plan Year which includes the first
anniversary of his employment or re-employment commencement date,
and the succeeding 12-month Computation Periods shall also be
based
on the Plan Year.<PAGE>
ARTICLE III
PARTICIPATION
3.1 Eligibility To Participate
(a) Each Employee shall be eligible to participate in
the Plan, provided that he (1) has completed at least one Year of
Service and (2) is not a member of a collective bargaining unit
in
which retirement benefits were the subject of good faith
bargaining
between the Employer or any Related Employer and one or more
employee representatives, (3) is not a nonresident alien
described
in Code Section 410(b)(3)(C), and (4) is not a United States
citizen employed by the Employer in a nation other than the
United
States (the "Foreign Country") who would be subject to tax under
the laws of such Foreign Country upon receiving an allocation to
his Account pursuant to Section 6.1.
(b) Each Employee who participated in the Plan in
accordance with its terms prior to the Effective Date shall
continue as a Participant. Each other Employee who satisfies the
eligibility requirements of Section 3.1(a) shall become a
Participant on the later of the Effective Date or the Entry Date
coincident with or immediately following the date on which he
satisfies such eligibility requirements, provided that he is
still
employed by the Employer on such date.
3.2 Duration of Participation; Re-Employment
(a) Subject to the provisions of Sections 3.2(b) and
(c), an Employee shall cease to be a Participant for purposes of
Section 6.1 upon ceasing to be employed by the Employer, but
shall
remain a Participant for all other purposes hereunder until such
time as his Vested Account Balance is paid to him (or his
Beneficiaries) in full in accordance with Article IX, at which
time
his participation in the Plan shall cease.
(b) Each Participant who incurs a Termination of
Employment and is re-employed after incurring a Break in Service
shall again become a Participant as of his re-employment date for
all purposes under the Plan except Sections 4.1(a) and 7.4, and
shall again become a Participant for purposes of Sections 4.1(a)
and 7.4 on the Entry Date coincident with or immediately
following
the date on which he completes one Year of Service following such
re-employment; provided, however, that if either (1) such
Partici-
pant had a vested right to any portion of his Account Balance
when
he incurred his Termination of Employment, (2) the number of
Computation Periods in such Break in Service is fewer than the
number of Years of Service completed by the Participant prior to
such Break in Service or (3) the number of Computation Periods
such
Break in Service is fewer than 5, then his participation for all
purposes under the Plan shall be retroactive to his date of re-
employment.
(c) Each Employee or each Participant who incurs a
Termination of Employment and is re-employed prior to incurring a
Break in Service shall be treated, for purposes of eligibility to
participate in the Plan, as though he never incurred a
Termination
of Employment.
(d) An Employee's participation in the Plan shall not
be affected by the fact that he continues to be employed after
his
Normal Retirement Date.
<PAGE>
ARTICLE IV
CONTRIBUTIONS BY EMPLOYER
4.1 Amount
(a) The Board of Directors of the Administrator shall
determine the aggregate amount to be contributed by all Employers
for each Plan Year. Such aggregate amount shall not, however, be
less than the amount required to permit the Trust to make all
payments then due under any debt incurred by the Trust pursuant
to
Section 14.2. Subject to Section 4.1(d), each Employer hereby
agrees to contribute to the Trust for a Plan Year its share of
the
aggregate amount, in the proportion that the total Compensation
paid or accrued by such Employer to all Participants for the
immediately preceding Plan Year bears to the total Compensation
paid or accrued to all Participants by all Employers for such
Plan
Year; provided, however, that he contribution made by any
Employer
for any Plan Year shall not exceed the maximum amount deductible
by
such Employer for that Plan Year under the provisions of Section
404 of the Code. Effective as to Plan Years ending on or after
May
29, 1993, the preceding sentence shall read as follows:
"Subject to Section 4.1(d), each Employer hereby agrees
to contribute to the Trust for a Plan Year its share of
the aggregate amount, in the proportion that the total
Compensation paid or accrued by such Employer to all
Participants for such Plan Year bears to the total
Compensation paid or accrued to all Participants by all
Employers for such Plan Year; provided, however, that he
contribution made by any Employer for any Plan Year shall
not exceed the maximum amount deductible by such Employer
for that Plan Year under the provisions of Section 404 of
the Code."
(b) If any Employer is unable to make its full
contribution for any Plan Year, the remaining Employers may (but
shall not be obligated to) make all or a portion of such
Employer's
contribution on its be behalf, subject to the foregoing
limitations.
(c) The Employer's contribution shall be in the form
of cash or stock at its fair market value, or a combination
thereof; provided that at all times at least 51% of the total
balance in all Employer Contribution Accounts and the Suspense
Account (excluding amounts held to make current debt payments and
dividends held pending distribution pursuant to Section 9.6)
shall
be in the form of Stock or other stock of the Employer.
(d) The Employer shall be required to contribute [in
the same proportion as provided in Section 4.1(a)] the amount of
any previously forfeited amounts which are require to be restored
to any re-employed Participant's Employer Contribution Account
during such Plan Year pursuant to Section 8.5(b), reduced by any
forfeitures for such Plan Year and by any excess Employer
contributions and any excess forfeitures allocated pursuant to
Sections 7.5(c), (d) and (e).
(e) The determination of the Administrator as to the
amount to be contributed by each Employer hereunder shall in all
respects be final, binding and conclusive upon all persons or
parties claiming any rights either under the Plan or the Trust.
4.2 Time for Payment
All contributions by the Employer shall be delivered to
the Trustee not later than the date fixed by law for the filing
of
the Employer's Federal income tax return for the Plan Year which
includes the Anniversary Date as of which such contribution is to
be allocated (including any extensions of time granted by the
Internal Revenue Service for the filing of such return).
ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS
5.1 Contributions by Participants
Participants shall not be required or permitted to make
any contributions to the Plan.<PAGE>
ARTICLE VI
ALLOCATION OF EMPLOYER
CONTRIBUTIONS
6.1 Manner of Allocation
(a) All contributions made by any Employer under
Section 4.1(a) for a Plan Year, and all stock released from the
Suspense Account for such Plan Year under Section 14.2, shall be
allocated among the Employer Contribution Accounts of the
eligible
Participants [as defined in Section 6.1(b)] in the proportion
that
the Compensation paid or accrued to each Participant during the
immediately preceding Plan Year bears to the total Compensation
paid or accrued to all such Participants during such Plan Year.
Effective as to Plan Years ending on or after May 29, 1993, the
preceding sentence shall read as follows:
"All contributions made by any Employer under Section
4.1(a) for a Plan Year, and all stock released from the
Suspense Account for such Plan Year under Section 14.2,
shall be allocated among the Employer Contribution
Accounts of the eligible Participants [as defined in
Section 6.1(b)] in the proportion that the Compensation
paid or accrued to each Participant during such Plan Year
bears to the total Compensation paid or accrued to all
such Participants during such Plan Year."
To the extent that such contributions are used to repay debt
incurred under Section 14.2, the payment shall be charged to the
Participants' Employer Contribution Accounts in the same
proportion.
(b) The Participants who shall be eligible to receive
an allocation under this Section 6.1 with respect to a Plan Year
shall be limited to: (1) Participants who are Employees on the
last
work day of the immediately preceding Plan Year (including
Participants who incurred a Termination of Employment on such
date)
and who are credited with a Year of Service for such Plan Year,
(2)
Participants who retired on or after their Normal Retirement Date
during such immediately preceding Plan Year, and (3) Participants
who terminated employment during such immediately preceding Plan
Year due to death or Permanent Disability. Effective as to Plan
Years ending on or after May 29, 1993, the preceding sentence
shall
read as follows:
"The Participants who shall be eligible to receive an
allocation under this Section 6.1 with respect to a Plan
Year shall be limited to: (1) Participants who are
Employees on the last work day of such Plan Year
(including Participants who incurred a Termination of
Employment on such date) and who are credited with a Year
of Service for such Plan Year, (2) Participants who
retired on or after their Normal Retirement Date during
such Plan Year, and (3) Participants who terminated
employment during such Plan Year due to death or
Permanent Disability."
(c) Anything to the contrary notwithstanding, the
allocation of the Employer's contributions shall subject to the
limitations set forth in Sections 7.5 and 7.6, and, in any Top-
Heavy Year, the limitations of Section 6.2.
(d) Contributions required by Section 4.1(d) shall be
restored to the Employer Contribution Account of the re-employed
Participant.
(e) For purposes of Sections 6.1(a) and 7.4, there
shall be included in the Compensation of a Participant who
commenced participation in the Plan during a Plan Year the
portion
of his Compensation paid or accrued prior to the Entry Date on
which he became a Participant.
6.2 Allocations in Top-Heavy Years
(a) Anything to the contrary notwithstanding, for any
Plan Year which is a Top-Heavy Year, the aggregate allocation of
the Employer's contribution to the Employer Contribution Account
of
each Non-Key Employee who is a Participant (including those who
are
employed by the Employer on the last work day of such Plan Year
but
who are not credited with a Year of Service for such Plan Year)
shall not be less than 3% of such Non-Key Employee's Compensation
for such Plan Year.
(b) If, in any Top-Heavy Year, the Key Employee
Percentage (as hereinafter defined) for each Key Employee who is
a
Participant is less than 3%, the highest Key Employee Percentage
shall be substituted for 3% in Section 6.2(a) unless a defined
benefit plan [as defined in Section 414(j) of the Code] which is
described in Section 2.35(d) must be combined with the Plan in
order to satisfy the requirements of Section 401(a) or Section
410
of the Code. For purposes of this Section 6.2, the "Key Employee
Percentage" for each Key Employee shall be the aggregate amount
of
the Employer's contribution allocated to such Key Employee's
Employer Contribution Account for such Plan Year (taking into
account adjustments pursuant to this Section 6.2) as a percentage
of such Key Employee's Compensation.
(c) In the event that the allocation of the
Employer's
contribution to any Non-Key Employee under Section 6.1 in a Top-
Heavy Year would otherwise violate the provisions of this Section
6.2, the aggregate amount allocated to the Employer Contribution
Accounts of the Key Employees shall be reallocated (in proportion
to the amount otherwise allocated to each Key Employee) to the
Company Contribution Accounts of the Non-Key Employees (in
proportion to the difference between the amount otherwise
allocated
to each Non-Key Employee and the amount required to be allocated
under this Section 6.2) until the requirements of this Section
6.2
are satisfied.
(d) In the event that a Non-Key Employee is a
partici-
pant in any other defined contribution plan [as defined in
Section
414(i) of the Code] maintained by the Employer or any Related
Employer, the amount required to be allocated to such Non-Key
Employee under this Section 6.2 shall be reduced by the aggregate
amount allocated to the Non-Key Employee's accounts under all
such
other plans.
(e) In the event that a Non-Key Employee is a
partici-
pant in any defined benefit plan [as defined in Section 414(j) of
the Code] maintained by the Employer or any Related Employer
which
is a "top-heavy plan" (as defined in Section 416(g) of the Code},
then, if the accrued benefit of such plan satisfies the require-
ments of Section 416(c)(1) of the Code [taking into account the
modifications required by Section 416(h)(2)(A)(ii) of the Code if
Section 6.2(e) applies], then Section 6.2(a) shall not apply to
such Non-Key Employee. If such accrued benefit does not satisfy
such requirements, then "5%" shall be substituted for "3%" in
Section 6.2(a) with respect to such Non-Key Employee, and Section
6.2(b) shall not apply to such Non-Key Employee.
(f) If Section 7.6(c) applies for any Plan Year, then
"4%" shall be substituted for "3%" in Section 6.2(a), and "7.5%"
shall be substituted for "5%" in Section 6.2(e).
(g) For purposes of this Section 6.2, contributions
by
the Employer shall include forfeiture allocations.
6.3 Administrator to Notify Trustee
As soon as practicable after the close of each Plan
Year,
the Administrator shall furnish the Trustee with a statement
showing the Compensation paid to each Participant for such Plan
Year.<PAGE>
ARTICLE VII
ACCOUNTS OF PARTICIPANTS
7.1 Separate Accounts
The Administrator shall create and maintain adequate
records to disclose the interest in the Trust of each Participant
(or Beneficiary of a deceased Participant). For accounting
purposes, a separate Account shall be maintained for each
Partici-
pant, reflecting his proportionate share of all contributions,
forfeitures, net increases or decreases in the value of the Trust
assets and distributions to the Participant (or his Beneficiary).
Credits and charges shall be made to such Accounts in the manner
described herein. The maintenance of such separate Accounts
shall
not require the segregation of any assets from any other assets
held in the Trust.
7.2 Adjustments to Accounts
(a) As of each Valuation Date, the Administrator
shall:
(1) First, charge to the proper Accounts all
payments or distributions made from the Accounts since
the immediately preceding Valuation Date.
(2) Second, adjust the Account Balances upward or
downward, on a proportional basis, according to the net
gain or loss of the Trust assets from investments (as
reflected by interest payments, dividends, realized and
unrealized gains and losses on securities and other
investment transactions) and from the payment of expens-
es, so that the aggregate Account Balances equal the fair
market value, as determined by the Trustee, of the Trust
assets on such Valuation Date. For purposes of this
Section 7.2(a)(2), Account Balances shall not include (i)
any Account which has been segregated for the payment of
installments pursuant to Section 9.4(b) or (ii) any asset
of an Account the gain or loss from which is, pursuant to
Article XIV, allocated to a specific Participant's
Account. All gain or loss (whether realized or
unrealized) attributable to an Account described in the
preceding sentence shall be allocated directly to such
Account, and the fair market value of the balance in all
such Accounts, after such allocation (or, in the case of
an asset allocated to a specific Participant's Account,
the fair market value of such asset) shall be subtracted
from the fair market value of the Trust's assets (and, if
applicable, from the Account Balance to which such asset
is allocated), prior to the adjustment set forth herein.
(3) Third, if such Valuation Date is an
Anniversary Date, allocate and credit the balances, if
any, in the Excess Contribution Account and the Excess
Forfeiture Account in accordance with Sections 7.5(d) and
(e).
(4) Fourth, if such Valuation Date is an
Anniversary Date, allocate and credit the Employer
contributions and Stock released from the Suspense
Account in accordance with Section 7.3 and forfeitures,
if any, in accordance with Section 7.4, in either case
except to the extent modified by Sections 7.5, 7.6 and
7.7.
(b) Every adjustment made pursuant to this Section
7.2
shall be considered as having been made as of the Anniversary
Date
of the applicable Plan Year regardless of the dates of actual
entries or receipt by the Trustee of the contribution made by the
Employer for such Plan Year; provided, however, that Employer
contributions pursuant to Section 4.1(a) for the Plan Years
ending
in 1988 through 1992, inclusive, as well as the Employer
contribution made in 1992 for the Plan Year ended May 29, 1993,
shall be considered as having been made as of the first day of
the
applicable Plan Year regardless of the dates of actual entries or
receipt by the Trustee of such contributions.
(c) The determination as to the value of the assets
of
the Trust and the charges or credits to the Accounts of the
Participants shall be conclusive and binding on all persons.
7.3 Crediting of Employer Contributions
Each Participant's Employer Contribution Account shall
be
credited with that portion of the Employer's contribution for the
current Year and Stock released from the Suspense Account for the
current year to which such Participant is entitled, as provided
in
Section 6.1.
7.4 Crediting of Forfeitures
Forfeitures, if any, from any Account occurring as a
result of the Termination of Employment of Participants during
the
Plan Year shall first be allocated to the Employer Contribution
Accounts of re-employed Participants as required by Section
8.5(b),
and any excess shall be allocated among the Employer Contribution
Accounts of all Participants eligible to receive an allocation of
the Employer's contribution under Section 6.1(a) in the
proportion
which the Compensation paid or accrued to each such Participant
during such Plan Year bears to the total Compensation paid or
accrued to all such Participants during such Plan Year.
7.5 Limitation on Allocations
(a) Notwithstanding any other provisions of the Plan,
the Annual Additions with respect to a Participant for any
Limitation Year shall not exceed the lesser of (1) $30,000, or
such
higher amount as may be permitted at the relevant time under
applicable law, or (2) 25% of the Compensation paid to the
Participant by the Employer (or any Related Employers) during
such
year. The limitations in the preceding sentence shall not apply
to
amounts credited to a Participant's Employer Contribution Account
pursuant to Section 8.5(b). An amount credited to a
Participant's
Account in order to correct an error made in a previous
Limitation
Year shall be treated for purposes of this Section 7.5(a) as
having
been credited to such Account in the Limitation Year to which the
error relates.
(b) If the allocation of the Employer's contribution
to a Participant's Employer Contribution Account in a particular
Limitation Year would cause the limitations of Section 7.5(a) to
be
exceeded with respect to such Participant, the excess
contribution
shall, subject to the limitations of Section 7.5(a), be
reallocated
among the Employer Contribution Accounts of all other
Participants
eligible to share in the Employer's contribution for the Plan
Year
ending in or coinciding with such Limitation Year, in proportion
to
their Compensation for such Plan Year. If, following such
reallocation, there remains an excess portion of the Employer's
contribution which cannot be allocated to the Employer
Contribution
Account of any eligible Participant without exceeding the limita-
tions of Section 7.6(a), such excess portion shall be placed in a
suspense account, designated the "Excess Contribution Account."
(c) If, following the allocation of the Employer's
contribution for a particular Plan Year [including all realloca-
tions required pursuant to Section 7.5(b)], the allocation of
forfeitures to a Participant's Employer Contribution Account
would
cause the limitations of Section 7.5(a) to be exceeded with
respect
to such Participant, the excess forfeiture shall, subject to the
limitations of Section 7.5(a), be reallocated among the Employer
Contribution Accounts of all other Participants eligible to share
in forfeitures for such Plan Year, in accordance with Section
7.4.
If, following such reallocation, there remains an excess portion
of
the forfeitures which cannot be allocated to the Employer Contr-
ibution Account of any eligible Participant without exceeding the
limitations of Section 7.5(a), such excess portion shall be
placed
in a suspense account, designated the "Excess Forfeiture
Account."
(d) As of the Anniversary Date for a Plan Year, the
balance in the Excess Contribution Account shall first be applied
to reduce the Employer's contribution under Section 4.1(b). The
balance, if any, remaining in the Excess Contribution Account
shall
be included in the Employer's contribution for such Plan Year for
purposes of Section 6.1. Section 7.5(b) shall apply to any
amount
which cannot be allocated pursuant to the preceding sentences.
(e) As of the Anniversary Date for a Plan Year, the
balance in the Excess Forfeiture Account shall first be applied
to
reduce the Employer's contribution under Section 4.1(b) after the
application of Section 7.5(d). Any remaining balance in such
Excess Forfeiture Account shall be allocated as a forfeiture
under
Section 7.4. Section 7.5(c) shall apply to any amount which
cannot
be allocated pursuant to the preceding sentences.
(f) For purposes of Section 7.5(a)(2) and Section
7.6,
"Compensation" shall have the meaning set forth in Section 2.11;
provided, however, that notwithstanding any provision of Section
2.11, for purposes of Section 7.5(a)(2) Compensation shall not
include: any contributions made by the Employer or any Related
Employer to this Plan or any other plan qualified under Section
401(a) of the Code to the extent excludable from the Employee's
income, or any distributions from this Plan or any such qualified
plan; contributions made to any simplified employee pension plan
described in Section 408(k) of the Code, to the extent deductible
by the Employee; amounts included in the Employee's income under
Section 83 of the Code [other than by reason of an election under
Section 83(b)]; amounts realized from the sale, exchange or other
disposition of stock acquired upon exercise of a qualified stock
option; or other amounts which receive special tax benefits under
the Code, such as contributions to a health or accident plan
which
are excludable from the Employee's income or contributions
towards
the purchase of an annuity contract described in Section 403(b)
of
the Code (whether or not excludable from the Employee's income).
Notwithstanding the foregoing, Compensation shall include any
amounts deferred under a nonqualified, unfunded plan of deferred
compensation in the Plan Year received by the Employee. If so
elected by the Administrator pursuant to Treasury Regulations
1.415-2(d)(5), items of compensation shall be included in
Compensa-
tion for purposes of this Section 7.5 and Section 7.6 in the
Limitation Year in which they are accrued by the Employer or a
Related Employer rather than the Limitation Year in which they
are
received by or made available to the Participant, provided that
the
making or revocation of such an election shall not have the
effect
of causing any such item to be included in Compensation for more
than one Limitation Year.
(g) The Administrator of this Plan shall co-ordinate
the application of this Section 7.5 with the application of the
corresponding provisions of the instrument establishing
Richardson
Electronics, Ltd. Employees Profit-Sharing Plan (the "Profit-
Sharing Plan") by the administrator of Profit-Sharing Plan in
circumstances where the limitations under Section 7.5(a) and the
corresponding provisions of the instrument establishing the
Profit-
Sharing Plan would be exceeded, so as to determine under which of
the 2 plans (or both plans, if such administrators so determine)
the adjustments required by Sections 7.5(b) and (c) and the
corresponding provisions of the instrument establishing the
Profit-
Sharing Plan shall be made.
(f) If, in any Limitation Year, not more than 1/3 of
the total amount allocated under Section 6.1(b) which are
deductible under Section 404(a) of the Code is allocated to the
Employer Contribution Accounts of Participants who are "highly
compensated employees," as defined in Section 414(q) of the Code,
the following rules shall apply:
(1) The dollar limitation set forth in Section
7.5(a)(1) shall be increased by the lesser of such dollar
limitation or the amount of Stock contributed under
Section 6.1(b), or purchased with cash contributed under
Section 6.1(b), for such Limitation Year; and
(2) The following allocations to a Participant's
Account shall be disregarded in applying Section 7.5(a):
(A) Any forfeitures of Stock which
was acquired by a loan under Section 14.2; or
(B) Any Employer contributions to
the Plan which are deductible under Code
Section 404(a)(9)(B) and charged against such
Participant's Account.
Section 7.5(f)(1) shall not apply to Plan Years beginning after
July 12, 1989.
7.6 Combined Plan Limitation
(a) Anything to the contrary notwithstanding, if
during
any Limitation Year a Participant also participates in a "defined
benefit plan" [as defined in Section 414(j) of the Code]
maintained
by the Employer or any Related Employer, the otherwise
permissible
Annual Addition on behalf of any Participant under the Plan may
be
further reduced to the extent necessary, as determined by the
Administrator in its sole discretion, to comply with the
additional
limitations set forth in Sections 7.6(b) and (c).
(b) In the event that a Participant also participates
in a defined benefit plan as described in Section 7.6(a), the sum
of the Defined Benefit Plan Fraction and the Defined Contribution
Plan Fraction (as hereafter defined) for any Limitation Year
shall
not exceed 1.0. For purposes of this Section 7.6, the "Defined
Benefit Plan Fraction" for any Limitation Year is a fraction, the
numerator of which is the Participant's projected annual benefit
under the defined benefit plan (determined as of the close of its
plan year) and the denominator of which is the lesser of: (1) the
product of 1.25 multiplied by the maximum dollar limitation in
effect under Section 415(b)(l)(A) of the Code for such Limitation
Year, or (2) the product of 1.4 multiplied by the amount which
may
be taken into account under Section 415(b)(l)(B) of the Code for
such Limitation Year. The "Defined Contribution Plan Fraction"
for
any Limitation Year is a fraction, the numerator of which is the
sum of the annual additions to the Participant's Account (as
determined under Section 7.5) as of the close of the Limitation
Year and the denominator of which is the sum of the lesser of the
following amounts determined for such Limitation Year and each
prior Year of Service [assuming, for this purpose, that Section
415(c) of the Code had been in effect during such prior Years of
Service]: (1) the product of 1.25 multiplied by the maximum
dollar
limitation in effect under Section 415(c)(l)(A) of the Code for
such Year (determined without regard to Section 415(c) (6) of the
Code), or (2) the product of 1.4 multiplied by the maximum amount
which may be taken into account under Section 415(c)(1)(B) of the
Code for such Limitation Year.
(c) Notwithstanding the foregoing, "1.0" shall be
substituted for "1.25" wherever it appears in Section 7.6(b) for
any Plan Year in or coinciding with a Limitation Year which is a
Top-Heavy Year, except as hereinafter provided. If as a result
of
such substitution the amount credited to any Employee's Account
would exceed the limitations of this Section 7.6, then such
substitution shall not be made and the allocations to Non-Key
Employees shall be revised in accordance with Section 6.2(f),
unless such Plan Year would still be a Top-Heavy Year if "90%"
were
substituted for "60%" in all provisions of Section 2.35.
(d) For purposes of this Section 7.6, all defined
benefit plans of the Employer or any Related Employer, whether or
not terminated, are to be treated as one defined benefit plan,
and
all defined contribution plans of the Employer or any Related
Employer, whether or not terminated, are to be treated as one
defined contribution plan. The extent to which the annual
allocations made under this Plan shall be reduced as compared
with
the extent to which the annual benefit under a defined benefit
plan
shall be reduced in order to achieve compliance with the limita-
tions of Sections 415 and 416 of the Code shall be determined by
the Administrator in such a manner so as to maximize the
aggregate
benefits payable to such Participant. If such reduction is under
this Plan the Administrator shall advise affected Participants of
any additional limitation on their annual allocations required by
this Section 7.6(d).
(e) The provisions of this Section 7.6 are intended
to
comply with the provisions of Section 415 of the Code, as
modified
by Section 416 of the Code, so that the maximum benefits provided
by the Employer or any Related Employer shall be exactly equal to
the maximum amounts allowed under the Code. If there is any
inconsistency between this Section 7.6 and the provisions of
Section 415 of the Code, as modified by Section 416 of the Code,
such inconsistency shall be resolved in such a way so as to give
full effect to the provisions of the Code.
7.7 Correction of Error
In the event of an error in the adjustment of a Parti-
cipant's Account, the Administrator, in its sole discretion, may
correct such error either by crediting or charging the adjustment
required to make such correction to or against the income and
expenses of the Trust for the Plan Year in which the correction
is
made or the Employer may make an additional contribution to
permit
the correction of the error. Except as provided in this Section
7.7, the Accounts of other Participants shall not be readjusted
on
account of such error.
7.8 Transfer Accounts
(a) The Plan shall accept from the Trustees of the
Richardson Electronics, Ltd., Employees Profit-Sharing Trust (the
"Profit-Sharing Trust") all of the Stock held by the
Profit-Sharing
Trust (the "Transfer Stock") as of the Transfer Date. For
purposes
of this Section 7.8, the term "Transfer Date" shall mean a date
selected by Richardson, as Administrator of both this Plan and of
the Richardson Electronics, Ltd. Profit-Sharing Plan (the
"Profit-
Sharing Plan"), in its sole and absolute discretion; provided,
however, in no event shall the Transfer Date be any earlier than
30
days after the date on which the notice required by Code Section
6058(b) has been filed with the Internal Revenue Service nor any
later than December 31, 1989.
(b) The Transfer Stock shall be credited among the
Transfer Accounts created and maintained under this Plan for the
purpose of recording each Participant's share, if any, of such
Transfer Stock. The Transfer Account of each Employee who
participated in the Profit-Sharing Plan on the Transfer Date
shall
initially be credited with that number of shares of Transfer
Stock
which is identical to the number of shares of Transfer Stock
credited to his account in the Profit-Sharing Plan as of the
Transfer Date. Separate sub-accounts shall be established with
respect to those shares of Transfer Stock acquired with Employer
contributions to the Profit-Sharing Trust and those shares of
Transfer Stock acquired with Participants' after-tax
contributions
to said trust. Thereafter, each such sub-account shall be
credited
with all dividends on the Transfer Stock allocated to such sub-
account and all net increases or decreases in the value of such
Transfer Stock and shall be debited with all distributions to the
Participant (or his Beneficiary) on whose behalf such sub-account
was established. A Participant shall always be 100% vested in
that
sub-account of his Transfer Account which is attributable to
Transfer Stock acquired with his after-tax contributions to the
Profit-Sharing Trust.
<PAGE>
ARTICLE VIII
VESTING OF INTEREST IN TRUST
8.1 Normal Retirement
The Vested Account Balance of a Participant who retires
on or after his Normal Retirement Date shall be 100% of his
Account
Balance.
8.2 Disability Retirement
The Vested Account Balance of a Participant who retires
prior to his Normal Retirement Date because of a Permanent
Disability shall be 100% of his Account Balance.
8.3 Death
The Vested Account Balance of a Participant who dies
prior to incurring a Termination of Employment shall be 100% of
his
Account Balance.
8.4 Other Termination of Employment
Upon a Participant's Termination of Employment prior to
his Normal Retirement Date for any reason other than death or
Permanent Disability, such Participant's Vested Account Balance
shall be the sum of:
(a) 100% of his Pre-Break Account Balance; plus
(b) 100% of the balance in the sub-account of his
Transfer Account which is described in the last sentence
of Section 7.8(b); plus
(c) A percentage of his Employer Contribution
Account Balance, and that portion of his Transfer Account
Balance other than the sub-account balance referred to in
the last sentence of Section 7.8(b), based upon the
number of completed Years of Service according to the
following schedule:
Completed Years of Service Vested Percentage
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
<PAGE>
8.5 Treatment of Forfeited Amounts; Reinstatement
(a) The excess of a Participant's Account Balance
over
his Vested Account Balance shall be forfeited as of the date of
the
Participant's Termination of Employment. The forfeited amount
shall be allocated as provided in Section 7.4 as of the
Anniversary
Date coincident with or immediately following the date the
Participant incurs such a Termination of Employment (or, if
later,
the date the Participant fails to return to work following a
layoff
or a Leave of Absence as provided in Section 2.20).
(b) If a Participant returns to the employment of the
Employer or any Related Employer before incurring a Break in
Service consisting of at least 5 Years, any amount forfeited upon
such Participant's Termination of Employment shall be reinstated
by
using forfeitures in accordance with Section 7.4 and thereafter,
to
the extent necessary, by an additional Employer contribution
allocated to the Participant's Employer Contribution Account.
8.6 Computation of Years of Service
All Years of Service with the Employer or any Related
Employer (including the Plan Year in which a Termination of
Employment occurs, if the Participant completes 1,000 Hours of
Service in such Plan Year) shall be taken into account in
computing
Years of Service for purposes of this Article VIII, except that:
(a) If an Employee incurs a Break in Service,
Years of Service before such Break in Service shall be
disregarded until he has completed one Year of Service
after his re-employment by the Employer or any Related
Employer.
(b) If a Participant who does not have a nonfor-
feitable right to any portion of his Employer
Contribution Account Balance incurs a Break in Service
consisting of at least 5 Computation Periods, Years of
Service before such Break in Service shall be disregarded
if the number of Computation Periods in such Break in
Service equals or exceeds the aggregate number of Years
of Service completed prior to such Break in Service.
(c) In any Plan Year during which a Participant
completes more than 500 Hours of Service but less than
1,000 Hours of Service, the Participant shall not receive
credit for a Year of Service for such Plan Year, but
shall continue to be a Participant, shall be credited
with earnings of the Trust and shall remain in his
present position on the vesting schedule in Section 8.4
without advancement.
<PAGE>
8.7 Vesting on Termination of Trust or of
Employer's Agreement to Contribute
The Vested Account Balance of each Participant shall be
100% of such Participant's Account Balance in the event that (a)
the Plan is terminated or partially terminated, (b) the Employer
shall permanently discontinue contributions to the Trust or (c)
the
Employer's agreement to make contributions to the Trust shall be
permanently or partially terminated, whether by withdrawal from
the
Plan, by amendment to the Plan or by bankruptcy, liquidation or
discontinuance of the business of such Employer, or by merger,
consolidation or reorganization of such Employer without the
adoption of this Plan within 180 thereafter by such merged,
consolidated or reorganized corporation, or by operation of law
or
otherwise. If the Plan is partially terminated, the provisions
of
this Section 8.7 shall apply only to Participants affected by the
partial termination.
8.8 Vesting Following Plan Amendment
In the event that any amendment is adopted to the Plan
which affects, directly or indirectly, the computation of the
Participants' Vested Account Balances:
(a) The Vested Account Balance of each
Participant shall not, as a result of such amendment, be
less than it would have been had the Participant incurred
a Termination of Employment on the day immediately
preceding the day such amendment was adopted; and
(b) The Vested Account Balance of a Participant
who, on the day the amendment is adopted, had completed
at least 3 Years of Service shall thereafter be equal to
the greater of the amount determined under the Plan as so
amended or the amount determined under the Plan without
regard to such amendment.
8.9 Vesting Following Partial Distributions
(a) If a Participant receives a distribution of all
or
a portion of his Employer Contribution Account Balance at a time
when it is possible for him to increase the vested percentage of
his Employer Contribution Account (including a Participant who
received a distribution upon incurring a Termination of
Employment,
who returns to the employment of the Employer or any Related
Employer before incurring a Break in Service consisting of at
least
5) Computation Periods, then such Participant's Vested Account
Balance at any time after he is re-employed shall be determined
by
(1) increasing the Participant's Employer Contribution Account
Balance at such time by the Adjusted Distribution (as hereafter
defined), (2) then multiplying the Employer Contribution Account
Balance (as so increased) by the relevant vesting percentage
under
Section 8.4, and (3) then subtracting the Adjusted Distribution
from the product obtained. For purposes of this Section 8.9(a),
the "Adjusted Distribution" shall be equal to the amount of the
distribution multiplied by a fraction, the numerator of which is
the Participant's Account Balance at the time the formula is
applied and the denominator of which is the Account Balance
immediately following the distribution (without regard to
forfeitures).
(b) If a Participant returns to the employment of the
Employer or any Related Employer after incurring a Break in
Service
consisting of at least 5 Computation Periods, and such
Participant
did not receive payment of the full amount of his Vested Account
Balance, his Vested Account Balance remaining unpaid shall be
placed in a separate Pre-Break Account for the Participant. The
Pre-Break Account shall be treated in the same manner as the
Employer Contribution Account of the Participant, except that it
shall not be credited with the Employer's contributions and the
Participant shall be 100% vested in such Pre-Break Account.
ARTICLE IX
PAYMENT OF VESTED ACCOUNT BALANCES
9.1 Benefit Commencement Date
(a) Subject to the remaining provisions of this
Section
9.1, the Benefit Commencement Date for each Participant shall be
as
soon as practicable after the Participant has incurred both a
Termination of Employment and a Break in Service consisting of at
least 5 years.
(b) Unless the Participant requests, in writing, a
later commencement date, the Benefit Commencement Date shall not
be
later than one Plan Year after the close of the Plan Year in
which
the latest of the following events occurs:
(1) Termination of Employment due to having
retired upon reaching the Participant's Normal Retirement
Date, disability, or death; or
(2) The Participant's Termination of Employment
for any other reason (provided the Participant has not
been re-employed by the Employer or any Related Employer
prior to that time); or
(3) To the extent that a Participant's Account
Balance consists of Stock which was acquired with the
proceeds of a loan incurred pursuant to Section 14.2, the
Plan Year in which such loan is fully repaid.
(b) Except as provided in Section 9.8, a
Participant's
Benefit Commencement Date shall not be later than the April l of
the calendar year following the calendar year determined below:
(1) In the case of a Participant not described in
any other clause of this Section 9.1(b), the calendar
year in which he attains the age of 70-1/2.
(2) In the case of a Participant who attained the
age of 70-1/2 prior to January 1, 1988, and who was not
described in Section 2.19(a)(3) during the Plan Year
which included the last day of the calendar year in which
he attained the age of 66-1/2 or any subsequent Plan
Year, the later of (i) the calendar year in which he
attains the age of 70-1/2 or (ii) the calendar year in
which he retires.
(3) In the case of a Participant who attained the
age of 70-1/2 prior to January 1, 1988, and who was
described in Section 2.19(a)(3) during the Plan Year
which included the last day of the calendar year in which
he attained the age of 66-1/2 or a subsequent Plan Year,
the later of (i) the calendar year in which he attains
the age of 70-1/2 or (ii) the earlier of the calendar
year in which he retires or the calendar year which
includes the last day of the Plan Year in which he was
first described in Section 2.19(a)(3).
(4) In the case of a Participant who attained the
age of 70-1/2 during the calendar year 1988, who was not
described in Section 2.19(a)(3) during the Plan Year
which includes the last day of the calendar year in which
he attained the age of 66-1/2 or any subsequent Plan
Year, and who is still alive on January 1, 1989, the
calendar year 1989.
The provisions of this Section 9.1(b) shall apply to all Partici-
pants whose Account Balances were not completely distributed
prior
to January 1, 1985, subject, however, to the transitional rules
set
forth in Proposed Treasury Regulations Section 1.401(a)(9)-1,
Part
I, which are hereby incorporated herein.
(c) The Benefit Commencement Date of a Participant
whose Vested Account Balance exceeds $3,500 shall not be earlier
than his Normal Retirement Date unless the Participant consents
in
writing to an earlier date. A Participant who requests, in
writing, the distribution of his Vested Account Balance prior to
his Normal Retirement Date shall be considered to have consented
to
such distributions. If the value of a Participant's Vested
Account
Balance, determined at the time of a distribution to him, Exceeds
$3,500, then such value at any subsequent time shall be deemed to
exceed $3,500.
(d) The date upon which the payment of a deceased
Participant's Vested Account Balance to his Beneficiary commences
shall be determined under Section 9.3.
9.2 Payment to Participants
(a) Each Participant who does not elect to receive
installment payments under Section 9.2(b) shall receive a single
lump sum payment on his Benefit Commencement Date equal to his
Vested Account Balance on such date.
(b) Any Participant whose Vested Account Balance on
his Benefit Commencement Date exceeds $3,500 may elect to receive
his Vested Account Balance in a series of not more than 10 annual
installments determined in accordance with Section 9.6 commencing
with his Benefit Commencement Date; provided, however, that the
number of installments shall not be more than the number of
years
of the Participant's remaining life expectancy (or the remaining
joint and last survivor life expectancy of the Participant and
his
designated Beneficiary) as of the Benefit Commencement Date; and
provided further, that except as otherwise provided in Section
9.6
the amount of any installment shall not be less than the
Participant's remaining Vested Account Balance as of the date on
which such installment is paid, divided by the remaining life
expectancy of the Participant (or by the remaining joint and last
survivor life expectancy of the Participant and his designated
Beneficiary), determined as of the first day of the calendar year
in which such installment payment is made. For purposes of this
Section 9.2(b), life expectancy shall be determined by the
Administrator in accordance with the regulations promulgated
under
Section 72 of the Code. The first such installment shall be paid
for the calendar year which is not later than the calendar year
specified in the applicable clause of Section 9.1(b). An
election
pursuant to this Section 9.2(b) may be made or revoked at any
time
prior to the Benefit Commencement Date in accordance with rules
established by the Administrator. After installment payments
have
commenced, a Participant may revoke his election, in which event
his full remaining Vested Account Balance shall be distributed to
him in a single lump sum as soon as practicable, but in no event
later than the date upon which the next installment payment would
have been required to have been made.
9.3 Payment to Beneficiaries
(a) If a Participant dies after his Benefit
Commencement Date but before his Vested Account Balance has been
distributed in full, all remaining payments which would have been
made to the Participant shall be made instead at the same time
and
in the same amounts to his Beneficiaries; provided, however, that
either the Participant prior to his death, or all Beneficiaries
following his death, may elect to have the remaining Vested
Account
Balance distributed in a single lump sum payment, subject to the
provisions of Section 9.3(c).
(b) If a Participant dies prior to his Benefit
Commencement Date (whether or not still employed by the
Employer),
then his Vested Account Balance shall be paid to his
Beneficiaries
as follows:
(1) If neither the Participant nor his
Beneficiaries elect installment payments under Section
9.3(b)(2), then the Participant's Vested Account Balance
shall be distributed to his Beneficiaries in a single
lump sum payment as soon as practicable, but in no event
later than 5 years after the Participant's death.
(2) If either the Participant prior to his death,
or his Beneficiaries following his death, so elect in
accordance with the provisions of Section 9.3(c), then
each Beneficiary's share of such Vested Account Balance
shall be distributed in a series of annual installment
payments which meet either of the following requirements:
(i) The Beneficiary's entire share of
such Vested Account Balance shall be
distributed within 5 years after the
Participant's death; or
(ii) The first installment payment
shall be made to the Beneficiary within one
year after the Participant's death, and each
installment payment made to such Beneficiary
shall be at least equal to such Beneficiary's
share of the Participant's remaining Vested
Account Balance divided by such Beneficiary's
remaining life expectancy as of the first day
of the calendar year in which such payment is
made (determined in accordance with
regulations promulgated under Section 72 of
the Code).
In the case of a Beneficiary who is the surviving Spouse
of the Participant, the first payment made under Section
9.3(b)(2)(ii) may be made not later than the day on which
the Participant would have attained age 70-1/2, and if
such surviving Spouse dies before such date, such
surviving Spouse's share of the Participant's Vested
Account Balance shall be distributed in accordance with
the provisions of this Section 9.3(b) as though such
surviving Spouse were the Participant. For purposes of
the preceding sentence, the Administrator may, to the
extent of regulations promulgated under Section
401(a)(9)(F) of the Code, treat amounts payable to a
child of the Participant as made to his surviving Spouse
if such amounts will become payable to such Spouse upon
such child reaching the age of majority or upon such
other event occurring as may be specified in such
regulations.
(c) Any election and any revocation of any election
made under this Section 9.3 shall be in accordance with rules
established by, and shall be subject to the approval of, the
Administrator; provided that any election which has the effect of
causing any portion of the Vested Account Balance to be paid to
any
Beneficiary other than the surviving Spouse of the Participant,
shall be effective only if (1) such election identifies the
designated Beneficiary, and is consented to, in writing, by the
Spouse and the Spouse's signature is witnessed either by a
representative designated by the Administrator or by a notary
public, or (2) it is established, to the satisfaction of the
Administrator, that the Participant had no surviving Spouse, or
that the consent of the Spouse cannot be obtained because the
Spouse cannot be located or because of such other circumstances
as
may be specified in regulations promulgated under Section
417(a)(2)(B) of the Code. The Spouse's consent, if given, shall
be
irrevocable, but shall not be binding upon any future Spouse.
Such
election may be revoked by the Participant at any time prior to
his
Benefit Commencement Date without the Spouse's consent, but any
change in such election (including any change in the Beneficiary
specified therein) shall require the Spouse's consent as set
forth
above.
(d) Anything else in this Section 9.3 to the
contrary
notwithstanding, if a Participant's Beneficiary is his estate
pursuant to Section 10.2, his Vested Account Balance shall be
paid
to his estate in a single lump sum.
9.4 Extent of Further Participation in Trust
(a) Upon the distribution of the full amount of a
Participant's Vested Account Balance in a lump sum pursuant to
the
provisions of Sections 9.2(a) or 9.3(b)(1), such Participant (and
his Beneficiaries) shall cease to have any interest in the Trust
and all obligations hereunder of the Trustee and the Employer or
any Related Employer to them shall cease.
(b) In the event that the distribution of a
Participant's Vested Account Balance is made in installments
pursuant to the provisions of Sections 9.2(b) or 9.3(b)(2), such
Participant's Vested Account Balance remaining payable from time
to
time shall constitute a liability of the Trust and at the
election
of the Participant or his Beneficiary, as the case may be, shall
either (1) continue to share in the gains and losses of the Trust
pursuant to Section 7.2 until it is completely distributed or (2)
shall be segregated and placed in an account at a national bank
or
other comparable financial institution insured by the Federal
Deposit Insurance Corporation and shall be credited with any
interest earned on such account. Such Participant's Vested
Account
Balance remaining payable from time to time, after it is
segregated, shall not participate in gains or losses of the Trust
or in the Employer's contributions thereto. The Administrator
shall adopt such rules as it deems necessary or advisable to
permit
Participants to make elections and, if it so determines, to
revoke
or to modify such elections under this Section 9.4(b).
(c) Each Account of a Participant who dies or incurs
a Termination of Employment shall continue to share in all
allocations of gains and losses of the Trust pursuant to Section
7.2 until it is completely distributed or segregated pursuant to
Sections 9.4(a) or (b), as the case may be.
9.5 Payment to Persons Under Legal Disability
In the event that any amount hereunder shall become
payable to a minor or to a person under legal or other disability
who, in the opinion of the Administrator, is unable to administer
such distribution, such amount may be paid to any person(s) the
Administrator deems best for the maintenance, care, support and
education of such minor or disabled person. Any such payment in
accordance with the provisions of this Section 9.5 shall be a
complete discharge of any liability for the making of such
payment
under the provisions of the Plan.
9.6 Payment in Installments
(a) If a Participant or Beneficiary elects to have
an
Account distributed in annual installments pursuant to Section
9.2(b) or 9.3(b)(2), the installment for each calendar year shall
be paid not later than December 31 of such calendar year. Not-
withstanding the foregoing, if the first calendar year for which
an
installment payment is to be made pursuant to Section 9.2(b) is
the
calendar year specified under the applicable clause of Section
9.1(c), payment of such installment may be deferred until not
later
than the date set forth in Section 9.1(c), but such deferral
shall
not affect the date by which the installment for the next
succeed-
ing year must be paid.
(b) The amount of the installment payment for any
calendar year shall be equal to the Vested Account Balance as of
the Anniversary Date which occurs in the immediately preceding
calendar year, divided by the divisor determined under Section
9.6
(c). For purposes of determining the amount of the installment
payment, the Vested Account Balance shall include all income,
expenses, gains, losses, contributions and forfeitures allocated
as
of such Anniversary Date, and shall be reduced by distributions
made after the Anniversary Date only (1) if the Anniversary Date
is
other than a December 31 and such distributions are made on or
before December 31 of the calendar year in which the Anniversary
Date occurs, or (2) to the extent that, as permitted by the
second
sentence of Section 9.6(a), a portion of the first installment
payment required under Section 9.2(b) is paid after the end of
the
calendar year for which such installment is required. To the
extent that any amount is distributed for any calendar year in
excess of the installment payment required for such calendar
year,
such excess shall not reduce the amount of the installment
payment
required for any subsequent year.
(c) The divisor used to determine the amount of each
installment payment shall be determined as follows:
(1) Unless the person making the election elects
to redetermine life expectancies each year in accordance
with Section 9.6(c)(2), the divisor for the first year
for which an installment payment is to be made (hereinaf-
ter the "initial divisor") shall be a number specified by
the person making the election, and the divisor for each
succeeding year shall be equal to the divisor for the
immediately preceding year reduced by one. If the first
year for which an installment payment will be made is the
latest calendar year for which installment payments are
allowed to commence pursuant to Section 9.2(b) or Section
9.2(c)(2), the initial divisor shall not be greater than,
in the case of installments payable under Section 9.2(b),
the life expectancy of the Participant (or, if applica-
ble, the joint and last survivor life expectancy of the
Participant and Beneficiary) or, in the case of install-
ments payable under Section 9.3(b)(2), the life expectan-
cy of the Beneficiary, determined as of the Participant's
and/or Beneficiary's birthday which occurs in such
calendar year. If installments commence in a calendar
year earlier than the latest calendar year for which they
are required to begin, the initial divisor shall not be
greater than the maximum initial divisor as set forth in
the preceding sentence, increased by one for each
calendar year prior to the latest year for which install-
ments are required to begin. If the person making the
election fails to specify the initial divisor, or
specifies an improper initial divisor, the initial
divisor shall be the largest initial divisor that the
person making the election could have specified.
(2) If the person electing to receive install-
ments is either the Participant or the Participant's
Spouse, such person may also elect to redetermine the
life expectancy of the Participant, the Participant's
Spouse, or both, on an annual basis. Such election may
be made or revoked, in writing, at any time prior to the
time at which the first installment is required to be
paid pursuant to Section 9.2(b) or Section 9.3(b)(2).
Thereafter, such election or failure to elect shall be
irrevocable. If such election is made, then the divisor
for each year for installments payable pursuant to
Section 9.2(b) shall be the remaining life expectancy of
the Participant (or, if applicable, the remaining joint
and last survivor life expectancy of the Participant and
his Beneficiary) determined as of their respective
birthdays attained in such year; provided, however, that
if the Participant's Beneficiary is other than the
Participant's Spouse, or if the Participant has not
elected to redetermine his Spouse's life expectancy, then
the divisor shall be determined in accordance with
Proposed Treasury Regulations Section 1.401(a)(9)-1, Q&A
E-8(b). The divisor for each year for installments
payable to the Participant's surviving Spouse under
Section 9.3(b)(2) shall be the remaining life expectancy
of the surviving Spouse as of his birthday attained in
such year.
(3) For all purposes of this Section 9.6, life
expectancies shall be determined in accordance with the
expected return multiplies set forth in Tables V and VI
of Treasury Regulations Section 1.72-9 as in effect at
the time the life expectancy is being determined.
(4) Anything else contained herein to the contrary
notwithstanding, the divisor for any year shall not be
less than the divisor required by the minimum distribu-
tion incidental benefit requirement as set forth in
Proposed Treasury Regulations Section 1.401(a)(9)-2, Q&A
4.
(d) Installments may be paid at regular intervals of
less than a year, provided that the total amount paid in any year
shall not be less than the annual installment required for such
year pursuant to this Section 9.6.
9.7 Compliance with Regulations
The provisions of this Article IX are intended to
comply
with the minimum distribution requirements of Section 401(a)(9)
of
the Code and of Proposed Treasury Regulations Section
1.401(a)(9)-1
promulgated thereunder, including the incidental death benefit
requirement as set forth in Proposed Treasury Regulations Section
1.401(a)(9)-2. Anything else contained in this Plan to the
contrary notwithstanding, all distributions shall be made in
accordance with Section 401(a)(9) and said Regulations, which
shall
override any provisions of this Plan which are inconsistent
therewith. Upon the promulgation of final Treasury Regulations
replacing Proposed Treasury Regulations Section 1.401(a)(9)-1 and
- - -2, the provisions of this Article IX shall be construed by
reference to such final Treasury Regulations and shall be imple-
mented accordingly.
9.8 Distributions of Stock and Dividends
(a) Anything else in this Article IX to the contrary
notwithstanding, any Stock held in the Account of a Participant
as
of his Benefit Commencement Date or the date of his death shall
be
distributed to such Participant or his Beneficiaries in kind,
unless such Participant or his Beneficiaries affirmatively elect,
in writing, to receive a distribution of the value of such Stock
in
cash; provided, however, that the value of any fractional share
of
Stock shall be distributed in cash. To the extent the value of
such Stock is distributed in cash, such Stock shall be
reallocated
among the Employer Contribution Accounts of the remaining
Partici-
pants, and the amount of such cash distribution shall be charged
against such Employer Contribution Accounts, in proportion to the
balances therein.
(b) If any dividend is paid on Stock held by the
Trust, the Administrator may, in its discretion, direct the
Trustee
to distribute such dividend among the Participants in proportion
to
the Stock allocated to their Accounts as of the end of the Plan
Year in which such dividend is paid, not later than 90 days after
the end of such Plan Year.
<PAGE>
9.9 Right of First Refusal and Options on Stock
(a) Subject to Section 9.9(c), all shares of such
distributed to any Participant or Beneficiary may, as determined
by
the issuer of the Stock or the Administrator, be subject to a
right
of first refusal. Such right shall provide that prior to any
subsequent transfer, the Stock must first be offered by written
offer to the Trust, and then, if refused by the Trust, to the
issuer. In the event that the proposed transfer constitutes a
gift
or other transfer at less than fair market value, the price per
share shall be determined by an independent appraiser (appointed
by
the Administrator) as of the Anniversary Date coinciding with or
immediately preceding the date of exercise. In the event of a
proposed purchase by a prospective bona fide purchaser, the price
shall be the greater of the fair market value, as so determined,
or
the price offered by the prospective bona fide purchaser.
Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. The
Trust may accept the offer at any time during a period not
exceeding seven days after receipt of such offer. In the event
the
Trust does not accept such offer, the issuer may accept such
offer
at any time during a period not exceeding seven days thereafter.
Payment for Stock purchased pursuant to a right of first refusal
with respect to a proposed gift shall be either in cash, not
later
than 30 days after the right is exercised, or in not more than
five
annual installments, the first to be paid within 30 days of
exercise, and the remaining four to bear interest at the rate
designated under Section 483(c)(l)(B) of the Code from time to
time. In the case of a proposed sale, payment shall be made in
accordance with the payment terms offered by the proposed
purchaser.
(b) Any Participant (or Beneficiary) to whom Stock
is
distributed shall have the right to require the issuer of such
Stock to purchase such Stock, by written notice delivered to such
issuer, either within 60 days after such distribution is received
or within the first 60 days of the next succeeding Plan Year.
The
Purchase price in either case shall be the fair market value
[determined as provided in Section 9.9(a)] as of the Anniversary
Date preceding the exercise of the option. The purchase price
shall be paid either in cash within 30 days of exercise or in not
more than 5 annual installments, the first to be paid within 30
days of exercise, and the remaining 4 to bear interest at the
rate
designated under Section 483(c)(l)(B) of the Code from time to
time. If any Participant notifies such issuer that he is
exercising his option, such issuer shall notify the Trustee,
which
shall have the right to assume the rights and obligations of such
issuer under this Section 9.9(b).
(c) Sections 9.9(a) and (b) shall not apply to any
Stock which is readily tradable on an established market.
(d) Except as otherwise provided in this Section
9.7,
no Stock shall be subject to any option, right of first refusal,
buy-sell agreement, or similar restriction. No amendment shall
be
adopted to the Plan which shall cause any Stock to be subject to
any such restriction, whether or not the Plan continues to be an
employee stock ownership plan as defined in Code Section 4975(a).
9.10 Direct Rollovers
(a) This Section 9.10 applies to distributions made
on
or after January 1, 1993.
(b) Notwithstanding any other provision of the Plan
to
the contrary which would otherwise limit the election of a
Distributee (as hereinafter defined) under this Section 9.10, a
Distributee may elect, at the time and in the manner permitted by
the Administrator, to have any portion of an Eligible Rollover
Distribution (as hereinafter defined) paid directly to an
Eligible
Retirement Plan (as hereinafter defined) specified by the
Distribu-
tee in a Direct Rollover (as hereinafter defined).
(c) For purposes of this Section 9.10, the following
terms shall have the meanings indicated:
(1) "Direct Rollover": A payment by the Plan to
the Eligible Retirement Plan specified by a Distributee.
(2) "Distributee": A Participant who is an Em-
ployee or former Employee. In addition, (i) such a
Participant's spouse or former spouse who is the alter-
nate payee under a "qualified domestic relations order,"
as defined in section 414(p) of the Code, and (ii) the
surviving spouse of a deceased Participant who was an
Employee or former Employee, are Distributees with regard
to the interest of such spouse or former spouse in the
Plan.
(3) "Eligible Retirement Plan": An individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust de-
scribed in Section 401(a) of the Code, which accepts a
Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to a
Distributee who is surviving spouse, an "Eligible
Retirement Plan" means an individual retirement account
or individual retirement annuity.
(4) "Eligible Rollover Distribution": Any distri-
bution of all or any portion of the balance to the credit
of the Distributee under the Plan, except that an
Eligible Rollover Distribution shall not include: (i)
any distribution which is one of a series of substantial-
ly equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectan-
cies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of 10 years or
more; (ii) any distribution to the extent such distribu-
tion is required under Section 401(a)(9) of the Code; and
(iii) the portion of any distribution which is not
includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with
respect to Employer securities). The enumeration in the
preceding sentence of any form of payment shall not imply
that any person has the right to receive benefits under
the Plan in such form unless otherwise specifically
provided under the Plan.
9.11 Withdrawals Due to Permanent Disability
In the event a Participant becomes Permanently
Disabled,
but has not yet incurred a Termination of Employment, he or his
legal representative may withdraw all or a portion of his Vested
Account Balance. The form of any such withdrawal shall be
determined pursuant to Section 9.2.<PAGE>
ARTICLE X
DESIGNATION OF BENEFICIARIES
10.1 Participants to Name Beneficiaries
Each Participant may file with the Administrator, in
such
form as the Administrator shall from time to time require, a
written designation of a Beneficiary or Beneficiaries (including
contingent or successive Beneficiaries) who shall be entitled to
receive any benefits which may become payable upon the Partici-
pant's death. If more than one Beneficiary is designated, such
designation shall also specify the manner in which payments are
to
be divided. In the absence of such designation, all payments
shall
be divided per capita, or, if the Beneficiaries are the
Participant's descendants, per stirpes. The Beneficiaries may be
changed at any time or times by the filing of a new designation
with the Administrator, without the necessity of obtaining the
written consent of any Beneficiary, subject to the rights of the
Participant's spouse under Section 9.3(c). No designation of a
Beneficiary or change thereof shall be effective until it has
been
received by the Administrator. The Administrator shall be
entitled
to rely upon the last designation filed by the Participant prior
to
his death.
10.2 No Beneficiary Designated; Death of Beneficiary
If a Participant dies without having a Beneficiary
designation in force, or if at the time of the Participant's
death
(or the date on which a subsequent installment payment is due)
all
designated Beneficiaries have died or are no longer in existence
(in the case of Beneficiaries who are not individuals), payment
shall be made to the deceased Participant's surviving Spouse; or
if there is no surviving Spouse (or if the surviving Spouse dies
before a subsequent installment payment is due), to the deceased
Participant's descendants (including adopted descendants), per
stirpes; or if there are no living descendants, to the deceased
Participant's estate.
10.3 No Liability for Payment to Beneficiaries
The Administrator shall determine the identity of
Beneficiaries, and in so doing, may act upon such information as,
on reasonable inquiry, it may deem reliable with respect to
heirship, relationship, survivorship, or any other fact relative
to
the distributes; and the Trustee and Administrator shall be
indemnified and saved harmless by the Employer with respect to
all
payments required to be made hereunder, if made in good faith and
without actual notice or knowledge of the changed condition or
status of any person receiving payments. The Administrator may
rely on any list or notice furnished by the Employer or any
Related
Employer as to the facts, the occurrence of any events, or the
existence of any situation, and shall not be bound to inquire as
to
the basis of any such decision, list, or notice, and shall be
indemnified and saved harmless by the Employer for any action
taken
or suffered to be taken by him in reliance thereon. In the event
any question or dispute shall arise as to the proper person or
persons to whom any payment shall be made, the Trustee may
withhold
such payment until a determination of such question or dispute
shall have been made, or until the Trustee shall have been
adequately indemnified against loss to his satisfaction. In
consideration of being permitted to designate his Beneficiaries,
the Participant hereby waives, for himself and all persons
claiming
by or through him, any claim against the Administrator, the
Committee, the Trustee and the Employer or any Related Employer
as
a result of any determination made in good faith as to the
persons
entitled to receive any distribution of the Participant's Vested
Account Balance.
10.4 Qualified Domestic Relations Orders
To the extent provided in any Qualified Domestic
Relations Order, and subject to the provisions of Section 17.4(b)
the person or persons named therein shall be considered the
Participant's Beneficiary.<PAGE>
ARTICLE XI
FIDUCIARY CAPACITY AND RESPONSIBILITY
11.1 General Fiduciary Standard of Conduct
Each fiduciary under the Plan shall discharge his
duties
hereunder solely in the interest of the Participants and their
Beneficiaries and for the exclusive purpose of providing benefits
to the Participants and their Beneficiaries and defraying the
reasonable expenses of administering the Plan and the Trust.
Each
fiduciary shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man,
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,
in
accordance with the documents and instruments governing the Plan
and the Trust, insofar as such documents and instruments are
consistent with this standard.
11.2 Allocation of Responsibility Among Fiduciaries
(a) The fiduciaries shall have only those specific
powers, duties, responsibilities and obligations as are
specifically given to them under this Plan. The Employer shall
have the sole responsibility for making the contributions
provided
for under Article IV, and to amend or terminate, in whole or in
part, the Plan and the Trust. The Committee shall have the sole
responsibility for assisting the Administrator in the administra-
tion of the Plan, which responsibility is specifically described
in
the Plan. The Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held
under the Trust (unless otherwise managed by an investment
manager), all as specifically provided in the Trust. Each fidu-
ciary warrants that any directions given, information furnished
or
action taken by him shall be in accordance with the provisions of
the Plan or the Trust authorizing or providing for such
direction,
information or action. Each fiduciary may rely upon any such
direction, information or action of another fiduciary as being
proper under the Plan and the Trust, and is not required to
inquire
into the propriety of any such direction, information or action.
No fiduciary guarantees the Trust in any manner against
investment
loss or depreciation in asset value. The Administrator, the
members of the Committee, the Trustee and any investment manager
shall each be a "named fiduciary" as defined in Section 402(a)(2)
of ERISA. The Administrator may appoint such other named
fiduciaries as it may determine are necessary or appropriate for
the administration of the Plan.
(b) A fiduciary shall not be liable for the acts or
omissions of another fiduciary unless (1) the fiduciary knowingly
participates in, or knowingly attempts to conceal the act or
omission of, another fiduciary and knows the act or omission is a
breach of a fiduciary responsibility by the other fiduciary; or
(2)
the fiduciary has knowledge of a breach by the other fiduciary
and
shall not make reasonable efforts to remedy the breach; or (3)
the
fiduciary's breach of his own fiduciary responsibility permits
the
other fiduciary to commit a breach.
11.3 Administrator
(a) Richardson, or such person as the Employer shall
designate pursuant to paragraph (b), shall serve as the
Administrator of the Plan. The Administrator shall be the "plan
administrator" as defined in Section 414(g) of the Code, and the
"administrator" as defined in Section 3(16)(A) of ERISA. The
Administrator shall have the duty to file such plan descriptions
and annual reports as may be required by ERISA or similar legis-
lation and shall be designated to accept service of legal process
and any other notices for the Plan. The Administrator shall also
furnish each Participant with a summary plan description and
provide each Participant with a statement of his Account Balance
and his Vested Account Balance as of each Anniversary Date. The
Administrator shall provide the notice required by Section 402(f)
of the Code, with each distribution made after December 31, 1984,
which constitutes a qualifying rollover distribution as defined
by
Section 402(a)(5)(E) of the Code.
(b) The Employer shall have the authority to appoint
another corporation or one or more persons to serve as the Admin-
istrator hereunder, in which event such corporation or person (or
persons) shall exercise all of the powers, duties,
responsibilities
and obligations of the Administrator hereunder.
11.4 Powers and Duties of Administrator
The Administrator shall have all necessary power to
accomplish its duties under the Plan in its discretion, including
without limitation the power to:
(a) Construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner
and time of payment of any benefits hereunder (which
determinations shall, in the absence of abuse of discre-
tion, be binding upon all parties);
(b) Prescribe procedures to be followed by Par-
ticipants or Beneficiaries filing applications for
benefits;
(c) Assist any Participant regarding any rights,
benefits or elections available under the Plan;
(d) Adopt reasonable procedures for determining
whether any order, judgment or decree constitutes a
Qualified Domestic Relations Order, and notify the
Participant and all alternate payees affected or their
designated representatives as to the results of its
determinations;
(e) Determine whether to permit assets of the
Trust to be used for loans to Participants pursuant to
Section 14.1 and, if such use is to be permitted, adopt
reasonable procedures to implement such determination and
give all instructions to the Trustee relating thereto;
(f) Direct the Trustee with respect to the amount
and type of benefits to which any Participant or Bene-
ficiary shall be entitled hereunder and with respect to
other disbursements from the Trust;
(g) Receive from the Employer and from Partici-
pants such information as shall be necessary for the
proper administration of the Plan;
(h) Maintain all the necessary records for the
administration of the Plan;
(i) Receive, review and keep on file (as it deems
convenient and proper) reports of benefit payments made
by the Trustee and reports of disbursements for expenses
directed by it;
(j) Make, or instruct the Trustee to make, equi-
table adjustments for any mistakes or errors made in the
administration of the Plan; and
(k) Do all other acts which the Administrator
deems necessary or proper to accomplish and implement its
responsibilities under the Plan.
11.5 Claims Procedure
(a) A Participant or Beneficiary, or an authorized
representative acting on his behalf (hereinafter called the
"Claimant"), may notify the Administrator of a claim for benefits
under the Plan. Such notice shall be in writing and may be in
any
form provided by or acceptable to the Administrator and shall set
forth the basis of such claim and shall authorize the
Administrator
to conduct such examinations as may be necessary to determine the
validity of the claim and to take such steps as may be necessary
to
facilitate the payment of any benefits to which the claimant may
be
entitled under the terms of the Plan. A Claimant shall have no
right to seek review of a denial of benefits, or to bring any
action in any court to enforce a claim for benefits prior to his
filing a claim for benefits and exhausting his rights to review
under this Section 11.5.
(b) When a claim for benefits has been filed
properly,
such claim for benefits shall be evaluated and the Claimant shall
be notified of the approval or the denial within 90 days after
the
receipt of such claim unless special circumstances require an
extension of time for processing the claim. If such an extension
of time for processing is required, written notice of the
extension
shall be furnished to the Claimant prior to the termination of
the
initial 90-day period which shall specify the special
circumstances
requiring an extension and the date by which a final decision
will
be reached (which date shall not be later than 180 days after the
date on which the claim was filed). A Claimant shall be given a
written notice in which the Claimant shall be advised as to
whether
the claim is granted or denied, in whole or in part. If a claim
is
denied, in whole or in part, the Claimant shall be given written
notice which shall contain (1) the specific reasons for the
denial,
(2) references to pertinent plan provisions upon which the denial
is based, (3) a description of any additional material or
informa-
tion necessary to perfect the claim and an explanation of why
such
material or information is necessary and (4) the Claimant's
rights
to seek review of the denial.
(c) If a claim is denied, in whole or in part, the
Claimant shall have the right to request that the Administrator
review the denial, provided that the Claimant files a written
request for review with the Administrator within 60 days after
the
date on which the Claimant received written notification of the
denial. A Claimant (or his duly authorized representative) may
review pertinent documents and submit issues and comments in
writing to the Administrator. Within 60 days after a request for
review is received, the review shall be made and the Claimant
shall
be advised in writing of the decision on review, unless special
circumstances require an extension of time for processing the
review, in which case the Claimant shall be given a written
notification within such initial 60-day period specifying the
reasons for the extension and when such review shall be completed
(provided that such review shall be completed within 120 days
after
the date on which the request for review was filed). The
decision
on review shall be forwarded to the Claimant in writing and shall
include specific reasons for the decision and references to plan
provisions upon which the decision is based. A decision on
review
shall be final and binding on all persons for all purposes. If a
Claimant shall fail to file a request for review in accordance
with
the procedures described in this Section 11.5, such Claimant
shall
have no right to review and shall have no right to bring action
in
any court and the denial of the claim shall become final and
binding on all persons for all purposes.
11.6 Indemnification by Employer
The Employer shall indemnify the members of the Commit-
tee, the Administrator and each Trustee for, and hold them
harmless
from and against, any and all liabilities, losses, costs or
expenses (including reasonable attorneys fees) of whatsoever kind
and nature which may be imposed on, incurred by or asserted
against
them at any time by reason of their service under the Plan or the
Trust as long as they did not act dishonestly or engage in
willful
misconduct or gross negligence in their official capacities
hereunder.
11.7 Service in Multiple Capacities
Any person may serve in more than one fiduciary
capacity
hereunder, including but not limited to service both as a member
of
the Committee and as a Trustee.
11.8 Voting of Stock by Participants and
Beneficiaries
With respect to any Stock which is entitled to vote and
which is a "registration-type class of securities," within the
meaning of Code Section 409(e)(4), each Participant or
Beneficiary
to whose Account shares of such Stock have been allocated shall
be
entitled to direct the Trustee as to the manner in which such
shares are to be voted. With respect to any Stock not described
in
the preceding sentence, each Participant or Beneficiary to whose
Account shares of such Stock have been allocated shall be
entitled
to direct the Trustee as to the manner in which the voting rights
with respect to such Stock are to be exercised with respect to
any
corporate matter which involves the voting of such shares with
respect to the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all of the assets of a trade
or
business or such similar transaction as the Secretary of the
Treasury may prescribe in regulations.
ARTICLE XII
THE COMMITTEE
12.1 Appointment and Membership
The Administrator shall appoint a Committee to assist
it
in its administration of the Plan. The Committee shall consist
of
such number of members as the Administrator shall determine, who
shall be appointed by and serve at the pleasure of the
Administrator. The Administrator may delegate to the Committee
any
of its specific duties, rights and authorities under the Plan, or
may delegate the Committee general authority to administer the
Plan, in which event this Plan shall be construed as though the
term "Committee" were substituted for "Administrator" wherever
the
latter appears other than in this Article XII; provided that
neither the Committee nor any member of the Committee shall be
deemed to be the Administrator pursuant to Section 11.3(a)
unless
the Committee or such member is specifically so designated.
12.2 Compensation and Expenses
The members of the Committee shall serve without
compensation for their services hereunder. All expenses of the
Committee, including expenses incurred in the hiring of con-
sultants, advisors, investment managers, attorneys and
accountants,
shall be paid by the Employer to the extent that such expenses
are
not paid out of the Trust.
12.3 Committee Procedures and Actions
(a) The Committee shall act by a majority of its
members at the time in office and such action may be taken either
by vote at a meeting or in writing without a meeting.
(b) The Committee may adopt such by-laws, rules and
regulations as it deems necessary, desirable or appropriate for
the
conduct of its affairs. All rules and decisions of the Committee
shall be uniformly and consistently applied to all Participants
and
Beneficiaries in similar circumstances. When making a deter-
mination or calculation, the Committee shall be entitled to rely
upon information furnished by a Participant or Beneficiary, the
Employer or any Related Employer, the Administrator or the
Trustee,
and shall have no duty or responsibility to verify such
information.
(c) The Committee may authorize any one or more of
its
members to execute any instrument or document on its behalf.
(d) The Committee shall periodically (but no less
frequently than annually) consult with the Trustee (or any
investment manager) with regard to the investment policy of the
Plan and the methods to be used to carry out the Plan's
objectives.
12.4 Resignation or Removal of Committee Member
(a) Any member of the Committee may resign from
office
at any time by notifying the Administrator, the other members of
the Committee and the Trustee in writing, at least 10 days in
advance, of such resignation; provided, however, that such notice
may, at the option of the parties, be waived.
(b) Any member of the Committee may be removed from
office by the Administrator at any time, with or without cause.
Such removal shall be effectuated by the tendering to such
member,
the other members of the Committee and the Trustee of a written
notice of removal, to take effect on the date specified therein;
provided, however, that such notice may, at the option of the
parties, be waived. A member of the Committee who is a
Participant
shall automatically be removed from the Committee upon his
retirement, Permanent Disability or Termination of Employment.
(c) Upon such resignation or removal of a member of
the Committee, or upon his death, the Administrator shall
promptly
appoint a successor member of the Committee, who may be any
individual, whether or not a Participant, and shall give prompt
written notice thereof to the other members of the Committee and
the Trustee. In the event of the failure of the Administrator to
appoint such successor by the effective date of such resignation
or
removal, or within 10 days after such death, the remaining
members
of the Committee may appoint such successor.
(d) Each successor member of the Committee shall
have
all the powers, duties, responsibilities and obligations
conferred
by the Plan as if originally named to the Committee. No
successor
member of the Committee shall be personally liable for any act or
failure to act of his predecessor or have any duty to review the
actions of his predecessor.
12.5 Committee/Administrator Decisions Final
The Committee and the Administrator have discretionary
authority to determine matters within their jurisdiction and the
decisions of the Committee and of the Administrator in matters
within its jurisdiction shall be final, binding and conclusive
upon
the Employer and the Trustee and upon each Employee, Participant,
former Participant, Beneficiary and every other person or party
interested or concerned.<PAGE>
ARTICLE XIII
THE TRUST
13.1 Trust Agreement
All matters relating to the establishment of the Trust,
the investment of the Trust assets and the appointment,
resignation
or removal, compensation, powers and duties of the Trustees are
set
forth in the Trust Agreement, except to the extent Article XIV
applies.
<PAGE>
ARTICLE XIV
LOANS TO PARTICIPANTS;
LOANS TO ACQUIRE STOCK; DIRECTED INVESTMENTS
14.1 Loans to Participants
(a) If the Administrator determines, in its sole
discretion, to permit loans to Participants, it shall specify a
form of loan application. After receiving and reviewing a
Participant's application for a loan and such other material as
may
reasonably be required, the Administrator may, in its sole
discretion, direct the Trustee to make a loan to a Participant.
Any borrowing by a Participant shall not affect his participation
in the Plan. Loans shall be made available to all Participants
on
a reasonably equivalent basis, and shall not be made available to
Highly Compensated Employees [as defined in Section 414(q) of the
Code] in an amount greater than that which is made available to
other Participants.
(b) Each Participant may borrow not more than the
lesser of (1) $50,000 reduced by the excess, if any, of (i) the
highest outstanding balance of loans made to the Participant from
the Plan during the one year period ending on the day before the
date on which such loan was made, over (ii) the outstanding
balance
of loans made to the Participant from the Plan on the date on
which
such loan was made, or (2) 50% of his Vested Account Balance. In
determining if these limitations have been exceeded, all loans
previously made to a Participant from the Plan [or from any other
employee plan qualified under Section 401(a) of the Code
maintained
by the Employer or any Related Employer] shall be taken into
consideration, to the extent of the highest outstanding balances
of
such loans during the one year period ending on the date on which
the loan from this Plan is made.
(c) Anything to the contrary notwithstanding, all
loans from the Plan shall be deemed to be a directed investment
of
the Participant's Account. For purposes of determining the
annual
value of the assets of the Trust, the amount of any loan to a
Participant shall be valued separately from the other assets of
the
Trust as provided in Section 7.2(a)(2), although any loan shall
be
considered at all times to be part of a Participant's Account for
all other purposes of the Plan.
(d) All loans from the Plan shall be at a reasonable
rate of interest as determined from time to time by the
Administrator. All interest paid by a Participant on a loan
shall
be credited directly to his Account.
(e) All loans shall be evidenced by a written
promissory note executed by the Participant which shall contain
the
terms of repayment. As security for a loan, the Participant
shall
execute an irrevocable pledge and assignment to the Trustee of
his
entire right, title and interest in and to his Account.
(f) All loans shall be repaid by the Participant in
such manner and upon such terms as shall be elected by the
Participant and approved by the Administrator in accordance with
guidelines established from time to time by the Administrator;
provided, however, that any repayment terms shall be subject to
the
following guidelines:
(1) Any loan [other than a loan described in
Section 14.1(f)(2)] shall be required, by its terms, to
be repaid by the Participant within 5 years.
(2) Any loan which is used by the Participant to
acquire any dwelling unit which within a reasonable time
is to be used (determined at the time the loan is made)
as a principal residence of the Participant shall be
required, by its terms, to be repaid by the Participant
within a period of time as determined by the
Administrator.
(3) Any loan shall be required, by its terms, to
be amortized in level payments, made not less frequently
than quarterly, over the term of the loan. Such amorti-
zation may be made by level payments of combined interest
and principal, or by equal payments of principal with
interest actually earned.
(g) The Administrator shall have the authority to
adopt such rules and procedures as may be necessary in its sole
discretion to implement the provisions contained in this Section
14.1, provided that such rules and procedures are not
inconsistent
with the provisions of ERISA.
14.2 Loans to Acquire Stock
(a) The Administrator may at any time direct the
Trustee to cause the Trust to borrow money from a "disqualified
person" (as defined in Section 4975 of the Code), or to incur a
debt guaranteed by a disqualified person if the entire proceeds
of
such loan are used in a reasonable time to either purchase Stock,
or to repay a loan previously incurred under this Section 14.2
and
the loan otherwise meets the requirements of this Section 14.2.
(b) Any debt incurred pursuant to Section 14.2(a)
must:
(1) Be for the primary benefit of Participants;
(2) Be on terms such that the repayment will not
cause other assets of the Trust to be depleted;
(3) If the lender is not an independent party, Be
on terms at least as favorable to the Trust as the terms
of a comparable loan from an independent party;
(4) Provide that, on default, the value of trust
assets transferred in satisfaction of the loan do not
exceed the amount of the default; and, if the lender is
a disqualified person, must provide that a default
consists only of failure to make payments when due and is
limited to the amount of such payments;
(5) Be at a reasonable rate of interest; and
(6) Comply with all other regulations and rulings
applicable to a loan described in Section 4975(d)(3) of
the Code.
(c) All Stock acquired with the proceeds of a loan
described in Section 14.2(a), whether or not pledged or otherwise
encumbered, shall be credited to a Suspense Account. Each Plan
Year, there shall be released from the Suspense Account, and
allocated in accordance with Section 6.1(b), a number of shares
of
stock equal to the total number of shares held in the Suspense
Account immediately prior to such release multiplied by a
fraction,
the numerator of which is the principal and interest paid on such
loan during the Plan Year and the denominator of which is the sum
of the numerator and all principal and interest payments
remaining
unpaid at the end of the Plan Year; without regard to possible
renewals or extensions. If the interest rate on the loan is
variable, such fraction shall be computed by assuming that the
interest rate in effect at the end of the Plan Year shall remain
in
effect for the remaining term of the loan. The terms of any loan
made pursuant to Section 14.2(a) must provide for a definitely
ascertainable number and amount of payments, and the terms of any
pledge or other encumbrance of the Stock which secures such loan
must permit the release of a sufficient number of shares of stock
to satisfy this Section 14.2(c).
14.3 Directed Investments
(a) Each Qualified Participant (as hereinafter
defined) may make an election (the "Election") within 90 days
after
each Anniversary Date during the Qualified Election Period (as
defined below) to direct the Plan to diversify the investment of
a
portion of his Account Balance equal to his Diversification
Amount
(as hereinafter defined). An Election shall be made in, in
writing, on a form to be supplied by the Administrator for such
purpose. A Participant shall become a "Qualified Participant" on
the first day on or after which he has both attained age 55 and
completed 10 years of participation in the Plan. The "Qualified
Election Period" shall be the 5-year period commencing with the
Plan Year which begins after the Plan Year in which the
Participant
becomes a Qualified Participant. During any one of the first 4
Plan Years of the Qualified Election Period, the "Diversification
Amount" shall be an amount equal to the excess, if any, of 25% of
the sum of:
(1) the Qualified Participant's Account Balance
as of the end of the immediately preceding Plan Year plus
all prior distributions of cash made to such Qualified
Participant pursuant to this Section 14.3 during the
Qualified Election Period; over
(2) any amounts as to which such Qualified
Participant has previously made an Election during the
Qualified Election Period.
In the last Plan Year of the Qualified Election Period, the
preceding sentence shall be applied by substituting "50%" for
"25%."
(b) Not later than 90 days after the close of each
90
day period described in Section 14.3(a), the Administrator shall
implement the Participant's Election by either
(1) distributing to the Participant cash in an
amount equal to the amount as to which the Participant
has made the Election in that year or
(2) offering the Participant the opportunity to
direct the investment of such amount in at least 3
investment funds which satisfy the requirements of the
regulations promulgated under Code Section 401(a)(28)
(the "Investment Funds").
(c) To the extent provided in the Trust Agreement,
Richardson may appoint investment managers to manage any of the
Investment Funds, including the power to acquire and dispose of
assets of such funds.
(d) The Administrator shall have the sole
responsibility for and complete discretion in establishing and,
if
it deems it necessary, amending the rules and procedures
governing
the time and manner in which Qualified Participants may make,
modify or revoke any Election pursuant to this Section 14.3 and
Qualified Participants may invest in the various Investment Funds
and allocate or reallocate their account balances among such
Investment Funds. The discretion of the Administrator in this
regard shall only be limited by the general requirement that such
discretion be exercised in a non-discriminatory manner and in
compliance with the requirements of Code Section 401(a)(28) and
the
regulations promulgated thereunder.
(e) The purpose of this Section 14.3 is to conform
to
the requirements of Code Section 401(a)(28) which is incorporated
herein by this reference. To the extent that this Section 14.3
is
inconsistent with Section 401(a)(28) of the Code, the provisions
of
Section 401(a)(28) of the Code shall govern and control.
<PAGE>
ARTICLE XV
AMENDMENT
15.1 Right to Amend
Richardson shall have the right at any time or times to
amend this Plan, in whole or in part.
15.2 Retroactivity of Amendments
No amendment to this Plan may be made effective
retroactively to a date prior to the beginning of the Plan Year
in
which it is adopted, except amendments which are necessary to
establish or maintain, without interruption, the qualification of
the Plan for tax exemption under the provisions of the Code.
15.3 Limitations On Right To Amend
No amendment shall be made to this Plan which shall:
(a) Directly or indirectly operate to give the
Employer or any Related Employer any interest in the
Trust or to deprive any Participant or Beneficiary of his
interest in the Trust, or cause any part of the income or
corpus of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of the
Participants or their Beneficiaries, except as provided
in Section 17.1.
(b) Impose any duties, responsibilities or
obligations on the Trustee without its written consent;
or
(c) Eliminate an optional form of benefit or
eliminate or reduce an "early retirement benefit" or a
"retirement-type subsidy" [as defined in Section
411(d)(6)(B) of the Code].
<PAGE>
ARTICLE XVI
ADOPTION, WITHDRAWAL AND TERMINATION
16.1 Adoption of Plan
(a) With the written consent of the Administrator,
any
other corporation, including a Related Employer, may adopt this
Plan for the exclusive benefit of its eligible employees by
appropriate resolution, which shall specify the effective date of
such adoption and which may contain such changes and variations
in
the Plan and Trust as the Administrator shall approve, and by
agreeing to be bound by the terms of this Plan.
(b) Each participating Employer shall pay a
proportionate part of the expenses incurred in the administration
of the Plan and the Trust to the extent that such expenses are
not
paid directly out of the Trust.
16.2 Withdrawal from Plan
A participating Employer may withdraw from the Plan by
giving written notice to the Administrator and the Trustee, which
notice shall specify the effective date of the withdrawal, which,
unless such requirement is waived by the Administrator, shall not
be less than 30 days after such notice is given. If the date of
withdrawal is not an Anniversary Date, the Trustee shall value
all
Trust assets as of the effective date of the withdrawal in the
manner provided in Section 7.2 as if such date were an
Anniversary
Date, but shall not allocate the participating Employers'
contribution. The withdrawal by an Employer shall be treated as
a
termination of the Plan with respect to Participants employed by
the withdrawing Employer, and such Participants shall be 100%
vested in their Account Balance as of the date of withdrawal, and
such Account Balance shall be distributed as provided in Article
IX.
16.3 Termination
(a) The Agreement may be terminated at any time by
Richardson.
(b) Upon termination of the Plan and Trust, the
Administrator shall direct the Trustee to value the Trust in
accordance with Section 7.2 and to distribute in accordance with
the terms of the Plan all assets remaining in the Trust (after
payment or reserving funds for payment of any fees, taxes and
expenses properly chargeable against the Trust) to the
Participants
in accordance with the value of the credits standing to each
Participant's Accounts as of the date of such termination, in
cash
or in kind valued at fair market at the date of distribution, in
such manner as the Trustee shall determine.
(c) In the event of the sale by an Employer of sub-
stantially all of its assets and business, the successor to the
Employer shall be substituted for and shall exercise and have all
the rights and obligations of the Employer hereunder upon the
filing, in writing, of its election to do so with the Trustee.
ARTICLE XVII
MISCELLANEOUS
17.1 No Reversion to Employer
No part of the corpus or income of the Trust shall
revert
to the Employer or any Related Employer or be used for, or
diverted
to, purposes other than for the exclusive benefit of the
Participants and their Beneficiaries; provided, however, that:
(a) Any balance remaining in the Excess
Contribution Account or the Excess Forfeiture Account at
the time the Plan is terminated, and which cannot be
allocated in the final Plan Year of the Plan without
violating the limitations of Section 7.6, shall be
returned to the Employer (and, in the event that there is
more than one participating Employer, such reversion
shall be in the proportion that the aggregate
contributions made by each such Employer in all Plan
Years with respect to which amounts were credited to
either of such accounts bears to the aggregate
contributions made by all participating Employers in all
such Plan Years).
(b) In the event that any portion of a contribu-
tion is made by the Employer to the Plan because of
either a good faith mistake of fact or a good faith
mistake in determining that such contribution is de-
ductible under Section 401 of the Code, the Trustee shall
return to the Employer, upon written notice thereof, an
amount equal to the portion of such contribution which
would not have been made but for such mistake of fact, or
which is determined to be non-deductible, as the case may
be, subject to the following conditions and limitations.
No amount shall be returned to the Employer pursuant to
this Section 17.1(b) unless such amount is returned not
later than one year after the date on which the
contribution was made in the case of a contribution based
on a mistake of fact was made, or the date on which the
deduction is disallowed in case of a contribution
mistakenly believed to be deductible. For purposes of
the preceding sentence, a deduction shall be considered
to be disallowed on either (1) the day on which the
Employer voluntarily files an amended federal income tax
return correcting the error; (2) the day on which the
Internal Revenue Service issues a statutory notice of
deficiency, notice of final partnership or S corporation
administrative adjustment, or other determination from
which no further administrative appeal is possible, which
notice is based in whole or part upon disallowance of
such deduction, provided that, if applicable, no person
files a timely petition for judicial review of such
determination; or (3) if such a petition for judicial
review is filed, the day on which a final judgment is
entered dismissing such petition or upholding the
disallowance of such deduction from which judgment no
further appeal is possible, or as to which the time for
filing an appeal expires. The amount returned to the
Employer shall not include any earnings attributable to
the erroneous contribution, but shall be reduced by any
losses attributable thereto. Notwithstanding the
provisions of Article VIII, an erroneous contribution may
be returned in accordance with this Section 17.1(b) after
such contribution has been allocated and credited to the
Participants' Accounts, in which event the amount so
returned shall be charged to the Accounts in the same
proportion that the contribution was originally
allocated; provided, however, that in no event shall the
Account Balance of any Participant be reduced as a result
of the return of an erroneous contribution to less than
it would have been had the erroneous contribution not
been made, and the amount returned to the Employer shall
be reduced to the extent necessary to avoid such a
reduction.
17.2 Evidence of Action by Necessary Parties
(a) Any action by the Employer pursuant to the
provisions of this Plan shall be evidenced by a resolution of its
Board of Directors, or by written instrument executed by any
person
authorized by its Board of Directors to take such action.
(b) Necessary parties to any accounting, litigation
or
other proceedings shall include only the Trustee and the
Employer,
and the settlement or judgment in any such case in which the
Employer is duly served or cited shall be binding upon all
persons
entitled to benefits under the Plan, the estate of any such
person,
and upon all persons claiming by, through or under them.
17.3 Rights of Participants Limited
Neither the adoption of the Plan nor anything contained
in the Plan or the Trust shall be construed as giving any
Participant, Beneficiary or Employee any equity or other interest
in the assets, business or affairs of the Employer or any Related
Employer, or the right to complain about any action taken by the
officers, directors or stockholders of, or about any policy
adopted
or pursued by, the Employer or any Related Employer, or the right
to examine the books and records of the Employer or any Related
Employer, or as giving any Employee the right to be retained in
the
service of the Employer or any Related Employer, and all
Employees
shall remain subject to discharge to the same extent as if the
Plan
and the Trust had never been executed. Prior to the time that
distributions are made in conformity with the provisions of the
Plan, neither the Participants, nor their spouses, Beneficiaries,
heirs-at-law, or legal representatives shall receive cash or any
other thing of current exchangeable value from the Employer or
any
Related Employer or the Trustee as a result of the Trust.
17.4 Assignment and Alienation
(a) No payment to any person under any of the
provisions of the Plan or the Trust, nor the right to receive
such
payment or payments, nor any interest in the Trust, shall be
subject to assignment, alienation, transfer or anticipation,
either
by the voluntary or involuntary act of any Participant or
Beneficiary or by operation of law, nor, except for the repayment
of loans to Participants authorized under Section 14.1 and
payments
pursuant to a Qualified Domestic Relations Order in accordance
with
Section 17.4(b), shall such payment or right or interest be
subject
to the demands or claims of any creditor of such person, nor be
liable in any way for such person's debts, obligations or
liabilities.
(b) Upon receiving any order, judgment or decree
which
may be a Qualified Domestic Relations Order, the Administrator
shall promptly notify the Participant involved and any Alternate
Payee [as defined in Section 2.28(a)] who may be affected by such
order of the receipt of the order and of the Plan's procedure for
determining whether the order is a Qualified Domestic Relations
Order, and shall proceed to determine whether the order is a
Qualified Domestic Relations Order. During the period during
which
it is being determined whether such order is a Qualified Domestic
Relations Order, any payments which would, under such order, be
payable to an Alternate Payee, shall be placed in a separate
account in the Trust. If, within 18 months after receipt of such
order, the Administrator determines that such order is a
Qualified
Domestic Relations Order, the amount of such separate account,
with
any earnings thereon, shall be paid to the Alternate Payees as
provided in such order. If the status of such order has not been
established within such 18-month period, or if it is determined
that the order is not a Qualified Domestic Relations Order, the
amount of such separate account shall be paid to the Participant,
or, if it would not otherwise have been payable currently, shall
be
restored to the Participant's Account. Any determination made
more
than 18 months after the receipt of such order that such order is
a Qualified Domestic Relations Order shall be applied
prospectively
only.
(c) In the event that any Participant's benefits are
garnished or attached by order of any court, the Trustee may
bring
an action for a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to
be paid by the Trust. During the pendency of said action, any
benefits that become payable shall be paid into the court as they
become payable, to be distributed by the court to the recipient
it
deems proper at the close of said action.
17.5 Missing Participants or Beneficiaries
(a) Each Participant shall file with the Employer,
in
writing, his post office address, the post office address of each
of his Beneficiaries, and each change of post office address.
Any
communication, statement or notice addressed to Participant or
Beneficiary with postage prepaid at his last post office address
filed with the Employer, or if no address is filed with the
Employer, then at his last post office address as shown on the
Employer's records, will be binding on the Participant and his
Beneficiary for all purposes of the Plan. Neither the Trustee
nor
the Administrator is required to search for or locate Participant
or Beneficiary.
(b) If the Administrator or Trustee shall send by
registered or certified mail, postage prepaid, to the last known
address of a Participant or Beneficiary, a notification that he
is
entitled to a distribution hereunder and if either (1) such
notification is returned because the addressee cannot be located
at
such address and neither the Employer nor the Trustee shall have
any knowledge of such Participant's or Beneficiary's whereabouts
within 3 years from the date such notification was mailed, or (2)
within 3 years after such notification was mailed to such
Partici-
pant or Beneficiary, he does not respond thereto by informing the
Trustee of his whereabouts, then, upon the Anniversary Date
coincident with or immediately following the third anniversary of
the mailing of said notification, the then undistributed Account
Balance of such Participant or Beneficiary shall be paid to the
person or persons who would have been entitled to take in the
event
of the death of the Participant or Beneficiary whose whereabouts
is
unknown, assuming that such death had occurred on the Anniversary
Date immediately succeeding the third anniversary of the mailing
of
said notification.
(c) If any check in payment of a benefit hereunder
which has been mailed by regular United States mail to the last
address of the payee furnished the Trustee by the Administrator
is
returned unclaimed, the Trustee shall notify the Administrator
and
shall discontinue further payments to such payee until it
receives
the further instructions of the Administrator.
17.6 Merger and Consolidation of Plan
In the case of any merger or consolidation with, or
transfer of assets and liabilities to, any other employee plan
qualified under Section 401(a) of the Code, provisions shall be
made so that each Participant in the Plan on the date thereof
would
receive a benefit immediately after the merger, consolidation or
transfer (if the other employee plan terminated on that date)
which
is equal to or greater than the benefit he would have been
entitled
to receive immediately prior to the merger, consolidation or
transfer (if the Plan had then terminated).
17.7 Severability
In case any provision of this Plan shall be held
illegal
or invalid for any reason, said illegality or invalidity shall
not
affect the remaining provisions, but shall be fully severable and
this Agreement shall be construed and enforced as if said illegal
or invalid provision had never been inserted herein.
17.8 Applicable Law
This Plan shall be construed and enforced and the Trust
shall be administered in accordance with the laws of the State of
Illinois, to the extent that such laws are not preempted by the
laws of the United States of America.
17.9 Method of Accounting
The Plan shall use the accrual method of accounting as
to
Plan Years beginning prior to May 27, 1989 and as to Plan Years
beginning after June 1, 1991. For the Plan Years beginning May
27,
1989, May 26, 1990 and June 1, 1991, the Plan shall use the
modified cash method of accounting.
IN WITNESS WHEREOF, Richardson has caused this Plan to
be executed as of the date and year first written above.
RICHARDSON ELECTRONICS,
LTD.
By:
______________________________
Title:________________________
EXHIBIT 10(m)
January 13, 1994
Mr. Samuel Rubinovitz
3 Bowser Rd.
Lexington MA 02173
Dear Sam:
This is to confirm our agreement pursuant to which you will
provide consulting services to our Company.
In broad lines we expect from you:
1. Through inputs from you, contribution to the strategy
of our Corporation, and, in particular such tasks and
assistance you may agree to perform at the request of
the Strategic Planning Committee of our Board of
Directors which are beyond your duties as a member of
the Board or such Committee.
2. Other advice and assistance, relevant to our business,
which we may mutually agree to require from you.
We will periodically meet to review your consulting program
which I will personally set in agreement with you.
You will work for us as such an independent contractor
consultant for one (1) year beginning as of January 13, 1994.
The agreement shall automatically renew for additional one year
terms unless either party gives the other party written notice of
non-renewal at least ninety (90) days prior to the next renewal
date.
You shall determine your working hours and the manner, means
and methods of carrying out requested service and projects,
subject at all times, however, to the specific directions,
statements and input from our Company's personnel concerning
Company policy, objectives and needs.
As full and complete compensation for your services for
consultation required by us hereunder and for discharge of all
your obligations hereunder, we shall pay you a fee in advance at
the rate of $10,000 per quarter. The first quarterly payment
will be made on February 1, 1994, and thereafter quarterly
payments will be made on each May 1, August 1, November 1 and
February 1 that you continue to be retained as a consultant
hereunder. In addition, we shall reimburse you for all
out-of-pocket expenses (transportation, hotel, meals) necessarily
incurred by you in connection with any trip made at our request
and with our prior approval. Reimbursement shall be made by
payment within 15 days after receipt of invoice, rendered by you.
In the performance of all services hereunder you shall be
deemed to be and shall be an independent contractor and as such:
(a) you shall not be entitled to any benefits applicable to
employees of our Company such as profit sharing, life insurance,
medical or heath benefits or other social benefits; and (b) you
shall have sole responsibility for the payment of all applicable
governmental taxes and for all employment and disability
insurance, social taxes and other similar taxes as may be
applicable, the Company will not be required to make any
deductions or contribution for any such items and you agree to
hold us harmless and indemnify us from liability, cost or
expense, in connection therewith. Notwithstanding the foregoing,
the Company may, in its sole discretion, make such withholding
for taxes as is appropriate or required.
The information and knowledge divulged to you by our Company
or which you acquire in connection or as a result of your
services hereunder shall be regarded by you as confidential.
Without limiting the generality of the foregoing, you recognize
that, unless and until published, all features of the plans,
programs, applications and methods developed by you hereunder or
heretofore or hereafter used or developed by us (or by any of our
predecessors in business) are and shall be our trade secrets.
You shall not use, nor shall you disclose, any such information,
knowledge or trade secrets to any person either during or after
the period of this agreement, except to our employees as may be
necessary in the regular course of your duties hereunder, or
except as otherwise authorized by us.
All records and notes and copies thereof relating to our
operations, investigations and business made or received by you
in connection with your consulting services hereunder during the
period of this agreement are and shall be our property
exclusively, and you shall keep the same at all times in your
custody and subject to your control, and shall surrender the same
at the termination of this agreement if not before.
You shall indemnify and hold harmless our Company from and
against any and all liability, loss, cost, expense, damage,
claims or demands arising out of or resulting in any manner from
or occurring in connection with your performance of services
hereunder, including, without limitation, on account of injuries
(including death) to you or loss of or damage to your property.
If the foregoing is in accordance with your understanding
please indicate your agreement to the same by executing and
returning the enclosed copy of this letter.
Very truly yours,
RICHARDSON ELECTRONICS, LTD.
/s/ Edward J. Richardson
Edward J. Richardson
Chairman
Agreed to:
/s/ Samuel Rubinovitz
EXHIBIT 10(n)
EMPLOYMENT AGREEMENT
WITH CONSULTING SERVICES UPON TERMINATION
This Agreement made this 1st day of April, 1994 by and
between RICHARDSON ELECTRONICS, LTD. whose principal office is
40W267 Keslinger Road, LaFox, Illinois 60147 (hereinafter
together with its subsidiaries called the "Company") and LEONARD
R. PRANGE of 1010 Willow Creek Rd., West Chicago IL 60185
(hereinafter called the "Employee").
WITNESSETH:
WHEREAS,the Employee has been an employee and executive
officer of the Company for many years and the parties wish to
provide for his continuing employment and future services upon
terms and conditions set forth in this agreement;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Employment and Term. The Company continues to employ
the Employee, and the Employee agrees to and hereby does continue
in the employ of the Company to render full time service to the
Company until notice of termination of employment is given by one
party to the other and thereafter to provided consulting services
to the Company for a two year period as provided in paragraph 5
below, all upon the terms and conditions and for the
consideration hereinafter set forth.
2. Duties. Until further action by the Board of Directors
of the Company, Employee shall be the Chief Financial Officer of
the Company having the duties and responsibilities assigned to
that position by the Company and shall have such other offices
and duties and responsibilities as are assigned to him from time
to time. Should the Board of Directors of the Company remove the
Employee as Chief Financial Officer he shall be a Group Vice
President reporting to the Chief Executive Officer of the Company
and in such position shall have such duties and responsibilities
and other offices as are assigned to him from time to time by the
Chief Executive Officer of the Company. The Employee shall carry
out his duties and responsibilities to the best of his abilities
and with the same level of professional attention previously
devoted to his employment with the Company.
3. Compensation. For all services to be rendered by him in
any capacity hereunder (including as an officer, director,
committee member or otherwise of the Company or any subsidiary or
division) on behalf of the Company, the Company agrees to pay
Employee so long as he is employed hereunder:
(a) Salary. A fixed salary ("Salary") at the rate of One Hundred
Forty Thousand Seven Hundred Ninety Five Dollars
($140,795.00) per annum payable in installments in
accordance with the Company's regular pay periods for
employees generally;
(b) Bonus. In addition to the Salary set forth in (a) above, a
bonus ("Bonus") which would provide the Employee with an
annual Bonus of up to 50% of the annual Salary set forth in
(a) above if Employee meets all individual objectives as
established by the Chief Executive Officer of the Company
from time to time; provided, however, that a minimum of 50%
of the Bonus (25% of Salary) will be payable during
employment under this agreement and the Bonus will be
payable in accordance with the Company's regular pay
periods; and
(c) Contingent Compensation. Upon termination of his employment,
except as otherwise provided and subject to the conditions
set forth in paragraph 5 below, contingent compensation
("Contingent Compensation"), if and to the extent payable,
for a period of twenty four (24) months thereafter
commencing on the first day of the month following the date
on which his employment terminates, at the rate of Fourteen
Thousand Six Hundred Sixty Seven Dollars ($14,667.00) per
month so long as he has not accepted other full time
employment and if he has accepted, or thereafter during the
period of payment of Contingent Compensation accepts, other
full time employment, then the amount of Contingent
Compensation shall be reduced to the rate of Seven Thousand
Three Hundred Thirty Three Dollars ($7,333.00) per month
beginning on the first day of the month following the date
he has accepted other full time employment.
No additional compensation shall be payable to Employee by reason
of the number of hours worked or by reason of hours worked on
Saturdays, Sundays, holidays or otherwise.
4. Benefits. During the term of full time employment
hereunder, in addition to the Salary and Bonus provided above,
Employee shall be entitled to participate in benefits generally
offered to all Company officer employees for which he is
eligible, including vacations commensurate with length of service
and holidays, stock options, profit sharing and pension plan,
health care and life insurance, as detailed in the Richardson
Employee Benefit Plans. In the event that the Employee shall,
during the term of his full time employment hereunder, die or
become disabled he shall be entitled to the benefits provided to
officer employees generally under the Company's Employee Group
Insurance and Benefit Plans for employees and the Company shall
have no further duty or obligation to pay the Salary and Bonus or
Contingent Compensation provided above in paragraph 3. beyond
such date of death or disability. During the period of payment
of contingency compensation provided for in paragraph 3.(c) above
Employee shall be entitled to participate in health care plans
which the Company then offers generally to its officer employees
on the same terms as such officer employees, but shall not be
entitled to participate in any other benefits.
5. Contingent Compensation and Consulting Services. The
Contingent Compensation provided for in paragraph 3.(c) above
shall be payable if and when but not unless:
(a) Termination. The employment of Employee shall have been
terminated by other than the Employee's death or disability
entitling him or his heirs, estate or beneficiaries to
benefits provided to officer employees generally under the
Company's Employee Group Insurance and Benefit Plans for
employees: and
(b) Conditions. The Employee shall, if and as long as such
Contingent Compensation shall be paid (but in any event for
a period of at least 24 months following termination of his
employment) and without additional compensation, fee, or
other payment by the Company (other that the payment by the
Company for health care coverage as provided for in
paragraph 4. above and other than the payment or
reimbursement of reasonable actual out-of-pocket travel and
other approved expenses)
(i) Consulting. Render such consulting and advisory
services as the Company may from time to time reasonably
request, having in mind the Employee's health, residence,
and personal circumstances, in connection with any matter on
which the Employee was working at time of the termination of
his employment or with respect to which the Employee might
be expected to have special competence by reason of his
former employment by the Company or otherwise;
(ii) Non-Compete. Refrain (independently of and without
reference to paragraph 8 hereof), after the expiration of a
period of thirty (30) days from the mailing to him of
written notice by the Secretary of the Company of a
direction to do so, from engaging in the operation or
management of a business, whether as owner, shareholder,
partner, officer, employee or otherwise, which then shall be
in competition with any business which the Company or any of
its subsidiaries was engaged at the time of the termination
of the Employee's employment, provided that ownership as an
investor of not more than one per cent (1%) of the
outstanding shares of stock of any company listed on a
national securities exchange shall not in itself constitute
a violation of these provisions;
(iii) Confidential Information. Refrain (independently of
and without reference to paragraph 7 hereof) from disclosing
to unauthorized persons information relative to the business
of the Company or any of its subsidiaries which he shall
have reason to believe is confidential; and
(iv) Company's Interest. Refrain (independently of and
without reference to paragraph 6 hereof) from otherwise
acting or conducting himself in a manner which he shall have
reason to believe is inimical or contrary to the best
interests of the Company.
In the event that the Employee shall fail to comply with any
provision of paragraph 5.(b) hereof, the Company's obligation to
make any further payment of the Contingent Compensation provided
for in paragraph 3.(c) above shall forthwith terminate.
The Employee by written notice to the Company during his
lifetime signed by him and witnessed by at least two persons, may
designate one or more persons or entities (including a trust or
trusts or his estate) to receive any balance of his Contingent
Compensation in the event of his death prior to full payment
thereof but subsequent to the time before which his death would
terminate his right to receive Contingent Compensation as
provided in paragraph 4. above, and if he shall designate more
than one, the proportion in which each is to receive such
payments. He may also designate the person or persons who shall
succeed to the rights of the person or persons originally
designated in case the latter should die. He may from time to
time change any designation so made and the last written notice
given by him before his death shall be controlling. In the
absence of a designation made by the Employee pursuant to this
paragraph 5. or, in the event of the death of a person to whom
payments were being made pursuant to this paragraph 5. before
such payments are completed and, failing any other designation by
the Employee, such balance of payments shall be paid to the legal
representatives of Employee.
6. Company's Good Name. Employee agrees that he will at no
time engage in conduct which demeans, defames, libels, slanders,
destroys or diminishes in any way the property, assets or rights,
or the reputation or goodwill of the Company, its subsidiaries,
or their respective shareholders, directors, officers, employees,
or agents or the products sold by the Company.
7. Confidentiality. The Employee shall not (except in the
proper course of his duties hereunder) either during the period
of his employment with the Company or thereafter make use of,
disseminate or divulge to any person, firm, company, association
or other entity, and shall use his best endeavors to prevent the
use, dissemination, publication or disclosure of, any
information, knowledge or data disclosed to Employee or known by
Employee as a consequence of or through his employment or
relationship with the Company or any of its predecessors or
subsidiaries (including information, knowledge or data conceived,
originated, discovered or developed by Employee) not generally
known in the business of manufacturing or distributing electron
tubes, semiconductors, or data display products, about the
Company's or its predecessors' or subsidiaries' businesses,
products, processes and services, including without limitation
information relating to financial matters, purchasing, sales,
research, development, methods, policies, procedures, systems,
practices, merchandising, suppliers or customers. It is not
intended to limit or restrict Employee's right to utilize
financial related ideas, concepts or structures of a general
nature so long as they are not used in a business competitive
with that of the Company.
8. Non Competition.
(a) Engage in a Competing Business. Independent of any
obligation under any other paragraph or subparagraph hereof
or any other agreement, Employee agrees that during the term
of his employment, and during a further period of two years
after leaving the employ of the Company, whether upon
expiration of this agreement or otherwise, he will not,
except with the approval of the Chairman of the Board or
President of the Company, directly or indirectly (whether or
not for compensation or profit) through any other individual
or entity whether as an officer, director, shareholder,
creditor, partner, promoter, proprietor, associate,
employee, owner, agent, representative or otherwise, become
or be interested in, or associated with, any individual or
entity, other than the Company, engaged in any business or
enterprise the nature of which is competitive with that of
the Company in the territories served by the Company'
provided, however, that, anything above to the contrary
notwithstanding, Employee may, after the date of this
Agreement, own as an inactive investor, securities of any
corporation engaged in any prohibited business as described
above which is publicly traded on a national securities
exchange, so long as the holdings of the Employee, directly
or indirectly, in the aggregate, constitute less than 1% of
the outstanding voting securities of such corporation.
(b) Solicit. Independent of any obligation under any other
paragraph or subparagraph hereof or any other agreement,
Employee agrees that during the term of his employment, and
during a further period of two years after leaving the
employ of the Company, whether upon expiration of this
Agreement or otherwise, he will not, except with the
approval of the Chairman of the Board or President of the
Company, directly or indirectly (whether or not for
compensation or profit) through any other individual or
entity call upon, solicit, entice, persuade or induce any
individual or entity which during Employee's term of
employment with the Company was a customer or supplier, or
proposed customer or supplier, of the Company upon whom
Employee called or dealt with or whose account he supervised
on behalf of the Company, to purchase (with respect to
customers) or sell (with respect to suppliers) products of
the types or kind sold by the Company or which could be
substituted for or which serve the same purpose or function
as products sold by the Company or services of the type or
kind provided to or obtained from such customer or supplier
during Employee's employment or request or advise any such
customer or supplier to withdraw, curtail or cancel its
business with the Company, and Employee shall not approach,
respond to, or otherwise deal with any such customer or
supplier for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other
individual or entity.
(c) Remedies. In the event of a breach or threatened breach by
the Employee of the provisions of this paragraph 8 or of
paragraphs 6 or 7 the Company shall be entitled to an
injunction restraining the Employee from such breach.
Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to the Company
for such breach or threatened breach. The parties hereto
desire that this paragraph 8 and paragraphs 6 and 7 shall be
fully enforceable in accordance with the terms hereof and
thereof but if any portion is held unenforceable or void or
against public policy by any court of competent
jurisdiction, the remainder shall continue to be fully
enforceable in accordance with its terms or as it may be
modified by such court. The period of restriction specified
in paragraphs 6, 7 or 8 shall abate during the time of any
violation thereof and the remaining portion at the
commencement of the violation shall not begin to run until
the violation is cured.
(d) Survival. The provisions of this paragraph 8 and paragraphs
6 and 7 shall survive the termination or expiration of this
Agreement or Employee's employment for any reason.
9. Termination. Upon termination of Employee's employment
hereunder the Company, without any payment by Employee, shall:
(a) Auto. Transfer ownership and title to the automobile, if
any, belonging to the Company and then being used by the
Employee;
(b) Computer Equipment. Transfer ownership and title to the
laptop personal computer and/or desktop personal computer,
if any, belonging to the Company and then being used by the
Employee;
(c) Loans. Forgive the then outstanding principal balance and
interest on personal loans made by the Company to Employee
in 1987/88 and now having a principal balance of $41,000;
(d) References. Provide Employee references indicating that the
Employee's separation was amicable and was the result of
differences in business philosophy:
(e) Indemnification. Provide Employee with indemnification,
including any related legal costs, as provided under the
Company's by-laws for all action of Employee during the
course of his employment with the Company; and
(f) Outplacement. Provide outplacement services by a reputable
firm or firms such as Right Associates.
Employee acknowledges and agrees that the consideration from the
Company provided for in this agreement constitutes full
settlement of all claims that Employee may have against the
Company, its successors, assigns, affiliates, or any of its
officers, directors, shareholders, employees, agents, or
representatives, for compensation or otherwise in connection with
his employment or its termination, and Employee, except for
claims under this agreement, hereby releases all such claims or
rights, including without limitation any amounts for termination
due under any Company policy.
10. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives,
successors and assigns and shall inure to their respective
benefits.
(b) Modification. This Agreement shall not be subject to change,
modification, or discharge, in whole or in part, except by
written instrument signed by the parties; provided, however,
that if any of the terms, provisions or restrictions of
paragraph 6, 7 or 8 are held to be in any respect
unreasonable restrictions upon Employee, then the court so
holding shall reduce the territory to which it pertains
and/or the period of time in which it operates or effect any
other change to the extent necessary to render any of said
terms, provisions or restrictions enforceable.
(c) Waiver. The failure by the Company to insist upon strict
compliance by the Employee with respect to any of the terms
or conditions hereof shall not be deemed a waiver or
relinquishment of any other terms or conditions nor shall
any failure to exercise any right or power hereunder at one
or more times be deemed a waiver or relinquishment of such
right or power at any other time or times.
(d) Captions. The captions of this Agreement are inserted for
convenience only and are not to be construed as forming a
part of this Agreement.
(e) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of
Illinois.
(f) Notices. All notices required to be given hereunder to the
Company shall be addressed to its principal executive office
at 40W267 Keslinger Road, LaFox, Illinois 60147; attention:
William G. Seils, by certified or registered mail. All
notices required or to be given hereunder to the Employee
shall be addressed to the Employee at his residence as last
reflected on the records of the Company, by certified or
registered mail. Notice shall be deemed given if delivered
in person to William G. Seils on behalf of the Company or to
the Employee, or if mailed, when deposited in the United
States Mail addressed as aforesaid.
(g) Assignment. This is a personal services agreement, and
Employee's performance and obligations hereunder shall not
be assigned or delegated by Employee, and any purported
assignment or delegation shall be void.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement the day and year first above written.
EMPLOYEE RICHARDSON ELECTRONICS, LTD.
/s/ Leonard R. Prange /s/ Edward J. Richardson
Leonard R. Prange By:
Edward J. Richardson,
President and CEO
EXHIBIT 10(o)
April 4, 1994
Mr. Bart Petrini
1767 Garland Road
Knoxville, TN 37922
Dear Bart:
I am pleased to present the following offer to become the Vice
President and General Manager of the Electron Device Group of
Richardson Electronics.
The details of our offer of employment are outlined below.
Position: The position being offered is that of Vice President
and General Manager of the Electron Device Group.
Reporting Relationship: You will become a member of the
executive staff and report directly to me.
Annual Base Salary: Your annual base salary will be set at
$130,000. You will receive a performance appraisal and merit
salary increase on an annual basis on the anniversary of the date
of your employment.
Bonus Plan: You will have an opportunity to receive an incentive
equal to fifty percent of your base salary based upon attainment
of business unit and corporate objectives. This incentive will
be paid on a quarterly basis. Fifty percent of this bonus will
be guaranteed for the first year of employment and will be paid
as an incentive to join the Company once your employment begins.
A copy of the incentive plan as it currently exists is enclosed
for your reference.
Company Automobile: You will be eligible to receive a company
automobile. A copy of the executive automobile plan is enclosed.
Please note that the current purchase price of an automobile
under the plan is $33,000. All insurance, title, taxes,
gasoline, maintenance and repairs are included as part of the
plan.
Stock Options: I will recommend to the Stock Option Committee of
the Board of Directors that 25,000 shares of Richardson
Electronics common stock be granted to you as an incentive to
join the Company. The price of the stock is based on the market
closing price on the date the Board meets to authorize these
options. This date will be no later than the next regularly
scheduled meeting of the Board of Directors. These options are
vested and exercisable at 20 percent per year as outlined in the
enclosed information on the stock option plan. The stock option
plan is subject to the approval of the Board of Directors.
Employee Benefits: In addition to the compensation package
presented above, you will be eligible for participation in all
employee benefit programs including medical, dental, life and
disability insurance. You will also be eligible to participate
in the Company's profit sharing, 401K plan, employee stock
ownership plan, and employee stock purchase plan. A description
of these plans is enclosed. Please note that our medical plan
has a thirty day waiting period for all new employees.
You will be entitled 4 weeks vacation in each calendar year of
your employment, prorated for any particular year.
Relocation: The enclosed employee relocation policy is available
to you. Relocation should be coordinated with Joe Grill, Vice
President of Corporate Administration.
Effective Date: As soon as possible and as mutually agreed upon.
I believe you will find the position of Vice President and
General Manager of the Electron Device Group both challenging and
rewarding. I am confident that you can make a significant
contribution to the continued growth and success of Richardson
Electronics. Please feel free to contact me or Joe Grill if you
have any questions or concerns. I look forward to hearing from
you soon.
Sincerely,
RICHARDSON ELECTRONICS, LTD.
/s/ Edward J. Richardson
Edward J. Richardson
Chairman & CEO
Accepted this 8 day of April 1994.
/s/ Bart Petrini
EXHIBIT 10(p)
May 20, 1994
Mr. William Garry
1920B North Maud Street
Chicago, IL 60614
Dear Bill:
I am pleased to present the following offer to become the Vice
President of Finance and Chief Financial Officer of Richardson
Electronics.
The details of our offer of employment are outlined below.
Position: The position being offered is that of Vice President of
Finance and Chief Financial Officer
Reporting Relationship: You will become a member of the executive
staff and report directly to me.
Annual Base Salary: Your annual base salary will be set at
$165,000. You will receive a performance appraisal and merit
salary increase on an annual basis on the anniversary of the date
of your employment.
Bonus Plan: You will have an opportunity to receive an incentive
equal to fifty percent of your base salary based upon attainment of
personal and corporate objectives. This incentive will be paid on
a quarterly basis. A copy of the incentive plan as it currently
exists is enclosed for your reference.
Company Automobile: You will be eligible to receive a company
automobile. A copy of the executive automobile plan is enclosed.
Please note that the current purchase price of an automobile under
the plan is $33,000. All insurance, title, taxes, gasoline,
maintenance and repairs are included as part of the Plan.
Stock Options: I will recommend to the Stock Option Committee of
the Board of Directors that 35,000 shares of Richardson Electronics
common stock be granted to you as an incentive to join the Company.
The price of the stock is based on the market closing price on the
date the Board meets to authorize these options. This date will be
no later than the next regularly scheduled meeting of the Board of
Directors. These options are vested and exercisable at 20 percent
per year as outlined in the enclosed information on the stock
option plan. The stock option plan is subject to the approval of
the Board of Directors.
Employee Benefits: In addition to the compensation package
presented above, you will be eligible for participation in all
employee benefit programs including medical, dental, life and
disability insurance. You will also be eligible to participate in
the Company's profit sharing, 401K plan, employee stock ownership
plan, and employee stock purchase plan. A description of these
plans is enclosed. Please note that our medical plan has a thirty
day waiting period for all new employees.
You will be entitled 4 weeks vacation in each calendar year of your
employment, prorated for any particular year.
Relocation: The enclosed employee relocation policy is available
to you. Reimbursement for expenses will include the tax affect of
any amounts treated as compensation under Internal Revenue Service
regulations. Relocation should be coordinated with Joe Grill, Vice
President of Corporate Administration.
Effective Date: June 13, 1994 or as soon as possible and as
mutually agreed upon.
I believe you will find the position of Vice President of Finance
and Chief Financial Officer both challenging and rewarding. I am
confident that you can make a significant contribution to the
continued growth and success of Richardson Electronics. Please
feel free to contact me if you have any questions or concerns. I
look forward to hearing from you soon.
Sincerely,
RICHARDSON ELECTRONICS, LTD.
/s/ Edward J. Richardson
Edward J. Richardson
Chairman & CEO
Accepted this 31st day of May 1994.
/s/ William Garry
EXHIBIT 10(Q)(1)
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 81 25-64-60C
Federal Insurance Company, a stock
insurance company, incorporated under the
laws of Indiana, herein called the
Company.
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
40W267 KESLINGER ROAD
LA FOX, ILLINOIS
60147
Item 2. Policy Period: From 12:01 A.M. on MAY 31, 1994
To 12:01 A.M. MAY 31, 1995
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
FIDUCIARY LIABILITY
CRIME INSURANCE
KIDNAP/RANSOM AND EXTORTION
Item 4. Termination of
Prior Policies: 8125-64-60B
THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY,
OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A
CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE
SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING
THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused this
policy to be signed by its authorized officers, but it shall not be
valid unless also signed by a duly authorized representative of the
Company.
FEDERAL INSURANCE COMPANY
Henry G. Gulick Dean R. O'Hare
Secretary President
6/1/94 James R. Maschmeyer
Date Authorized Representative
CHUBB Executive Protection Policy
General Terms
and Conditions
Territory 1. Coverage shall extend anywhere in the world.
Terms and Conditions
2. Except for the General Terms and Conditions or
unless stated to the contrary in any coverage
section, the terms and conditions of each coverage
section of this policy apply only to that section
and shall not be construed to apply to any other
coverage section of this policy.
Limits of Liability and
Deductible Amounts
3. Unless stated to the contrary in any coverage
section, the limits of liability and deductible
amounts shown for each coverage section of this
policy are separate limits of liability and
separate deductible amounts pertaining to the
coverage section for which they are shown; the
application of a deductible amount to a loss under
one coverage section of this policy shall not
reduce the deductible amount under any other
coverage section of this policy.
Notice 4. Notice to the Company under this policy shall be
given in writing addressed to:
Notice of Claim:
National Claims Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
All Other Notices:
Executive Protection Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
Such notice shall be effective on the date of
receipt by the Company at such address.
Investigation and Settlement
5. The Company may make any investigation it deems
necessary and may, with the written consent of the
Insured, make any settlement of a claim it deems
expedient. If the Insured withholds consent to
such settlement, the Company's liability for all
loss on account of such claim shall not exceed the
amount for which the Company could have settled
such claim plus costs, charges and expenses accrued
as of the date such settlement was proposed in
writing by the Company to the Insured.
Valuation and
Foreign Currency
6. All premiums, limits, retentions, loss and other
amounts under this policy are expressed and payable
in the currency of the United States of America.
Except as otherwise provided in any coverage
section, if judgment is rendered, settlement is
denominated or another element of loss under this
policy is stated in a currency other than United
States of America dollars, payment under this
policy shall be made in United States dollars at
the rate of exchange published in the Wall Street
Journal on the date the final judgment is reached,
the amount of the settlement is agreed upon or the
other element of loss is due, respectively.
Subrogation
7. In the event of any payment under this policy, the
Company shall be subrogated to the extent of such
payment to all the Insured's rights of recovery,
and the Insured shall execute all papers required
and shall do everything necessary to secure and
preserve such rights, including the execution of
such documents necessary to enable the Company
effectively to bring suit in the name of the
Insured.
Action Against
the Company
8. No action shall lie against the Company unless, as
a condition precedent thereto, there shall have
been full compliance with all the terms of this
policy. No person or organization shall have any
right under this policy to join the Company as a
party to any action against the Insured to
determine the Insured's liability nor shall the
Company be impleaded by the Insured or his legal
representatives. Bankruptcy or insolvency of an
Insured or of the estate of an Insured shall not
relieve the Company of its obligations nor deprive
the Company of its rights under this policy.
Authorization Clause
9. By acceptance of this policy, the Parent
Organization agrees to act on behalf of all
Insureds with respect to the giving and receiving
of notice of claim or termination, the payment of
premiums and the receiving of any return premiums
that may become due under this policy, the
negotiation, agreement to and acceptance of
endorsements, and the giving or receiving of any
notice provided for in this policy (except the
giving of notice to apply for the Extended
Reporting Period), and the Insureds agree that the
Parent Organization shall act on their behalf.
Alteration
and Assignment
10. No change in, modification of, or assignment of
interest under this policy shall be effective
except when made by a written endorsement to this
policy which is signed by an authorized employee of
Chubb & Son Inc.
Termination of
Policy or
Coverage Section
11. This policy or any coverage section shall terminate
at the earliest of the following times:
(A) sixty days after the receipt by the Parent
Organization of a written notice of
termination from the Company,
(B) upon the receipt by the Company of written
notice of termination from the Parent
Organization,
(C) upon expiration of the Policy Period as set
forth in Item 2 of the Declarations of this
policy, or
(D) at such other time as may be agreed upon by
the Company and the Parent Organization.
The Company shall refund the unearned premium
computed at customary short rates if the policy or
any coverage section is terminated by the Parent
Organization. Under any other circumstances the
refund shall be computed pro rata.
Termination of
Prior Bonds
or Policies
12. Any bonds or policies issued by the Company or its
affiliates and specified in Item 4 of the
Declarations of this policy shall terminate, if not
already terminated, as of the inception date of
this policy. Such prior bonds or policies shall
not cover any loss under the Crime or Kidnap/Ransom
& Extortion coverage sections not discovered and
notified to the Company prior to the inception date
of this policy.
Definitions
13. When used in this policy:
Parent Organization means the organization
designated in Item 1 of the Declarations of this
policy.
Policy Period means the period of time specified in
Item 2.of the Declarations of this policy, subject
to prior termination in accordance with Subsection
11 above. If this period is less than or greater
than one year, then the Limits of Liability
specified in the Declarations for each coverage
section shall be the Company's maximum limit of
liability under such coverage section for the
entire period.
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: GENERAL TERMS
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of
this endorsement: MAY 31, 1994
To be attached to and form part of Policy No. 8125-64-60C
Issued to: RICHARDSON ELECTRONICS, LTD.
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 11, "Termination of Policy or Coverage Section", of the
General Terms and Conditions is amended by the following:
CANCELLATION
All notices of cancellation of insurance must be mailed at least 30
days prior to the effective date of cancellation during the first
60 days of coverage. After the policy or coverage section has been
effective for 61 days or more, all notices must be mailed at least
60 days prior to the effective date of cancellation. All such
notices shall include a specific explanation of the reason or
reasons for cancellation and shall be mailed to the Parent
Organization and mortgagee or lien holder, if known, at the last
mailing address known to the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
No policy or coverage section which has been in effect for 60 days
may be cancelled except for one of the following reasons:
(a) Nonpayment of premium;
(b) The policy or coverage section was obtained through a
material misrepresentation;
(c) Any insured violated any of the terms and conditions of
the policy or coverage section;
(d) The risk originally accepted has measurably increased;
(e) Certification to the Director of the loss of reinsurance
by the insurer which provided coverage to the insurer for
all or a substantial part of the underlying risk insured;
or,
(f) A determination by the Director that the continuation of
the policy or coverage section could place the insurer in
violation of the insurance laws of this state.
NONRENEWAL AND EXTENDED REPORTING PERIOD
No company shall fail to renew any policy or coverage section of
insurance unless it shall send by mail to the Parent Organization
at least 60 days advance notice of its intention not to renew. The
company shall maintain proof of the mailing of such notice on one
of the following forms: a recognized U.S. Post Office form or a
form acceptable to the U.S. Post Office or other commercial mail
delivery service. An exact and unaltered copy of such notice shall
also be sent to the Parent Organization's broker, if known, or the
agent of record and to the mortgagee or lien holder at the last
mailing address known by the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
Should a company fail to comply with the notice requirements, the
policy or coverage section shall terminate only as provided in this
Subsection. In the event notice is provided at least 31 days, but
less than 60 days prior to expiration of the policy or coverage
section, the policy or coverage section shall be extended for a
period of 60 days or until the effective date of any similar
insurance procured by the Insured, whichever is less, on the same
terms and conditions as the policy or coverage section sought to be
terminated. In the event notice is provided less than 31 days
prior to the expiration of the policy or coverage section, the
policy or coverage section shall be extended for a period of one
year or until the effective date of any similar insurance procured
by the insured, whichever is less, on the same terms and conditions
as the policy or coverage section sought to be terminated unless
the insurer has manifested its willingness to renew at a premium
which represents an increase not exceeding 30%. The premium for
coverage shall be prorated in accordance with the amount of the
last year's premium, and the company shall be entitled to this
premium for the extension of coverage and such extension may be
contingent upon the payment of such premium.
Renewal of a policy or coverage section does not constitute a
waiver or estoppel with respect to grounds for cancellation which
existed before the effective date of such renewal.
In all notices of intention not to renew any policy or coverage
section for insurance, the company shall provide a specific
explanation of the reasons for nonrenewal.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
James R. Maschmeyer
Authorized Representative
6/1/94
Date
<PAGE>
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE LIABILITY AND
INDEMNIFICATION COVERAGE SECTION
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
Item 2. Limits of Liability:
(A) Each Loss $15,000,000.
(B) Each Policy Period $15,000,000.
Note that the limits of liability and any deductible or
retention are reduced or exhausted by Defense Costs.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 1,000,000.
Item 5. Insured Organization:
Richardson Electronics, Ltd.
and its Subsidiaries.
Item 6. Insured Persons:
Any person who has been, now is, or shall become a duly
elected director or a duly elected or appointed officer
of the Insured Organization.
Item 7. Extended Reporting Period:
(A) Additional Premium: 75% of the annual premium
(B) Additional Period: one year
Item 8. Pending or Prior Date: October 12, 1983
Item 9. Continuity Date: October 12, 1983
<PAGE>
CHUBB Executive Protection Policy
Executive Liability
and Indemnification
Coverage Section
In consideration of payment of the premium and subject to
the Declarations, General Terms and Conditions, and the
limitations, conditions, provisions and other terms of
this coverage section, the Company agrees as follows:
Insuring Clauses
Executive
Liability Coverage
Insuring Clause 1
1. The Company shall pay on behalf of each of the
Insured Persons all Loss for which the Insured
Person is not indemnified by the Insured
Organization and which the Insured Person becomes
legally obligated to pay on account of any Claim
first made against him, individually or otherwise,
during the Policy Period or, if exercised, during
the Extended Reporting Period, for a Wrongful Act
committed, attempted, or allegedly committed or
attempted by such Insured Person before or during
the Policy Period.
Executive
Indemnification
Coverage
Insuring Clause 2
2. The Company shall pay on behalf of the Insured
Organization all Loss for which the Insured
Organization grants indemnification to each Insured
Person, as permitted or required by law, which the
Insured Person has become legally obligated to pay
on account of any Claim first made against him,
individually or otherwise, during the Policy Period
or, if exercised, during the Extended Reporting
Period, for a Wrongful Act committed, attempted, or
allegedly committed or attempted by such Insured
Person before or during the Policy Period.
Estates and Legal Representatives
3. Subject otherwise to the General Terms and
Conditions and the limitations, conditions,
provisions and other terms of this coverage
section, coverage shall extend to Claims for the
Wrongful Acts of Insured Persons made against the
estates, heirs, legal representatives or assigns of
Insured Persons who are deceased or against the
legal representatives or assigns of Insured Persons
who are incompetent, insolvent or bankrupt.
Extended
Reporting Period
4. If the Company terminates or refuses to renew this
coverage section other than for nonpayment of
premium, the Parent Organization and the Insured
Persons shall have the right, upon payment of the
additional premium set forth in Item 7(A) of the
Declarations for this coverage section, to an
extension of the coverage granted by this coverage
section for the period set forth in Item 7(B) of
the Declarations for this coverage section
(Extended Reporting Period) following the effective
date of termination or nonrenewal, but only for any
Wrongful Act committed, attempted, or allegedly
committed or attempted, prior to the effective date
of termination or nonrenewal. This right of
extension shall lapse unless written notice of such
election, together with payment of the additional
premium due, is received by the Company within 30
days following the effective date of termination or
nonrenewal. Any Claim made during the Extended
Reporting Period shall be deemed to have been made
during the immediately preceding Policy Period.
If the Parent Organization terminates or declines
to accept renewal, the Company may, if requested,
at its sole option, grant an Extended Reporting
Period. The offer of renewal terms and conditions
or premiums different from those in effect prior to
renewal shall not constitute refusal to renew.
Exclusions
Exclusions Applicable
to Insuring
Clauses 1 and 2
5. The Company shall not be liable for Loss on account
of any Claim made against any Insured Person:
(a) based upon, arising from, or in consequence of
any circumstance if written notice of such
circumstance has been given under any policy
or coverage section of which this coverage
section is a renewal or replacement and if
such prior policy or coverage section affords
coverage (or would afford such coverage except
for the exhaustion of its limits of liability)
for such Loss, in whole or in part, as a
result of such notice;
(b) based upon, arising from, or in consequence of
any demand, suit or other proceeding pending,
or order, decree or judgement entered against
any Insured on or prior to the Pending or
Prior Date set forth in Item 8 of the
Declarations for this coverage section, or the
same or any substantially similar fact,
circumstance or situation underlying or
alleged therein;
(c) brought or maintained by or on behalf of any
Insured except:
(i) a Claim that is a derivative action
brought or maintained on behalf of an
Insured Organization by one or more
persons who are not Insured Persons and
who bring and maintain the Claim without
the solicitation, assistance or
participation of any Insured,
(ii) a Claim brought or maintained by an
Insured Person for the actual or alleged
wrongful termination of the Insured
Person, or
(iii) a Claim brought or maintained by an
Insured Person for contribution or
indemnity, if the Claim directly results
from another Claim covered under this
coverage section;
(d) for an actual or alleged violation of the
responsibilities, obligations or duties
imposed by the Employee Retirement Income
Security Act of 1974 and amendments thereto or
similar provisions of any federal, state or
local statutory law or common law upon
fiduciaries of any pension, profit sharing,
health and welfare or other employee benefit
plan or trust established or maintained for
the purpose of providing benefits to employees
of an Insured Organization;
(e) for bodily injury, mental or emotional
distress, sickness, disease or death of any
person or damage to or destruction of any
tangible property including loss of use
thereof; or
(f) based upon, arising from, or in consequence of
(i) the actual, alleged or threatened
discharge, release, escape or disposal of
Pollutants into or on real or personal
property, water or the atmosphere; or (ii) any
direction or request that the Insured test
for, monitor, clean up, remove, contain,
treat, detoxify or neutralize Pollutants, or
any voluntary decision to do so; including but
not limited to any Claim for financial loss to
the Insured Organization, its security holders
or its creditors based upon, arising from, or
in consequence of the matters described in (i)
or (ii) of this exclusion.
Exclusions Applicable
to Insuring
Clause 1 Only
6. The Company shall not be liable under Insuring
Clause 1 for Loss on account of any Claim made
against any Insured Person:
(a) for an accounting of profits made from the
purchase or sale by such Insured Person of
securities of the Insured Organization within
the meaning of Section 16 (b) of the
Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal,
state or local statutory law or common law;
(b) based upon, arising from, or in consequence of
any deliberately fraudulent act or omission or
any willful violation of any statute or
regulation by such Insured Person, if a
judgement or other final adjudication adverse
to the Insured Person establishes such a
deliberately fraudulent act or omission or
willful violation; or
(c) based upon, arising from, or in consequence of
such Insured Person having gained in fact any
personal profit, remuneration or advantage to
which such Insured Person was not legally
entitled.
Severability of Exclusions
7. With respect to the Exclusions in Subsections 5 and
6 of this coverage section, no fact pertaining to
or knowledge possessed by any Insured Person shall
be imputed to any other Insured Person to determine
if coverage is available.
Limit of Liability,
Deductible and
Coinsurance
8. For the purposes of this coverage section, all Loss
arising out of the same Wrongful Act and all
Interrelated Wrongful Acts of any Insured Person
shall be deemed one Loss, and such Loss shall be
deemed to have originated in the earliest Policy
Period in which a Claim is first made against any
Insured Person alleging any such Wrongful Act or
Interrelated Wrongful Acts.
The Company's maximum liability for each Loss,
whether covered under Insuring Clause 1 or Insuring
Clause 2 or both, shall be the Limit of Liability
for each Loss set forth in Item 2(A) of the
Declarations for this coverage section. The
Company's maximum aggregate liability for all Loss
on account of all Claims first made during the same
Policy Period, whether covered under Insuring
Clause 1 or Insuring Clause 2 or both, shall be the
Limit of Liability for each Policy Period set forth
in Item 2(B) of the Declarations for this coverage
section.
The Company's liability under Insuring Clause 2
shall apply only to that part of each Loss which is
excess of the Deductible Amount set forth in Item 4
of the Declarations for this coverage section and
such Deductible Amount shall be borne by the
Insureds uninsured and at their own risk.
If a single Loss is covered in part under Insuring
Clause 1 and in part under Insuring Clause 2, the
Deductible Amount applicable to the Loss shall be
the Insuring Clause 2 deductible set forth in Item
4 of the Declarations for this coverage section.
With respect to all Loss (excess of the applicable
Deductible Amount) originating in any one Policy
Period, the Insureds shall bear uninsured and at
their own risk that percent of all such Loss
specified as the Coinsurance Percent in Item 3 of
the Declarations for this coverage section, and the
Company's liability hereunder shall apply only to
the remaining percent of all such Loss.
Any Loss covered in whole or in part by this
coverage section and the Employment Practices
Liability coverage section of this policy (if
purchased) shall be subject to the limits of
liability, deductible and coinsurance percent
applicable to such other coverage section;
provided, however, if any limit of liability
applicable to such other coverage section is
exhausted with respect to such Loss, any remaining
portion of such Loss otherwise covered by this
coverage section shall be subject to the Limits of
Liability and Coinsurance Percent applicable to
this coverage section, as reduced by the amount of
such Loss otherwise covered by this coverage
section which is paid by the Company pursuant to
such other coverage section.
For purposes of this Subsection 8 only, the
Extended Reporting Period, if exercised, shall be
part of and not in addition to the immediately
preceding Policy Period.
Presumptive
Indemnification
9. If the Insured Organization.
(a) fails or refuses, other than for reason of
Financial Impairment, to indemnify the Insured
Person for Loss; and
(b) is permitted or required to indemnify the
Insured Person for such Loss pursuant to:
(i) the by-laws or certificate of
incorporation of the Insured Organization
in effect at the inception of this
coverage section, or
(ii) any subsequently amended or superseding
by-laws or certificate of incorporation
of the Insured Organization provided,
however, that such amended or superseding
by-laws or certificate of incorporation
expand or broaden, and do not restrict or
in any way limit, the Insured
Organization's ability to indemnify the
Insured Person;
then, notwithstanding any other conditions,
provisions or terms of this coverage section
to the contrary, any payment by the Company of
such Loss shall be subject to (i) the Insuring
Clause 2 Deductible Amount set forth in Item 4
of the Declarations for this coverage section,
and (ii) all of the Exclusions set forth in
Subsections 5 and 6 of this coverage section.
For purposes of this Subsection 9, the
shareholder and board of director resolutions
of the Insured Organization shall be deemed to
provide indemnification for such Loss to the
fullest extent permitted by such by-laws or
certificate of incorporation.
Reporting
and Notice
10. The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company written notice as soon
as practicable of any Claim made against any of
them for a Wrongful Act.
If during the Policy Period or Extended Reporting
Period (if exercised) an Insured becomes aware of
circumstances which could give rise to a Claim and
gives written notice of such circumstance(s) to the
Company, then any Claims subsequently arising from
such circumstances shall be considered to have been
made during the Policy Period or the Extended
Reporting Period in which the circumstances were
first reported to the Company.
The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company such information and
cooperation as it may reasonably require, including
but not limited to a description of the Claim or
circumstances, the nature of the alleged Wrongful
Act, the nature of the alleged or potential damage,
the names of actual or potential claimants, and the
manner in which the Insured first became aware of
the Claim or circumstances.
Defense and Settlement
11. Subject to this Subsection, it shall be the duty of
the Insured Persons and not the duty of the Company
to defend Claims made against the Insured Persons.
The Insureds agree not to settle any Claim, incur
any Defense Costs or otherwise assume any
contractual obligation or admit any liability with
respect to any Claim without the Company's written
consent, which shall not be unreasonably withheld.
The Company shall not be liable for any settlement,
Defense Costs, assumed obligation or admission to
which it has not consented.
The Company shall have the right and shall be given
the opportunity to effectively associate with the
Insureds in the investigation, defense and
settlement, including but not limited to the
negotiation of a settlement, of any Claim that
appears reasonably likely to be covered in whole or
in part by this coverage section.
The Insureds agree to provide the Company with all
information, assistance and cooperation which the
Company reasonably requests and agree that in the
event of a Claim the Insureds will do nothing that
may prejudice the Company's position or its
potential or actual rights of recovery.
Defense Costs are part of and not in addition to
the Limits of Liability set forth in Item 2 of the
Declarations for this coverage section, and the
payment by the Company of Defense Costs reduces
such Limits of Liability.
Allocation
12. If both Loss covered by this coverage section and
loss not covered by this coverage section are
incurred, either because a Claim against the
Insured Persons includes both covered and uncovered
matters or because a Claim is made against both an
Insured Person and others, including the Insured
Organization, the Insureds and the Company shall
use their best efforts to agree upon a fair and
proper allocation of such amount between covered
Loss and uncovered loss.
If the Insureds and the Company agree on an
allocation of Defense Costs, the Company shall
advance on a current basis Defense Costs allocated
to the covered Loss. If the Insureds and the
Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist in
any arbitration, suit or other proceeding;
(b) the Company shall advance on a current basis
Defense Costs which the Company believes to be
covered under this coverage section until a
different allocation is negotiated, arbitrated
or judicially determined; and
(c) the Company, if requested by the Insureds,
shall submit the dispute to binding
arbitration. The rules of the American
Arbitration Association shall apply except
with respect to the selection of the
arbitration panel, which shall consist of one
arbitrator selected by the Insureds, one
arbitrator selected by the Company, and a
third independent arbitrator selected by the
first two arbitrators.
Any negotiated, arbitrated or judicially determined
allocation of Defense Costs on account of a Claim
shall be applied retroactively to all Defense Costs
on account of such Claim, notwithstanding any prior
advancement to the contrary. Any allocation or
advancement of Defense Costs on account of a Claim
shall not apply to or create any presumption with
respect to the allocation of other Loss on account
of such Claim.
Other
Insurance
13. If any Loss arising from any Claim made against any
Insured Persons is insured under any other valid
policy(ies), prior or current, then this coverage
section shall cover such Loss, subject to its
limitations, conditions, provisions and other
terms, only to the extent that the amount of such
Loss is in excess of the amount of payment from
such other insurance whether such other insurance
is stated to be primary, contributory, excess,
contingent or otherwise, unless such other
insurance is written only as specific excess
insurance over the Limits of Liability provided in
this coverage section.
Changes in Exposure
Acquisition or
Creation of
Another Organization
14. If the Insured Organization (i) acquires securities
or voting rights in another organization or creates
another organization, which as a result of such
acquisition or creation becomes a Subsidiary, or
(ii) acquires any organization by merger into or
consolidation with an Insured Organization, such
organization and its Insured Persons shall be
Insureds under this coverage section but only with
respect to Wrongful Acts committed, attempted, or
allegedly committed or attempted, after such
acquisition or creation unless the Company agrees,
after presentation of a complete application and
all appropriate information, to provide coverage by
endorsement for Wrongful Acts committed, attempted,
or allegedly committed or attempted, by such
Insured Persons prior to such acquisition or
creation.
If the fair value of all cash, securities, assumed
indebtedness and other consideration paid by the
Insured Organization for any such acquisition or
creation exceeds 10% of the total assets of the
Parent Organization as reflected in the Parent
Organization's most recent audited consolidated
financial statements, the Parent Organization shall
give written notice of such acquisition or creation
to the Company as soon as practicable together with
such information as the Company may require and
shall pay any reasonable additional premium
required by the Company.
Acquisition of Parent
Organization by
Another Organization
15. If (i) the Parent Organization merges into or
consolidates with another organization, or (ii)
another organization or person or group of
organizations and/or persons acting in concert
acquires securities or voting rights which result
in ownership or voting control by the other
organization(s) or person(s) of more than 50% of
the outstanding securities representing the present
right to vote for the election of directors of the
Parent Organization, coverage under this coverage
section shall continue until termination of this
coverage section, but only with respect to Claims
for Wrongful Acts committed, attempted, or
allegedly committed or attempted, by Insured
Persons prior to such merger, consolidation or
acquisition. The Parent Organization shall give
written notice of such merger, consolidation or
acquisition to the Company as soon as practicable
together with such information as the Company may
require.
Cessation of Subsidiaries
16. In the event an organization ceases to be a
Subsidiary before or after the Inception Date of
this coverage section, coverage with respect to
such Subsidiary and its Insured Persons shall
continue until termination of this coverage section
but only with respect to Claims for Wrongful Acts
committed, attempted or allegedly committed or
attempted prior to the date such organization
ceased to be a Subsidiary.
Representations and Severability
17. In granting coverage to any one of the Insureds,
the Company has relied upon the declarations and
statements in the written application for this
coverage section and upon any declarations and
statements in the original written application
submitted to another insurer in respect of the
prior coverage incepting as of the Continuity Date
set forth in Item 9 of the Declarations for this
coverage section. All such declarations and
statements are the basis of such coverage and shall
be considered as incorporated in and constituting
part of this coverage section.
Such written application(s) for coverage shall be
construed as a separate application for coverage by
each of the Insured Persons. With respect to the
declarations and statements contained in such
written application(s) for coverage, no statement
in the application or knowledge possessed by any
Insured Person shall be imputed to any other
Insured Person for the purpose of determining if
coverage is available.
Definitions
18. When used in this coverage section:
Claim means:
(i) a written demand for monetary damages,
(ii) a civil proceeding commenced by the service of
a complaint or similar pleading,
(iii) a criminal proceeding commenced by a return of
an indictment, or
(iv) a formal administrative or regulatory
proceeding commenced by the filing of a notice
of charges, formal investigative order or
similar document,
against any Insured Person for a Wrongful Act,
including any appeal therefrom.
Defense Costs means that part of Loss consisting of
reasonable costs, charges, fees (including but not
limited to attorneys' fees and experts' fees) and
expenses (other than regular or overtime wages,
salaries or fees of the directors, officers or
employees of the Insured Organization) incurred in
defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
Financial Impairment means the status of the
Insured Organization resulting from (i) the
appointment by any state or federal official,
agency or court of any receiver, conservator,
liquidator, trustee, rehabilitator or similar
official to take control of, supervise, manage or
liquidate the Insured Organization, or (ii) the
Insured Organization becoming a debtor in
possession.
Insured, either in the singular or plural, means
the Insured Organization and any Insured Person.
Insured Capacity means the position or capacity
designated in Item 6 of the Declarations for this
coverage section held by any Insured Person but
shall not include any position or capacity in any
organization other than the Insured Organization,
even if the Insured Organization directed or
requested the Insured Person to serve in such other
position or capacity.
Insured Organization means, collectively, those
organizations designated in Item 5 of the
Declarations for this coverage section.
Insured Person, either in the singular or plural,
means any one or more of those persons designated
in Item 6 of the Declarations for this coverage
section.
Interrelated Wrongful Acts means all causally
connected Wrongful Acts.
Loss means the total amount which any Insured
Person becomes legally obligated to pay on account
of each Claim and for all Claims in each Policy
Period and the Extended Reporting Period, if
exercised, made against them for Wrongful Acts for
which coverage applies, including, but not limited
to, damages, judgements, settlements, costs and
Defense Costs. Loss does not include (i) any amount
not indemnified by the Insured Organization for
which the Insured Person is absolved from payment
by reason of any covenant, agreement or court
order, (ii) any amount incurred by the Insured
Organization (including its board of directors or
any committee of the board of directors) in
connection with the investigation or evaluation of
any Claim or potential Claim by or on behalf of the
Insured Organization, (iii) fines or penalties
imposed by law or the multiple portion of any
multiplied damage award, or (iv) matters
uninsurable under the law pursuant to which this
coverage section is construed.
Pollutants means any substance located anywhere in
the world exhibiting any hazardous characteristics
as defined by, or identified on a list of hazardous
substances issued by, the United States
Environmental Protection Agency or a state, county,
municipality or locality counterpart thereof. Such
substances shall include, without limitation,
solids, liquids, gaseous or thermal irritants,
contaminants or smoke, vapor, soot, fumes, acids,
alkalis, chemicals or waste materials. Pollutants
shall also mean any other air emission, odor, waste
water, oil or oil products, infectious or medical
waste, asbestos or asbestos products and any noise.
Subsidiary, either in the singular or plural, means
any organization in which more than 50% of the
outstanding securities or voting rights
representing the present right to vote for election
of directors is owned or controlled, directly or
indirectly, in any combination, by one or more
Insured Organizations.
Wrongful Act means any error, misstatement,
misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly
committed or attempted, by an Insured Person,
individually or otherwise, in his Insured Capacity,
or any matter claimed against him solely by reason
of his serving in such Insured Capacity.
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of this endorsement: MAY 31, 1994
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60C
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 4, "Extended Reporting Period", shall be deleted and
replaced by the following:
EXTENDED REPORTING PERIOD
4. If the Company or the Insured terminates or refuses to renew
this coverage section, the Parent Organization and the Insured
Persons shall have the right, upon payment of the additional
premium set forth in Item 7(A) of the Declarations for this
coverage section, to an extension of the coverage granted by
the coverage section for a period of one year as set forth in
Item 7(B) of the Declarations for this coverage section
(Extended Reporting Period) following the effective date of
termination or nonrenewal, but only for any Wrongful Act
committed, attempted, or allegedly committed or attempted,
prior to the effective date of termination or nonrenewal.
This right of extension shall lapse unless written notice of
such election, together with payment of the additional premium
due, is received by the Company within 30 days following the
effective date of termination or nonrenewal. Any Claim made
during the Extended Reporting Period shall be deemed to have
been made during the immediately preceding Policy Period. The
offer of renewal terms and conditions or premiums different
from those in effect prior to renewal shall not constitute
refusal to renew.
It is further agreed that Subsection 18, "Definitions", shall be
amended by deleting Defense Costs and replacing it with the
following:
Defense Costs means that part of Loss consisting of reasonable
costs, charges, fees (including but not limited to attorneys'
fees and experts' fees) and expenses (other than regular or
overtime wages, salaries or fees of the directors, officers or
employees of the Insured Organization or the salaries of the
employees, officers or staff attorneys of the Company)
incurred in defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
James R. Maschmeyer
Authorized Representative
6/1/94
Date
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 2
Effective date of this endorsement: MAY 31, 1994
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60C
It is agreed that Item 6 of the Declarations page, Insured Persons,
is amended to include the following:
Microwave Business Unit Manager
Broadcast Business Unit Manager
Export/Middle East/Africa/Reg. Sls. Mgr.
Regional Sales Manager - REI/GEB
Industrial Business Unit Manager
General Manager - RESA
Solid State Components Bus. Unit Manager
Director General - REISA
Regional Sales Manager - RESA
Medical Business Unit Manager
Canada Region Sales Manager
Western Region Sales Manager
Eastern Region Sales Manager
Director Marketing Administration ROW
Regional Sales Manager - GmbH
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
James R.Maschmeyer
Authorized Representative
6/1/94
Date
EXHIBIT 10(q)(2)
NATIONAL UNION
FIRE INSURANCE COMPANY
OF PITTSBURGH,PA. POLICY NUMBER:
A CAPITAL STOCK COMPANY 443 01 66
ADMINISTRATIVE OFFICE: RIN 441 05 87
70 PINE STREET, NEW YORK, N.Y.10270
The Company agrees with the Insured named below, in consideration
of the premium paid and subject to all terms and conditions set
forth below that the insurance afforded by this policy shall follow
all the terms and conditions of Policy Number 8125-64-60C issued by
Federal Insurance Company (but not including any renewal or rewrite
thereof unless otherwise specifically agreed in writing by the
Company), except for any endorsements attached hereto.
NAMED INSURED: RICHARDSON ELECTRONICS, LTD.
ADDRESS: 40W267 KESLINGER ROAD
LAFOX, IL 60147
POLICY PERIOD: May 31,1994 to May 31,1995
COVERAGE EXCESS DIRECTORS AND OFFICERS LIABILITY AND CORPORATE
REIMBURSEMENT
LIMIT OF LIABILITY: $15,000,000 EXCESS OF $15,000,000
PREMIUM: $110,000
RATE: FLAT
IN WITNESS WHEREOF, the Company has caused this policy to be signed
by its President and Secretary at New York, New York and
countersigned by a duly authorized representative of the Company.
Elizabeth M. Tuck William D. Smith
SECRETARY President
IRLAND, JOHN E. & COMPANY
230 WEST MONROE STREET
CHICAGO, IL 60606
June M. Clifford
Authorized Representative JUN 24 94
<PAGE>
ENDORSEMENT # 1
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
In consideration of the premium charged, it is hereby expressly
agreed that liability for any covered Loss with respect to claims
first made and reported during the Policy Period shall attach to
the Insurer only after the Insurers of the Primary and Underlying
excess policies, the Company, and/or the Insureds shall have paid,
admitted or been held liable to pay the full amount of the Limits
of Liability of the Primary and Underlying excess policies, and the
Company and/or the Insureds shall have paid, admitted or been held
liable to pay the full amount of the applicable Retention amount
for such Policy Period. It is further understood and agreed that
in the event of the reduction of the aggregate limits of liability
under the Primary and Underlying excess policies (as scheduled
below) by reason of Losses paid thereunder, this policy shall,
subject to its terms, conditions and exclusions:
(1) in the event of reduction, pay the excess of the reduced
Primary and Underlying excess limits;
(2) in the event of exhaustion, continue in force as Primary
Insurance;
provided always that in the latter event this policy shall only pay
excess of the retention amount stated in the primary policy.
Nothing on this endorsement shall be construed to provide coverage
for claims within this policy's layer of liability which are
otherwise excluded or limited by this policy, including such terms
and conditions, if any, which are attached to this policy by
endorsement or otherwise and differ from that of the Primary and
Underlying excess policy.
It is a condition of this policy that the Primary and Underlying
excess policies shall be maintained in effect at all times when
this policy is in effect, and that such Primary and Underlying
excess policies shall be valid and collectible. If the foregoing
condition is breached, unless the Insurer otherwise agrees, this
policy shall:
(1) immediately and automatically terminate on the date
ENDORSEMENT# 1 (Continued)
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
any of the Primary and Underlying excess policies ceases to be
in effect; and
(2) automatically terminate 30 days following the date an insurer
of any Primary or Underlying excess policy becomes subject to
a receivership, liquidation, dissolution, rehabilitation or
any similar proceeding or is taken over by any regulatory
authority unless the Company obtains replacement coverage for
such Primary and Underlying Policies within such 30 day
period.
In the event this policy automatically terminates, the Insurer
shall retain the pro-rata proportion of the premium. Payment or
tender of any unearned premium by the Insurer shall not be a
condition precedent to the effectiveness of such termination, but
such payment shall be made as soon as practicable.
Schedule of Primary and Underlying excess policies
Insurer Policy Number Limits Policy Period
Primary Policy
Federal Insurance 8125-64-60C $15,000,000 May 31, 1994 to
May 31, 1995
June M. Clifford
AUTHORIZED REPRESENTATIVE
<PAGE>
ENDORSEMENT # 2
This endorsement, effective 12:01 AM, May 31, 1994 forms a part
of policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
In consideration of the premium charged, it is hereby understood
and agreed that notice hereunder shall be given in writing to
National Union Fire Insurance Company of Pittsburgh, Pa., Financial
Services Claims Department, 10 Pine Street, New York, N.Y.
102l0-0150. (herewritten the "Insurer")
(a) The Company or the Insureds shall, as a condition precedent to
the obligations of the Insurer under this policy, give written
notice to the Insurer as soon as practicable during the Policy
Period, or during the Extended Discovery Period (if
applicable), of any claim made against the Insureds.
(b) If during the Policy Period or during the Extended Discovery
Period (if applicable) written notice of a claim has been
given to the Insurer pursuant to Clause (a) above, then any
claim which is subsequently made against the Insureds and
reported to the Insurer alleging, arising out of, based upon
or attributable to the facts alleged in the claim of which
such notice has been given, or alleging any Wrongful Act which
is the same as or related to any Wrongful Act alleged in the
claim of which such notice has been given, shall be considered
made at the time such notice was given.
(c) The Insurer does not, however, under this policy, assume any
duty to defend. The Insureds shall not admit or assume any
liability, enter into any settlement agreement, stipulate to
any judgment or incur any Defense Costs without the prior
written consent of the Insurer. Only those settlements,
stipulated judgments and Defense Costs which have been
consented to by the Insurer shall be recoverable as Loss under
the terms of this policy. The Insurer consent shall not be
unreasonably withheld, provided that the Insurer shall be
entitled to effectively associate in the defense and the
negotiation of any settlement of any claim in order to reach
a decision as to reasonableness.
(d) The Insurer shall have the right to effectively associate with
the Company and the Insureds in the defense and settlement of
any claim that appears
<PAGE>
ENDORSEMENT# 2 (Continued)
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
reasonably likely to involve the Insurer, including but not
limited to effectively associating in the negotiation of a
settlement. The Insureds shall defend and contest any such
claim. The Company and the Insureds shall give the Insure full
cooperation and such information as it may reasonably require.
(e) With respect to the Defense Costs and any joint settlement of
any claim made against the Company and the Insureds, such
Defense Costs and joint settlement having been consented to by
the Insurer the Company and the Insureds and the Insurer agree
to use their best efforts to determine a fair and proper
allocation of the amounts as between the Company and the
Insureds and the Insurer.
June M. Clifford
AUTHORIZED REPRESENTATIVE
<PAGE>
ENDORSEMENT# 3
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
In consideration of the premium charged, it is hereby
understood and agreed that as respects to the Limit of
Liability $10,000,000 excess of $15,000,000 the Company shall
not be liable to make any payment for Loss in connection with
any claim or claims made against the Insured(s) alleging,
arising out of, based upon or attributable to any pending or
prior litigation as of May 31, 1991 or alleging or derived
from the same or essentially the same facts as alleged in such
pending or prior litigation.
It is further understood and agreed that as respects to the
Limit of Liability $5,000,000 excess of $25,000,000 the
Company shall not be liable to make any payment for Loss in
connection with any claim or claims made against the
Insured(s) alleging, arising out of, based upon or
attributable to any pending or prior litigation as of May 31,
1990 or alleging or derived from the same or essentially the
same facts as alleged in such pending or prior litigation.
June M. Clifford
AUTHORIZED REPRESENTATIVE
<PAGE>
ENDORSEMENT# 4
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
ODL EXCLUSION FOR AN EXCESS POLICY
In consideration of the premium charged, it is hereby
understood and agreed that National Union Fire Insurance
Company of Pittsburgh, Pa. shall not be liable to make payment
for Loss in connection with any claim or claims against the
Directors or Officers alleging, arising out of, based upon or
attributable to any act or omission in their capacities as
directors or officers of any other entity other than
Richardson Electronics, Ltd. or by reason of their status as
a director or officer of such other entity.
June M. Clifford
AUTHORIZED REPRESENTATIVE
<PAGE>
ENDORSEMENT# 5
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
In consideration of the premium charged, it is hereby
understood and agreed that this policy follows the terms and
conditions of the Federal Insurance Company's policy number
8125 64 60- ("Underlying Policy") subject to the terms and
conditions of this and any other endorsement attached hereto
to this policy as follows:
FOLLOWED COVERAGE SECTIONS
Coverage Section Form Number
Executive Liability and 14-02-0943 (Ed. 1-92)
Indemnification Coverage
Applicable Sections of General 14-02-0941 (Ed. 1-92)
Term and Conditions
In no event shall this policy be construed to provide coverage
for or follow the terms and conditions of any other coverage
section of said Underlying Policy or provide Fiduciary
Liability Coverage, Crime Coverage, Kidnap/Ransom and
Extortion Coverage, Outside Directorship Liability Coverage,
and Employment Practices Liability Coverage.
June M. Clifford
AUTHORIZED REPRESENTATIVE
<PAGE>
ENDORSEMENT# 6
This endorsement, effective 12:01 AM, May 31, 1994 forms a part of
policy number 443-01-66
issued to RICHARDSON ELECTRONICS LTD
by National Union Fire Insurance Company of Pittsburgh, Pa.
Renewal Application Endorsement
(Standard Form-Public Company)
In consideration of the premium charged, it is hereby understood
and agreed that for the purposes of coverage as is afforded by this
policy, the term "Application" or "Renewal Application" shall mean
the insurance application(s) or request(s) made to the Insurer for
the insurance as is provided by this policy and incorporates all
written statements and materials furnished to the Insurer in
conjunction therewith. It also incorporates the following public
documents produced by the Company within the last twelve (12)
months, whether or not furnished to the Insurer, the Company's
Annual Report(s), 10K(s) filed with the SEC, 10Q(s) filed with the
SEC, Proxy Statements/Notice to Shareholders and Registration
Statements filed with the SEC. It is agreed that the Renewal
Application is a supplement to the application(s) which are part of
the Expiring Policy, and that those application(s) together with
the Renewal Application, constitute the complete Application that
is the basis of this policy and forms a part hereof.
June M. Clifford
AUTHORIZED REPRESENTATIVE
EXHIBIT 10(q)(3)
CNA
Commercial Governance
Liability
Financial Insurance Division
DATE: May 26, 1994
FAX: (708) 564-4169
TO: Robina Fisher
FROM: Mark Tomlinson
TEL: (312) 822-2137
FAX: (312) 822-5716
RE: Richardson Electronics Ltd.: Policy #600028634
Robina;
Please accept this as evidence that coverage, as quoted, has been
bound on the above captioned insured effective 5/31/94. If you
need anything else please call.
Sincerely, Mark
Exhibit 11
Richardson Electronics, Ltd. and Subsidiaries
Computation of Net Income per Share
Net income (loss) per share for 1994, 1993 and 1992 was computed by
dividing net income (loss) by the weighted average number of common and
common share equivalents outstanding. The treasury stock method was
applied to those stock options that would have a dilutive effect on net
income per share. The average market price of the Company's stock was used
in determining primary income per share, while the year-end market price (if
greater than the average market price) was used in determining fully diluted
net income per share.
The Company's 7 1/4% Convertible Debentures have not been included in the
calculation of income per share because their effect would be anti-dilutive.
Fully diluted income per share has not been presented on the face of the
income statement because it does not differ significantly from primary
income per share for each year.
(Shares and Amounts in Thousands)
1994 1993 1992
-------- -------- --------
Primary net income (loss) per share:
Weighted average shares outstanding 11,285 11,251 11,199
Effect of dilutive stock options 14 84 31
-------- -------- --------
Total 11,299 11,335 11,230
======== ======== ========
Net income (loss) $(19,809) $2,802 $1,707
======== ======== ========
Net income (loss) per share $(1.75) $0.25 $0.15
======== ======== ========
Fully diluted net income per share:
Weighted average shares outstanding 11,285 11,251 11,199
Effect of dilutive stock options 14 98 45
-------- -------- --------
Total 11,299 11,349 11,244
Net income (loss) $(19,809) $2,802 $1,707
======== ======== ========
Net income (loss) per share $(1.75) $0.25 $0.15
======== ======== ========
The following portions of the Company's Annual Report to Stockholders for the
Year Ended May 31, 1994 are incorporated by reference. The page numbers as
indicated are the same as the printed copy which was distributed to the
shareholders.
<TABLE>
Five-Year Financial Review
Statement of Operations Data
<CAPTION>
Year Ended May 31
(in thousands, except per share amounts) 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $172,094 $159,215 $158,789 $161,146 $160,101
Cost of products sold 124,703 111,620 109,600 115,401 105,637
Phase-down of manufacturing operations (1) 26,500 -- -- 20,000 --
Special charges (2) -- -- -- -- 8,000
Selling, general and administrative expenses 41,226 38,070 40,947 41,890 39,778
Other expense, net 5,874 5,023 5,385 8,397 6,099
-------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item (26,209) 4,502 2,857 (24,542) 587
Income tax provision (benefit) (6,400) 1,700 1,150 (8,329) (425)
-------- -------- -------- -------- --------
Income (loss) before extraordinary item (19,809) 2,802 1,707 (16,213) 1,012
Extraordinary gain on bond repurchase -- -- -- 2,290 --
-------- -------- -------- -------- --------
Net income (loss) $(19,809) $2,802 $1,707 $(13,923) $1,012
======== ======== ======== ======== ========
Net income (loss) per share:
Before extraordinary item $(1.75) $.25 $.15 $(1.46) $.09
Extraordinary gain on bond repurchase -- -- -- .21 --
-------- -------- -------- -------- --------
Net income (loss) per share $(1.75) $.25 $.15 $(1.25) $.09
======== ======== ======== ======== ========
Dividends per common share $.16 $.16 $.16 $.16 $.16
======== ======== ======== ======== ========
Balance Sheet and Other Data May 31
(dollars in thousands) 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Receivables $34,901 $30,267 $27,488 $26,711 $30,675
Inventories 73,863 86,955 84,427 88,661 80,477
Working capital, net 96,494 103,987 103,165 97,332 100,172
Investments 17,836 29,080 28,785 31,056 49,865
Property, plant and equipment, net 16,932 36,242 39,328 42,013 32,006
Total assets 179,532 205,043 205,837 214,723 215,689
Long-term debt 86,421 98,855 101,456 103,163 99,610
Stockholders' equity 52,573 75,417 76,009 73,383 89,779
Employees 654 683 655 693 727
Stockholders 785 778 819 789 732
</TABLE>
(1) In 1991, the Company established a $20,000,000 provision for
the estimated costs of the settlement of the Department of Justice
investigation and related matters and the phase-down of domestic
manufacturing operations. In 1994, the Company established a
$26,500,000 provision, which included $21,400,000 for the
estimated costs of a plan to dispose of its manufacturing
operations in Brive, France, and $5,100,000 for incremental costs
related to the 1991 provision.
(2) Includes special charges for manufacturing restructuring costs
and disposal of inventory at reduced values.
Page 10
Management's Discussion and Analysis
Results of Operations
Sales Analysis
The Company operates in one industry segment as a value-added
distributor of electronic components, including electron and special purpose
vacuum tubes and semiconductors. The marketing and sales organization of the
Company is divided into four strategic business units (SBUs): Electron Device
Group (EDG), Solid State and Components (SSC), Display Products Group (DPG)
and Security Systems Division (SSD). Consolidated sales in fiscal 1994 were a
record $172.1 million, detailed by SBU as follows:
(in thousands) 1994 1993 1992
-------- -------- --------
Electron Device Group $91,736 $97,846 $102,783
Solid State and Components 42,274 31,619 27,388
Display Products Group 27,150 19,076 16,278
Security Systems Division 10,934 10,674 12,340
-------- -------- --------
Consolidated $172,094 $159,215 $158,789
======== ======== ========
On a geographic basis, United States sales increased 4% in 1993 and 11%
in 1994 to $93.0 million. International sales declined 4% in 1993, but
increased 5% in 1994 to $79.1 million. International sales were negatively
impacted in 1993 and 1994 by economic conditions, particularly in Europe, and
by changes in exchange rates as the U.S. dollar strengthened. Approximately
one-third of the Company's sales are denominated in currencies other than the
U.S. dollar. Foreign exchange rate changes reduced these sales by an average
of 9% in 1994 and 6% in 1993.
Sales trends are analyzed for each strategic business unit in the
following sections. (Chart amounts are in millions).
Electron Device Group
(Sales trend chart inserted here, reflecting following sales data:
1990- $123.6, 1991- $115.9, 1992- $102.8, 1993- $97.80, 1994- $91.7)
The vacuum tube industry, in which EDG operates, is characterized by
mature products, the emergence of tube rebuilders, and vigorous price
competition. EDG sales results reflect the effects of this market
environment, declining 5% in 1993 and 6% in 1994, to $91.7 million. Several
initiatives are underway to provide new growth areas for EDG. Primary among
these is the Group's entry into the medical electronics replacement market.
Demand for x-ray, computed tomography (CT), medical resonance imaging (MRI)
and radiation therapy components is expected to increase in response to the
desire to control rising medical costs. International sales represented 54%,
55% and 56% of EDG's sales in 1994, 1993 and 1992, respectively.
Solid State and Components
(Sales trend chart inserted here, reflecting following sales data:
1990- $20.3, 1991- $23.9, 1992- $27.4, 1993- $31.6, 1994- $42.3)
This group operates in several markets, including the highly competitive
and rapidly growing wireless and telecommunications markets. Sales increased
15% in 1993 and 34% in 1994 to $42.3 million. The reorganization and
expansion of the sales force on a specialty basis was a major factor in the
acceleration of SSC's growth rate. A significant portion of the increase in
sales represents expansion of product lines and the addition of major
manufacturers of RF and microwave components to support expanding
technologies. SSC's international sales are increasing, but not as rapidly as
domestic sales. As a result, international sales represented 37%, 40% and 41%
of SSC's sales in 1994, 1993 and 1992, respectively.
Display Products Group
(Sales trend chart inserted here, reflecting following sales data:
1990- $7.4, 1991- $10.9, 1992- $16.3, 1993- $19.1, 1994- $27.2)
DPG sales increased 17% in 1993 and 42% in 1994 to $27.2 million. Sales
growth in North America benefited from the implementation of the specialty
sales force and the addition of significant new customers for major original
equipment manufacturer and multi-vendor repair programs. Sales growth is
expected to continue in the replacement market for cathode ray tubes and
related products. The product mix for DPG is shifting from monochrome CRTs to
higher priced color CRTs, which have increased from 6% of units sold in 1992
to 9% in 1993 and 20% in 1994. International sales represented 33%, 30% and
29% of DPG's sales in 1994, 1993 and 1992, respectively.
Security Systems Division
(Sales trend chart inserted here, reflecting following sales data:
1990- $8.8, 1991- $10.5, 1992- $12.3, 1993- $10.7, 1994- $10.9)
This group's sales grew 2% in 1994 to $10.9 million, after a 13% decline
in 1993. In response to the 1993 results, the Company reorganized SSD to
specialize primarily in closed circuit television and other security related
products. This strategy contributed to the 1994 sales growth. International
sales, primarily in Canada, represented 40%, 34% and 37% of SSD's sales in
1994, 1993 and 1992, respectively.
Page 11
Cost of Sales and Gross Margins
The following table shows the product margin on distribution activities
and reconciles to the gross margins reported in the Statements of Operations:
(% of sales) 1994 1993 1992
------- ------- -------
Product margin on distribution 32.2 % 33.8 % 35.2 %
Manufacturing underabsorption,
inefficiencies and warranties (2.9)% (2.2)% (2.5)%
Overstock provisions (0.9)% (0.8)% (1.0)%
Other costs (0.9)% (0.9)% (0.7)%
------- ------- -------
Gross margin 27.5 % 29.9 % 31.0 %
======= ======= =======
The distribution margin fluctuations reflect the effects of higher
product costs, foreign exchange rate variations, changes in product mix and,
in 1993 and 1994, the inclusion of value-added costs in the cost of the
product. This reclassification from selling expense was made to provide
better cost data, to improve pricing decisions and to encourage productivity
improvements. Average selling prices, excluding the effects of foreign
currency changes, increased 0.7% in 1994 and 2.1% in 1993.
Gross margins for all three years were negatively impacted by
underutilization of capacity, manufacturing inefficiencies and manufactured
product warranties at both of the Company's facilities. These persistent
problems have distracted the Company from its primary focus as a value-added
distributor. Management has therefore developed a plan to phase down its
involvement in manufacturing operations. In developing this plan, the Company
solicited offers for the sale of the Brive, France operation from strategic
buyers, including local management who has expressed preliminary interest in a
management buy-out.
At May 31, 1994, the Company recorded a charge of $26.5 million to
provide for the anticipated costs and asset write-downs from the phase-down of
its involvement in manufacturing operations. Of the related charge, $21.4
million consists of asset write-downs and costs related to management's plan
to sell or dispose of the Brive facility. The balance of $5.1 million is an
increase in the provision for the phase-down of domestic manufacturing
operations and settlement of certain litigation, originally established at
$20.0 million in 1991. Details of management's plan, the related costs and
employees affected are presented in Note B to the accompanying consolidated
financial statements.
As part of any sale, the Company intends to enter into purchase
commitments with the buyer in order to assure an uninterrupted source of
supply for Richardson's customers. It is anticipated that the higher earnings
levels and stability which will result from the elimination of manufacturing
inefficiencies will be partially offset by reduced profit margins on
distributed product.
Selling, General and Administrative Expenses
Selling, general and administrative expense represented 24.0% of sales
in 1994, 23.9% in 1993 and 25.8% in 1992. The 1993 reduction reflects the
reclassification of value-added costs to cost of sales (1.1% of sales) and a
cost reduction program initiated in the third quarter of fiscal 1992.
Other (Income) Expense
Investment income was $2.4 million in 1994, $3.2 million in 1993 and
$1.9 million in 1992. The decrease in 1994 reflects lower investment levels
and lower realized capital gains. The 1993 increase over 1992 was due to
higher realized capital gains. Interest expense remained essentially the same
for all three years. The remaining other (income) expense is primarily the
result of foreign exchange (gains) losses, which were $0.6 million in 1994,
$0.5 million in 1993 and $(0.3) million in 1992.
Income Tax Provision
The effective tax rates were 24% in fiscal 1994, 38% in 1993 and 40% in
1992. The 1994 rate differs from the 34% U.S. statutory rate as a result of
the provision for the sale or disposition of the Company's French
manufacturing operations, which for financial reporting purposes resulted in a
U.S. tax benefit at a lower rate (See Note F to the accompanying consolidated
financial statements). The rates in 1993 and 1992 were higher than the
federal statutory rate due to state income taxes and foreign net operating
losses for which no benefit has been realized.
Net Income (Loss) and per Share Data
Net income (loss) was $(19.8) million in 1994, $2.8 million in 1993 and
$1.7 million in 1992. The 1994 loss includes the provision for the phase-down
of manufacturing operations, which had an after-tax effect of $(19.5) million,
or $(1.73). Net income (loss) per share was $(1.75), $.25 and $.15,
respectively.
Page 12
Financial Condition
Liquidity
Liquidity is provided by the operating contributions of the Company,
adjusted for non-cash items, and is reduced by debt service, capital equipment
and working capital requirements.
Cash provided by operations, exclusive of working capital requirements,
was $5.8 million in fiscal 1994, $9.1 million in 1993 and $12.8 million in
1992. Higher working capital requirements of $8.1 million in 1994, $3.1
million in 1993 and $4.4 million in 1992 and debt service and dividend
payments were met from cash generated by operations and by liquidation of
investments.
Working capital requirements included higher receivables resulting from
strong fourth quarter sales in 1993 and 1994, and, in 1994, the payment of a
$2 million IRS tax settlement. The Company's market niche as a distributor of
electron tubes and semiconductors for replacement results in relatively high
levels of inventory due to the nature of the product carried and the markets
served. Many of these products represent trailing edge technology which may
not be available from other sources, and may not be currently manufactured.
Also, in many cases, the products are components of production equipment for
which immediate availability is critical to the customer.
Cash requirements in 1995 in addition to routine disbursements for debt
repayment, dividends and capital expenditures are expected to include
approximately $6.3 million for severance, legal and other costs related to the
phase-down of manufacturing operations.
Financing
In March 1994, the Company entered into a $13 million term loan
agreement. The proceeds were used to repay then outstanding term loans.
In connection with the December 1986 debt issuance, certain restrictions
were placed on the Company relating to the purchase of treasury stock and the
payment of cash dividends. At May 31, 1994, $1.0 million was free of such
restrictions. Payment of dividends will be considered quarterly.
Investments
At May 31, 1994, the Company's non-current investments totaled
approximately $17.8 million. Management regularly monitors its investment
portfolio performance, including its high-yield bonds. These funds are being
maintained for corporate purposes, which may include short-term operating
needs, and the evaluation of joint venture or potential acquisition
candidates. Effective May 31, 1994, the Company adopted a new accounting
principle whereby the portfolio is carried at fair market value. (See Note D
to the accompanying consolidated financial statements for further
information.)
Currency Fluctuations
The Company's foreign denominated assets and liabilities are accounts
receivable, accounts payable and bank loans, primarily in member countries of
the European community, and, to a lesser extent, in Canada, Singapore and
Japan. The Company monitors its foreign exchange exposures and will enter
into forward contracts to hedge significant transactions. Other tools used to
manage foreign exchange exposures include the use of currency clauses in sales
contracts and the use of local debt to offset asset exposures.
Page 13
Consolidated Balance Sheets
May 31
(in thousands) 1994 1993
--------- ---------
Assets
Current assets
Cash and equivalents $9,739 $7,098
Receivables, less allowance of $1,405 and $1,456 34,901 30,267
Inventories - Note A 73,863 86,955
Assets held for disposition, less valuation
reserve of $15,832 - Notes B and E 10,274 --
Other 8,190 7,967
--------- ---------
Total current assets 136,967 132,287
Investments - Note D 17,836 29,080
Property, plant and equipment, net - Note A 16,932 36,242
Other assets - Note A 7,797 7,434
--------- ---------
Total assets $179,532 $205,043
========= =========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $10,925 $11,902
Liabilities related to disposition - Note B 15,842 --
Accrued expenses - Note G 11,839 13,264
Current portion of long-term debt - Note E 1,867 3,134
--------- ---------
Total current liabilities 40,473 28,300
Long-term debt, less current portion - Note E 86,421 98,855
Deferred income taxes - Note F 65 2,471
--------- ---------
Total liabilities 126,959 129,626
--------- ---------
Stockholders' equity - Notes E and H
Common Stock, $.05 par value 403 401
Class B Common Stock, convertible, $.05 par value 162 162
Preferred Stock, $1.00 par value -- --
Additional paid-in capital 49,352 49,158
Retained earnings 4,912 26,475
Foreign currency translation adjustment (2,383) (779)
Market appreciation on investments, net of
tax - Note D 127 --
--------- ---------
Total stockholders' equity 52,573 75,417
--------- ---------
Total liabilities and stockholders' equity $179,532 $205,043
========= =========
See notes to consolidated financial statements
Page 14
Consolidated Statements of Operations
Year Ended May 31
(in thousands, except per share amounts) 1994 1993 1992
--------- --------- ---------
Net sales $172,094 $159,215 $158,789
Costs and expenses:
Cost of products sold 124,703 111,620 109,600
Phase-down of manufacturing operations
- Note B 26,500 -- --
Selling, general and administrative
expenses 41,226 38,070 40,947
--------- --------- ---------
192,429 149,690 150,547
--------- --------- ---------
Operating income (loss) (20,335) 9,525 8,242
Other (income) expense:
Interest expense 7,631 7,676 7,783
Investment income - Note D (2,442) (3,216) (1,902)
Other 685 563 (496)
--------- --------- ---------
5,874 5,023 5,385
--------- --------- ---------
Income (loss) before income taxes (26,209) 4,502 2,857
Income tax provision (benefit) - Note F (6,400) 1,700 1,150
--------- --------- ---------
Net income (loss) $(19,809) $2,802 $1,707
========= ========= =========
Net income (loss) per share $(1.75) $.25 $.15
========= ========= =========
Average shares outstanding 11,299 11,335 11,230
========= ========= =========
Dividends per common share $.16 $.16 $.16
========= ========= =========
See notes to consolidated financial statements.
Page 15
Consolidated Statements of Cash Flows
Year Ended May 31
(in thousands) 1994 1993 1992
--------- --------- ---------
Operating Activities:
Net income (loss) $(19,809) $2,802 $1,707
Adjustments to reconcile net income
(loss) to cash (used in) provided by
operating activities:
Depreciation 4,753 5,150 4,812
Amortization of intangibles and
financing costs 964 1,353 1,149
Deferred income taxes (6,717) (309) 4,660
Stock contribution to employee
ownership plan 125 125 500
Phase-down of manufacturing operations
- Note B 26,500 - -
--------- --------- ---------
Net adjustments 25,625 6,319 11,121
--------- --------- ---------
Net income (loss) adjusted for
non-cash items 5,816 9,121 12,828
Changes in working capital, net of
effects of currency translation:
Receivables (5,132) (3,182) (215)
Inventories 1,197 (3,574) 5,492
Other current assets (928) 1,105 (382)
Accounts payable (770) 1,728 (4,783)
Accrued expenses (2,485) 812 (4,547)
--------- --------- ---------
Net changes in working capital (8,118) (3,111) (4,435)
--------- --------- ---------
Net cash (used in) provided by
operating activities (2,302) 6,010 8,393
--------- --------- ---------
Financing Activities:
Proceeds from borrowings 13,770 6,390 1,320
Payments on debt (16,641) (8,811) (5,191)
Proceeds from sale of common stock 71 118 114
Cash dividends (1,754) (1,749) (1,739)
--------- --------- ---------
Net cash used in financing activities (4,554) (4,052) (5,496)
--------- --------- ---------
Investing Activities:
Capital expenditures (2,164) (2,313) (3,186)
Reduction (increase) in investments 11,453 (295) 2,271
Other 208 (325) 528
--------- --------- ---------
Net cash provided by (used in)
investing activities 9,497 (2,933) (387)
--------- --------- ---------
Increase (decrease) in cash and
equivalents 2,641 (975) 2,510
Cash and equivalents at beginning
of year 7,098 8,073 5,563
--------- --------- ---------
Cash and equivalents at end of year $9,739 $7,098 $8,073
========= ========= =========
See notes to consolidated financial statements.
Page 16
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
Shares Issued Addi-
--------------- tional Market
(shares and dollars Class B Par Paid-in Treasury Retained Foreign Appre-
in thousands) Common Common Value Capital Stock Earnings Currency ciation Total
------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance June 1, 1991 7,941 3,250 $559 $48,691 $(824) $25,892 $(935) $ -- $73,383
Shares contributed to
ESOP - Note I 20 -- 1 113 824 (438) -- -- 500
Shares issued under
ESPP and stock
option plan - Note H 24 -- 1 113 -- -- -- -- 114
Conversion of Class B
to Common shares 2 (2) -- -- -- -- -- -- --
Dividends -- -- -- -- -- (1,739) -- -- (1,739)
Currency translation -- -- -- -- -- -- 2,044 -- 2,044
Net income -- -- -- -- -- 1,707 -- -- 1,707
------ ------ ------ ------- ------ ------- ------- ------ -------
Balance May 31, 1992 7,987 3,248 561 48,917 -- 25,422 1,109 -- 76,009
Shares contributed to
ESOP - Note I 15 -- 1 124 -- -- -- -- 125
Shares issued under
ESPP and stock
option plan - Note H 17 -- 1 117 -- -- -- -- 118
Dividends -- -- -- -- -- (1,749) -- -- (1,749)
Currency translation -- -- -- -- -- -- (1,888) -- (1,888)
Net income -- -- -- -- -- 2,802 -- -- 2,802
------ ------ ------ ------- ------ ------- ------- ------ -------
Balance May 31, 1993 8,019 3,248 563 49,158 -- 26,475 (779) -- 75,417
Shares contributed to
ESOP - Note I 20 -- 1 124 -- -- -- -- 125
Shares issued under
ESPP and stock
option plan - Note H 17 -- 1 70 -- -- -- -- 71
Dividends -- -- -- -- -- (1,754) -- -- (1,754)
Currency translation -- -- -- -- -- -- (1,604) -- (1,604)
Cumulative effect of
adoption of FASB
statement 115 - Note D -- -- -- -- -- -- -- 127 127
Net loss -- -- -- -- -- (19,809) -- -- (19,809)
------ ------ ------ ------- ------ ------- ------- ------ -------
Balance May 31, 1994 8,056 3,248 $565 $49,352 $ -- $4,912 $(2,383) $127 $52,573
====== ====== ====== ======= ====== ======= ======= ====== =======
</TABLE>
See notes to consolidated financial statements.
Page 17
Notes to Consolidated Financial Statements
Note A -- Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include
the accounts and operations of the Company and its subsidiaries. All
significant intercompany transactions are eliminated.
Cash Equivalents: The Company considers short-term investments that have a
maturity of three months or less, when purchased, to be cash equivalents. The
carrying amounts reported in the balance sheet for cash and equivalents
approximate the fair market value of these assets.
Inventories: Inventories are stated at the lower of cost or market.
Inventory costs determined using the last-in, first-out (LIFO) method
represent 78% and 74% of total inventories at May 31, 1994 and 1993,
respectively. The remaining inventories are costed on the first-in, first-out
(FIFO) method. If the FIFO method, which approximates current costs, had been
used for all inventories, the total amount of inventories would have been
increased by $5,653,000 and $5,288,000 at May 31, 1994 and 1993, respectively.
The components of inventories are as follows (1994 amounts reflect
reclassifications and write-downs of $10,989,000, as explained in Note B):
May 31
(in thousands) 1994 1993
-------- --------
Finished products $72,136 $76,294
Work in process 1,049 3,961
Materials 678 6,700
-------- --------
Total inventories $73,863 $86,955
======== ========
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Provisions for depreciation are computed principally using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. Property, plant and equipment consist of the
following (1994 amounts reflect reclassifications and write-downs of
$15,738,000, as explained in Note B):
May 31
(in thousands) 1994 1993
-------- --------
Land and improvements $2,618 $3,035
Buildings and improvements 18,508 31,283
Machinery and equipment 20,482 29,013
-------- --------
Property at cost 41,608 63,331
Accumulated depreciation (24,676) (27,089)
-------- --------
Property, net $16,932 $36,242
======== ========
Other Assets: Goodwill and other deferred charges are amortized using the
straight-line method over the expected economic life of the assets. Deferred
financing costs are amortized over the term of the related indebtedness by the
interest method. Deferred income taxes reverse as benefits are realized.
Other assets consist of the following (1994 amounts reflect reclassifications
and write-downs of $1,981,000, as explained in Note B):
May 31
(in thousands) 1994 1993
-------- --------
Deferred income taxes $3,470 $ -
Deferred financing costs 2,634 2,927
Goodwill 3,651 4,985
Other deferred charges 1,609 6,399
-------- --------
Other assets, at cost 11,364 14,311
Accumulated amortization (3,567) (6,877)
-------- --------
Other assets, net $7,797 $7,434
======== ========
Foreign Currency Translation: Foreign currency transactions and financial
statements are translated into U.S. dollars at current rates, except that
revenues, costs and expenses are translated at average current rates during
each reporting period. Gains and losses resulting from foreign currency
transactions are included in income currently. Foreign currency transaction
gains (losses) reflected in operations were $(607,000), $(480,000), and
$260,000 in 1994, 1993 and 1992, respectively. Gains and losses resulting
from translation of foreign financial statements are credited or charged
directly to a separate component of shareholders' equity.
Revenue Recognition: Revenues are recorded when shipments are made.
Income Taxes: Deferred tax liabilities are determined based on differences
between financial reporting and tax basis of assets and liabilities and are
measured using the enacted marginal tax rates and laws.
Earnings per Share: Earnings per share are based on the weighted average
number of Common and Class B shares outstanding and share equivalents that
would arise from the exercise of stock options. The 7 1/4% Convertible
Subordinated Debentures were not included as share equivalents because the
effect of conversion would be anti-dilutive.
Reclassification: Certain balance sheet items at May 31, 1993 and certain
statement of cash flow items for 1992 and 1993 were restated to conform to the
1994 financial statement presentation.
Note B -- Phase-down of Manufacturing Operations
In 1994, the Company recorded a charge of $26,500,000 to provide for the
anticipated costs and asset write-downs from the phase-down of its involvement
in manufacturing operations. Of the related charge, $21,400,000 consists of
the write-down of assets to net realizable value and the accrual of severance
and other costs associated with the Brive facility. The balance of the
charge, $5,100,000, relates to an increase in the provision for the phase-down
of domestic manufacturing operations and settlement of certain litigation,
originally established at $20,000,000 in 1991. The increase in the original
estimate relates primarily to remaining inventory after substantially
completing the market requirements program started in 1991.
Page 18
The Brive operations, which were acquired in 1989, have consistently
operated at a loss as a result of under-utilization of capacity, manufacturing
inefficiencies and product warranty claims. While considerable progress has
been made in improving product quality, continuing under-utilization and
inefficiencies have detracted from the Company's primary focus as a value-
added distributor. In developing its plan, management solicited offers for
the sale of the Brive operations from strategic buyers, including local
management who has expressed preliminary interest in a management buy-out.
The Board of Directors has authorized the Company to pursue the management
buy-out proposal as well as other alternatives.
The major components of these provisions are listed in the following
table. The asset write-downs represent non-cash items, while the remaining
charges are expected to require future cash outlays.
French Domestic
(in thousands) Operations Operations
-------- --------
Asset write-downs to net
realizable value $15,832 $3,738
Severance and related costs 2,580 533
Operating loss until disposition 1,366 -
Other costs 1,622 829
-------- --------
Provision for phase-down $21,400 $5,100
======== ========
Asset write-downs are primarily for net property, inventory and
intangible assets, including goodwill and purchased manufacturing technology.
Severance costs reflect the retirement or termination of 54 employees in
France and 7 employees in the United States. Other costs for the French
operations include the translation loss on investment and appraisal and
related costs. Other costs for the phase-down of domestic operations include
provisions for estimated legal and environmental clean-up costs.
The assets, adjusted to net realizable value, and the liabilities of the
French manufacturing operations have been segregated and classified as current
assets and liabilities on the balance sheet at May 31, 1994.
Management's plans for the sale or disposition of French manufacturing
operations and for the phase-down of domestic manufacturing operations will be
completed during fiscal 1995. The French provision is based on the successful
completion of the management buy-out agreement or similar alternative. If
such an agreement is not completed, revision of the estimated cost of the
phase-down will be required for additional severance and for any incremental
net asset impairment resulting from such change in circumstances. Management
estimates the potential impact on net income of such a revision to be less
than $4 million.
Note C -- Marketing Agreements
The Company has entered into several marketing distribution agreements
with various manufacturers in the electron tube and semiconductor businesses.
The most significant is a distribution agreement with the Electron Device
Group of Varian Associates, Inc. Product sales under this distribution
agreement or prior agreements accounted for 18%, 20% and 25%, of net sales of
the Company in fiscal 1994, 1993 and 1992, respectively.
Note D -- Investments
In May 1993, the Financial Accounting Standards Board issued Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
(the Statement). The Company adopted the provisions of the Statement for
investments held as of May 31, 1994. The Statement requires investments to be
classified as trading, available-for-sale or held-to-maturity. Management has
determined these investments are properly classified as available-for-sale.
In accordance with the Statement, prior period financial statements have not
been restated to reflect the change in accounting principle. The cumulative
effect, at May 31, 1994, of adopting the Statement increased shareholders'
equity by $127,000 (net of $82,000 in deferred income taxes) to reflect the
net unrealized gains on securities classified as available-for-sale previously
carried at cost.
The investment portfolio at May 31, 1993 is stated at cost. Under the
Statement, the investment portfolio at May 31, 1994 is stated at fair value
based on quoted market prices or dealers' quotes and consists of securities
available-for-sale, as follows:
Gross Gross Estimated
Unrealized Unrealized Fair
(in thousands) Cost Gains Losses Value
------- ------- ------- -------
At May 31, 1994:
Corporate bonds $8,357 $18 $(35) $8,340
Convertible bonds 1,954 152 (39) 2,067
Other bonds 1,318 48 (27) 1,339
Equity securities 5,998 349 (257) 6,090
------- ------- ------- -------
Total investments $17,627 $567 $(358) $17,836
======= ======= ======= =======
At May 31, 1993:
Equity securities $5,466 $264 $(257) $5,473
Total investments $29,080 (a) (a) $28,892
(a) Not reported in 1993
The maturity schedule for securities available-for-sale at May 31, 1994 is as
follows:
Estimated
Fair
(in thousands) Cost Value
------- -------
Due in one year or less $3,866 $3,882
Due after one year through five years 6,053 6,089
Due after five years through ten years 773 707
Due after ten years 937 1,068
------- -------
Total bonds 11,629 11,746
Equity securities 5,998 6,090
------- -------
Total investments $17,627 $17,836
======= =======
Interest and dividend income are accrued as earned. Gains and losses
are recognized in income on the investment portfolio when securities are sold
or to reflect a decline in market value estimated by management to be of a
Page 19
permanent nature. Investment income includes capital gains of $1,292,000 in
1994, $1,526,000 in 1993 and $284,000 in 1992. Of these amounts, sales of
equity securities generated gains of $739,000, $1,301,000 and $453,000,
respectively.
Note E -- Long-Term Financing
Long-term debt consists of the following:
(in thousands) 1994 1993
-------- --------
7 1/4% Convertible subordinated
debentures due 2006 $75,735 $75,735
Floating-rate bank term loan due
November 1998 (5 1/2% at May 31, 1994) 12,536 -
Floating-rate bank term loans - 14,375
7 1/4% Building mortgage (Brive, France)
due 2004 10,233 11,346
Other 58 533
-------- --------
Total debt 98,562 101,989
Less current maturities 1,867 3,134
Less liabilities related to disposition 10,274 -
-------- --------
Long-term debt, net $86,421 $98,855
======== ========
The 7 1/4% convertible subordinated debentures are unsecured and
subordinated to other long-term debt. Each $1,000 debenture is convertible
into the Company's Common Stock at any time prior to maturity at $21.14 per
share and is redeemable by the Company at a premium through 1996. The Company
is required to make sinking fund payments on December 15 of each year from
1996 to 2005 in order to retire 75% of the original $83,000,000 issue prior to
maturity, of which $7,265,000 has been repurchased. Sinking fund requirements
for the next five years are $5,185,000 and $6,225,000 due in fiscal 1998 and
1999, respectively. The debenture agreement restricts the use of retained
earnings for the payment of dividends or purchase of treasury stock. As of
May 31, 1994, $1,047,000 was free of such restrictions.
In March 1994, the Company entered into a $13,000,000 term loan
agreement with American National Bank. The proceeds of the loan were used to
repay then outstanding floating-rate term loans. The term loan requires
quarterly principal payments of $464,000 beginning April 30, 1994 and a
balloon payment at maturity in November 1998. The loan bears interest at the
bank's prime rate or the London Inter-Bank Offered Rate (LIBOR), adjusted
based on the Company's financial performance. Financial covenants under the
agreement set benchmark levels for tangible net worth, debt to tangible net
worth ratio and annual debt service coverage.
The 7 1/4% building mortgage is payable in equal annual installments
through December 7, 2004. Land and building in Brive, France with a net book
value of $10,274,000 is pledged as collateral. The mortgage and certain other
debt were reclassified on the balance sheet at May 31, 1994 to liabilities
related to disposition.
Aggregate maturities of long-term debt during the next five years,
excluding liabilities related to disposition, are as follows: $1,867,000 in
1995, $1,865,000 in 1996, $1,857,000 in 1997, $7,042,000 in 1998 and
$11,332,000 in 1999. Cash payments for interest were $7,710,000, $7,801,000
and $7,827,000 in 1994, 1993 and 1992, respectively.
In the following table, the fair value of the Company's 7 1/4%
convertible debentures is based on quoted market prices. The fair value of
floating rate bank term loans is based on carrying value. At May 31, 1993,
the carrying value was adjusted by the value of then existing swap agreements.
The fair value of other loans is based on current market rates for similar
instruments.
(in thousands) 1994 1993
Carrying Fair Carrying Fair
Value Value Value Value
------- ------- ------- -------
7 1/4% Convertible
debentures $75,735 $56,044 $75,735 $63,617
Bank term loans 12,536 12,536 14,375 14,877
Other loans 10,291 10,790 11,879 12,468
------- ------- ------- -------
Total $98,562 $79,370 $101,989 $90,962
======= ======= ======= =======
Note F -- Income Taxes
The components of income (loss) before income taxes are:
(in thousands) 1994 1993 1992
-------- -------- --------
United States $(2,284) $4,282 $2,208
Foreign (23,925) 220 649
-------- -------- --------
Income (loss) before taxes $(26,209) $4,502 $2,857
======== ======== ========
The 1994 financial statement loss was created by the provision for the
phase-down of manufacturing operations, most significantly the sale or
disposition of the Company's French operations (See Note B). The Company will
submit a request to the Internal Revenue Service for a private letter ruling
in conjunction with the planned ordinary loss deduction for U.S. federal
income tax purposes. For financial statement purposes, an estimated tax
benefit of $5,000,000 has been recorded, based on alternate tax strategies.
Additional tax benefits of $3,000,000 realizable based on treatment as an
ordinary loss have not been recorded pending a favorable determination by the
IRS.
The differences between the provision (credit) for income taxes and
income taxes computed at the federal statutory tax rate of 34% are as follows:
(in thousands) 1994 1993 1992
-------- -------- --------
Federal income tax at statutory
rate $(8,911) $1,531 $971
Effect of:
Non-deductible foreign losses 9,036 233 100
Estimated U.S. tax benefit on
provision for disposition
of French manufacturing (5,000) - -
State income taxes, net of
federal tax benefit (1,203) 226 105
FSC benefit on export sales (258) (247) (243)
Other (64) (43) 217
-------- -------- --------
Income tax provision (benefit) $(6,400) $1,700 $1,150
======== ======== ========
Page 20
The provisions (credits) for income taxes consist of the following:
(in thousands) 1994 1993 1992
-------- -------- --------
Currently payable:
Federal $137 $937 $(3,070)
State - 170 (759)
Foreign 196 885 329
-------- -------- --------
Total currently payable 333 1,992 (3,500)
-------- -------- --------
Deferred:
Federal (4,455) 174 3,741
State (1,822) 97 917
Foreign (456) (563) (8)
-------- -------- --------
Total deferred (6,733) (292) 4,650
-------- -------- --------
Income tax provision (benefit) $(6,400) $1,700 $1,150
======== ======== ========
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Non-current deferred tax assets and liabilities are offset on the balance
sheet within tax jurisdictions. Significant components of the Company's
deferred tax assets and liabilities as of May 31, 1994 and 1993 are as
follows:
Non- Non-
Current current current
(in thousands) Asset(1) Asset(2) Liability
-------- -------- --------
At May 31, 1994:
Deferred tax assets:
Phase-down of manufacturing
operations $ - $5,793 $ -
Elimination of intercompany
profit in inventory 2,470 - -
Inventory valuation 1,775 - -
Other, net - 625 -
-------- -------- --------
Deferred tax assets 4,245 6,418 -
Deferred tax liabilities:
Accelerated depreciation - (2,948) (65)
-------- -------- --------
Net deferred tax $4,245 $3,470 $(65)
======== ======== ========
At May 31, 1993:
Deferred tax assets:
Phase-down of manufacturing
operations $(133) $ - $ -
Elimination of intercompany
profit in inventory 1,928 - -
Inventory valuation 1,634 - -
Other, net (41) - 496
-------- -------- --------
Deferred tax assets 3,388 - 496
Deferred tax liabilities:
Accelerated depreciation - - (2,967)
-------- -------- --------
Net deferred tax $3,388 $ - $(2,471)
======== ======== ========
(1) Included in other current assets on the balance sheet
(2) Included in other assets on the balance sheet
Net income taxes paid (refunds received) were $3,053,000, $(1,792,000)
and $(2,002,000) in 1994, 1993 and 1992, respectively. The Company's United
States tax returns have been audited through 1990.
Note G -- Accrued Liabilities
Accrued liabilities consist of the following:
May 31
(in thousands) 1994 1993
-------- --------
Compensation and payroll taxes $4,178 $3,939
Accrual for phase-down of
domestic manufacturing 2,598 2,954
Interest 2,544 2,622
Income taxes 386 1,967
Other accrued expenses 2,133 1,782
-------- --------
Accrued expenses $11,839 $13,264
======== ========
Note H -- Stockholders' Equity
The Company has authorized 30,000,000 shares of Common Stock, 10,000,000
shares of Class B Common Stock and 5,000,000 shares of Preferred Stock. The
Class B Common Stock has ten votes per share and generally votes together with
the Common Stock. The Class B Common Stock has transferability restrictions;
however, it may be converted into Common Stock on a share-for-share basis at
any time. With respect to dividends and distributions, shares of Common Stock
and Class B Common Stock rank equally and have the same rights, except that
Class B Common Stock is limited to 90% of the amount of cash dividends
declared on Common Stock.
Total Common Stock issued at May 31, 1994 was 8,055,877 shares. An
additional 8,206,119 shares of Common Stock have been reserved for future
issuance under the Employee Stock Purchase and Option Plans and potential
conversion of the 7 1/4% Debentures and Class B Common Stock.
The Employee Stock Purchase Plan (ESPP) provides substantially all
employees an opportunity to purchase Common Stock of the Company at 85% of its
fair market value. The plan has reserved 247,500 shares, of which 181,918
shares had been purchased by employees through May 31, 1994.
The Incentive Stock Option Plan expired in August 1993. The Plan
authorized the granting of incentive stock options at the fair market value at
the date of grant. Generally, these options become exercisable over staggered
periods and expire up to ten years from the date of grant. On July 13, 1994,
the Board of Directors approved the Employees' 1994 Incentive Compensation
Plan, subject to shareholder approval. This plan, if approved, will authorize
the issuance of up to 500,000 shares as incentive stock options, non-qualified
stock options or stock awards.
Non-qualified stock options, exercisable based on earnings performance,
have reserved 74,787 shares for future issuance. Non-qualified stock options,
exercisable based on the passage of time, have reserved 499,580 shares for
future issuance to employees and 300,000 shares for issuance to non-employee
directors of the Company. Each option is exercisable over a period from its
date of grant at the market value on the date of grant and expires ten years
from the date of grant.
Page 21
The following table contains further information on the stock option
plans:
Incentive Stock Options 1994 1993 1992
-------- -------- --------
Outstanding, June 1 444,813 390,283 217,533
Granted 40,150 73,500 181,800
Cancelled (50,742) (18,970) (9,050)
-------- -------- --------
Outstanding, May 31 434,221 444,813 390,283
======== ======== ========
Price range at May 31 $6.00 $6.00 $6.00
to to to
$8.125 $8.125 $16.14
Exercisable at May 31 199,111 136,334 74,563
Available for grant at May 31 - 40,907 95,437
Non-Qualified Stock Options 1994 1993 1992
-------- -------- --------
Outstanding, June 1 493,532 373,121 379,036
Granted 208,100 152,500 -
Cancelled (31,742) (32,089) (5,915)
-------- -------- --------
Outstanding, May 31 669,890 493,532 373,121
======== ======== ========
Price range at May 31 $5.25 $7.25 $7.25
to to to
$12.95 $12.95 $12.95
Exercisable at May 31 345,026 304,823 138,450
Available for grant at May 31 204,477 380,805 501,216
Note I -- Employee Retirement Plans
The Company's domestic employee retirement plans consist of a profit
sharing plan and a stock ownership plan (ESOP). Annual contributions in cash
or Company stock are made at the discretion of the Board of Directors. In
addition, the profit sharing plan has a 401(k) provision whereby the Company
matches 50% of employee contributions up to 3% of base pay. Charges to
expense for discretionary and matching contributions to these plans were
$740,000 in 1994, $718,000 in 1993 and $703,000 in 1992. Foreign employees
are covered by a variety of primarily government mandated programs.
Note J -- Industry and Market Information
The Company operates in one industry as a distributor of electronic
components, including vacuum tubes and semiconductors. Historically, the
Company manufactured certain of the electronic tubes it distributed. See Note
B for further information. The Company invoices its customers and makes
shipments from two primary geographic locations: North America (which services
the U.S., Canada, Latin America and the Far East) and Europe.
(in thousands) 1994 1993 1992
-------- -------- --------
Sales:
North America $154,205 $142,197 $142,477
Less intersegment transfers 13,691 12,762 15,086
-------- -------- --------
To unaffiliated customers 140,514 129,435 127,391
-------- -------- --------
Europe 40,367 36,048 37,883
Less intersegment transfers 8,787 6,268 6,485
-------- -------- --------
To unaffiliated customers 31,580 29,780 31,398
-------- -------- --------
Consolidated $172,094 $159,215 $158,789
======== ======== ========
Operating income (loss):
North America $6,235 $10,700 $8,740
Europe (25,054) 399 1,124
Corporate expenses (1,516) (1,574) (1,622)
-------- -------- --------
Consolidated $(20,335) $9,525 $8,242
======== ======== ========
Identifiable assets:
North America $119,098 $120,721 $124,870
Europe 35,310 48,564 45,408
Corporate assets 25,124 35,758 35,559
-------- -------- --------
Consolidated $179,532 $205,043 $205,837
======== ======== ========
Intersegment transfers originate mainly from the United States or France
and are accounted for on an "arm's length" basis with profits eliminated in
consolidation. Export sales shipped directly from the United States,
principally to European and Canadian customers, were $29,667,000 in 1994,
$28,396,000 in 1993 and $29,839,000 in 1992.
Operating income in fiscal 1994 has been reduced by $5,100,000 in North
America and by $21,400,000 in Europe for the provision for phase-down of
manufacturing operations, as described in Note B. Corporate assets consist
primarily of cash and investments.
The Company sells its products to companies in diversified industries
and performs periodic credit evaluations of its customers' financial
condition. Terms are generally on open account, payable net 30 days. Credit
losses are recorded in the financial statements based on periodic reviews of
outstanding accounts and consistently have been within management's estimates.
Sales by product line are summarized in Management's Discussion and
Analysis.
Note K -- Litigation
On September 30, 1991, the Company reached a settlement with the U.S.
Department of Justice (DOJ) which prohibits the Company from collecting tube
carcasses otherwise available to tube rebuilders, provides certain
restrictions on its dealings with Varian Associates, Inc. with respect to
power grid tubes and requires the Company to obtain DOJ approval for the
acquisition of any company (or its power grid tube assets) engaged in the
rebuilding, manufacture or distribution of power grid tubes, except under
limited circumstances.
On June 19, 1990, the Company was served with a complaint in Panache
Broadcasting of Pennsylvania, Inc. v. Richardson Electronics, Ltd.; Varian
Page 22
Associates, Inc.; and Varian Supply Company (VASCO - a joint venture between
the Company and Varian Associates, Inc.), in U.S. District Court for the
Eastern Division of Pennsylvania alleging violations of Sections 1 and 2 of
the Sherman Act and Section 7 of the Clayton Act. This action purports to be
a class action on behalf of all persons and businesses in the U.S. "who
purchased electron power tubes from one or more of the defendant corporations
at any time" since the formation of VASCO. The suit seeks treble damages
alleged to be in excess of $100,000, injunctive relief and attorneys' fees.
The litigation has been transferred to the U.S. District Court for the
Northern District of Illinois, Eastern Division as cause No. 90C6400, and is
in the discovery stage. The Court has not determined whether the action may
be maintained on behalf of a class. The Company is vigorously defending
itself and the VASCO joint venture against this action.
The United States Government has advised the Company that the Government
is considering making a claim for damages and penalties against the Company
under the False Claims Act and the Lanham Act for conduct in connection with a
$3.1 million contract to supply certain tubes which was completed in 1989.
The False Claims Act permits the Government to seek a civil penalty for each
violation of not less than $5,000 nor more than $10,000, plus three times its
damages. The Company believes it has not violated these statutes and is
discussing the resolution of the matter with the Government. If such
discussions are not satisfactorily concluded, the Company plans to vigorously
defend itself against any litigation the Government may initiate.
While it is not possible at this time to predict the outcome of these
legal actions, in the opinion of management, the disposition of the lawsuits
and other matters mentioned above is not likely to have a material effect on
financial position.
Note L -- Selected Quarterly Financial Data
(Unaudited)
Summarized quarterly financial data for 1994 and 1993 follow. Fourth
quarter adjustments in 1994 include $675,000 in excess of original estimates
for overstock inventory and $365,000 for a LIFO reserve requirement. See Note
B regarding provision for the phase-down of manufacturing operations. In
1993, fourth quarter adjustments included $415,000 for a LIFO reserve
requirement.
(in thousands, except
per share amounts) First Second Third Fourth
------- ------- ------- -------
1994:
Net sales $35,846 $44,200 $43,051 $48,997
Gross profit 9,963 12,027 12,099 13,302
Phase-down of
manufacturing - - - (26,500)
Net income 60 597 258 (20,724)
Net income per share $.01 $.05 $.02 $(1.83)
1993:
Net sales $36,593 $41,214 $38,086 $43,322
Gross profit 11,671 12,961 11,300 11,663
Net income 950 1,193 236 423
Net income per share $.08 $.11 $.02 $.04
Report of Independent Auditors
Stockholders and Directors
Richardson Electronics, Ltd.
LaFox, Illinois
We have audited the accompanying consolidated balance sheets of
Richardson Electronics, Ltd. and subsidiaries as of May 31, 1994 and 1993, and
the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended May 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Richardson Electronics, Ltd. and subsidiaries at May 31, 1994 and 1993, and
the consolidated results of their operations and cash flows for each of the
three years in the period ended May 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note D to the consolidated financial statements, at May
31, 1994 the Company changed its method of accounting for its investments.
Ernst & Young LLP
Chicago, Illinois,
July 13, 1994
Page23
Stockholder Information
Corporate Offices
Richardson Electronics, Ltd.
40W267 Keslinger Road
LaFox, Illinois 60147
Annual Meeting
We encourage all stockholders to attend the annual meeting scheduled for
Tuesday, October 11, 1994 at 3:15 p.m. at American National Bank, One North
LaSalle Street, Chicago, IL 60690. Further details are available in your proxy
materials.
Transfer Agent and Registrar
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
Auditors
Ernst & Young LLP
233 South Wacker Drive
Chicago, Illinois 60606
Form 10K
A copy of the Company's Annual Report on Form 10K, filed with the Securities
and Exchange Commission is available without charge upon request. All
inquiries should be addressed to the Investor Relations Department, Richardson
Electronics, Ltd., 40W267 Keslinger Road, LaFox, Illinois 60147.
Market Price of Common Stock
The common stock is traded on the NASDAQ National Market System under the
symbol "RELL". The number of stockholders of Common Stock and Class B Common
Stock at May 31, 1994 was 739 and 46, respectively. The quarterly market price
ranges of the Company's common stock were as follows:
1994 1993
Fiscal Quarters High Low High Low
------- ------- ------- -------
First 7 3/4 6 8 1/2 6 3/4
Second 6 3/4 5 1/2 8 1/2 6 3/4
Third 6 3/4 5 3/4 10 1/2 8 1/2
Fourth 6 1/2 4 1/2 9 7/8 7 1/2
Corporate Officers
Edward J. Richardson
Chairman of the Board, President & Chief Executive Officer
Charles J. Acurio
Vice President,Display Products Group
Page Y. Chiang
Vice President & General Manager, Security Systems Division
Dennis R. Gandy
Executive Vice President, Corporate Development & Assistant Secretary
William J. Garry
Vice President, Finance & Chief Financial Officer
David Gilden
Vice President, Latin American Sales
Joseph C. Grill
Vice President, Human Resources
Ad Ketelaars
Vice President & Managing Director of Europe
Francis J. Leonard
Treasurer
Joel Levine
Senior Vice President & General Manager, Solid State & Components
Kathleen M. McNally
Vice President, Marketing Operations
Bart Petrini
Vice President & General Manager, Electron Device Group
Leonard R. Prange
Group Vice President & Assistant Secretary
Robert L. Prince
Vice President, Sales
Kevin F. Reilly
Vice President, Information Systems
William G. Seils
Senior Vice President, General Counsel & Corporate Secretary
George W. Snyder
Group Vice President
Board of Directors
Edward J. Richardson (1)
Arnold R. Allen
Consultant
Jacques Boyer (5)
Consultant
Kenneth J. Douglas (2,3)
Chairman of the Board, West Suburban Hospital Medical Center
Dennis R. Gandy (1)
David Gilden
Scott Hodes (2,3,4)
Partner, Law Firm of Ross & Hardies
Leonard R. Prange
Joel Levine
Samuel Rubinovitz (1,3,4,5)
Consultant
(1) Executive Committee
(2) Audit Committee
(3) Compensation / Stock Option Committee
(4) Executive Oversight Committee
(5) Strategic Planning Committee
Page 24
EXHIBIT 21
SUBSIDIARIES
OF
RICHARDSON ELECTRONICS, LTD.
Name of Immediate
Jurisdiction of Owner(s) and its/their
Subsidiary Incorporation Percentage of Ownership
Richardson Delaware Richardson
International, Inc. Electronics, Ltd. 100%
Richardson Virgin Islands Richardson
Electronics Foreign International, Inc.
Sales Corporation 100%
Cetron Delaware Richardson
International International, Inc.
Sales Corporation 100%
Richardson Canada Richardson
Electronics Canada, International, Inc.
Ltd. 100%
Richardson United Kingdom Richardson
Electronics (Europe) International, Inc.
Ltd. 100%
Richardson France Richardson
Electronique S.A. International Inc.
97%, Richardson
Electronics, Ltd. 2%
and Ceco Communications,
Inc., National Electronics,
Inc., Cetron Electronic
Corp., RFG, Ltd. and
Richardson Electronics
(Europe) Ltd., 1%.
Richardson France France Richardson Electronique
SNC S.A. 99% and Richardson
International, Inc. 1%
Richardson Italy Richardson International,
Electronics Inc. 90% and
Italy SRL Richardson Electronics,
Ltd. 10%
Richardson Spain Richardson International,
Electronics Inc. 88% and Richardson
Iberica, S.A. Electronics, Ltd., 12%
Richardson Germany Richardson International
Electronics GmbH Inc., 98% and Richardson
Electronics, Ltd., 2%
Richardson Japan Richardson International,
Electronics Japan Inc. 100%
K.K.
Richardson Singapore Richardson International,
Electronics Pte Ltd. Inc. 100%
Richardson Mexico Richardson Electronics,
Electronics S.A. Ltd. 100%
de C.V.
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in Post Effective
Amendment Number 1 to Registration Statement Number 2-89888 on
Form S-8, Registration Statement Number 33-36475 on Form S-8 and
Registration Statement Number 33-54745 on Form S-8 of our report
dated July 13, 1994, with respect to the consolidated financial
statements and schedules of Richardson Electronics, Ltd. included
in the Annual Report on Form 10-K for the year ended May 31,
1994.
Ernst & Young LLP
Chicago, Illinois
August 24, 1994
<TABLE>
Richardson Electronics, Ltd. and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
-------------------------------------- ----------- ------------------------ ----------- -----------
ADDITIONS
------------------------
(1) (2)
Balance at Charged to Charged to Balance at
DESCRIPTION Beginning Costs and Other Account Deductions - End of
of Period Expenses - Describe Describe Period
-------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended May 31, 1994:
Allowance for sales returns and
doubtful accounts $1,456,000 $199,000 $ - $250,000 (1) $1,405,000
Assets held for disposition $ - $15,832,000 $ - $ - $15,832,000
Liabilities related to disposition $ - $5,568,000 $ - $ - $5,568,000
Accrual for phase-down of domestic
manufacturing $2,954,000 $5,100,000 $ - $5,456,000 (2) $2,598,000
Year ended May 31, 1993:
Allowance for sales returns and
doubtful accounts $1,435,000 $328,000 $ - $307,000 (1) $1,456,000
Accrual for phase-down of domestic
manufacturing $4,510,000 $ - $ - $1,556,000 (3) $2,954,000
Year ended May 31, 1992:
Allowance for sales returns and
doubtful accounts $1,288,000 $158,000 $ - $11,000 (1) $1,435,000
Accrual for phase-down of domestic
manufacturing $9,000,000 $ - $ - $4,490,000 (4) $4,510,000
(1) Uncollectible amounts written off, net of recoveries and foreign currency translation.
(2) Primarily costs incurred for the phase-down of domestic manufacturing and the disposition
of manufactured inventory.
(3) Primarily costs incurred for the phase-down of domestic manufacturing and the transfer
of certain product lines to the Brive, France facility.
(4) Includes $2 million in fines and damages paid for litigation settlement and $2,490,000 of other costs
incurred.
</TABLE>
<TABLE>
Richardson Electronics, Ltd. and Subsidiaries
Schedule IX - Short-term Borrowings
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
--------------------------------- ------------ ---------- ------------ -------------- -------------
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest
CATEGORY OF AGGREGATE at end Interest During During Rate During
SHORT-TERM BORROWINGS of Period Rate the Period the Period the Period
--------------------------------- ------------ ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Year ended May 31, 1994:
Notes payable to bank $ - - $1,127,000 $505,000 (1) 7.3 % (2)
Year ended May 31, 1993:
Notes payable to bank $403,000 8.1 % $403,000 $127,000 (1) 8.1 % (2)
Year ended May 31, 1992:
Notes payable to bank $ - - $876,000 $253,000 (1) 11.6 % (2)
(1) The average amount outstanding during the period was computed by dividing the total month-end outstanding
principal balances by 12.
(2) The weighted average interest rate during the period was computed by dividing the actual interest expense by
the average monthly notes payable outstanding.
</TABLE>
<TABLE>
Richardson Electronics, Ltd. and Subsidiaries
Schedule XIII - Other Investments
May 31, 1994
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
-------------------------------------------- ------------- ---------------- ---------------- --------------
Number of Amount at
Shares or Market Value Which Each
Units-Principal of Each Issue Issue is
Amount of at Balance Carried on
Bonds Cost of Each Sheet the Balance
NAME OF ISSUER AND TITLE OF EACH ISSUE and Notes Issue Date Sheet <F1>
-------------------------------------------- ------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
NON - CURRENT INVESTMENTS AVAILABLE FOR SALE
Corporate Notes: <F2>
IBM Credit Corp., 6.33%, due 4/95 500,000 500,000 502,795 502,795
Merrill Lynch & Co., 9.25%, due 11/94 650,000 696,234 660,861 660,861
J P Morgan & Co., 8.875%, due 8/94 1,000,000 1,067,020 1,005,650 1,005,650
Assoc. Corp. of North America, 8.8%, due 350,000 373,457 356,202 356,202
Assoc. Corp. of North America, 9.0%, due 500,000 534,910 519,960 519,960
Boeing Co., 8.375%, due 3/96 500,000 534,945 515,625 515,625
E I DuPont, 8.65%, due 12/97 500,000 539,545 528,265 528,265
IBM Credit Corp., 6.125%, due 11/94 500,000 507,095 501,045 501,045
ITT Corp., 8.375%, due 3/96 400,000 420,000 411,044 411,044
Mobil Corp., 8.625%, due 7/94 500,000 532,200 501,485 501,485
Baxter International, 9.25%, due 9/96 400,000 432,740 420,944 420,944
Procter & Gamble Co., 7.1%, due 9/94 200,000 205,552 200,844 200,844
Coca Cola Co., 7.75%, due 2/96 1,000,000 1,066,570 1,025,690 1,025,690
Kellogg Co., 5.9%, due 7/97 1,000,000 995,030 979,960 979,960
Pepsico Inc., 7.875%, due 8/96 1,000,000 1,062,690 1,027,440 1,027,440
Plus Accrued Interest 207,078 207,078 207,078
-------------- -------------- ------------
9,675,066 9,364,888 9,364,888
Mortgage Bonds:
Old Dominion Electric, 7.27%, due 12/97 500,000 500,000 504,105 504,105
Plus Accrued Interest 18,074 18,074 18,074
-------------- -------------- ------------
518,074 522,179 522,179
Common Stock:
Anthem Electronics, Inc. 2,000 $64,200 $53,250 $53,250
Astro Medical Inc. 20,000 220,000 185,000 185,000
Authentic Fitness Corp. 14,600 214,480 213,525 213,525
Baker Michael Corp. 10,000 90,000 68,750 68,750
Beckman Instruments, Inc. 5,000 130,377 121,875 121,875
Beverly Enterprises 10,000 134,750 137,500 137,500
Corrpro Companies, Inc. 12,600 201,600 215,775 215,775
D H Technology 10,000 153,038 210,000 210,000
Grossman's Inc. 40,000 175,320 145,000 145,000
Haagen Alexander Properties 20,000 360,000 365,000 365,000
Hillhaven Corp. Nev. 5,000 109,250 95,000 95,000
International Business Machines 5,000 292,260 318,125 318,125
International Game Tech. 3,000 75,000 65,625 65,625
Littlefuse, Inc. 5,000 125,500 110,000 110,000
Litton Industries 5,000 165,710 156,875 156,875
Marietta Corp. 17,000 134,307 146,625 146,625
Mid-America Realty 25,000 270,310 243,750 243,750
Mid-Atlantic Realty 20,000 194,350 185,000 185,000
Myers Industries 14,000 286,268 287,000 287,000
National Medical Enterprises 5,000 88,800 83,750 83,750
Petsmart Inc. 8,500 251,675 250,750 250,750
Philadelphia Consolidated Holding Corp. 2,000 25,625 20,000 20,000
Quixote Corp. 7,000 118,741 141,750 141,750
Rural Metro Corp. 10,000 145,000 140,000 140,000
Shared Medical Systems 5,000 130,300 116,250 116,250
Sizeler Property 32,500 422,113 410,312 410,312
Southernwestern Properties 20,000 267,150 255,000 255,000
Sun Healthcare Group Inc. 10,000 197,500 197,500 197,500
Thermedics 10,000 133,581 146,250 146,250
Thermo Cardio Systems 16,800 158,155 352,800 352,800
Thermolase Inc. 20,000 100,000 100,000 100,000
Stockrights 20,000 100,000 100,000 100,000
UJB Financial Corp. 2,500 74,625 70,937 70,937
Warnaco Group Inc. 11,500 388,413 380,937 380,937
-------------- -------------- ------------
5,998,398 6,089,911 6,089,911
High Yield Bonds:
Vis Capital Corp., 12.375%, due 7/1/98 243,000 $267,375 $223,560 $223,560
Rule Industries, 12.50%, due 6/1/97 438,000 348,270 385,440 385,440
Bally Park Place, 11.875%, due 8/15/99 200,000 200,000 211,250 211,250
Other High Yield Bonds 100,000 100,000 100,000 100,000
Plus Accrued Interest 47,669 47,669 47,669
-------------- -------------- ------------
963,314 967,919 967,919
Convertible Bonds:
TPI Enterprises, 8.25%, due 7/02 120,000 120,000 147,600 147,600
Novacare Inc., 5.5%, due 1/00 500,000 500,000 461,250 461,250
Meditrust, 7%, due 3/98 250,000 250,000 265,000 265,000
National Health Investors (P), 7.375%, d 250,000 250,000 255,000 255,000
Sterling Software, 5.75%, due 2/03 100,000 96,500 115,830 115,830
Beverly Enterprises, 7.625%, due 3/03 100,000 100,500 100,000 100,000
Sterling Software, 5.75%, due 2/03 200,000 196,000 235,170 235,170
Mediplex Group Inc., 6.5%, due 8/03 200,000 200,000 224,000 224,000
Centerpoint Property, 8.22%, due 1/04 200,000 200,000 223,000 223,000
Plus Accrued Interest 39,745 39,745 39,745
-------------- -------------- ------------
1,952,745 2,066,595 2,066,595
Miscellaneous
Money market funds and other cash equivalents $1,825,334 $1,825,334 $1,825,334
-------------- -------------- ------------
20,932,931 20,836,826 20,836,826
Reclass to short-term investments <F3> (3,000,000) (3,000,000) (3,000,000)
-------------- -------------- ------------
$17,932,931 $17,836,826 $17,836,826
============== ============== ============
<FN>
<F1> Carrying value is market value at May 31, 1994. It is management's current intention to use the non-current
investments to meet future business needs of the Company. As such, these investments are considered
"available for sale" under the Financial Accounting Standards Board 115.
<F2> Selected corporate notes have first call options by the issuer ranging from one to four years.
<F3> Amount represents investments reclassified at May 31, 1994, primarily to provide for a semi-annual interest
payment due June 15, 1994.
</TABLE>
Appendix
Graphic images in Annual Report to Stockholders for the Year Ended
May 31, 1994:
Page 11 - Management's Discussion and Analysis of Results of
Operations and Financial Condition:
1. Electron Device Group sales history
2. Solid State and Components sales history
3. Display Products Group sales history
4. Security Systems Division sales history
