<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File Number 0-14365
ALPHA TECHNOLOGIES GROUP, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 76-0079338
- -------------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9465 Wilshire Blvd., Suite 980, Beverly Hills, CA 90212
------------------------------------------------------
(Address of principal executive offices)
(310) 385-1494
--------------
(Registrant's telephone number, including area code)
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
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.03 par value 6,695,199
- ---------------------------- ---------
Class Outstanding at May 30, 1998
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC.
FORM 10-Q
APRIL 26, 1998
TABLE OF CONTENTS
Page No.
--------
PART I FINANCIAL INFORMATION......................................... 3
CONSOLIDATED BALANCE SHEETS - OCTOBER 26, 1997 AND APRIL 26, 1998........ 3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS
ENDED APRIL 27, 1997 AND APRIL 26, 1998................................. 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
APRIL 27, 1997 AND APRIL 26, 1998....................................... 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................... 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................ 9
PART II - OTHER INFORMATION.............................................. 15
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - OCTOBER 26, 1997 AND APRIL 26, 1998
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
October 26, April 26,
1997 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 1,707 $ 2,076
Accounts receivable, net 11,766 12,514
Inventories, net 9,781 11,550
Prepaid expenses 1,140 1,209
--------- ---------
Total current assets 24,394 27,349
PROPERTY AND EQUIPMENT, at cost 17,341 19,701
Less - Accumulated depreciation and amortization 5,656 6,921
--------- ---------
Property and equipment, net 11,685 12,780
GOODWILL, net 2,878 2,752
OTHER ASSETS, net 2,421 2,425
--------- ---------
$ 41,378 $ 45,306
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable, trade $ 6,179 $ 7,280
Accrued compensation and related benefits 1,810 1,782
Other accrued liabilities 4,580 4,348
Current portion of long-term debt 1,494 1,441
--------- ---------
Total current liabilities 14,063 14,851
REVOLVING CREDIT FACILITY 5,198 7,403
LONG-TERM DEBT 2,865 2,958
OTHER LONG-TERM LIABILITIES 451 336
STOCKHOLDERS' EQUITY:
Preferred stock, $100 par value; shares authorized 180,000 - -
Common stock, $.03 par value; shares authorized 17,000,000; issued
7,700,733 at October 26, 1997 and 7,703,752 at April 26, 1998 231 231
Additional paid-in capital 43,523 43,532
Retained deficit (21,110) (20,204)
Cumulative translation adjustment, net of income taxes (125) (83)
Treasury stock, at cost (1,008,553 common shares at October 26, 1997 and
April 26, 1998) (3,718) (3,718)
--------- ---------
18,801 19,758
--------- ---------
$ 41,378 $ 45,306
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS
ENDED APRIL 27, 1997 AND APRIL 26, 1998
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-----------------------------------------------------------
Restated Restated
April 27, April 26 April 27, April 26,
1997 1998 1997 1998
------------ --------- --------- ---------
<S> <C> <C> <C> <C>
SALES $ 19,560 $22,295 $ 36,713 $42,695
COST OF SALES 16,287 17,399 31,052 33,713
------------ --------- --------- ---------
Gross profit 3,273 4,896 5,661 8,982
OPERATING EXPENSES
Research and development 364 686 735 1,176
Selling, general and administrative 3,162 3,451 6,391 6,567
Other - 42 214 42
------------ --------- --------- ---------
Total operating expenses 3,526 4,179 7,340 7,785
------------ --------- --------- ---------
OPERATING INCOME (253) 717 (1,679) 1,197
INTEREST AND OTHER INCOME (EXPENSE), net (249) (208) (502) (291)
------------ --------- --------- ---------
INCOME (LOSS) BEFORE TAXES (502) 509 (2,181) 906
PROVISION (BENEFIT) FOR INCOME TAXES - - - -
------------ --------- --------- ---------
INCOME (LOSS) BEFORE INCOME FROM OPERATION
SOLD (502) 509 (2,181) 906
INCOME FROM OPERATION SOLD, net of income taxes 57 - 84 -
------------ --------- --------- ---------
NET INCOME (LOSS) ($445) $ 509 ($2,097) 906
============ ========= ========= =========
BASIC NET INCOME (LOSS) PER SHARE
Income (loss) before discontinued operation ($0.08) $ 0.08 ($0.32) $ 0.14
Discontinued operation $ 0.01 - .01 -
------------ --------- --------- ---------
Net income (loss) ($0.07) $ 0.08 ($0.31) $ 0.14
============ ========= ========= =========
DILUTED NET INCOME (LOSS) PER SHARE
Income (loss) before discontinued operation ($0.08) $ 0.07 ($0.32) $ 0.13
Discontinued operation $ 0.01 - 01 -
------------ --------- --------- ---------
Net income (loss) ($0.07) $ 0.07 ($0.31) $ 0.13
============ ========= ========= =========
SHARES USED IN COMPUTING NET INCOME (LOSS)
PER SHARE
Basic 6,677 6,695 6,676 6,694
============ ========= ========= =========
Diluted 6,677 6,909 6,676 6,859
============ ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
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ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 27, 1997 AND APRIL 26, 1998
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Restated
April 27, April 26,
1997 1998
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,097) $ 906
Adjustments to reconcile net income to net cash (used)
By operating activities:
Depreciation and amortization 1,495 1,669
Gain on sale of equipment - (70)
Income from operation sold (84)
Cumulative translation adjustment 5 42
Changes in assets and liabilities:
(Increase) in accounts receivable (42) (748)
(Increase) decrease in inventory 1,439 (1,769)
(Increase) decrease in prepaid expenses 153 45
(Increase) in consulting agreement (592) -
Increase in accounts payable 1,014 1,101
(Decrease) in accrued compensation and related benefits (100) (28)
(Decrease) in other liabilities (513) (151)
------------------ -----------------
Total adjustments 2,775 91
Net cash provided by continuing operations 678 997
Net cash provided by operations sold 313 -
------------------ -----------------
Net cash provided by operating activities 991 997
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment - 88
Purchase of property and equipment, net (1,145) (2,946)
Change in goodwill 15 -
(Increase) decrease in other assets, net (262) (24)
-----------------
Net cash (used) by investing activities (1,392) (2,882)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 36 9
Proceeds from revolving credit lines 33,292 34,271
Payments on revolving credit lines (35,561) (32,066)
Proceeds from term debt 2,171 580
Payments on term debt (686) (540)
------------------ -----------------
Net cash provided (used) by financing activities (748 ) 2,254
NET INCREASE (DECREASE) IN CASH (1,149) 369
------------------ -----------------
CASH, beginning of year 3,935 1,707
------------------ -----------------
CASH, end of period $ 2,786 $ 2,076
================== =================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
Alpha Technologies Group, Inc. ("Alpha" or the "Company") manufactures thermal
management products and electronic connectors, and assembles custom designed
subsystems.
The thermal management segment's products, principally heat sinks, serve the
microprocessor, computer, consumer electronics, transportation, power supply,
aerospace and defense industries. Heat sinks are primarily fabricated aluminum
extrusions that have high surface area to volume ratios and are engineered to
dissipate unwanted heat generated by electronic components. The connector
segment's products, the majority of which are custom manufactured to meet rigid
specifications, serve the aerospace, automotive, communications, defense,
factory automation, industrial controls, medical electronics, process
instrumentation and test/measurement industries. Connectors are electro-
mechanical devices that permit electronic subassemblies, such as printed circuit
boards, power supplies and input-output wire harnesses/cable assemblies, to be
coupled and separated. The subsystem business serves the military,
telecommunications and certain commercial markets. Subsystems are operational
sub-units integrated into major networks for data transmission, retrieval and
transfer.
The thermal management business is conducted through the Company's wholly-owned
subsidiary, Wakefield Engineering, Inc. ("Wakefield") which includes the
Wakefield-Temecula division, Wakefield Extrusion, Inc. ("Wakefield Extrusion")
and Lockhart Industries, Inc. ("Lockhart"). The connector business is conducted
through the Company's wholly-owned subsidiary, Uni-Star Industries, Inc. ("Uni-
Star"), which does business as Microdot Connectors, and its two foreign
subsidiaries: Malco Microdot UK Ltd, Malco Microdot France SARL. During fiscal
1997, the Company's electronics systems business, which operates as Malco, was
transferred from Uni-Star to a newly formed Delaware corporation, Malco, Inc.
See 4. "Business Segment Information".
The Company was incorporated as Synercom Technology, Inc., in Texas in 1969 and
was reincorporated in Delaware in 1983. In 1993, the Company began its
transformation from a software company to its current businesses. Since October
1993, the Company has grown through a combination of acquisitions and internal
growth. In September of 1994, the Company sold the remaining aspects of its
software and related services business. In April 1995, the name of the
corporation was changed to Alpha Technologies Group, Inc.
6
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(2) CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of the Company, the accompanying interim unaudited consolidated
financial statements contain all material adjustments, consisting only of normal
recurring adjustments necessary to present fairly the financial condition, the
results of operations and the changes in cash flows of Alpha Technologies Group,
Inc. and subsidiaries for interim periods. The results for such interim periods
are not necessarily indicative of results for a full year. All material
intercompany transactions and balances have been eliminated.
Users of financial information produced for interim periods are encouraged to
refer to the footnotes contained in the Annual Report to Stockholders when
reviewing interim financial results.
(3) INVENTORIES
Inventories consisted of the following on October 26, April 26,
(in thousands): 1997 1998
------------ ----------
Raw materials and components $ 5,537 $ 5,489
Work in process 3,785 5,316
Finished goods 2,328 3,056
------------ ----------
11,650 13,861
Valuation reserve (1,869) (2,311)
------------ ----------
$ 9,781 $ 11,550
============ ==========
7
<PAGE>
(4) BUSINESS SEGMENT INFORMATION
Summarized financial information by business segment (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-------------------------------------------- --------------------------------------
Restated Restated
April 27, April 26, April 27, April 26,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
Net sales:
- ----------
Thermal management products $15,363 $17,575 $28,575 $33,366
Connector products 2,677 3,134 5,138 6,490
Subsystems 1,520 1,586 3,000 2,839
------- ------- ------- -------
Total 19,560 22,295 36,713 42,695
======= ======= ======= =======
Operating income (loss):
- ----------------------
Thermal management products 445 736 (262) 1,311
Connector products (394) 112 (815) 234
Subsystems 5 189 26 260
Corporate (309) (320) (628) (608)
------- ------- ------- -------
Total (253) 717 (1,679) 1,197
======= ======= ======= =======
Interest expense:
- ----------------
Thermal management products 253 225 533 444
Connector products 50 2 98 6
Subsystems 0 8 0 8
------- ------- ------- -------
Total 303 235 631 458
======= ======= ======= =======
Total assets:
- ------------
Thermal management products 30,140 31,951 30,140 31,951
Connector products 7,687 6,361 7,687 6,361
Subsystems 2,367 3,755 2,367 3,755
Corporate 4,212 3,239 4,212 3,239
------- ------- ------- -------
Total 44,406 45,306 44,406 45,306
======= ======= ======= =======
Depreciation and amortization:
- -----------------------------
Thermal management products 604 779 1,136 1,347
Connector products 164 118 273 235
Subsystems 38 37 77 74
Corporate 4 5 9 13
------- ------- ------- -------
Total 810 939 1,495 1,669
======= ======= ======= =======
Capital Expenditures:
- --------------------
Thermal management products 377 1,628 873 2,733
Connector products 127 91 222 193
Subsystems - 24 11 30
Corporate 37 - 39 -
------- ------- ------- -------
Total 541 1.743 1,145 2,956
======= ======= ======= =======
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Quarter to Quarter Comparison
Net Income/Loss. Net income for the second quarter of fiscal 1998 was
$509,000 which included a $42,000 restructuring charge related to severance
payments made at the Company's connector operations. This compares to a net loss
from continuing operations of $502,000 for the 1997 quarter. This improvement is
primarily the result of a company wide increase of gross profit percentage from
17% in last year's second quarter to 22% in this year's, revenue growth in the
thermal management and connector segments and control of expenses, including
headcount reductions.
Net income from thermal management operations for the second quarter of
fiscal 1998, before the allocation of Alpha corporate expenses ("corporate
allocation"), was $519,000 compared to net income of $186,000 for the fiscal
1997 quarter. Results from operations benefitted from an increase in sales
without a corresponding increase in overhead and operating expenses (resulting,
in part, from the consolidation of manufacturing facilities).
Net income from the connector products segment for the second quarter of
fiscal 1998, before corporate allocation, was $113,000 including a $42,000
restructuring charge related to severance payments. For the second quarter of
fiscal 1997, net loss from continuing operations for the connector products
segment, before corporate allocation, was $433,000. The increase in the results
of operations in the fiscal 1998 quarter compared to the fiscal 1997 quarter was
primarily due to increased sales, higher gross profits and improved expense
management.
Net income from the Company's subsystems operation for the second quarter
of fiscal 1998, before corporate allocation, was $184,000 compared to $2,000 for
the second quarter of fiscal 1997. The increase in earnings for the fiscal 1998
quarter compared to the fiscal 1997 quarter was primarily due to the effects of
the restructuring of this business, which included a reduction in headcount and
the outsourcing of many components in the third quarter of fiscal 1997. The
subsystems business now designs and assembles purchased components which has
resulted in higher gross profits and lower operating expenses. Additionally,
this segment raised prices for certain products which were previously being sold
at lower than acceptable margins.
Sales. The Company's sales for the second quarter of fiscal 1998 increased
$2,735,000, or 14.0%, to $22,295,000 from $19,560,000 for same period of fiscal
1997. Thermal management sales increased 14.4% to $17,575,000 for the fiscal
1998 quarter from $15,363,000 the second quarter of fiscal 1997 primarily due to
an increase in sales of extruded heat sinks and Penquin(TM) Cooler heat sinks.
Sales of extruded heat
9
<PAGE>
sinks and Penquin(TM) cooler heat sinks increased due to better penetration of
certain customer accounts, increased capacity and growth in the market for these
products. However, the Company experienced a substantial decrease in thermal
management products bookings in May, 1998. Management believes that its bookings
shortfall reflects the slowdown in the personal computer industry as well as
increased competition from Asian manufacturers. Management currently expects
that the decreased bookings will adversely affect the Company's fiscal 1998
third quarter sales and profit performance in comparison to the second quarter
of fiscal 1998, and is curently evaluating cost reduction measures in the
thermal management segment while the slowdown persists. As a result, the Company
currently expects to achieve approximately break-even results for its third
quarter. The Company, however, is continuing to invest in its next generation of
thermal management products, which is based on convoluted fin technology.
Connector sales were $3,134,000 during the second quarter of fiscal 1998
compared to $2,677,000 during the prior fiscal year, a 17.1% increase.
Management believes that this increase was primarily caused by increased demand
and improved efforts (and replacement) of sales representative firms for
connector products.
Gross Profit. The Company's overall gross profit as a percentage of total
revenues ("gross profit percentage") for the second quarter of fiscal 1998 was
22.0% compared to 16.7% for the 1997 fiscal quarter. The thermal management
segment's gross profit percentage increased to 20.3% from 18.2% for fiscal 1998
second quarter as a result of higher sales volume and programs to enhance
productivity and lower costs. In the second quarter of fiscal 1998, the thermal
management business' gross profit percentage increased despite additional labor
costs incurred as a result of manufacturing inefficiencies at its Fall River, MA
manufacturing facility which were partly due to the consolidation of the
Wakefield, MA facility into the Fall River, MA and Temecula, CA facilities. The
consolidation is near completion and the manufacturing inefficiencies have been
corrected.
The connector products segment's gross profit percentage increased to 25.7%
for the second quarter of fiscal 1998 from 9.1% for the 1997 quarter. This
increase is attributable to higher sales volume and better production planning
which resulted from increased backlog during fiscal 1997.
The gross profit percentage at the Company's subsystems operation increased
to 33.2% for the second quarter of fiscal 1998 from 15.8% for the 1997 quarter
primarily as a result of the shift in business strategy implemented in June 1997
and increased prices.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the quarter ended April 26, 1998 were $3,451,000, or
15.5% of sales, compared to $3,162,000, or 16.2% of sales, for the prior year
quarter. Selling, general and administrative expenses as a percentage of sales
decreased due to higher sales volume without a proportionate increase in these
expenses due to improved control of expenses.
10
<PAGE>
Restructuring and Other Expenses. During the second quarter of fiscal 1998,
the Company incurred restructuring charges of $42,000 related to downsizing
severance payments at the Company's connector subsidiary.
Interest and Other Income (Net). Interest expense was $303,000 and $235,000
for the fiscal 1997 and 1998 quarters, respectively. This decrease was due to a
lower average outstanding borrowing base due to higher sales and improved
results of operations.
Six Months to Six Months Comparison
Net Income/Loss. Net income for the first six months of fiscal 1998 was $906,000
which included a restructuring charge of $42,000 in the second quarter related
to severance payments, a gain of $70,000 from the sale of equipment and other
income of $59,000. This compares to a net loss from continuing operations of
$2,181,000 for the 1997 period which included a $214,000 restructuring charge
related to severance payments and $588,000 in additional inventory reserves.
This improvement is primarily the result of increases in gross profit in all
segments and revenue growth.
Net income from thermal management operations for the first six months of
fiscal 1998, before the allocation of Alpha corporate expenses ("corporate
allocation"), was $875,000 compared to a net loss of $801,000 for the 1997
period. The 1997 loss included a charge for severance payments of $172,000 and
additional inventory reserves of $588,000. The additional inventory reserves
recorded in the first six months of fiscal 1997 were recognized to fully reserve
the cost of certain custom products which were built in anticipation of orders
which have not been received. Results from operations, excluding the
restructuring and inventory reserve charges, increased primarily due to
increased sales and higher gross profits.
Net income from the connector products segment for the first six months of
fiscal 1998, before corporate allocation, was $354,000 including a $42,000
restructuring charge related to severance payments and $70,000 related to a gain
on the sale of certain equipment. For the first six months of fiscal 1997, net
loss from continuing operations of the connector products segment, before
corporate allocation, was $864,000 which included $34,000 related to severance
payments. The increase in the results of operations in the first six months of
fiscal 1998 compared to the 1997 period was primarily due to increased sales,
higher gross profits and improved expense management.
Net income from the Company's subsystems operation for the first six months
of fiscal 1998, before corporate allocation, was $258,000 compared to $23,000
for the first six months of fiscal 1997. The increase in earnings in the fiscal
1998 period compared to the fiscal 1997 period was primarily due to the
restructuring of this business, which included a reduction in headcount and the
outsourcing of many components, in the third quarter of fiscal 1997. The
subsystems business now designs and assembles purchased components which has
resulted in higher gross profits and lower operating expenses.
11
<PAGE>
Additionally, this segment raised prices for certain products which were
previously being sold at lower than acceptable margins.
Sales. The Company's sales for the first six months of fiscal 1998 increased
$5,982,000, or 16.3%, to $42,695,000 from $36,713,000 for same period of fiscal
1997. Thermal management sales increased 16.8% to $33,366,000 for the fiscal
1998 period from $28,575,000 the first six months of fiscal 1997 primarily due
to an increase in sales of extruded heat sinks, Penquin cooler heat sinks and an
increase in sales by the Company's Lockhart subsidiary which serves the active
cooling market. Sales of extruded heat sinks and Penquin cooler heat sinks
increased due to better penetration of certain customer accounts, increased
capacity and growth in the market for these products. However, the Company
experienced a substantial decrease in thermal management products bookings in
May, 1998. Management believes that its bookings shortfall reflects the slowdown
in the personal computer industry as well as increased competition from Asian
manufacturers. Management currently expects that the decreased bookings will
adversely affect the Company's fiscal 1998 third quarter sales and profit
performance in comparison to the second quarter of fiscal 1998, and is curently
evaluating cost reduction measures in the thermal management segment while the
slowdown persists. As a result, the Company currently expects to achieve
approximately break-even results for its third quarter. The Company, however, is
continuing to invest in its next generation of thermal management products,
which is based on convoluted fin technology.
Connector sales were $6,490,000 during the first six months of fiscal 1998
compared to $5,138,000 during the prior fiscal year period, a 26.3% increase.
Management believes that this increase was primarily caused by increased demand
and improved efforts (and replacement) of sales representative firms for
connector products.
Subsystems sales were $2,839,000 during the first six months of fiscal 1998
compared to $3,000,000 during the prior fiscal year. The decrease in sales was
due to the loss of customers who did not accept the Company's new pricing
policies. However, the gross profits in this business improved substantially
due to the restructuring implemented in the third quarter of fiscal 1997.
Gross Profit. The Company's overall gross profit as a percentage of
total revenues ("gross profit percentage") for the first six months of fiscal
1998 was 21.0% compared to 15.4% (including the effect of the $588,000 inventory
reserve taken) for the 1997 fiscal period. The thermal management segment's
gross profit percentage was 19.4% and 18.1% (excluding the effect of the
additional inventory reserve) for fiscal 1998 and 1997's first six months,
respectively. This increase was due to higher sales volume and the effects of
programs to enhance productivity and lower costs. In the first half of fiscal
1998, the thermal management business' gross profit percentage increased
despite additional labor costs that was incurred as a result of manufacturing
inefficiencies at its Fall River, MA manufacturing facility. These
inefficiencies were partly due to the consolidation of the Wakefield, MA
facility into the Fall River, MA and Temecula, CA facilities. The consolidation
is near completion and the manufacturing inefficiencies have been corrected.
12
<PAGE>
The connector products segment's gross profit percentage increased to 25.5%
for the first six months of fiscal 1998 from 11.3% for the 1997 period. This
increase is attributable to higher sales volume and better production planning
as a result of the improved backlog.
The gross profit percentage at the Company's subsystems operation increased to
30.2% for the first six months of fiscal 1998 from 16.5% for the 1997 period
primarily as a result of the shift in business strategy and increased prices.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the six months ended April 26, 1998 were $6,567,000,
or 15.4% of sales, compared to $6,391,000, or 17.4% of sales, for the prior year
period. Selling, general and administrative expenses as a percentage of sales
decreased due to higher sales volume without a proportionate increase in
selling, general, and administrative expenses due to improved control of
expenses.
Restructuring and Other Expenses. During the second quarter of fiscal 1998,
the Company incurred a restructuring charge of $42,000 which related to
downsizing severance payments at the Company's connector subsidiary. During the
fiscal 1997 quarter, the Company incurred restructuring charges of $214,000,
which related to downsizing throughout the company.
Interest and Other Income (Net). Interest expense was $631,000 and $458,000
for the first six months of fiscal 1997 and 1998, respectively. This decrease
was due to a lower average outstanding borrowing base. The Company recorded
other income for the first six months of $142,000 which was primarily a result
of a gain on the sale of equipment by the connector segment's operation in South
Pasadena, CA.
LIQUIDITY AND CAPITAL RESOURCES
On April 26, 1998, the Company had cash of approximately $2,076,000 compared
to $1,707,000 on October 26, 1997. Cash provided by operations and proceeds
from the Company's credit facilities were used for purchases of capital
equipment.
For the six months ended April 26, 1998, $997,000 was provided by operating
activities primarily from (i) net income and (ii) an increase in accounts
payable. Capital equipment purchases of $2,946,000 were made to improve
manufacturing capability, replace existing machinery which had reached its end
of life and to automate certain processes.
Effective January 1, 1998, Wakefield, Wakefield Extrusion, Lockhart and Malco
(hereinafter referred to as "Borrowers")became parties to an amended loan
agreement (the "Agreement") with a commercial bank which provides for revolving
loans of up to $9,000,000, with the ability to increase upon request to
13
<PAGE>
$12,000,000, and an equipment acquisition facility of $3.2 million. In May 1998,
the Company increased the amount available under the revolving loan to
$10,000,000. The advances on the revolving loans are based on the eligible
accounts receivable and inventories of Borrowers. The advances on the equipment
acquisition facility may be used for the purpose of funding capital equipment
purchases by the Borrowers. In addition, there are two term loans existing under
the Agreement in the original amounts of $2,250,000 and $1,900,000.
On April 26, 1998, $7,403,000 was drawn on the revolving credit facility.
Interest on $6,750,000 of the revolving credit facility accrues at the relevant
adjusted LIBOR rate plus 2.5% (8.125% per annum on April 26, 1998), and the
remainder of the revolving credit facility accrues interest at the bank's prime
rate plus .5% (9% per annum on April 26, 1998). There is an unused line fee
equal to .5% per annum on the difference between $10,000,000 (or $12,000,000
when increased) and the average daily outstanding principal balance of Revolving
Loans during each of the Company's fiscal quarters payable quarterly in arrears
on the first day of each fiscal quarter. The $2,250,000 term note accrues
interest at 8.75% per annum and is payable in fifty-nine (59) equal monthly
installments of $37,500 beginning December 1, 1996 and a final installment equal
to all unpaid principal on October 11, 2001, together, in each instance, with
interest thereon to the date of payment. On April 26, 1998, $ 1,813,000 was
outstanding on the $2,250,000 term loan. The $1,900,000 term loan accrues
interest at 8.85%, and is payable in eighty-three (83) equal monthly
installments of $22,619 beginning December 1, 1996 and a final installment equal
to all unpaid principal on October 29, 2003, together, in each instance, with
interest thereon to the date of payment. On April 26, 1998, $1,509,000 was
outstanding on the $1,900,000 term note. As of April 26, 1998, $580,000 was
outstanding on the $3.2 million equipment acquisition facility. The obligations
under the Agreement are secured by a first lien on and assignment of all of
the assets of Borrowers which in aggregate total $35,706,000 on April 26, 1998.
Borrowers' credit facilities will expire on December 31, 1999.
The Company has entered into interest swap agreements as a means of
managing its interest rate exposure. The agreements effectively fixed the
interest rate on floating rate debt at a rate of 8.75% for a notional principal
amount of $2,250,000 through November 1, 2001, and at a rate of 8.85% for a
notional principal amount of $1,900,000 through October 29, 2003. On April 26,
1998, the carrying value of the related debt approximated the fair value of the
debt including the swap agreements. Net amounts paid or received are reflected
in interest expense.
Working capital on April 26, 1998 was $12,498,000 compared to $10,331,000 on
October 26, 1997. The increase in working capital is attributable to an increase
in current assets funded by an increase in the Company's long term revolving
credit facility. The Company believes that its currently available cash,
anticipated cash flow from operations and availability under credit facilities
is sufficient to fund its operations, including the thermal management
consolidation, in the near-term.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's annual meeting of stockholders held on April 21, 1998 in Los
Angeles, CA, the stockholders elected the following management nominees:
Nominee Votes For Votes Withheld
------- --------- --------------
Marshall D. Butler 5,994,816 47,813
Lawrence Butler 5,995,516 47,113
Donald K. Grierson 5,996,116 46,513
Frederic A. Heim 5,876,569 166,060
Dr. Kenneth W. Rind 5,996,116 46,513
Michael J. Konigsberg 5,995,116 47,513
In addition, the stockholders approved the amendment to the 1994 Stock Option
Plan to increase the number of shares which may be granted thereunder:
Votes For Votes Against Votes Withheld
---------- ------------- --------------
5,254,925 699,578 28,121
15
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
10.24 Lease modification and extension agreement date February 4,
1998 by and between Richard J. Tobin as Trustee u/d/t dated
June 15, 1981 and entitled "J L N Realty Trust" and Wakefield
Engineering, Inc.
10.25 Employment agreement dated March 23, 1998 between Robert
Streiter and Uni-Star Industries, Inc.
10.26 ATGI 401(k) plan as amended
10.27 Lease dated April 30, 1998 between Cummings Properties
Management, Inc. and Wakefield Engineering, Inc.
11.1 Statement re Computation of Per Share Earnings for the quarters
and six months ended April 27, 1997 and April 26, 1998.
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
There were no reports for Form 8-K filed by the Company during the quarter
ended April 26, 1998.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alpha Technologies Group, Inc.
---------------------------------
(Registrant)
Date: June 10, 1998 By:/s/ Lawrence Butler
-------------------------- ------------------------------
Lawrence Butler
President and Chief Executive Officer
(Principal Executive Officer)
Date: June 10, 1998 By: /s/ Johnny J. Blanchard
-------------------------- -------------------------------
Johnny J. Blanchard
Chief Financial Officer
(Principal Financial and Accounting
Officer)
17
<PAGE>
EXHIBIT INDEX
Exhibit Page No.
------- --------
10.24 Lease modification and extension agreement date 2/4/98 by and
between Richard J. Tobin as Trustee u/d/t dated June 15, 1981 and
entitled "J L N Realty Trust" and Wakefield Engineering, Inc.
10.25 Employment agreement dated 3/23/98 between Robert Streiter and
Uni-Star Industries, Inc.
10.26 ATGI 401(k) plan as amended
10.27 Lease dated April 30, 1998 between Cummings Properties
Management, Inc. and Wakefield Engineering, Inc.
11.1 Statement re Computation of Per Share Earnings for the quarters
and six months ended April 27, 1997 and April 26, 1998.
27 Financial Data Schedule
18
<PAGE>
1
EXHIBIT 10.24
LEASE MODIFICATION AND EXTENSION AGREEMENT
Agreement made as of the 4th day of February, 1998, by and between Richard
J. Tobin, as Trustee u/d/t dated June 15, 1981 and entitled "J L N Realty
Trust", which trust is recorded in the Bristol County Fall River District
Registry of Deeds Land Court Records as Document No. 12977, as affected by
Amendment to Declaration of Trust dated as of March 24, 1995, of 68 Broadway,
Taunton, Bristol County, Massachusetts ("Lessor") and Wakefield Engineering,
Inc., a Delaware corporation, of 60 Audubon Road, Wakefield, Massachusetts
("Lessee"), amending a certain Indenture of Lease dated as of December 20, 1994
("Lease").
WHEREAS, under the terms and conditions of the Lease, the Lessor agreed to
lease to the Lessee and the Lessee agreed to lease from the Lessor certain
premises situated at 132 Sykes Road, Fall River, Bristol County, Massachusetts
("Premises");
WHEREAS, the Lessee has requested that the Lessor construct a 21,000 square
foot warehouse addition to the building on the Premises, including installation
of certain improvements, all as set forth in Exhibit A attached hereto, all for
the use of Lessee in its business operations on the Premises ("Improvements");
WHEREAS, the Lessor has agreed to construct the Improvements on the
Premises, subject, however, to Lessee's agreement to the terms and conditions of
this Lease Modification and Extension Agreement;
WHEREAS, the Lessor and the Lessee have agreed to the construction of the
Improvements for inclusion under the Lease and to certain modifications of the
Lease and to an extension of the term of the Lease, as defined in the Lease;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Lessor and the Lessee hereby
agree to modify the Lease as follows:
1. Upon execution and delivery of this agreement by Lessor and Lessee, Lessor
agrees to undertake the work of construction of the Improvements, including
the preparation of plans and specifications, the hiring of consultants and
contractors, and the obtaining of financing to pay for the cost of
construction of the Improvements, and agrees to use reasonable efforts to
complete the Improvements on or before July 31, 1998. Lessor shall not be
in default under this Agreement as a result of any delay in completing the
Improvements caused by any event or condition beyond the reasonable control
of the Lessor.
2. Other than the Improvements which the Lessor herein agrees to complete, the
Lessee agrees to construct, at its own expense, subject to the terms of the
Lease, such leasehold improvements for the Improvements for use in its
business operations on the Premises as it shall determine.
<PAGE>
2
3. Lessee agrees to cooperate with Lessor to allow for expeditious
construction of the Improvements, and to permit access to the Premises by
the Lessor, his representatives, consultants, contractors, lenders and
others for the purposes of planning for and constructing the Improvements;
provided, however, the Lessor shall, to the extent not required by the
construction of the Improvements, use reasonable efforts to minimize any
interference with the Lessee's business operations on the Premises.
4. The term of the Lease as defined therein is hereby extended and the term of
the Lease shall be for a ten (10) year period, which period shall commence
on the date of issuance of a certificate of occupancy for the Improvements
by the City of Fall River ("Additional Term"). Lessor and Lessee agree
that at the time of issuance of said certificate of occupancy, they will
execute a memorandum of the commencement date of the Additional Term,
which shall then become an integral part of the Lease. If at the
commencement of the Additional Term there remains any portion of the
Improvements to be completed, the Lessor and Lessee agree that they will
jointly inspect the Improvements and establish a punchlist of such items
for completion by the Lessor within a reasonable amount of time.
5. Rent as defined in Section 1.1 of the Lease during the Additional Term
shall be payable in monthly installments in accordance with the terms of
the Lease in the amount of Three Hundred Twenty-Four Thousand and 00/100
($324,000.00) Dollars annually during each of the first five years of the
Additional Term. Rent shall be adjusted on the first day of the sixth year
of the Additional Term and every two years thereafter ("Rent Adjustment
Date") as follows:
(i) In the event that the Prime Rate on the first Rent Adjustment Date
("Adjusted Prime Rate") is in excess of the Prime Rate on the date hereof
("Initial Prime Rate"), the Rent to be paid annually by the Lessee during
the sixth and seventh years of the Additional Term shall be increased by a
number equal to the difference between the Initial Prime Rate and the
Adjusted Prime Rate multiplied by $750,000. Thereafter, on each subsequent
Rent Adjustment Date, the Rent shall be increased by a number equal to the
difference between the Prime Rate on the then Rent Adjustment Date and the
greater of a) the Prime Rate on the prior Rent Adjustment Date or b) the
Initial Prime Rate, multiplied by $750,000.00. Such increases shall be paid
in equal monthly installments as part of the Rent in accordance with the
terms of the Lease. In the event that there is no increase in the Prime
Rate from the then Rent Adjustment Date and the prior Rent Adjustment Date,
there shall be no change then made in the amount of the Rent.
(ii) For purposes of this Agreement, the term "Prime Rate" shall mean
the Wall Street Prime Rate, which rate of interest shall mean the lowest
prime rate of interest being charged by U.S. money center commercial banks
to their best business borrowers (as reported in the Wall Street Journal or
equivalent publication if a listing in the Wall Street Journal shall not be
available). On this date, the parties acknowledge that the Prime Rate is
8.50%.
<PAGE>
3
6. Until the commencement of the Additional Term, Rent, as set forth in the
Lease prior to modification hereby, shall remain at the sums set forth in
Section 1.1 of the Lease. Rent under the Lease shall not abate during
construction of the Improvements.
7. Upon completion of construction of the Improvements, the Improvements shall
thereupon become a portion of the premises leased to the Lessee under the
Lease, and the respective obligations, duties and responsibilities of the
Lessor and Lessee under the Lease shall be applicable to the Improvements.
8. Lessee acknowledges and agrees that but for Lessee's agreements hereunder
to lease the Improvements and to extend the terms as set forth herein, the
Lessor would be unwilling to proceed with construction of the Improvements,
and that based upon the Lessee's agreements herein, the Lessor shall be
relying thereon in proceeding with the planning, developing, constructing,
and financing of the Improvements.
9. Upon commencement of the Additional Term, the Lessee's notice address as
set forth in Paragraph 24 of the Lease shall be changed to:
Wakefield Engineering, Inc.
132 Sykes Road
Fall River, MA 02720
Attn: Kelly Hoffmann, President
with a copy to:
Shapiro Forman & Allen
565 Fifth Avenue
New York, NY 10017
Attn: Robert W. Forman, Esq.
10. The Lease and this Agreement shall be binding upon each of the parties
hereto, their respective successors and assigns and shall be governed by
and construed under the laws of the Commonwealth of Massachusetts.
11. In all other respects the terms and conditions of the Lease are hereby
ratified and confirmed.
IN WITNESS WHEREOF, the Lessor and the Lessee have executed this Agreement
under seal as of the day and year first above written.
<PAGE>
4
WITNESSES: Lessor:
J L N REALTY TRUST
/s/ Janice E. Robbins /s/ Richard J. Tobin, Trustee
- ----------------------- -------------------------------
Richard J. Tobin, Trustee
Lessee:
WAKEFIELD ENGINEERING, INC.
/s/ Annette Galeno /s/ Michael A. Hoffmann
- ----------------------- -------------------------------
Name: Michael A. Hoffmann
Title: President & CEO
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF BRISTOL
In Raynham, Massachusetts, on the 4th day of February, 1998, before me
personally appeared Richard J. Tobin, as Trustee of J L N Realty Trust, to me
known and known by me to be the party executing the foregoing instrument, and he
acknowledged said instrument, by himself executed, to be his free act and deed,
as Trustee as aforesaid.
/s/ Janice E. Robbins
----------------------------------
Notary Public: Janice E. Robbins
My commission expires: 10/14/99
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF MIDDLESEX
In Wakefield, Massachusetts, on the 4th day of February, 1998, before me
personally appeared Michael A. Hoffmann, of Wakefield Engineering, Inc., to me
known and known by me to be the party executing the foregoing instrument, and
he/she acknowledged said instrument, by him/her executed, to be his/her free act
and deed and the free act and deed of said corporation.
/s/ Patricia M. Cleary
----------------------------------
Notary Public
My commission expires: 11/13/03
<PAGE>
Exhibit 10.25
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of March 23, 1998
(the "Effective Date"), between UNI-STAR INDUSTRIES, INC., a Delaware
corporation (the "Company"), and ROBERT STREITER, (the "Employee").
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. Employment, Duties and Acceptance.
1.1. The Company hereby employs the Employee, for the Term (as
hereinafter defined), to render exclusive full-time services to the business of
the Company as the President of the Company, subject to the direction of the
Board of Directors of the Company and the President and Chief Executive Officer
of Alpha Technologies Group, Inc. ("Alpha" or "ATGI"), the Company's corporate
parent, and, in connection therewith, to perform such executive, marketing,
product development, administrative and managerial duties as he shall reasonably
be directed by the Board of Directors of the Company or the President and Chief
Executive Officer of Alpha.
1.2. Acceptance of Employment by the Employee. The Employee hereby
accepts such employment and agrees to render the executive and managerial
services described above on the terms and conditions set forth.
1.3. Place of Employment. The services to be performed hereunder by
the Employee shall be performed primarily at the offices of the Company, which
are currently located in South Pasadena, California, subject to reasonable
travel requirements on behalf of the Company.
1.4. Vacation. The Employee shall be entitled to vacation at the rate
of three weeks for each twelve months of his employment during the Term, without
compensation for any accrued and unused vacation days as of the end of the Term.
2. Term of Employment. The term of the Employee's employment under this
Agreement (the "Term") shall commence on Effective Date and shall end on March
31, 1999, unless sooner terminated pursuant to Article 4 of this Agreement.
<PAGE>
3. Compensation.
3.1. Salary and Benefits. As full regular compensation for all
services to be rendered pursuant to this Agreement, the Company agrees to pay
the Employee, during the Term, a salary at the fixed rate of $125,000 per annum
(the "Annual Salary"). Said Annual Salary will be payable in such payroll
installments as the Company ordinarily pays its salaried employees, less such
deductions and withholdings as shall be required by applicable law and
regulations.
3.2. Options. As a further inducement to the Employee to enter into
this Agreement, Alpha is herewith granting to the Employee an option to purchase
15,000 shares of Alpha's common stock under its 1994 Stock Option Plan at an
exercise price reflecting the market price of the stock on the date of grant.
3.3. Bonus Compensation. Employee shall be eligible to participate
in, and to receive bonuses in accordance with, the Company's bonus plan. All
such payments shall be less such deductions and withholdings as may be required
by applicable law and regulations.
3.4. Expenses. The Company shall reimburse the Employee for all
reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers of such other supporting information as it may require;
provided, however, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman of the Board of Directors.
3.5. Benefits. The Employee shall be eligible to all rights and
benefits under any pension, group insurance or other so-called "fringe" benefits
which the Company may, in its sole discretion, provide for him and its senior
employees generally.
4. Termination.
4.1. Termination upon Death. If the Employee shall die during the
Term, this Agreement shall terminate, except that the Employee's legal
representatives shall be entitled to receive the Annual Salary provided for in
Section 3.1 of this Agreement to the 60th day after the date of the Employee's
death.
4.2. Termination upon Disability. If during the Term the Employee
shall become physically or mentally disabled, whether totally or partially, so
that he is unable substantially to perform his services hereunder for (i) a
period of three consecutive months, or (ii) for shorter periods aggregating
three months during
2
<PAGE>
any twelve-month period, the Company may at any time after the last day of the
third consecutive month of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of three months, by written notice to
the Employee (but before the Employee has recovered from such disability),
terminate the term of the Employee's employment hereunder. Notwithstanding such
disability the Company shall continue to pay the Employee the Annual Salary
herein provided for in Section 3.1 up to and including the date of such
termination. Nothing in this Section 4.2 shall be deemed to extend the Term.
4.3. Termination for Cause. Nothing contained herein shall preclude
the Company from terminating this Agreement for cause without notice, in which
case the Company shall have no further obligation to the Employee. Upon such
termination no incentive compensation shall be payable for the fiscal year in
which the termination took place. As used herein the term "for cause" shall be
deemed to include, with respect to the Employee breach of any of his
representations in this Agreement, chronic alcoholism, drug addiction, criminal
dishonesty, conviction of the Employee of any felony, or of any lesser crime or
offense involving the property or affairs of the Company or Alpha,
misappropriation of any money or other assets or properties of the Company or
Alpha, or any of its subsidiaries or operations, willful violation of specific
and lawful directions from the Board of Directors or the President of Alpha
(which directions must not be inconsistent with the provisions of this
Agreement), failure or refusal to perform the services required of the Employee
under this Agreement, willful misconduct by the Employee in connection with the
performance of his duties hereunder, or any other misconduct on the part of the
Employee seriously detrimental to the best interest of the Company or that of
its subsidiaries or operations.
5. Employee's Representation.
5.1. Representations. The Employee represents and warrants to the
Company that: (a) he is subject to no contractual, fiduciary or other
obligation which may affect or limit the performance of his duties under this
Agreement, (b) he has delivered to the Company his completed and signed
Officer's Questionnaire, (c) his answers therein are true and complete, and (d)
his employment with the Company will not require him to use or disclose
proprietary or confidential information of any other person or entity.
6. Confidentiality; Non-Solicitation Agreements; Proprietary Information.
(a) The Employee realizes that his employment with the Company will involve
access to information, whether or not in tangible form, which is the property of
the Company and which is
3
<PAGE>
not known in the trade or generally by the public, and to information which is
identified as confidential by the Company, or which the Employee has reason to
believe is being maintained in confidence, whether embodied in memoranda,
manuals, letters or other documents, computer disks, tapes or other information
storage devices or any other media or vehicle ("Proprietary Information").
Proprietary Information includes all results, intermediate and final, of the
Company's business plans and product and marketing activities in which the
Employee may participate or of which the Employee may obtain knowledge during
his employment with the Company, together with business, manufacturing,
development and research methods, including (without limitation) product design
and specifications, manufacturing procedures and tolerances, research and
development tools, test procedures, prices and pricing formulae, cost
information, customers' special materials and product specifications and
requirements, suppliers, sales records, salesmen's reports, customers lists,
customer contact reports, and customer records. Employee agrees to treat
Proprietary Information as confidential both during the Term and thereafter and
to recognize and protect the property rights of the Company. The Employee agrees
that during the term of his employment and thereafter, he will not use such
information for himself or others, or divulge or convey such information to
others, and at all times will hold such information in strictest confidence;
provided, however, that the Employee shall not be liable for disclosure of that
information if (A) the information is in, or becomes part of, the public domain,
other than by the Employee's disclosure of the information or (B) the
information is disclosed by the Employee with the prior written approval of the
Board of Directors of the Company or the President of Alpha.
(b) The Employee agrees that, during the Term, and for a period of one
year after its termination, but for a minimum period of two years from the date
of this Agreement, he shall not solicit for employment, directly or indirectly,
or advise or recommend to any other person that such person employ or solicit
for employment, any person who is or was employed by the Company or by Alpha
within one year of the termination of Employee's employment.
(c) It is understood and agreed that the Company would suffer
irreparable harm for which there is no adequate remedy available at law in the
event of a breach of this Section 6 by the Employee, and, in addition to
remedies available at law, the Company shall be entitled to enforce the
provisions of this Section 6 through actions in equity, including injunctive and
similar remedies.
4
<PAGE>
(d) The provisions of this Section 6 shall be non-exclusive and shall
not limit any rights the Company may have at law, and no action taken by the
Company pursuant to this Section 6 shall constitute a waiver of any rights the
Company may have at law.
(e) If for any reason any court of competent jurisdiction shall have
deemed the provisions of this Section 6 unreasonable in duration or in
geographic scope or otherwise unenforceable, the prohibitions herein contained
shall be restricted to such time and geographic area or shall otherwise be
reformed in such manner as the court determines to be reasonable.
(f) The Employee recognizes that, because of the nature of the subject
matter of Section 6, it would be impractical and extremely difficult to
determine the Company's actual damages in the event of his breach of Section 6.
Accordingly, if the Employee commits a breach, or threatens to commit a breach,
of any of the provisions of Section, the Company shall be entitled to have the
provisions of said Section specifically enforced by temporary, preliminary and
permanent injunctive relief without the posting of bond or other security by and
court of competent jurisdiction, notwithstanding the provisions of Section 9
hereof.
7. Ownership of Employee Developments. (a) All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by the Employee during the Term (collectively, the "Work Product") shall
belong exclusively to the Company and shall, to the extent possible, be
considered a work made by the Employee for hire for the Company within the
meaning of Title 17 of the United States Code. To the extent the Work Product
may not be considered work made by the Employee for hire for the Company, the
Employee agrees to assign, and automatically assigns to the Company at the time
of creation of the Work Product, without any requirement of further
consideration, any right, title or interest the Employee may have in such Work
Product. Upon request of the Company, the Employee shall take such further
actions, including execution and delivery of instruments of conveyance, as may
be appropriate to give full and proper effect to such assignment.
(b) The Employee assigns to the Company, will hold for the Company's
exclusive benefit, and will confirm assignment thereof in writing without
additional payment, all Employee's right, title and interest in and to
discoveries, inventions and improvements conceived or made by the Employee,
whether solely or jointly with others, during his employment with the Company
(including periods prior to the effective date of this Agreement)
5
<PAGE>
and which fall within the scope of the Company's, Alpha's or any of its
subsidiaries or affiliates actual or anticipated business or research and
development whether made within or outside of usual work hours, and whether on
or off Company premises. The Employee will make prompt and full disclosure
thereof to the Company and maintain records of creative or inventive activities
and deliver such records to the Company at terminations of employment or as
requested by the Company. The Employee will assist the Company both during and
after his employment with the Company in every proper manner and at the
Company's expense and without cost to the Employee to obtain for the Company in
any and all countries and to maintain and enforce patents, on all discoveries,
inventions, improvements, or refinements assigned by the Employee to the Company
as provided above, or which the executive is bound to assign to the Company, and
for that purpose, the Employee will sign all documents which the Company deems
necessary or desirable.
8. Avoidance of Conflicts of Interest. During the Term, the Employee
shall not engage in any business activity that conflicts with the interests of
the Company or his duties under the Agreement. He shall not have any direct or
indirect financial interest in, or receive any direct or indirect benefit from,
any competitor, except for minor investments, as part of a diversified
portfolio, in the securities of a competitor whose stock is traded on a national
securities exchange.
9. Disputes; Arbitration. In the event that a dispute should arise
between the Company and the Employee, and such dispute shall not have been
resolved within 30 days after it arose, then such dispute, subject to the
provisions of Section 6(f) hereof, shall be submitted to arbitration. Such
arbitration shall be conducted in Los Angeles, California, under the rules of
the American Arbitration Association then obtaining. The arbitrator(s) shall
award the predominantly prevailing party in the arbitration its reasonable
attorneys' fees and other costs and expenses in connection with the arbitration.
Such award shall be final and binding, and judgment upon such award may be
entered in any court having jurisdiction thereof.
10. Notices. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered personally, or mailed first-class,
postage prepaid by registered or certified mail (notices shall be deemed to have
been given when so delivered personally or, if mailed, two days after the date
of mailing) as follows, or to such other address as either party shall designate
by notice so given to the other in accordance herewith:
6
<PAGE>
If to the Company, to:
Uni-Star Industries, Inc.
Attention: Lawrence Butler
306 Pasadena Avenue
South Pasadena, CA 91030
If to the Employee, to:
Robert Streiter
c/o Uni-Star Industries, Inc.
306 Pasadena Avenue
South Pasadena, CA 91030
11. General.
11.1. This Agreement shall be governed by and construed and enforced
in accordance with the local laws of the State of California applicable to
agreements made and to be performed entirely in California.
11.2. The article and section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.3. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
11.4. This Agreement, and the Employee's rights and obligations
hereunder, may not be assigned by the Employee. The Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of the Company hereunder shall be binding
on its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
11.5. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by the party to be charged therewith. The failure
of either party at any time or times to require performance of any
7
<PAGE>
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement. The invalidity or unenforceability of any
term or provision of this Agreement shall in no way impair or affect the balance
thereof, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
UNI-STAR INDUSTRIES, INC.
By: /s/ Lawrence Butler
----------------------------
Lawrence Butler
Chairman of the Board
/s/ Robert Streiter
---------------------------
ROBERT STREITER
8
<PAGE>
Exhibit 10.26
ATGI 401(k) PLAN
IMPORTANT NOTE
Neither Connecticut General Life Insurance Company nor any of its employees can
provide you with legal advice in connection with the execution of this document.
Prior to execution of this document, you should consult your attorney on whether
this document is appropriate for you.
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Table Of Contents
ARTICLE I Definitions.................................................1
ARTICLE II Service....................................................17
ARTICLE III Eligibility, Enrollment and Participation..................20
ARTICLE IV Contributions..............................................21
ARTICLE V Limitations on Allocations.................................34
ARTICLE VI Distribution of Benefits...................................41
ARTICLE VI-A Direct Rollovers...........................................48
ARTICLE VII Retirement Benefits........................................50
ARTICLE VIII Joint and Survivor Annuity Requirements....................51
ARTICLE IX Termination of Employment..................................56
ARTICLE X Withdrawals................................................58
ARTICLE X-A Loans......................................................61
ARTICLE XI Fiduciary Duties and Responsibilities......................63
ARTICLE XII The Administrator..........................................64
ARTICLE XIII Participants' Rights.......................................66
ARTICLE XIV Amendment or Termination of the Plan.......................69
ARTICLE XV Substitution of Plans......................................71
ARTICLE XVI Miscellaneous..............................................72
ARTICLE XVI-A Top-Heavy Provisions.......................................74
ARTICLE XVII Trust Agreement............................................79
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ARTICLE I
DEFINITIONS
1.1 ACCRUED BENEFIT. The term Accrued Benefit means the value on any applicable
date of the Participant's Account.
1.2 ACTIVE PARTICIPANT. The term Active Participant means any Participant who
(a) performs duties as an Employee for the Employer, and (b) is not an
Inactive Participant.
1.3 ACTUAL CONTRIBUTION PERCENTAGE. The term Actual Contribution Percentage
means the average of the Actual Contribution Ratios of a specified group
computed to the nearest one-hundredth of one percent.
1.4 ACTUAL CONTRIBUTION PERCENTAGE TEST.
(A) For each Plan Year, the Plan shall satisfy the contribution percentage
requirement described in section 401(m)(2) of the Code and the
regulations thereunder, which are incorporated herein.
The Plan satisfies the Actual Contribution Percentage Test if:
(1) The Actual Contribution Percentage for the group of eligible
Highly Compensated Employees is not more than the Actual
Contribution Percentage for the group of all other eligible
Employees multiplied by 1.25; or
(2) The excess of the Actual Contribution Percentage for the group of
eligible Highly Compensated Employees over the Actual
Contribution Percentage for the group of all other eligible
Employees is not more than two percentage points, and the Actual
Contribution Percentage for the group of eligible Highly
Compensated Employees is not more than the Actual Contribution
Percentage for the group of all other eligible Employees
multiplied by two.
(B) Special Rules.
(1) For purposes of determining the Actual Contribution Percentage
Test, Employee Contributions are considered to have been made in
the Plan Year in which they were contributed to the Plan.
Matching Contributions and Qualified Nonelective Contributions
will be considered for a Plan Year only if allocated to the
Employee's Account as of any date within the Plan Year being
tested and only if made before the last day of the twelve-month
period immediately following the Plan Year to which such
contributions relate.
(2) A Matching Contribution that is forfeited to correct Excess
Aggregate Contributions, or because the contribution to which it
relates is treated as an Excess Contribution, Excess Deferral,
or Excess Aggregate Contribution, shall not be taken into account
for purposes of the Actual Contribution Percentage Test.
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(3) The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Contribution Percentage Test,
including records showing the extent to which Qualified
Nonelective Contributions and Elective Deferral Contributions are
taken into account.
1.5 ACTUAL CONTRIBUTION RATIO.
(A) An Employee's Actual Contribution Ratio is the sum of the Contribution
Percentage Amounts allocated to the Employee's Account for the Plan
Year (including any amounts required to be taken into account under
subparagraphs (B) (1) and (B) (2) of this section) divided by the
Employee's Compensation for the Plan Year. If no Matching
Contributions, Employee Contributions, Qualified Nonelective
Contributions, or Elective Deferral Contributions are taken into
account with respect to an eligible Employee, the Actual Contribution
Ratio of the Employee is zero.
(B) Special Rules.
(1) In the event that this Plan is aggregated with one or more plans
for purposes of section 410(b) of the Code (other than for
purposes of the average benefit percentage test), or if one or
more other plans satisfy the requirements of section 410(b) of
the Code (other than the average benefit percentage test) only if
aggregated with this Plan, then this section shall be applied by
determining the Actual Contribution Ratios of Employees as if all
such plans were a single plan. Plans may be aggregated only if
they have the same Plan Year.
(2) The Actual Contribution Ratio of a Highly Compensated Employee
who is eligible to participate in more than one plan of the
Employer to which Employee Contributions or Matching
Contributions are made shall be calculated by treating all such
plans in which the Employee is eligible to participate as one
plan. For Plan Years beginning after December 31, 1988, if a
Highly Compensated Employee participates in two or more plans
that have different plan years, all plans ending with or within
the same calendar year shall be treated as a single plan.
However, plans that are not permitted to be aggregated under
Treasury Regulation section 1.401(m)-1(b)(3)(ii) shall not be
aggregated for purposes of this section.
(3) For purposes of determining the Actual Contribution Ratio of a
Participant who is a 5-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall
include the Contribution Percentage Amounts (including any
amounts required to be taken into account under subparagraphs (B)
(1) and (B) (2) of this section) and Compensation for the Plan
Year of all Family Members.
If the Participant is required to be aggregated as a member of
more than one family group under the Plan, all eligible Employees
who are members of those family groups that include that Employee
are aggregated as one family group.
Family Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
Actual Contribution Ratio both for Participants who are Nonhighly
Compensated Employees and for Participants who are
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Highly Compensated Employees.
(4) The determination and treatment of the Actual Contribution Ratio
amounts of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
1.6 ACTUAL DEFERRAL PERCENTAGE. The term Actual Deferral Percentage means the
average of the Actual Deferral Ratios of a specified group, computed to the
nearest one-hundredth of one percent.
1.7 ACTUAL DEFERRAL PERCENTAGE TEST.
(A) For each Plan Year, the Plan shall satisfy the Actual Deferral
Percentage Test described in section 401(k)(3) and the regulations
thereunder, which are herein incorporated by reference.
The Plan satisfies the Actual Deferral Percentage Test for a Plan Year
only if:
(1) The Actual Deferral Percentage for the group of eligible Highly
Compensated Employees is not more than the Actual Deferral
Percentage for the group of all other eligible Employees
multiplied by 1.25; or
(2) The excess of the Actual Deferral Percentage for the group of
eligible Highly Compensated Employees over the Actual Deferral
Percentage for the group of all other eligible Employees is not
more than two percentage points, and the Actual Deferral
Percentage for the group of eligible Highly Compensated Employees
is not more than the Actual Deferral Percentage for the group of
all other eligible Employees multiplied by two.
(B) Special Rules.
(1) For purposes of determining the Actual Deferral Percentage Test,
Elective Deferral Contributions, Qualified Nonelective
Contributions, and Qualified Matching Contributions must be
allocated to the Employee's Account as of a date within the Plan
Year being tested and must be made before the last day of the
twelve-month period immediately following the Plan Year to which
such contributions relate.
(2) The Excess Deferrals of a Highly Compensated Employee shall be
taken into account for purposes of the Actual Deferral Percentage
Test. Conversely, the Excess Deferrals of an Employee who is a
Nonhighly Compensated Employee shall not be taken into account
for purposes of the Actual Deferral Percentage Test.
(3) The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage Test, including
the extent to which Qualified Nonelective Contributions and
Qualified Matching Contributions are taken into account.
1.8 ACTUAL DEFERRAL RATIO.
(A) An Employee's Actual Deferral Ratio for the Plan Year is the sum of
the Employee's Deferral Percentage Amounts allocated to the Employee's
Account for the Plan Year (including any amounts required to be taken
into account under subparagraphs (B) (1) and (B) (2) of this
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section), divided by the Employee's Compensation taken into account
for the Plan Year. If an eligible Employee makes no Elective Deferral
Contributions, and no Qualified Matching Contributions or Qualified
Nonelective Contributions are taken into account with respect to the
Employee, the Actual Deferral Ratio of the Employee is zero.
(B) Special Rules.
(1) In the event that this Plan is aggregated with one or more plans
for purposes of section 410(b) of the Code (other than for
purposes of the average benefit percentage test), or if one or
more other plans satisfy the requirements of section 410(b) of
the Code (other than the average benefit percentage test) only if
aggregated with this Plan, then this section shall be applied by
determining the Actual Deferral Ratio of Employees as if all such
plans were a single plan. Plans may be aggregated only if they
have the same Plan Year.
(2) The Actual Deferral Ratio of a Highly Compensated Employee who is
eligible to participate in more than one cash or deferred
arrangement (as described in section 401(k) of the Code) of the
same Employer shall be calculated by treating all the cash or
deferred arrangements in which the Employee is eligible to
participate as one arrangement. If the cash or deferred
arrangements that are treated as a single arrangement under the
preceding sentence are parts of plans that have different Plan
Years, the cash or deferred arrangements are treated as a single
arrangement with respect to the Plan Years ending with or within
the same calendar year. However, plans that are not permitted to
be aggregated under Treasury Regulation section 1.401(k)-
1(b)(3)(ii)(B) are not aggregated for purposes of this section.
(3) For purposes of determining the Actual Deferral Ratio of a
Participant who is a 5 percent owner or one of the 10 most Highly
Compensated Employees, the Deferral Percentage Amounts and
Compensation of such Participant shall include the Deferral
Percentage Amounts (including any amounts required to be taken
into account under subparagraphs (B) (1) and (B) (2) of this
section) and Compensation for the Plan Year of Family Members.
If an Employee is required to be aggregated as a member of more
than one family group under the Plan, all eligible Employees who
are members of those family groups that include that Employee are
aggregated as one family group.
Family Members, with respect to such Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Actual Deferral Percentage both for Participants
who are Non-highly Compensated Employees and for Participants who
are Highly Compensated Employees.
(4) The determination and treatment of the Actual Deferral Ratio
amounts of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
1.9 ANNUITY. The term Annuity means a series of payments made over a specified
period of time which, for a fixed annuity are, of equal, specified amounts,
and for a variable annuity increase or decrease to reflect changes in
investment performance of the underlying portfolio.
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1.10 ANNUITY STARTING DATE. The term Annuity Starting Date means the first day
of the first period for which an amount is payable as an Annuity. In the
case of a benefit not payable in the form of an Annuity, the term Annuity
Starting Date means the first day on which all events have occurred which
entitle the Participant to such benefit.
1.11 BENEFICIARY. The Participant's Spouse is the designated Beneficiary of 50%
of the Participant's Vested Interest. However, each Participant shall have
the right to designate another Beneficiary in lieu of his Spouse and to
specify the form of death benefit the Beneficiary is to receive, subject to
the requirements of the "Qualified Election" provisions of Article VIII,
Joint and Survivor and/or the form of death benefit Requirements. The
Participant may change the Beneficiary and/or the form of death benefit at
any time, subject to the requirements of the "Qualified Election"
provisions of Article VIII, Joint and Survivor Annuity Requirements.
In addition, each Participant shall have the right to designate a
Beneficiary for the balance of his Vested Interest that is not
automatically payable to his Spouse and to specify the form of death
benefit each Beneficiary is to receive. This designation is not subject to
the terms of Article VIII.
If any distribution hereunder is made to a Beneficiary in the form of an
Annuity, and if such Annuity provides for a death benefit, then such
Beneficiary shall also have the right to designate a Beneficiary and to
change that Beneficiary from time to time. As an alternative to receiving
the benefit in the form of an Annuity, the Beneficiary may elect to receive
a single cash payment or any other form of payment provided for in the
Plan.
If a Participant who has an Hour of Service on or after August 23, 1984
designates a Beneficiary, other than his Spouse, to receive more than 50%
of his Vested Interest and does not obtain the appropriate spousal consent,
50% of the Participant's Vested Interest shall first be paid to his Spouse,
after which any remaining benefits shall be paid to the designated
Beneficiary.
If a Beneficiary has not been designated for the portion of the
Participant's Vested Interest that is not automatically payable to his
Spouse, or if no designated Beneficiary survives the Participant, the
Participant's entire Vested Interest shall be distributed to the
Participant's Spouse, if living; otherwise in equal shares to any surviving
children of the Participant. In the event none of the above named
individuals survives the Participant, the Participant's entire Vested
Interest shall be paid to the executor or administrator of the
Participant's estate.
For purposes of Investment of Contributions as described in Article XIII,
an individual who is designated as an alternate payee in a qualified
domestic relations order (as defined in section 414(p) of the Code)
relating to a Participant's benefits under this Plan shall be treated as a
Beneficiary hereunder, to the extent provided by such order.
1.12 BOARD OF DIRECTORS. The term Board of Directors means the Employer's board
of directors or other comparable governing body.
1.13 CODE. The term Code means the Internal Revenue Code of 1986, as amended
from time to time.
1.14 COMPENSATION.
(A) Except as otherwise provided in the Plan, the term Compensation means
wages within the
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meaning of section 3401(a) of the Code for the purposes of income tax
withholding at the source but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in section 3401(a)(2) of the Code).
(B) Compensation shall include only that Compensation which is actually
paid to the Participant during the determination period. Except as
provided elsewhere in the Plan, the determination period shall be the
Plan Year. However, for the Plan Year in which an Employee begins
participation in the Plan and the Plan Year in which an Employee ends
participation in the Plan, the determination period is the portion of
the Plan Year during which the Employee is a Participant in the Plan.
(C) Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of the employee under sections 125,
402(e)(3), 402(h), or 403(b) of the Code; Compensation deferred under
an eligible deferred compensation plan within the meaning of section
457(d) of the Code; and employee contributions described in section
414(h)(2) of the Code that are picked up by the employing unit and,
thus, are treated as employer contributions.
(D) The annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any determination
period shall not exceed $200,000. This limitation shall be adjusted
by the Secretary of the Treasury at the time and in the same manner as
under section 415(d) of the Code, except that the dollar increase in
effect on January 1 of any calendar year is effective for
determination periods beginning in such calendar year and the first
adjustment to the $200,000 limitation is effected on January 1, 1990.
If the period for determining Compensation used in calculating an
Employee's allocation for a determination period is a short Plan Year
(i.e., shorter than 12 months), the annual Compensation limit is an
amount equal to the otherwise applicable annual Compensation limit
multiplied by a fraction, the numerator of which is the number of
months in the short Plan Year, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only
the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year.
If, as a result of the application of such rules, the adjusted
$200,000 limitation is exceeded, then either the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this section prior to
the application of this limitation, or the limitation shall be
allocated among the affected individuals in an objective and
nondiscriminatory manner based on a reasonable, good faith
interpretation of section 401(a)(17) of the Code. The method chosen
in the preceding sentence shall be uniformly applied to all affected
individuals in a Plan Year and shall be applied consistently from year
to year.
If Compensation for any prior determination period is taken into
account in determining an Employee's allocations or benefits for the
current determination period, the Compensation for such prior
determination period is subject to the applicable annual Compensation
limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual Compensation
limit is $200,000.
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(E) In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual Compensation limit. The OBRA '93
annual Compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months,
over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer
than 12 months, the OBRA '93 annual Compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12. For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17) of
the Code shall mean the OBRA '93 annual Compensation limit set forth
in this provision. If Compensation for any prior determination period
is taken into account in determining an employee's benefits accruing
in the current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual Compensation
limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA
'93 annual Compensation limit is $150,000.
1.15 CONSIDERED NET PROFITS. The term Considered Net Profits means the entire
amount of the accumulated or current operating profits (excluding capital
gains from the sale or involuntary conversion of capital or business
assets) of the Employer after all expenses and charges other than (i) the
contributions made by the Employer to the Plan, and (ii) federal or state
or local taxes based upon or measured by income, as determined by the
Employer, either on an estimated basis or a final basis, in accordance with
the generally accepted accounting principles used by the Employer. When the
amount of Considered Net Profits has been determined by the Employer, and
the contributions are made by the Employer on the basis of such
determination, for any Plan Year, such determination and contribution shall
be final and conclusive and shall not be subject to change because of any
adjustments in income or expense which may be required by the Internal
Revenue Service or otherwise. Such determination and contribution shall not
be open to question by any Participant either before or after the
contributions by the Employer have been made.
1.16 CONTRIBUTION PERCENTAGE AMOUNTS. The term Contribution Percentage Amounts
means the sum of the Employee Contributions, Matching Contributions, and
Qualified Matching Contributions (to the extent not taken into account for
purposes of the Actual Deferral Percentage Test) made under the Plan on
behalf of the Employee for the Plan Year. The term Contribution Percentage
Amounts also includes Qualified Nonelective Contributions and Elective
Deferral Contributions treated as Matching Contributions and taken into
account in determining the Employee's Actual Contribution Ratio for the
Plan Year.
1.17 CONTRIBUTION PERIOD. The term Contribution Period means that regular period
specified by the Employer in Article IV for which contributions shall be
made.
1.18 DEFERRAL PERCENTAGE AMOUNTS. The term Deferral Percentage Amounts means an
Employee's Elective Deferral Contributions for the Plan Year. The term
Deferral Percentage Amounts also includes Qualified Nonelective
Contributions and Qualified Matching Contributions treated as Elective
Deferral Contributions and taken into account in determining the Employee's
Actual Deferral Ratio for the Plan Year.
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1.19 DISABILITY. The term Disability means a Participant's incapacity to engage
in any substantial gainful activity because of a medically determinable
physical or mental impairment which can be expected to result in death, or
to be of long, continued and indefinite duration. Such determination of
Disability shall be made by the Administrator with the advice of competent
medical authority. All Participants in similar circumstances will be
treated alike.
1.20 DISABILITY RETIREMENT DATE. The term Disability Retirement Date means the
first day of the month after the Plan Administrator has determined that a
Participant's incapacity is a Disability.
1.21 EFFECTIVE DATE. The term Effective Date means November 1, 1989.
1.22 ELECTIVE DEFERRAL CONTRIBUTION. The term Elective Deferral Contribution
means any Employer Contribution made to the Plan at the election of the
Participant, in lieu of cash compensation, and includes contributions made
pursuant to a Salary Deferral Agreement or other deferral mechanism.
Solely for purposes of the dollar limitation specified in section 402(g) of
the Code, with respect to any taxable year, a Participant's Elective
Deferral Contributions are the sum of all employer contributions made on
behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in section 401(k) of
the Code, any simplified employee pension cash or deferred arrangement
described in section 402(h)(1)(B) of the Code, any plan as described under
section 501(c)(18) of the Code, and any employer contributions made on
behalf of a Participant for the purchase of a tax sheltered annuity
contract under section 403(b) of the Code pursuant to a salary reduction
agreement.
The term Elective Deferral Contribution shall not include any deferrals
properly distributed as excess annual additions.
1.23 EMPLOYEE. The term Employee means an individual who performs services for
the Employer and who is either a common law employee of the Employer or a
self-employed individual/owner employee treated as an Employee pursuant to
Code section 401(c)(1). The term Employee also includes a Leased Employee
who is treated as an Employee of the Employer-recipient pursuant to the
provisions of Code section 414(n) or 414(o). For purposes of determining
the Highly Compensated Employees, the Employer may elect, on a reasonable
and consistent basis, to treat such Leased Employees covered by a plan
described in Code section 414(n)(5) as Employees.
1.24 EMPLOYEE CONTRIBUTIONS. The term Employee Contributions means any
contributions to the Plan or any other plan that are designated or treated
at the time of contribution as after-tax Employee Contributions and are
allocated to a separate account to which the attributable earnings and
losses are allocated. Such term includes Employee Contributions applied to
the purchase of life insurance policies.
Such term does not include repayment of loans or buy-back of benefits
described in code section (411)(a)(7)(c) or employee contributions
transferred to this Plan.
1.25 EMPLOYER. The term Employer means Alpha Technologies Group, Inc. and any
adopting subsidiary of the Employer and any successor organization to such
Employer which elects to continue the Plan. In the case of a group of
employers which constitutes a controlled group of corporations (as defined
in Code section 414(b)), or which constitutes trades or businesses (whether
or not incorporated) which are under common control (as defined in Code
section 414(c)), or which constitutes an affiliated service
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group (as defined in Code section 414(m)), all such employers shall be
considered a single employer for purposes of participation, vesting, Top-
Heavy provisions and determination of Highly Compensated Employees.
1.26 EMPLOYER CONTRIBUTION. The term Employer Contribution means any
contribution made to the Plan by the Employer on behalf of a Participant,
other than an Employee Contribution or Rollover Contribution.
1.27 ENTRY DATE. The term Entry Date means either the Effective Date or the
November 1, February 1, May 1 or August 1 thereafter when an Employee who
has fulfilled the eligibility requirements commences participation in the
Plan.
Any Employee who has satisfied the maximum eligibility requirements
permissible under ERISA, shall be eligible to commence participation in
this Plan no later than the earlier of (A) or (B) below, as applicable,
provided that the Employee has not separated from the Service of the
Employer:
(A) The first day of the first Plan Year beginning after the date on which
the Employee satisfied such requirements; or
(B) The date six months after the date on which the Employee satisfied
such requirements.
If an Employee is not in the active Service of the Employer as of his
initial Entry Date, his subsequent Entry Date shall be the date he returns
to the active Service of the Employer, provided he still meets the
eligibility requirements. If an Employee does not enroll as a Participant
as of his initial Entry Date, his subsequent Entry Date shall be the
applicable Entry Date as specified above when the Employee actually enrolls
as a Participant.
1.28 ERISA. The term ERISA means the Employee Retirement Income Security Act of
1974 (PL 93-406) as it may be amended from time to time, and any
regulations issued pursuant thereto as such Act and such regulations affect
this Plan and Trust.
1.29 EXCESS AGGREGATE CONTRIBUTIONS.
(A) The term Excess Aggregate Contributions means, with respect to any
Plan Year, the excess of the aggregate amount of the Contribution
Percentage Amounts actually made on behalf of Highly Compensated
Employees for the Plan Year (including any amounts required to be
taken into account under subparagraphs (B) (1) and (B) (2) of Section
1.5 of the Plan), over the maximum amount of contributions permitted
under the Actual Contribution Percentage Test. The amount of Excess
Aggregate Contributions for each Highly Compensated Employee is
determined by using the method described in paragraph (B) of this
section.
(B) The amount of Excess Aggregate Contributions for a Highly Compensated
Employee for a Plan Year is the amount (if any) by which the
Employee's Employee Contributions and Matching Contributions must be
reduced for the Employee's Actual Contribution Ratio to equal the
highest permitted Actual Contribution Ratio under the Plan.
To calculate the highest permitted Actual Contribution Ratio under the
Plan, the Actual Contribution Ratio of the Highly Compensated Employee
with the highest Actual Contribution Ratio is reduced by the amount
required to cause the Employee's Actual Contribution Ratio to
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equal the ratio of the Highly Compensated Employee with the next
highest Actual Contribution Ratio. If a lesser reduction would enable
the Plan to satisfy the Actual Contribution Percentage Test, only this
lesser reduction may be made. This process shall be repeated until the
Plan satisfies the Actual Contribution Percentage Test. The highest
Actual Contribution Percentage Ratio remaining under the Plan after
leveling is the highest permitted Actual Contribution Ratio.
For each Highly Compensated Employee, the amount of Excess Aggregate
Contributions for a Plan Year is equal to the total Contribution
Percentage Amounts (including any amounts required to be taken into
account under subparagraphs (B) (1) and (B) (2) of Section 1.5 of the
Plan), minus the amount determined by multiplying the Employees's
highest permitted Actual Contribution Ratio (determined after
application of this section) by the compensation used in determining
the ratio.
1.30 EXCESS CONTRIBUTION.
(A) The term Excess Contribution means, with respect to a Plan Year, the
excess of Deferral Percentage Amounts made on behalf of eligible
Highly Compensated Employees for the Plan Year (including any amounts
required to be taken into account under subparagraphs (B) (1) and (B)
(2) of Section 1.8 of the Plan) over the maximum amount of such
contributions permitted under the Actual Deferral Percentage Test for
the Plan Year. The amount of Excess Contributions for each Highly
Compensated Employee is determined by using the method described in
paragraph (B) of this section.
(B) The amount of Excess Contributions for a Highly Compensated Employee
for a Plan Year is the amount (if any) by which the Employee's
Elective Deferral Contributions must be reduced for the Employee's
Actual Deferral Ratio to equal the highest permitted Actual Deferral
Ratio under the Plan.
To calculate the highest permitted Actual Deferral Ratio under the
Plan, the Actual Deferral Ratio of the Highly Compensated Employee
with the highest Actual Deferral Ratio is reduced by the amount
required to cause the Employee's Actual Deferral Ratio to equal the
ratio of the Highly Compensated Employee with the next highest Actual
Deferral Ratio. If a lesser reduction would enable the arrangement to
satisfy the Actual Deferral Percentage Test, only this lesser
reduction shall be made. This process shall be repeated until the cash
or deferred arrangement satisfies the Actual Deferral Percentage Test.
The highest Actual Deferral Ratio remaining under the Plan after
leveling is the highest permitted Actual Deferral Ratio.
1.31 EXCESS DEFERRALS. The term Excess Deferrals means those Elective Deferral
Contributions that are includible in a Participant's gross income under
section 402(g) of the Code to the extent such Participant's Elective
Deferral Contributions for a taxable year exceed the dollar limitation
under such Code section.
1.32 FAIL-SAFE CONTRIBUTION. The term Fail-Safe Contribution means a Nonelective
Contribution, designated by the Employer at the time of contribution as a
Qualified Nonelective Contribution, which is contributed to the Plan solely
for the purposes of satisfying either the Actual Deferral Percentage Test
or the Actual Contribution Percentage Test and is made in accordance with
the provisions of Article IV of this Plan.
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1.33 FAMILY MEMBER. The term Family Member means, with respect to any Employee,
such Employee's Spouse and lineal ascendants and descendants and the
spouses of such lineal ascendants and descendants.
1.34 FIDUCIARY. The term Fiduciary means any, or all, of the following, as
applicable:
(A) Any Person who exercises any discretionary authority or control
respecting the management of the Plan or its assets; or
(B) Any Person who renders investment advice for a fee or other
compensation, direct or indirect, respecting any monies or other
property of the Plan or has authority or responsibility to do so; or
(C) Any Person who has discretionary authority or responsibility in the
administration of the Plan; or
(D) Any Person who has been designated by a Named Fiduciary pursuant to
authority granted by the Plan, who acts to carry out a fiduciary
responsibility, subject to any exceptions granted directly or
indirectly by ERISA.
1.35 FORFEITURE. The term Forfeiture means the amount, if any, by which the
value of a Participant's Account exceeds his Vested Interest following such
Participant's Termination of Employment, and at the time specified in
Section 9.1.
1.36 HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated Employee means any
Highly Compensated Active Employee or Highly Compensated Former Employee as
further defined herein.
For purposes of the determination of Highly Compensated Employees, the term
Compensation means Compensation as defined in Article V of the Plan, but
includes the amount of any elective contributions made by the Employer on
the Employee's behalf to a cafeteria plan established in accordance with
the provisions of Code section 125, a qualified cash or deferred
arrangement in accordance with the provisions of Code section 402(e)(3), a
simplified employee pension plan in accordance with the provisions of Code
section 402(h), or a tax sheltered annuity plan maintained in accordance
with the provisions of Code section 403(b).
A "Highly Compensated Active Employee" is any Employee who performs
services for the Employer during the current Plan Year and who, during the
current Plan Year or the 12-month period immediately preceding such Plan
Year:
(A) Owns (or is considered to own within the meaning of section 318 of the
Code, as modified by section 416(i)(1)(B)(iii) of the Code), more than
5% of the outstanding stock of the Employer or stock possessing more
than 5% of the total combined voting power of all stock of the
Employer, or, if the Employer is other than a corporation, owns more
than 5% of the capital or profits interest in the Employer. The
determination of 5% ownership shall be made separately for each member
of a controlled group of corporations (as defined in Code section
414(b)), or of a group of trades or businesses (whether or not
incorporated) that are under common control (as defined in Code
section 414(c)), or of an affiliated service group (as defined in Code
section 414(m)); or
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(B) Receives Compensation in excess of $75,000 multiplied by the
applicable cost-of-living adjustment factor prescribed under Code
section 415(d) and then prorated in the case of a short Plan Year; or
(C) Receives Compensation in excess of $50,000, as adjusted for cost-of-
living increases in accordance with Code section 415(d) and then
prorated in the case of a short Plan Year, and is in the top 20% of
Employees ranked by Compensation; or
(D) Is, at any time, an officer of the Employer and receives Compensation
in excess of 50% of the amount in effect under Code section
415(b)(1)(A) for the applicable period.
If no officer receives Compensation in excess of the amount specified
above, the highest paid officer for the applicable period shall be a
Highly Compensated Employee.
In no event if there are more than 500 Employees, shall more than 50
Employees or, if there are less than 500 Employees, shall the greater
of three Employees or 10% of all Employees, be taken into account as
officers.
In determining both the top 20% of Employees ranked by Compensation for
purposes of paragraph (C) above, and officers of the Employer for purposes
of paragraph (D) above, Employees who have not completed six months of
Service by the end of the applicable period, Employees who normally work
less than 17-1/2 hours per week, Employees who normally work less than six
months during a year, Employees who have not attained 21, and nonresident
aliens who receive no earned income from U.S. sources shall be excluded.
Also excluded under the above paragraph are Employees who are covered by an
agreement which the Secretary of Labor finds to be a collective bargaining
agreement. Such Employees will be excluded only if retirement benefits
were the subject of good faith bargaining, 90% of the Employees of the
Employer are covered by the agreement, and the Plan covers only Employees
who are not covered by the agreement.
Notwithstanding the above provisions, an Employee, other than a 5% owner as
described in paragraph (A) above who was not highly compensated during the
12-month period immediately preceding the current Plan Year will not be
considered to be a Highly Compensated Employee in the current Plan Year
unless such Employee is one of the top 100 Employees ranked by Compensation
for the current Plan Year.
A "Highly Compensated Former Employee" is any former Employee who separated
from Service with the Employer in a Plan Year preceding the current Plan
Year and was a Highly Compensated Active Employee in either:
(A) the Plan Year in which his separation from Service occurred; or
(B) any Plan Year ending on or after such former Employee's 55th birthday.
A former Employee is an Employee who performs no services for the Employer
during a Plan Year (for example, by reason of a leave of absence).
1.37 INACTIVE PARTICIPANT. The term Inactive Participant means any Participant
who does not
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currently meet the requirements to be an Active Participant due to a
suspension of the performance of duties for the Employer.
1.38 INSTALLMENT REFUND ANNUITY. The term Installment Refund Annuity means an
annuity which provides fixed monthly payments for a period certain of not
less than three nor more than 15 years. If the Participant dies before the
period certain expires, the annuity will be paid to the Participant's
Beneficiary for the remainder of the period certain. The period certain
shall be chosen by the Participant at the time the annuity is purchased,
and the Installment Refund Annuity will be the amount of benefit which can
be purchased with the Participant's Vested Interest. The Installment
Refund Annuity is not a life annuity and in no event shall the period
certain extend to a period which equals or exceeds the life expectancy of
the Participant.
1.39 JOINT AND SURVIVOR ANNUITY. The term Joint and Survivor Annuity means an
Annuity for the life of the Participant with a survivor Annuity for the
life of the Participant's Spouse which is not less than one-half, nor
greater than, the amount of the Annuity payable during the joint lives of
the Participant and the Participant's Spouse. The Joint and Survivor
Annuity will be the amount of benefit which can be purchased with the
Participant's vested account balance. In the case of an unmarried
Participant, Joint and Survivor Annuity means an Annuity payable over the
Participant's life.
1.40 LATE RETIREMENT DATE. The term Late Retirement Date means the first day of
the month coinciding with or next following the date a Participant is
separated from Service with the Employer after his Normal Retirement Age,
for any reason other than death.
1.41 LEASED EMPLOYEE. The term Leased Employee means any person (other than an
Employee of the recipient) who, pursuant to an agreement between the
recipient and any other person ("leasing organization"), has performed
services for the recipient (or for the Employer and related persons
determined in accordance with Code section 414(n)(6)) on a substantially
full-time basis for a period of at least one year, and such services are of
a type historically performed by employees in the business field of the
recipient Employer.
1.42 MATCHING CONTRIBUTIONS. The term Matching Contributions means
contributions made by the Employer to the Plan on behalf of a Participant
on account of either Elective Deferral Contributions, if any, Employee
Contributions, if any, or required contributions, if any.
1.43 NAMED FIDUCIARY. The term Named Fiduciary means the Plan Administrator, the
Trustee and any other Fiduciary designated in writing by the Employer, and
any successor thereto.
1.44 NONELECTIVE CONTRIBUTIONS. The term Nonelective Contributions means
contributions made by the Employer (other than Matching Contributions) that
the Participant may not elect to have paid in cash or other benefits
instead of being contributed to the Plan.
1.45 NONHIGHLY COMPENSATED EMPLOYEE. The term Nonhighly Compensated Employee
means an Employee who is not a Highly Compensated Employee.
1.46 NORMAL RETIREMENT AGE. The term Normal Retirement Age means the date the
Participant attains age 59, or if later, the fifth anniversary of the
Participant's commencement date. The Participant's commencement date is
the first day of the first Plan Year in which the Participant began
participating.
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1.47 NORMAL RETIREMENT DATE. The term Normal Retirement Date means the first day
of the month coinciding with or next following the date a Participant
attains his Normal Retirement Age.
1.48 PARTICIPANT. The term Participant means any Employee of the Employer, who
is or becomes eligible to participate under this Plan in accordance with
its provisions and shall include an Active Participant, an Inactive
Participant and for purposes of Investment of Contributions as described in
Article XIII of the Plan, former participants. Former participants shall
include those Participant's who upon termination of employment defer
distribution in accordance with Section 6.2 of the Plan.
1.49 PARTICIPANT'S ACCOUNT. The term Participant's Account means the sum of the
following sub-accounts held on behalf of each Participant:
. Elective Deferral Contributions, if any, and earnings thereon.
. Matching Contributions, if any, and earnings thereon.
. Qualified Matching Contributions, if any, and earnings thereon.
. Nonelective Contributions, if any, and earnings thereon.
. Qualified Nonelective Contributions, if any, and earnings thereon.
. Employee Contributions, if any, and earnings thereon.
. Rollover Contributions, if any, and earnings thereon.
A Participant's Account shall be invested in accordance with the rules
established by the Plan Administrator, which shall be applied in a
consistent and nondiscriminatory manner.
1.50 PARTICIPANT'S EMPLOYER STOCK ACCOUNT. The term Participant's Employer
Stock Account means that portion, if any, of the Participant's Account
which is invested in shares of the Employer's stock. Such Participant's
Employer Stock Account shall be credited with dividends paid, if any. Such
Participant's Employer Stock Account will be valued on the last day of each
month that the public exchange over which the Employer's stock is traded is
open for unrestricted trading.
Amounts which are to be invested in the Participant's Employer Stock
Account may be invested in any short-term account prior to actual
investment in the Participant's Employer Stock Account.
The Trustee will vote the shares of the Employer's stock invested in the
Participant's Employer Stock Account. The Trustee may request voting
instructions from the Participants, provided this is done in a consistent
and nondiscriminatory manner.
1.51 PERSON. The term Person means any natural person, partnership, corporation,
trust or estate.
1.52 PLAN. The term Plan means ATGI 401(k) Plan, the terms of which are set
forth herein as it may be amended from time to time.
1.53 PLAN ADMINISTRATOR. The terms Plan Administrator and Administrator are
used interchangeably throughout the Plan and Trust and shall mean the
Employer.
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1.54 PLAN YEAR. The term Plan Year means the 12-month period commencing on
November 1 and ending on the following October 31.
1.55 QUALIFIED MATCHING CONTRIBUTIONS. The term Qualified Matching
Contributions shall mean Matching Contributions which are subject to the
distribution and nonforfeitability requirements under section 401(k) of the
Code when made.
1.56 QUALIFIED NONELECTIVE CONTRIBUTIONS. The term Qualified Nonelective
Contributions shall mean Nonelective Contributions which are subject to the
distribution and nonforfeitability requirements under section 401(k) of the
Code when made.
1.57 ROLLOVER CONTRIBUTION. The term Rollover Contribution means an amount
representing all or part of a distribution from a pension or profit-sharing
plan meeting the requirements of Code section 401(a) that is eligible for
rollover to this Plan in accordance with the requirements set forth in Code
section 402 or Code section 408(d)(3), whichever is applicable.
1.58 SALARY DEFERRAL AGREEMENT. The term Salary Deferral Agreement means an
agreement between a Participant and the Employer to defer the Participant's
Compensation for the purpose of making Elective Deferral Contributions to
the Plan.
1.59 TERMINATION OF EMPLOYMENT. The term Termination of Employment means a
severance of the Employer-Employee relationship which occurs prior to a
Participant's Normal Retirement Age for any reason other than Disability or
death.
1.60 TRUST. The term Trust means the trust agreement entered into by the
Employer, the Administrator and the Trustee, which trust agreement forms a
part of, and implements the provisions of this Plan.
1.61 TRUSTEE. The term Trustee means one or more individuals collectively
appointed and acting under the trust agreement, and any successor thereto.
1.62 VESTED INTEREST. The term Vested Interest on any date means the
nonforfeitable right to an immediate or deferred benefit in the amount
which is equal to the following:
(A) the value on that date of that portion of the Participant's Account
that is attributable to the following contributions:
. Elective Deferral Contributions, if any
. Employee Contributions, if any
. Rollover Contributions, if any
. Qualified Matching Contributions, if any
. Qualified Nonelective Contributions, if any
(B) plus the value on that date of that portion of the Participant's
Account that is attributable to and derived from:
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. Matching Contributions, if any
. Nonelective Contributions, if any
Such contributions pursuant to Subsection (B), plus the earnings
thereon, shall be, at any relevant time, a part of the Participant's
Vested Interest equal to an amount ("X") determined by the following
formula:
X = P(AB + D) - D
For the purposes of applying this formula:
P = The Participant's Vesting Percentage
at the relevant time.
AB = The account balance attributable
to such contributions, plus
the earnings thereon, at the
relevant time.
D = The amount of the distribution.
1.63 VESTING PERCENTAGE. The term Vesting Percentage means the percentage used
to determine a Participant's Vested Interest in contributions made by the
Employer, plus the earnings thereon, credited to his Participant's Account
that are not 100% immediately vested. The Vesting Percentage for each
Participant shall be determined in accordance with the following schedule
based on Years of Service with the Employer:
Years of Service Vesting Percentage
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
However, if an Active Participant dies prior to attaining his Normal Retirement
Age, his Vesting Percentage shall be 100%.
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ARTICLE II
SERVICE
2.1 SERVICE. The term Service means active employment with the Employer as an
Employee. For purposes of determining Service, employment with any company
which is under common control with the Employer as specified in section 414
of the Internal Revenue Code shall be treated as employment with the
Employer.
2.2 ABSENCE FROM EMPLOYMENT. Absence from employment on account of a leave of
absence authorized by the Employer pursuant to the Employer's established
leave policy will be counted as employment with the Employer provided that
such leave of absence is of not more than two years' duration. Absence
from employment on account of active duty with the Armed Forces of the
United States will be counted as employment with the Employer. If the
Employee does not return to active employment with the Employer, his
Service will be deemed to have ceased on the date the Administrator
receives notice that such Employee will not return to the active Service of
the Employer. The Employer's leave policy shall be applied in a uniform
and nondiscriminatory manner to all Participants under similar
circumstances.
FOR PURPOSES OF VESTING AND CONTRIBUTIONS, THE FOLLOWING PROVISIONS SHALL
APPLY:
2.3 HOUR OF SERVICE. The term Hour of Service means a period of Service during
which an Employee shall be credited with one Hour of Service as described
in (A), (B), (C), and (D) below:
(A) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer for the performance of duties.
These hours shall be credited to the Employee for the computation
period or periods in which the duties are performed; and
(B) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer for reasons (such as vacation,
sickness or Disability) other than for the performance of duties.
Hours under this Subsection shall be calculated and credited pursuant
to section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by this reference; and
(C) Each hour for which back pay, irrespective of mitigation of damages,
has been either awarded or agreed to by the Employer. These hours
shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made;
and
(D) Each hour for which an Employee is on an authorized unpaid leave (such
as service with the Armed Forces, jury duty, educational leave).
These hours shall be credited to the Employee for the computation
period or periods in which such authorized leave takes place.
However, no more than 501 hours shall be credited under this
subparagraph (D).
Hours of Service will be credited for employment with other members of an
affiliated service group
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(under Internal Revenue Code section 414(m)), a controlled group of
corporations (under Internal Revenue Code section 414(b)), or a group of
trades or businesses under common control (under Internal Revenue Code
section 414(c)), of which the adopting employer is a member. Hours of
Service will also be credited for any individual considered an Employee
under Internal Revenue Code section 414(n).
Solely for purposes of determining whether a One-Year Break in Service, as
defined in Section 2.4, for participation and vesting purposes has occurred
in a computation period, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual but for
such absence, or in any case in which such hours cannot be determined,
eight Hours of Service per day of such absence. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means an
absence (1) by reason of the pregnancy of the individual, (2) by reason of
a birth of a child of the individual, (3) by reason of the placement of a
child with the individual in connection with the adoption of such child by
such individual, or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of
Service credited under this paragraph shall be credited (1) in the
computation period in which the absence begins if the crediting is
necessary to prevent a Break in Service in that period, or (2) in all other
cases, in the following computation period.
2.4 ONE-YEAR BREAK IN SERVICE. The term One-Year Break in Service means any
Plan Year during which an Employee fails to complete more than 500 Hours of
Service.
2.5 DETERMINING VESTING PERCENTAGE. Vesting credit shall be given for each Year
of Service except those periods specified in Section 2.7.
If a Participant completes less than 1,000 Hours of Service during a Plan
Year while remaining in the Service of the Employer, his Vesting Percentage
shall not be increased for such Plan Year. However, at such time as the
Participant again completes at least 1,000 Hours of Service in any
subsequent Plan Year, his Vesting Percentage shall then take into account
all Year(s) of Service with the Employer except those specified in Section
2.7.
If an individual who ceases to be an Employee and is subsequently rehired
as an Employee enrolls (or re-enrolls) in the Plan, upon his participation
(or subsequent participation) his Vesting Percentage shall then take into
account all Year(s) of Service except those specified in Section 2.7.
2.6 YEAR(S) OF SERVICE. The term Year(s) of Service means a 12-consecutive-
month period during which an Employee has completed at least 1,000 Hours of
Service.
(A) Vesting Computation Period.
In computing Years of Service and Breaks in Service for vesting, the
12-consecutive-month period shall be the Plan Year. However, active
participation as of the last day of the Plan Year is not required in
order for a Participant to be credited with a Year of Service for
vesting purposes.
For purposes of the Vesting Computation Period, if any Plan Year is
less than 12-consecutive months, and if a Participant would have been
credited with a Year of Service during the 12-consecutive-month period
beginning on the first day of the short Plan Year, then the
Participant will receive a Year of Service for the short Plan Year.
The Participant receives
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credit for an additional Year of Service if the Participant would have
been credited with a Year of Service for the Plan Year immediately
following the short Plan Year.
(B) Contribution Computation Period.
For purposes of determining a Participant's eligibility to receive a
contribution made by the Employer, pursuant to Article IV, which is
conditioned upon a Year of Service requirement, the twelve-
consecutive-month period shall be any Plan Year during which the
Active Participant is credited with at least 1,000 Hours of Service.
However, when an Employee first becomes a Participant or resumes
active participation in the Plan following a One-Year Break in Service
on a date other than the first day of the Plan Year, all Hours of
Service credited to the Participant during that Plan Year, including
those hours credited prior to the date the Employee enrolls (or re-
enrolls) as an Active Participant in the Plan, shall be counted.
For purposes of the Contribution Computation Period, if any Plan Year
is less than 12 consecutive months, the number of Hours of Service
required to accrue a Year of Service, in such short Plan Year, shall
bear the same ratio to 1000 as the number of days in the short Plan
Year bears to 365.
2.7 EXCLUDED YEARS OF SERVICE. In determining the Vesting Percentage of an
Employee, all Years of Service with the Employer shall be taken into
account except:
. Plan Years during which a Participant did not complete at least 1,000
Hours of Service.
2.8 PREDECESSOR ORGANIZATION SERVICE. For purposes of this Article, Service
with a predecessor organization of the Employer shall be treated as Service
with the Employer in any case in which the Employer maintains the Plan of
such predecessor organization.
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ARTICLE III
ELIGIBILITY, ENROLLMENT AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee, including a Leased Employee, shall be eligible
to become a Participant as of the Effective Date or the first Entry Date
following his employment commencement date.
3.2 ENROLLMENT AND PARTICIPATION. Each eligible Employee may enroll as of his
Entry Date by completing and delivering to the Administrator an enrollment
form and, if applicable, a Salary Deferral Agreement. He will then become a
Participant as of his Entry Date.
3.3 RE-EMPLOYED EMPLOYEE. An individual who ceases to be an Employee and is
subsequently rehired as an Employee, shall become an Active Participant in
the Plan as of the date he is re-employed, after completing the applicable
form(s), in accordance with Section 3.2.
3.4 WAIVER OF PARTICIPATION. Notwithstanding any provision of the Plan to the
contrary, any Employee in accordance with the rules of the Plan may decline
to become a Participant or cease to be an Active Participant by filing a
written waiver of participation with the Administrator in the manner he
prescribes. Such waiver must be filed prior to the date such Employee is
eligible to become a Participant, or in the case of an Active Participant,
in the last month of the Plan Year immediately preceding the Plan Year for
which he wishes to cease being an Active Participant.
Any Employee who files such a waiver shall not become a Participant, or if
an Active Participant, shall elect to cease to be such as of the first day
of the succeeding Plan Year; and such Employee shall not receive any
additional compensation or other sums by reason of his waiver of
participation.
Any such waiver may be rescinded by an Employee effective on the first day
of the first Plan Year following one or more Plan Years commencing after
the filing of such waiver in which he was not an Active Participant, in
which event he shall become a Participant, or again become an Active
Participant, as the case may be, effective as of such date.
As of the effective date of the waiver the Participant shall be entitled to
receive a distribution of that portion of his Account attributable to
Employee Contributions, which distribution shall be further subject to the
terms and conditions of Article VI.
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ARTICLE IV
CONTRIBUTIONS
4.1 ELECTIVE DEFERRAL CONTRIBUTIONS. Each Active Participant may enter into a
written Salary Deferral Agreement with the Employer in an amount equal to a
maximum of 15% of his Compensation for the Contribution Period. In
consideration of such agreement, the Employer will make a contribution for
each Contribution Period on behalf of the Participant in an amount equal to
the total amount by which the Participant's Compensation from the Employer
was deferred during the Contribution Period pursuant to the Salary Deferral
Agreement then in effect. Elective Deferral Contributions shall be paid by
the Employer to the Trust not less frequently than monthly, but in no event
later than 90 days following the date the amounts were deferred.
Salary Deferral Agreements shall be governed by the following provisions:
(A) Amounts contributed pursuant to a Salary Deferral Agreement shall be
100% vested and non-forfeitable at all times.
(B) No Participant shall be permitted to have Elective Deferral
Contributions made under this Plan, or any other qualified plan
maintained by the Employer, during any taxable year, in excess of the
dollar limitation contained in section 402(g) of the Code in effect at
the beginning of the taxable year. However, this $7,000 limit shall
not apply to certain amounts deferred in 1987 that were attributable
to Service performed in 1986.
(C) Amounts contributed pursuant to a Salary Deferral Agreement, which are
not in excess of the limit described in Subsection (B) above, shall be
subject to the Limitations on Allocations in accordance with Article
V. Elective Deferral Contributions that are in excess of the limit
described in Subsection (B) shall also be subject to the Limitations
on Allocations in accordance with Article V.
(D) A Salary Deferral Agreement may be changed by a Participant four times
during the Plan Year, on the first of any month, by filing written
notice thereof with the Administrator. Such notice shall be
effective, and the Salary Deferral Agreement shall be changed on the
date specified in such notice or as soon as administratively possible,
which date must be at least 15 days after such notice is filed.
(E) Elective Deferral Contributions shall be subject to the Actual
Deferral Percentage Test limitations.
(F) Correction of Excess Contributions.
(1) If the Employer determines prior to the end of the Plan Year that
the Actual Deferral Percentage Test may not be satisfied, the
Employer may take the corrective action specified in Section 4.15
of the Plan.
(2) If, after the end of the Plan Year, the Employer determines that
the Plan will fail the
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Actual Deferral Percentage Test, the Employer shall take the
corrective action specified in Section 4.17 or Section 4.20 of
the Plan, or a combination of such corrective actions, in order
to ensure that the Plan does not fail the Actual Deferral
Percentage Test for the Plan Year being tested.
4.2 MATCHING CONTRIBUTIONS. The Employer shall make a Matching Contribution in
an amount equal to $.50 for each $1.00 by which a Participant defers his
Compensation pursuant to a Salary Deferral Agreement up to a maximum of 6%
of his Compensation, subject to the Limitations on Allocations specified in
Article V. However, effective September 1, 1994, the Matching Contribution
shall be a discretionary amount to be determined in advance each month by
the Employer. The Matching Contribution shall be paid to the Trust not
less frequently than monthly and may be increased, decreased or entirely
omitted in any month. Matching Contributions shall be subject to the
Actual Contribution Percentage Test. The Employer may designate at the
time of contribution that all or a portion of such Matching Contributions
be treated as Qualified Matching Contributions.
If the Employer determines prior to the end of the Plan Year that the
Actual Contribution Percentage Test may not be satisfied, the Employer may
take the corrective action specified in Section 4.16 of the Plan.
If, after the end of the Plan Year, the Employer determines that the Plan
will fail the Actual Contribution Percentage Test, the Employer shall take
the corrective action specified in Section 4.18 or Section 4.20 of the
Plan, or a combination of such corrective actions, in order to ensure that
the Plan does not fail the Actual Contribution Percentage Test for the Plan
Year being tested.
Such Matching Contribution shall be allocated as of the last day of the
Contribution Period for which such contribution is made to each Participant
who:
. is an Active Participant as of the last day of the Contribution
Period.
Notwithstanding the above provision, an allocation will be made on behalf
of a Participant who dies, retires, or becomes disabled during the
Contribution Period.
4.3 NONELECTIVE CONTRIBUTIONS. The Employer may make a contribution under the
Plan for any Plan Year of an amount that the Employer's Board of Directors
shall determine by resolution. Such resolution shall either specify a fixed
amount or specify a definite formula by which a fixed amount can be
determined.
The Employer may designate at the time of contribution that all or a
portion of such Nonelective Contribution be treated as a Qualified
Nonelective Contribution.
Such Nonelective Contribution shall be allocated as of the last day of the
Plan Year for which such contribution is made to each Participant who:
. has a Year of Service for contribution purposes, as defined in Article
II.
. is an Active Participant as of the last day of the Plan Year.
Notwithstanding the above provision, an allocation will be made on behalf
of a Participant who dies, retires, or becomes disabled during the Plan
Year.
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For each Plan Year the contribution shall be allocated to each Participant
in the proportion that the Compensation paid to each Participant during the
Plan Year bears to the Compensation paid to all such Participants, subject
to the Limitations on Allocations specified in Article V.
The contribution as described above, for any Plan Year, shall be paid to
the Trust at the end of the Plan Year, or as soon as possible on or after
the last day of such Plan Year, but in any event not later than the date
which is prescribed by law for filing the Employer's income tax return,
including any extension thereof.
4.4 FAIL-SAFE CONTRIBUTION. The Employer reserves the right to make a
discretionary Nonelective Contribution to the Plan for any Plan Year, if
the Employer determines that such a contribution is necessary to ensure
that either the Actual Deferral Percentage Test or the Actual Contribution
Percentage Test will be satisfied for that Plan Year. Such amount shall be
designated by the Employer at the time of contribution as a Qualified
Nonelective Contribution and shall be known as a Fail-Safe Contribution.
The Fail-Safe Contribution shall be made on behalf of all eligible non-
Highly Compensated Employees who are Participants and who are considered
under the Actual Deferral Percentage Test or the Actual Contribution
Percentage Test. This contribution shall be allocated to the Participant's
Account of each such Participant in an amount equal to a fixed percentage
of such Participant's Compensation. The fixed percentage shall be equal to
the minimum fixed percentage necessary to be contributed by the Employer on
behalf of each eligible non-Highly Compensated Employee who is a
Participant so that the Actual Deferral Percentage Test or the Actual
Contribution Percentage Test is satisfied.
The Fail-Safe Contribution for any Plan Year as determined above shall be
paid to the Trust at the end of the Plan Year, or as soon as possible on or
after the last day of such Plan Year, but in no event later than the date
which is prescribed by law for filing the Employer's income tax return,
including any extensions thereof.
4.5 PROFITS NOT REQUIRED. Contributions to this Plan shall not be precluded
because the Employer does not have Considered Net Profits. Notwithstanding
the existence of Considered Net Profits, the Employer may determine in its
sole discretion that it will make no contributions for such Plan Year.
4.6 PAYMENT OF EXPENSES. The Employer may contribute to the Plan the amount
necessary, to pay any applicable expense charges and administration
charges. In lieu of the Employer's contributing the amount necessary to
pay such charges, these expenses may be paid from the Trust fund.
4.7 ALLOCATION OF FORFEITURES. The contributions made by the Employer shall be
reduced by any Forfeitures available as an Employer credit in accordance
with Section 9.3.
4.8 CREDITING OF ELECTIVE DEFERRAL AND OTHER CONTRIBUTIONS. Elective Deferral
Contributions and other contributions made by the Employer shall be
credited to the Participant Account of each Participant for whom such
contributions are made, in accordance with the provisions of Article XIII.
4.9 ROLLOVER CONTRIBUTIONS. Without regard to the Limitations on Allocations
imposed under Article V, the Trustee may receive, on behalf of a
Participant, Rollover Contributions representing all or part of the entire
amount of:
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(a) any distribution from a terminated pension or profit sharing plan
meeting the requirements of Internal Revenue Code section 401(a); or
(b) any lump sum distribution received by a Participant from a pension or
profit sharing plan meeting the requirements of Internal Revenue Code
section 401(a).
Rollover Contributions must be received from the Participant within 60 days
of his receipt of the funds either directly from the pension or profit
sharing plan described above or through the medium of an individual
retirement account.
In addition, Rollover Contributions may only include amounts attributable
to Employer Contributions and earnings thereon, earnings on Employee
Contributions, and Employee Contributions which were eligible for a tax
deduction under Internal Revenue Code section 219 and earnings thereon.
Rollover Contributions shall be credited to the Participant's Account and
may be invested in any manner authorized under the provisions of this Plan.
4.10 TRANSFERS. Without regard to the Limitations on Allocations imposed under
Article V, the Trustee may receive, directly from another qualified pension
or profit-sharing plan meeting the requirements of Internal Revenue Code
section 401(a), all or part of the entire amount distributable on behalf of
a Participant from such plan. Likewise, the Trustee may receive Transfers
representing the assets of any predecessor plan.
Transfers may be invested in any manner authorized under the provisions of
this Plan.
4.11 EMPLOYEE CONTRIBUTIONS. As of his Entry Date each Active Participant may
elect to make periodic Employee Contributions under the Plan in an amount
equal to a maximum of 10% of his Compensation by completing and delivering
to the Administrator a payroll deduction order. Each Active Participant
may redesignate a new permissible amount as an Employee Contribution four
times each Plan Year, on the first of any month, by notifying the Plan
Administrator 30 days before such date. Such redesignation shall be made
as if it were an original designation and shall be effective as of such
date. Employee Contributions shall be subject to the terms of Article V.
Employee Contributions shall be deducted by the Employer from the
Participant's earnings while he has a payroll deduction order in effect and
shall be paid by the Employer to the Trust not less frequently than
monthly.
Employee Contributions shall be subject to the Actual Contribution
Percentage Test.
4.12 EMPLOYEE CONTRIBUTIONS MADE IN A LUMP SUM. An Active Participant may elect
to make an Employee Contribution in a lump sum. Such lump-sum Employee
Contribution may be made (1) as of the Effective Date, or (2) as of any
date, during the Plan Year, in an amount equal to a maximum of 10% of the
Participant's Compensation.
Employee Contributions made in a lump sum shall be paid by the Employer to
the Trust within 30 days after the date such contribution is made by the
Participant. Employee Contributions made in a lump sum shall be considered
Employee Contributions for all other purposes of the Plan and shall be
subject to the terms thereof.
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If the Employer determines prior to the end of the Plan Year that the
Actual Contribution Percentage Test may not be satisfied, the Employer may
take the corrective action specified in Section 4.16 of the Plan.
If, after the end of the Plan Year, the Employer determines that the Plan
will fail the Actual Contribution Percentage Test, the Employer shall take
the corrective action specified in Section 4.18 or Section 4.20 of the
Plan, or a combination of such corrective actions, in order to ensure that
the Plan does not fail the Actual Contribution Percentage Test for the Plan
Year being tested.
4.13 CREDITING OF EMPLOYEE CONTRIBUTIONS. Each Participant's Employee
Contributions, if any, shall be credited to his Participant's Account.
4.14 SUSPENSION OF ELECTIVE DEFERRAL AND EMPLOYEE CONTRIBUTIONS. The following
provisions shall apply with respect to suspension of Elective Deferral and
Employee Contributions.
(A) Elective Suspension. An Active Participant may elect to suspend his
Salary Deferral Agreement for Elective Deferral Contributions or
payroll deduction order for Employee Contributions by filing a written
notice thereof with the Administrator at any time. The Salary
Deferral Agreement or payroll deduction order, as the case may be,
shall be suspended on the date specified in such notice, which date
must be at least 15 days after such notice is filed. The notice shall
specify the period for which such suspension shall be effective. Such
period must be a minimum of three months and may extend indefinitely.
(B) Suspension for Leave. A Participant who is absent from employment on
account of an authorized leave of absence or military leave shall have
his Salary Deferral Agreement and payroll deduction order suspended
during such leave. Such suspension of contributions shall be effective
on the date payment of Compensation by the Employer to him ceases, and
shall remain in effect until payment of Compensation is resumed.
(C) Withdrawal Suspension. An Active Participant who elects a withdrawal
in accordance with Article X may have his Salary Deferral Agreement or
payroll deduction order, as applicable, suspended on the date such
election becomes effective. Such suspension shall remain in effect for
the number of months specified therein.
The Participant may elect to reactivate his Salary Deferral Agreement for
Elective Deferral Contributions or payroll deduction order for Employee
Contributions by filing a written notice thereof with the Plan
Administrator. The Salary Deferral Agreement or payroll deduction order,
as the case may be, shall be reactivated on February 1, May 1, August 1, or
November 1 following the expiration of the suspension period described
above.
4.15 LIMITATION OF ELECTIVE DEFERRAL CONTRIBUTIONS. If the Employer determines
prior to the end of the Plan Year that the Plan may not satisfy the Actual
Deferral Percentage Test for the Plan Year, the Employer may require that
the amount of Elective Deferral Contributions being allocated to the
accounts of Highly Compensated Employees be reduced to the extent necessary
to prevent Excess Contributions from being made to the Plan.
Although the Employer may reduce the amount of Elective Deferral
Contributions that may be allocated to the Participant's Account of Highly
Compensated Employees, the affected Employees shall continue
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to participate in the Plan. When the situation that resulted in the
reduction of Elective Deferral Contributions ceases to exist, the Employer
shall reinstate the amount of Elective Deferral Contributions elected by
the Participant in the Salary Deferral Agreement to the fullest extent
possible for all affected Participants in a nondiscriminatory manner.
4.16 LIMITATION OF MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS. If the
Employer determines prior to the end of the Plan Year that the Plan may not
satisfy the Actual Contribution Percentage Test for the Plan Year, the
Employer may require that the amount of Matching Contributions or Employee
Contributions, or both, being allocated to the Accounts of Highly
Compensated Employees be reduced to the extent necessary to prevent Excess
Aggregate Contributions from being made to the Plan.
4.17 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(A) The Employer may distribute Excess Contributions (and income allocable
thereto) to the appropriate Highly Compensated Employee after the
close of the Plan Year in which the Excess Contribution arose and
within 12 months after the close of that Plan Year.
(B) The income allocable to Excess Contributions is equal to the sum of
the allocable gain or loss for the Plan Year and shall be determined
as follows:
(1) The income allocable to Excess Contributions is determined by
multiplying the income for the Plan Year allocable to Deferral
Percentage Amounts by a fraction. The numerator of the fraction
is the Excess Contributions attributable to the Employee for the
Plan Year. The denominator of the fraction is equal to the sum
of (A) the total account balance of the Employee attributable to
Deferral Percentage Amounts as of the beginning of the Plan Year,
plus (B) the Employee's Deferral Percentage Amounts for the Plan
Year.
(2) The allocable gain or loss for the period between the end of the
Plan Year and the date of distribution shall not be taken into
consideration when determining the income allocable to Excess
Contributions.
(C) The amount of Excess Contributions to be distributed with respect to
an Employee for a Plan Year shall be reduced by Excess Deferrals
previously distributed to the Employee for the Employee's taxable year
ending with or within the Plan Year.
(D) The distribution of Excess Contributions made to the Family Members of
a family group that was combined for purposes of determining a Highly
Compensated Employee's Actual Deferral Ratio shall be allocated among
the Family Members in proportion to the Elective Deferral Contribution
(including any amounts required to be taken into account under
subparagraphs (B) (1) and (B) (2) of Section 1.8 of the Plan) of each
Family Member that is combined to determine the Actual Deferral Ratio.
(E) A corrective distribution of Excess Contributions (and income) shall
be made without regard to any Participant or spousal consent or any
notice otherwise required under sections 411(a)(11) and 417 of the
Code.
(F) Any Matching Contributions or Qualified Matching Contributions that
relate to the Excess
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Contribution being distributed shall be forfeited. The Matching
Contribution so forfeited shall be in proportion to the applicable
Employee's vested and nonvested interest in Matching Contributions
under the Plan for the Plan Year in which the Excess Contribution
arose. Forfeitures of Matching Contributions or Qualified Matching
Contributions that relate to Excess Contributions shall be applied to
reduce Employer contributions or pay Plan expenses.
(G) In no case may the amount of Excess Contributions to be distributed
for a Plan Year with respect to any Highly Compensated Employee exceed
the amount of Elective Deferral Contributions made on behalf of the
Highly Compensated Employee for the Plan Year.
(H) In the event of a complete termination of the Plan during the Plan
Year in which an Excess Contribution arose, the corrective
distribution must be made as soon as administratively feasible after
the date of the termination of the Plan, but in no event later than 12
months after the date of termination.
(I) Any distribution of less than the entire amount of Excess
Contributions with respect to any Highly Compensated Employee shall be
treated as a pro-rata distribution of Excess Contributions and
allocable income or loss.
4.18 CORRECTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(A) Excess Aggregate Contributions may be corrected using one of the
methods described in subparagraphs (1) and (2) below. The Employer
shall elect the method of correction to be used and shall apply such
method to the correction of the Excess Aggregate Contribution for the
Plan Year.
(1) Method 1:
(a) Any unmatched Employee Contributions (and income) allocated
to the Plan for the Plan Year in which the Excess Aggregate
Contribution arose shall be distributed to the appropriate
Employee after the close of the Plan Year in which the
Excess Aggregate Contribution arose and within 12 months
after the close of that Plan Year.
(b) If, after the application of subparagraph (1) (a) above, an
Excess Aggregate Contribution still exists, the remaining
Excess Aggregate Contribution (and income) shall be
forfeited, if forfeitable, or distributed on a pro-rata
basis from the Employee's Account attributable to
Contribution Percentage Amounts. The distribution or
forfeiture shall be made after the close of the Plan Year in
which the Excess Aggregate Contribution arose and within 12
months after the close of that Plan Year. Whether an amount
is distributed or forfeited under this subparagraph (b)
shall be determined based on the rules set forth in
paragraph (B) of this section.
(2) Method 2:
(a) Any Matching Contributions (and Qualified Matching
Contributions, to the extent not taken into account for
purposes of the Actual Deferral Percentage Test), and income
allocable thereto, shall be forfeited, if forfeitable, or
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distributed to the appropriate Highly Compensated Employee.
The distribution or forfeiture shall be made after the close
of the Plan Year in which the Excess Aggregate Contribution
arose and within 12 months after the close of that Plan
Year. Whether an amount is forfeited or distributed shall
be determined under the rules set forth in paragraph (B) of
this section.
(B) Determination of Distributable and Forfeitable Amounts. For purposes
of paragraph (A) of this section:
(1) An Excess Aggregate Contribution attributable to Employee
Contributions, vested Matching Contributions, Qualified Matching
Contributions (and, if applicable, Qualified Nonelective
Contributions and Elective Deferral Contributions) shall be
distributed to the appropriate Highly Compensated Employee in
accordance with the terms of this section.
(2) An Excess Aggregate Contribution attributable to an Employee's
nonvested Matching Contributions shall be forfeited in accordance
with the terms of this section.
(3) A Highly Compensated Employee's vested and nonvested interest in
Matching Contributions (and income allocable thereto)
attributable to Excess Aggregate Contributions shall be based on
the proportion that represents the Employee's Vested Interest in
Matching Contributions under the Plan for the Plan Year in which
the Excess Aggregate Contribution arose.
(C) Forfeited Excess Aggregate Contributions. In accordance with
paragraph (B) of this section, the amount that represents the
Employee's nonvested interest in Matching Contributions (and income),
and is attributable to Excess Aggregate Contributions, shall be
forfeited and, as such, shall be applied to reduce Employer
contributions or pay expenses.
(D) Income Allocable to Excess Aggregate Contributions. For purposes of
this section, the income allocable to Excess Aggregate Contributions
is equal to the sum of the allocable gain or loss for the Plan Year,
and shall be determined as follows:
(1) The income allocable to Excess Aggregate Contributions is
determined by multiplying the income for the Plan Year allocable
to Contribution Percentage Amounts by a fraction. The numerator
of the fraction is the Excess Aggregate Contributions for the
Employee for the Plan Year. The denominator of the fraction is
equal to the sum of (A) the total account balance of the Employee
attributable to Contribution Percentage Amounts as of the
beginning of the Plan Year, plus (B) the Contribution Percentage
Amounts for the Plan Year.
(2) The allocable gain or loss for the period between the end of the
Plan Year and the date of correction shall not be taken into
consideration when determining the income allocable to Excess
Aggregate Contributions.
(E) The distribution of Excess Aggregate Contributions (and income) made
to Family Members of a family group that was combined for purposes of
determining a Highly Compensated Employee's Actual Contribution Ratio
shall be allocated among Family Members in proportion to the
Contribution Percentage Amounts (including any amounts required to be
taken into
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account under subparagraphs (B) (1) and (B) (2) of Section 1.5 of the
Plan) of each Family Member that are combined to determine the Actual
Contribution Ratio.
(F) In the event of a complete termination of the Plan during the Plan
Year in which an Excess Aggregate Contribution arose, the corrective
distribution or forfeiture shall be made as soon as administratively
feasible after the date of termination of the Plan, but in no event
later than 12 months after the date of termination.
(G) If the entire account balance of a Highly Compensated Employee is
distributed during the Plan Year in which the Excess Aggregate
Contribution arose, the distribution shall be deemed to have been a
corrective distribution of Excess Aggregate Contributions (and income)
to the extent that a corrective distribution would otherwise have been
required.
(H) Any distribution of less than the entire amount of Excess Aggregate
Contributions (and income) shall be treated as a pro-rata distribution
of Excess Aggregate Contributions and allocable income or loss.
(I) In no case may the amount of Excess Aggregate Contributions
distributed to a Highly Compensated Employee exceed the amount of
Employee Contributions and Matching Contributions made on behalf of
the Highly Compensated Employee for the Plan Year.
(J) A distribution of Excess Aggregate Contributions (and income) shall be
made under this section without regard to any notice or consent
otherwise required under sections 411(a)(11) and 417 of the Code.
4.19 CORRECTIVE DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other
provision of the Plan, Excess Deferrals, plus any income and minus any loss
allocable thereto, may be distributed to any Participant to whose account
Excess Deferrals were allocated for the individual's taxable year. Such a
corrective distribution shall be made in accordance with this section.
(A) Correction of Excess Deferrals After Taxable Year.
(1) Not later than the March 15 following the close of a
Participant's taxable year, the Participant may notify the Plan
of the amount of Excess Deferrals received by the Plan during
that taxable year. The notification shall be in writing, shall
specify the Participant's Excess Deferrals, and shall be
accompanied by the Participant's written statement that if such
amounts are not distributed, these amounts, when added to all
other Elective Deferral Contributions made on behalf of the
Participant during the taxable year, shall exceed the dollar
limitation specified in section 402(g) of the Code.
(2) The Participant is deemed to have notified the Plan of Excess
Deferrals if, not later than the March 1 following the close of a
Participant's taxable year, the Employer notifies the Plan on
behalf of the Participant of the Excess Deferrals. Such Excess
Deferrals shall be calculated by taking into account only
Elective Deferral Contributions under the Plan and any other
plans of the Employer.
(3) Not later than the April 15 following the close of the taxable
year, the Plan shall distribute to the Participant the amount of
Excess Deferrals designated under subparagraphs (1) or (2) above.
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(B) Correction of Excess Deferrals During the Taxable Year. A Participant
who has an Excess Deferral during a taxable year may receive a
corrective distribution during the same year. Such a corrective
distribution shall be made if:
(1) The Participant designates the distribution as an Excess
Deferral. The designation shall be made in the same manner as
the notification described in subparagraph (A) (1) of this
section. The Participant will be deemed to have designated the
distribution as an Excess Deferral if the Employer makes the
designation on behalf of the Participant to the extent that the
Participant has Excess Deferrals for the taxable year calculated
by taking into account only Elective Deferral Contributions to
the Plan and other plans of the Employer.
(2) The corrective distribution is made after the date on which the
Plan received the Excess Deferral.
(3) The Plan designates the distribution as a distribution of Excess
Deferrals.
(C) If the Participant provides the Employer with satisfactory evidence
and written notice to demonstrate that all Elective Deferral
Contributions by the participant in this Plan and any other qualified
plan exceed the applicable limit under section 402(g) of the Code for
such individual's taxable year, then the Plan Administrator may (but
is not required to) distribute sufficient Elective Deferral
Contributions (not to exceed the amount of Elective Deferral
Contributions actually contributed on behalf of the Participant to
this Plan during the Participant's taxable year) from this Plan to
allow the Participant to comply with the applicable limit. The
evidence provided by the Participant must establish clearly the amount
of Excess Deferrals. The Participant must present this evidence to the
Plan Administrator by the March 1 following the end of the calendar
year in which the Excess Deferrals occurred.
(D) Income Allocable to Excess Deferrals. The income allocable to Excess
Deferrals is equal to the sum of allocable gain or loss for the
taxable year of the individual and shall be determined as follows:
(1) The gain or loss allocable to Excess Deferrals is determined by
multiplying the income for the taxable year allocable to Elective
Deferral Contributions by a fraction. The numerator of the
fraction is the Excess Deferrals by the Employee for the taxable
year. The denominator of the fraction is equal to the sum of:
(a) The total account balance of the Employee attributable to
Elective Deferral Contributions as of the beginning of the
Plan Year, plus
(b) The Employee's Elective Deferral Contributions for the
taxable year.
(2) The income allocable to Excess Deferrals shall not include the
allocable gain or loss for the period between the end of the
taxable year and the date of distribution.
(E) No Employee or Spousal Consent Required. A corrective distribution of
Excess Deferrals (and income) shall be made without regard to any
notice or consent otherwise required under sections 411(a)(11) and 417
of the Code.
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(F) Any Matching Contributions or Qualified Matching Contributions that
relate to the Excess Deferral being distributed shall be forfeited.
The Matching Contribution so forfeited shall be in proportion to the
applicable Employee's vested and nonvested interest in Matching
Contributions under the Plan for the Plan Year in which the Excess
Deferral arose. Forfeitures of Matching Contributions or Qualified
Matching Contributions that relate to Excess Deferrals shall be
applied to reduce Employer contributions or pay Plan expenses.
4.20 QUALIFIED CONTRIBUTIONS. In lieu of distributing Excess Contributions as
provided in Section 4.17 of the Plan, or Excess Aggregate Contributions as
provided in Section 4.18 of the Plan, the Employer may take the actions
specified below in order to satisfy the Actual Deferral Percentage Test or
the Actual Contribution Percentage Test, or both, pursuant to the
regulations under the Code.
(A) At the election of the Employer, Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, may be taken into
account as Elective Deferral Contributions for purposes of calculating
the Actual Deferral Ratio of a Participant.
The amount of Qualified Nonelective Contributions or Qualified
Matching Contributions made under the terms of this Plan and taken
into account as Elective Deferral Contributions for purposes of
calculating the Actual Deferral Ratio, subject to such other
requirements as may be prescribed by the Secretary of the Treasury,
shall be such Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, that are needed to meet the Actual
Deferral Percentage Test.
(B) At the election of the Employer, Qualified Nonelective Contributions
or Elective Deferral Contributions, or both, may be taken into account
as Matching Contributions for purposes of calculating the Actual
Contribution Ratio of a Participant.
The amount of Qualified Nonelective Contributions or Elective Deferral
Contributions made under the terms of this Plan and taken into account
for purposes of calculating the Actual Contribution Ratio, subject to
such other requirements as may be prescribed by the Secretary of the
Treasury, shall be such Qualified Nonelective Contributions or
Elective Deferral Contributions, or both, that are needed to meet the
Actual Contribution Percentage Test.
(C) Any Qualified Nonelective Contribution, Qualified Matching
Contribution, and Elective Deferral Contribution taken into account
under paragraphs (A) or (B) must be allocated to the Employee's
Account as of a date within the Plan Year in which the Excess
Contribution or Excess Aggregate Contribution arose and must be paid
to the Plan no later than the 12-month period immediately following
the Plan Year to which the contribution relates.
4.21 MULTIPLE USE OF ALTERNATIVE LIMITATION.
(A) Multiple use of the alternative limitation occurs if all of the
conditions of this paragraph (A) are satisfied:
(1) One or more Highly Compensated Employee of the Employer are
eligible employees in both a cash or deferred arrangement subject
to section 401(k) and a plan maintained by the Employer subject
to section 401(m).
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(2) The sum of the Actual Deferral Percentage of the entire group of
eligible Highly Compensated Employees under the arrangement
subject to section 401(k) and the Actual Contribution Percentage
of the entire group of eligible Highly Compensated Employees
under the Plan subject to section 401(m) exceeds the aggregate
limit of paragraph (C) of this section.
(3) Actual Deferral Percentage of the entire group of eligible Highly
Compensated Employees under the arrangement subject to section
401(k) exceeds the amount described in section
401(k)(3)(A)(ii)(I).
(4) The Actual Contribution Percentage of the entire group of
eligible Highly Compensated Employees under the arrangement
subject to section 401(m) exceeds the amount described in section
401(m)(2)(A)(i).
(B) For purposes of this section, the aggregate limit is the greater of:
(1) The sum of-
(a) 1.25 times the greater of the relevant Actual Deferral
Percentage or the relevant Actual Contribution Percentage,
and
(b) Two percentage points plus the lesser of the relevant Actual
Deferral Percentage or the relevant Actual Contribution
Percentage. In no event, however, may this amount exceed
twice the lesser of the relevant Actual Deferral Percentage
or the Actual Contribution Percentage; or
(2) The sum of-
(a) 1.25 times the lesser of the relevant Actual Deferral
Percentage or the relevant Actual Contribution Percentage,
and
(b) Two percentage points plus the greater of the relevant
Actual Deferral Percentage or the relevant Actual
Contribution Percentage. In no event, however, may this
amount exceed twice the greater of the relevant Actual
Deferral Percentage or the relevant Actual Contribution
Percentage.
(C) For purposes of paragraph (B) of this section, the term "relevant
Actual Deferral Percentage" means the Actual Deferral Percentage of
the group of Nonhighly Compensated Employees under the arrangement
subject to section 401(k) for the Plan Year, and the term "relevant
Actual Contribution Percentage" means the Actual Contribution
Percentage of the group of Nonhighly Compensated Employees eligible
under the Plan subject to section 401(m) for the Plan Year beginning
with or within the Plan Year of the arrangement subject to section
401(k).
(D) The Actual Deferral Percentage and Actual Contribution Percentage of
the group of eligible Highly Compensated Employees are determined
after use of Qualified Nonelective Contributions and Qualified
Matching Contributions to meet the requirements of the Actual Deferral
Percentage Test and after use of Qualified Nonelective Contributions
and Elective Deferral Contributions to meet the requirements of the
Actual Contribution Percentage Test. The Actual Deferral Percentage
and Actual Contribution Percentage of the group of Highly
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Compensated Employees are determined after any corrective distribution
or forfeiture of Excess Deferrals, Excess Contributions, or Excess
Aggregate Contributions and after recharacterization of Excess
Contributions required without regard to this section. Only plans and
arrangements maintained by the Employer are taken into account under
paragraph (B). If the Employer maintains two or more cash or deferred
arrangements subject to section 401(k) that must be mandatorily
disaggregated pursuant to section 401(k)-1(g)(11)(iii) multiple use is
tested separately with respect to each plan.
(E) If multiple use of the alternative limit occurs with respect to two or
more plans or arrangements maintained by the Employer, it shall be
corrected by reducing the Actual Contribution Percentage of Highly
Compensated Employees in the manner described in paragraph (F) of this
section. Instead of making this reduction, the Employer may eliminate
the multiple use of the alternative limitation by making Qualified
Nonelective Contributions to the Plan.
(F) The amount of the reduction by which each Highly Compensated
Employee's Actual Contribution Ratio is reduced shall be treated as an
Excess Aggregate Contribution. The Actual Contribution Percentage of
all Highly Compensated Employees under the plan subject to reduction
shall be reduced so that there is no multiple use of the alternative
limitation.
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ARTICLE V
LIMITATIONS ON ALLOCATIONS
5.1 LIMITATIONS ON ALLOCATIONS. Definitions - The following definitions are
atypical terms which refer only to terms used in the Limitations on
Allocations Sections of this Article V.
(A) Annual Additions. The term Annual Additions shall mean the sum of the
following amounts allocated on behalf of a Participant for a
Limitation Year:
(1) all contributions made by the Employer which shall include:
. Elective Deferral Contributions, if any;
. Matching Contributions, if any;
. Qualified Matching Contributions, if any;
. Nonelective Contributions, if any;
. Qualified Nonelective Contributions, if any;
(2) all Forfeitures, if any;
(3) all Employee Contributions, if any.
For the purposes of this Article, Excess Amounts reapplied under
Section 5.2 (D) shall also be included as Annual Additions. Also, for
the purposes of this Article, Employee Contributions are determined
without regard to deductible employee contributions within the meaning
of section 72(o)(5) of the Code.
Amounts allocated after March 31, 1984, to an individual medical
account, as defined in Internal Revenue Code section 415(l)(1), which
is part of a defined benefit plan maintained by the Employer, are
treated as Annual Additions to a defined contribution plan. Also,
amounts derived from contributions paid or accrued attributable to
post-retirement medical benefits allocated to the separate account of
a key employee, as defined in Internal Revenue Code section
419A(d)(3), under a welfare benefit fund, as defined in Internal
Revenue Code section 419(e), maintained by the Employer, are treated
as Annual Additions to a defined contribution plan.
Contributions do not fail to be Annual Additions merely because they
are Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions or merely because Excess Contributions or Excess
Aggregate Contributions are corrected through distribution or
recharacterization. Excess Deferrals that are distributed in
accordance with Section 4.19 of the Plan are not Annual Additions.
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Forfeited Matching Contributions that are forfeited because the
contributions to which they relate are treated as Excess Aggregate
Contributions, Excess Contributions, or Excess Deferrals and that are
reallocated to the Participant Accounts of other Participants for the
Plan Year in which the forfeiture occurs, are treated as Annual
Additions for the Participants to whose accounts they are reallocated
and for the Participants from whose accounts they are forfeited.
(B) Compensation. The term Compensation means wages within the meaning of
section 3401(a) of the Code for the purposes of income tax withholding
at the source but determined without regard to any rules that limit
the remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the Code).
For Limitation Years beginning after December 31, 1991, for purposes
of applying the limitations of this article, Compensation for a
Limitation Year is the Compensation actually paid or made available
during such Limitation Year.
(C) Defined Contribution Dollar Limitation. The term Defined Contribution
Dollar Limitation shall mean $30,000 or, if greater, one-fourth of the
defined benefit dollar limitation set forth in Internal Revenue Code
section 415(b)(1) as in effect for the Limitation Year.
(D) Employer. The term Employer shall mean the Employer that adopts this
Plan. In the case of a group of employers which constitutes a
controlled group of corporations (as defined in Internal Revenue Code
section 414(b) as modified by section 415(h)), or which constitutes
trades or business (whether or not incorporated) which are under
common control (as defined in section 414(c) as modified by section
415(h)), or affiliated service groups (as defined in section 414(m))
of which the adopting Employer is a part, all such employers shall be
considered a single Employer for purposes of applying the limitations
of this Article.
(E) Excess Amount. The term Excess Amount shall mean the excess of the
Participant's Annual Additions for the Limitation Year over the
Maximum Permissible Amount.
(F) Limitation Year. The term Limitation Year shall mean the calendar
year.
(G) Maximum Permissible Amount. The term Maximum Permissible Amount shall
mean the lesser of (1) the Defined Contribution Dollar Limitation, or
(2) 25% of the Participant's Compensation for the Limitation Year.
If a short Limitation Year is created because of an amendment changing
the Limitation Year to a different period of 12 consecutive months,
the Maximum Permissible Amount for the short Limitation Year will be
the lesser of (1) the Defined Contribution Dollar Limitation
multiplied by a fraction, the numerator of which is the number of
months in the short Limitation Year, and the denominator of which is
12, or (2) 25% of the Participant's Compensation for the short
Limitation Year.
5.2 LIMITATIONS ON ALLOCATIONS. If the Employer does not maintain any
qualified plan in addition to this Plan:
(A) The amount of Annual Additions which may be allocated under this Plan
on a Participant's behalf for a Limitation Year shall not exceed the
lesser of the Maximum Permissible Amount or
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any other limitation contained in this Plan.
(B) Prior to the determination of the Participant's actual Compensation
for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated annual
Compensation. Such Compensation shall be determined on a reasonable
basis and shall be uniformly determined for all Participants similarly
situated. Any employer contributions based on estimated annual
Compensation shall be reduced by any Excess Amounts carried over from
prior years.
(C) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
Compensation for such Limitation Year. In the event a Participant
separates from the Service of the Employer prior to the end of the
Limitation Year, the Maximum Permissible Amount for such Participant
shall be determined prior to any distribution of his Participant's
Account on the basis of his actual Compensation. Any Excess Amounts
shall be disposed of in accordance with Section 5.2 (D).
(D) If there is an Excess Amount with respect to a Participant for a
Limitation Year as a result of a reasonable error in estimating the
Participant's annual compensation, an allocation of forfeitures, a
reasonable error in determining the amount of elective deferrals
(within the meaning of section 402(g)(3) of the Code) that may be made
with respect to any individual under the limits of section 415 of the
Code, or under other limited facts and circumstances which the
commissioner finds justified, such Excess Amount shall be disposed of
as follows:
(1) Any Employee Contributions (including earnings and losses
thereon) shall be returned to the Participant, to the extent that
the return would reduce the Excess Amount. This distribution
shall be made as soon as administratively feasible after the
Excess Amount is determined. Employee Contributions so returned
shall be disregarded for purposes of the Actual Contribution
Percentage Test.
(2) If, after the application of subparagraph (1), an Excess Amount
still exists, (excluding Elective Deferral Contributions) such
Excess Amount shall be held unallocated in a suspense account for
the Limitation Year and allocated and reallocated in the next
Limitation Year to all Participants in the Plan. The excess
amount must be used to reduce Employer Contributions for the next
Limitation Year (and succeeding Limitation Years, as necessary)
for all of the Participants in the Plan. For purposes of this
subparagraph, the Excess Amount may not be distributed to
Participants or former Participants.
(3) If, after the application of subparagraph (2) an Excess Amount
still exists, then the Participant's Elective Deferral
Contributions (including earnings and losses thereon) allocated
for the Limitation Year shall be returned to the Participant to
the extent that an Excess Amount exists. This distribution shall
be made as soon as administratively feasible after the Excess
Amount is determined. Any Elective Deferral Contributions
returned under this paragraph shall be disregarded for purposes
of the Actual Deferral Percentage Test.
(4) Alternatively, if after the application subparagraph (1) an
Excess Amount still exists, the Plan Administrator may elect to
dispose of the Excess Amount by applying the
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procedure in subparagraph (3) before applying the procedure in
subparagraph (2). If the Plan Administrator makes this election,
the Plan Administrator must apply it uniformly to all
Participants in a Limitation Year.
(5) If a suspense account is in existence at any time during a
Limitation Year pursuant to this section, it will not participate
in the allocation of investment gains or losses. If a suspense
account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts before any
Employer Contributions or Employee Contributions which would
constitute Annual Additions may be made to the Plan for that
Limitation Year.
5.3 LIMITATIONS ON ALLOCATIONS. If the Employer maintains one or more defined
contribution plans in addition to this Plan:
(A) The amount of Annual Additions which may be allocated under this Plan
on a Participant's behalf for a Limitation Year, shall not exceed the
lesser of:
(1) The Maximum Permissible Amount, reduced by the sum of any Annual
Additions allocated to the Participant's Account for the same
Limitation Year under this Plan and such other defined
contribution plan; or
(2) Any other limitation contained in this Plan.
Prior to the determination of the Participant's actual Compensation
for the Limitation Year, the amounts referred to in Subsection (1)
above may be determined on the basis of the Participant's estimated
annual Compensation for such Limitation Year. Such estimated annual
Compensation shall be determined for all Participants similarly
situated.
Any contribution made by the Employer based on estimated annual
Compensation shall be reduced by any Excess Amounts carried over from
prior years, if applicable.
(B) As soon as is administratively feasible after the end of the
Limitation Year, the amounts referred to in Section 5.3 (A) shall be
determined on the basis of the Participant's actual Compensation for
such Limitation Year.
(C) If amounts are contributed to a Participant's Account under this Plan
on an allocation date which does not coincide with the allocation
date(s) for all such other plans, and if a Participant's Annual
Additions under this Plan and all such other plans result in an Excess
Amount, such Excess Amount shall be deemed to have derived from those
contributions last allocated.
(D) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributable to this Plan will be the product
of (1) and (2) below:
(1) The total Excess Amount allocated as of such date (including any
amount which would have been allocated but for the limitations of
Internal Revenue Code section 415).
(2) The ratio of (1) the amount allocated to the Participant as of
such date under this Plan,
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divided by (2) the total amount allocated as of such date under
all qualified defined contribution plans (determined without
regard to the limitations of Internal Revenue Code section 415).
(E) Any Excess Amounts attributed to this Plan shall be disposed of as
provided in Section 5.2 (D).
5.4 LIMITATIONS ON ALLOCATIONS. If the Employer maintains a defined benefit
plan in addition to this Plan:
(A) If an individual is a Participant at any time in both this Plan and a
defined benefit plan maintained by the Employer, the sum of the
Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction for any year may not exceed 1.0. In the event that the sum
of the Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction exceeds 1.0, the Defined Contribution Plan Fraction will be
reduced until the sum of the Defined Contribution Plan Fraction and
the Defined Benefit Plan Fraction does not exceed 1.0.
If an individual was a Participant in this Plan or in any other
defined contribution plan maintained by the Employer which was in
existence on July 1, 1982, the numerator of the Defined Contribution
Plan Fraction will be adjusted if the sum of the Defined Contribution
Plan Fraction and the Defined Benefit Plan Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the
Fractions over 1.0 times (2) the denominator of the Defined
Contribution Plan Fraction, will be permanently subtracted from the
numerator of the Defined Contribution Plan Fraction. The adjustment
is calculated using the Fractions as they would be computed as of the
later of the end of the last Limitation Year beginning before January
1, 1983, or June 30, 1983. This adjustment also will be made if at
the end of the last Limitation Year beginning before January 1, 1984,
the sum of the Fractions exceeds 1.0 because of accruals or additions
that were made before the limitations of this Article became effective
to any plans of the Employer in existence on July 1, 1982.
In addition, if an individual was a Participant in this Plan or in any
other defined contribution plan maintained by the Employer which was
in existence on May 6, 1986, the numerator of the Defined Contribution
Plan Fraction will be adjusted if the Employer's defined benefit plan
was also in existence on May 6, 1986, and the sum of the Defined
Contribution Plan Fraction and the Defined Benefit Plan Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the
sum of the Fractions over 1.0 times (2) the denominator of the Defined
Contribution Plan Fraction, will be permanently subtracted from the
numerator of the Defined Contribution Plan Fraction. This adjustment
is calculated using the Fractions as they would be computed as of the
end of the last Limitation Year beginning before January 1, 1987. In
the event that a Participant's accrued benefit as of December 31,
1986, under the defined benefit plan exceeds the defined benefit
dollar limitation set forth in Internal Revenue Code section
415(b)(1), the amount of that accrued benefit shall be used in both
the numerator and the denominator of the Defined Benefit Plan Fraction
in making this adjustment.
For purposes of this Section 5.4, all defined benefit plans of the
Employer, whether or not terminated, will be treated as one defined
benefit plan and all defined contribution plans of the Employer,
whether or not terminated, will be treated as one defined contribution
plan.
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(B) The Defined Benefit Plan Fraction for any 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 the Limitation
Year), and the denominator of which is the lesser of (1) or (2) below:
(1) 1.25 times the dollar limitation in effect under Internal Revenue
Code section 415(b)(1)(A) on the last day of the Limitation Year;
or
(2) 1.4 times the amount which may be taken into account under
Internal Revenue Code section 415(b)(1)(B) with respect to such
Participant for the Limitation Year.
Notwithstanding the above, if the Participant was a participant in one
or more defined benefit plans maintained by the Employer which were in
existence on July 1, 1982, the denominator of the Defined Benefit Plan
Fraction will not be less than 125% of the sum of the annual benefits
under such plans which the Participant had accrued as of the later of
the end of the last Limitation Year beginning before January 1, 1983
or June 30, 1983. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Internal Revenue Code section 415 as in effect at the
end of the 1982 Limitation Year.
(C) A Participant's Projected Annual Benefit is equal to the annual
benefit to which the Participant would be entitled under the terms of
the defined benefit plan based upon the following assumptions:
(1) The Participant will continue employment until reaching Normal
Retirement Age as determined under the terms of the plan (or
current age, if that is later);
(2) The Participant's Compensation for the Limitation Year under
consideration will remain the same until the date the Participant
attains the age described in sub-division (1) of this
subparagraph; and
(3) All other relevant factors used to determine benefits under the
plan for the Limitation Year under consideration will remain
constant for all future Limitation Years.
(D) 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 Accounts in such Limitation Year and for all prior
Limitation Years, and the denominator of which is the lesser of (1) or
(2) below for such Limitation Year and for all prior Limitation Years
of such Participant's employment (assuming for this purpose, that
Internal Revenue Code section 415(c) had been in effect during such
prior Limitation Years):
(1) 1.25 times the dollar limitation in effect under Internal Revenue
Code section 415(c)(1)(A) on the last day of the Limitation Year;
or
(2) 1.4 times the amount which may be taken into account under
Internal Revenue Code section 415(c)(1)(B) with respect to such
Participant for the Limitation Year.
For the purposes of determining these Limitations on Allocations, any
non-deductible employee contributions made under a defined benefit
plan will be considered to be a separate defined contribution plan and
will be considered to be part of the Annual Additions for the
appropriate
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Limitation Year.
Annual Additions for any Limitation Year beginning before January 1,
1987, shall not be recomputed to treat all Employee Contributions as
Annual Additions.
(E) Notwithstanding the foregoing, at the election of the Plan
Administrator, in computing the Defined Contribution Plan Fraction
with respect to any Plan Year ending after December 31, 1982, the
denominator shall be an amount equal to the product of:
(1) The denominator of the Defined Contribution Plan Fraction,
computed in accordance with the rules in effect for the Plan Year
ending in 1982; and
(2) the transition fraction, which is a fraction
(a) the numerator of which is the lesser of:
(i) $51,875, or
(ii) 1.4 times 25% of the Compensation of the Participant
for the Plan Year ending in 1981, and
(b) the denominator of which is the lesser of:
(i) $41,500, or
(ii) 25% of the Compensation of the Participant for the Plan
Year ending in 1981.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 DISTRIBUTIONS IN GENERAL. Each Participant may elect, with his Spouse's
consent if required, a distribution in the form of an Annuity, a single sum
cash payment, Employer stock, or a combination of the above. All
distributions are subject to the provisions of Article VIII, Joint and
Survivor Annuity Requirements.
Distributions of Employer stock are limited to the value of the
Participant's Employer Stock Account and shall be made by the Trustee.
6.2 TIMING OF DISTRIBUTIONS. If the value of a Participant's Vested Interest
exceeds (or at the time of any prior distribution exceeded) $3,500 and is
immediately distributable (as defined in Section 8.5), the Participant and
his Spouse, if required, must consent to the distribution before it is
made.
Instead of consenting to a distribution, the Participant may make a written
election to defer the distribution for a specified period of time ending no
later than the Participant's attainment of age 62. Such election to defer
shall be irrevocable.
If the Participant and Spouse, if applicable, do not consent to a
distribution or if no election to defer is made within 90 days after
receiving a written explanation of the optional forms of benefit available
pursuant to Income Tax Regulation 1.411(a)(11), all benefits shall be
deferred to, and distribution shall be made as of the Participant's
attainment of age 62. The distribution will be made in accordance with
Section 8.2.
A Participant whose actual retirement date is on or after his attainment of
age 62 may not elect to defer distribution of his benefit beyond the date
of his actual retirement.
If the value of a Participant's Vested Interest is $3,500 or less at the
time it becomes payable, the distribution shall be made in the form of a
single sum cash payment and shall be made upon such Participant's
Termination of Employment. Such a distribution may not be deferred.
Unless the Participant elects otherwise, the payment of benefits under this
Plan to the Participant shall begin not later than the 60th day after the
close of the Plan Year in which the later of (A) or (B), below, occurs:
(A) the date on which the Participant attains his Normal Retirement Age or
age 62, if later; or
(B) the date on which the Participant terminates his Service (including
Termination of Employment, death or Disability) with the Employer.
Notwithstanding the foregoing, the failure of a Participant and Spouse, if
required, to consent to a distribution while a benefit is immediately
distributable shall be deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy the above paragraph.
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6.3 DISTRIBUTION LIMITATION. Elective Deferral Contributions, Qualified
Nonelective Contributions and Qualified Matching Contributions, and income
allocable to each, are not distributable to a Participant or a Beneficiary,
in accordance with such Participant's or Beneficiary's election, earlier
than upon the Participant's Termination of Employment, death, or
disability.
Such amounts may also be distributed upon:
(A) Termination of the Plan without the establishment or maintenance of a
successor plan.
For purposes of this paragraph, a successor plan is any other defined
contribution plan maintained by the same employer. However, if fewer
than two percent of the Employees who are eligible under the Plan at
the time of its termination are or were eligible under another defined
contribution plan at any time during the 24 month period beginning 12
months before the time of the termination, the other plan is not a
successor plan. The term "defined contribution plan" means a plan
that is a defined contribution plan as defined in section 414(i) of
the Code, but does not include an employee stock ownership plan as
defined in section 4975(e) or 409 of the Code or a simplified employee
pension as defined in section 408(k) of the Code. A plan is a
successor plan only if it exists at the time the Plan is terminated or
within the period ending 12 months after distribution of all assets
from the Plan.
After March 31, 1988, a distribution may be made under this paragraph
only if it is a lump sum distribution. The term "lump sum
distribution" has the same meaning provided in section 402(e)(4) of
the Code, without regard to subparagraphs (A)(i) through (iv), (B),
and (H) of that section.
(B) The disposition by the Employer to an unrelated corporation of
substantially all the assets (within the meaning of section 409(b)(2)
of the Code) used in the trade or business of the Employer if the
Employer continues to maintain this Plan after the disposition.
However, a distribution may be made under this paragraph only to an
Employee who continues employment with the corporation acquiring such
assets.
In addition, this requirement is satisfied only if the purchaser does
not maintain the Plan after the disposition. A purchaser maintains
the plan of the seller if it adopts the plan or otherwise becomes an
employer whose employees accrue benefits under the Plan. A purchaser
also maintains the Plan if the Plan is merged or consolidated with, or
any assets or liabilities are transferred from the Plan to a plan
maintained by the purchaser in a transaction subject to section
414(l)(1) of the Code. A purchaser is not treated as maintaining the
Plan merely because the Plan that it maintains accepts rollover
contributions of amounts distributed by the Plan.
For purposes of this paragraph, the sale of "substantially all" the
assets used in a trade or business means the sale of at least 85
percent of the assets.
After March 31, 1988, a distribution may be made under this paragraph
only if it is a lump sum distribution. The term "lump sum
distribution" has the same meaning provided in section 402(e)(4) of
the Code, without regard to subparagraphs (A)(i) through (iv), (B),
and (H) of that section.
(C) The disposition by the Employer to an unrelated entity or individual
of the Employer's interest
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in a subsidiary (within the meaning of section 409(d)(3) of the Code)
if the Employer continues to maintain this Plan. However, a
distribution may be made under this paragraph only to an Employee who
continues employment with such subsidiary.
In addition, this requirement is satisfied only if the purchaser does
not maintain the Plan after the disposition. A purchaser maintains the
plan of the seller if it adopts the plan or otherwise becomes an
employer whose employees accrue benefits under the Plan. A purchaser
also maintains the Plan if the Plan is merged or consolidated with, or
any assets or liabilities are transferred from the Plan to a plan
maintained by the purchaser in a transaction subject to section
414(l)(1) of the Code. A purchaser is not treated as maintaining the
Plan merely because the Plan that it maintains accepts rollover
contributions of amounts distributed by the Plan.
After March 31, 1988, a distribution may be made under this paragraph
only if it is a lump sum distribution. The term "lump sum
distribution" has the same meaning provided in section 402(e)(4) of
the Code, without regard to subparagraphs (A)(i) through (iv), (B),
and (H) of that section.
(D) In the case of Elective Deferral Contributions only, the attainment of
age 59-1/2, as described in Section 10.1 of the Plan.
(E) In the case of Elective Deferral Contributions only, the hardship of
the Participant, as described in Section 10.2 of the Plan.
6.4 COMMENCEMENT OF DISTRIBUTIONS. Notwithstanding the provisions of the
preceding Timing of Distributions Section, distributions to a Participant
will commence no later than the date determined in accordance with the
provisions of this Section.
Distribution to a Participant must commence no later than the required
beginning date. The first required beginning date of a Participant is the
first day of April of the calendar year following the calendar year in
which the Participant attains age 70-1/2.
The required beginning date of a Participant who attains age 70-1/2 before
January 1, 1988, shall be the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment
of age 70-1/2 occurs, provided the Participant was not a 5% owner in the
Plan Year ending in the year in which the Participant attained age 66-1/2
or any later Plan Year. A Participant is treated as a 5% owner for
purposes of this section if such Participant is a 5% owner as defined in
section 416(i) of the Code (determined in accordance with section 416 but
without regard to whether the Plan is Top-Heavy). The required beginning
date of a Participant who is a 5% owner during any year beginning after
December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant attained age 70-1/2, or
(B) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a 5% owner, or the calendar year
in which the Participant retires.
Once distributions have begun to a 5% owner under this section, they must
continue to be distributed, even if the Participant ceases to be a 5% owner
in a subsequent year. Distribution to such Participant must commence no
later than the first day of April following the calendar year in which the
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Participant's Termination of Employment occurs.
If distribution to any Participant is made in other than a single sum
payment, the second payment shall be distributed no later than the December
31 following the April 1 by which the first payment was required to be
distributed. Each succeeding payment shall be distributed no later than
each December 31 thereafter.
6.5 DISTRIBUTION REQUIREMENTS.
(A) Except as otherwise provided in Article VIII, the requirements of this
Section shall apply to any distribution of a Participant's Accrued
Benefit.
(B) All distributions required under this Article shall be determined and
made in accordance with the Income Tax Regulations under section
401(a)(9), including the minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the regulations.
(C) Limits on Settlement Options. Distributions, if not made in a lump
sum, may only be made over one of the following periods (or a
combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated Beneficiary,
(3) a period certain not extending beyond the life expectancy of the
Participant, or
(4) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated Beneficiary.
(D) Minimum Amounts to be Distributed. If the Participant's entire Vested
Interest is to be distributed in other than a lump sum, then the
amount to be distributed each year must be at least an amount equal to
the quotient obtained by dividing the Participant's entire Vested
Interest by the life expectancy of the Participant or the joint and
last survivor expectancy of the Participant and designated
Beneficiary. Life expectancy and joint and last survivor expectancy
are computed by the use of the return multiples contained in section
1.72-9 of the Income Tax Regulations. For purposes of this
computation, a Participant's life expectancy may be recalculated no
more frequently than annually; however, the life expectancy of a
Beneficiary other than the Participant's Spouse may not be
recalculated.
(1) If the Participant's Spouse is not the designated Beneficiary,
the method of distribution selected must assure that at least 50%
of the present value of the amount available for distribution is
paid within the life expectancy of the Participant.
(2) For calendar years beginning after December 31, 1988, the amount
to be distributed each year, beginning with distributions for the
first distribution calendar year, shall not be less than the
quotient obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy or (2) if the
Participant's Spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4
of section 1.401(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the Participant shall be
distributed using the applicable life expectancy in subsection
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(d)(1) above as the relevant divisor without regard to
regulations section 1.401(a)(9)-2.
(3) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution
for other calendar years, including the minimum distribution for
the distribution calendar year in which the Employee's required
beginning date occurs, must be made on or before December 31 of
that distribution calendar year.
6.6 NON-TRANSFERABLE. The Participant's right to any Annuity payments,
benefits, and refunds is not transferable and shall be free from the claims
of all creditors to the fullest extent permitted by law.
6.7 DEATH DISTRIBUTION PROVISIONS. If the Participant dies before distribution
of his Vested Interest commences, the following provisions shall apply:
(A) If a distribution is to be made to a Beneficiary other than the
Surviving Spouse:
(1) If the present value of the Participant's Vested Interest exceeds
(or at the time of any prior distribution exceeded) $3,500,
unless the Beneficiary elects another form of distribution, that
portion of the Participant's Vested Interest payable to the
Beneficiary will be distributed in the form of a single sum cash
payment within a reasonable period of time after the Plan
Administrator is notified of the Participant's death.
(2) If the present value of the Participant's Vested Interest is
$3,500 or less at the time it becomes payable, the distribution
shall always be made in the form of a single sum cash payment and
shall be paid within a reasonable period of time after the Plan
Administrator is notified of the Participant's death.
(B) If the distribution is to be made to a Beneficiary who is the
Surviving Spouse, such distribution will be made in accordance with
the following:
(1) If the present value of the Participant's Vested Interest exceeds
(or at the time of any prior distribution exceeded) $3,500 and is
immediately distributable (as defined in Section 8.5), the
surviving spouse must consent to the distribution before it is
made. If the Surviving Spouse does not consent to a distribution,
all benefits shall be deferred to a date that complies with the
terms of Section 6.8 (B).
The distribution shall be made in accordance with the provisions
of Section 8.3.
(2) If the present value of the Participant's Vested Interest payable
to the Surviving Spouse is $3,500 or less at the time it becomes
payable, the distribution shall always be made in the form of a
single sum cash payment and shall be paid within a reasonable
period of time after the Plan Administrator is notified of the
Participant's death.
6.8 DEATH DISTRIBUTION COMMENCEMENT DATE. Upon the death of the Participant,
the following distribution provisions shall take effect:
(A) If the Participant dies after distribution of his entire Vested
Interest has commenced, the remaining portion of such Vested Interest
will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
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In no event shall distribution of the Participant's remaining Vested
Interest be made in a lump sum after the Participant's death unless
such distribution is consented to, in writing, by the Participant's
Surviving Spouse, if any.
(B) If the Participant dies before distribution of his Vested Interest
commences, the Participant's entire Vested Interest will be
distributed no later than five years after the Participant's death
except to the extent that an election is made to receive distributions
in accordance with (1) or (2) below:
(1) If any portion of the Participant's Vested Interest is payable to
a designated Beneficiary, distributions may be made in
substantially equal installments over the life or life expectancy
of the designated Beneficiary (or over a period not extending
beyond the life expectancy of such Beneficiary), commencing no
later than one year after the Participant's death;
(2) If the designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in
accordance with (1) above shall not be earlier than the date on
which the Participant would have attained age 70-1/2. However,
the Surviving Spouse may elect, at any time following the
Participant's death, to defer the date on which distributions
will begin until no later than the date on which the Participant
would have attained age 70-1/2 and, if the Spouse dies before
payments begin, subsequent distributions shall be made as if the
Spouse had been the Participant.
(C) For purposes of (B) above, payments will be calculated by use of the
return multiples specified in section 1.72-9 of the Income Tax
Regulations. Life expectancy of a Surviving Spouse may be
recalculated annually; however, in the case of any other designated
Beneficiary, such life expectancy will be calculated at the time
payment first commences without further recalculation.
(D) For purposes of this Section (Death Distribution Commencement Date)
any amount paid to a child of the Participant will be treated as if it
had been paid to the Surviving Spouse if the amount becomes payable to
the Surviving Spouse when the child reaches the age of majority.
6.9 TRANSITIONAL RULE.
(A) Notwithstanding the other requirements of this Article and subject to
the requirements of Article VIII, distribution on behalf of any
Employee may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Plan is one which would not have
disqualified such Plan under Internal Revenue Code section
401(a)(9) as in effect prior to amendment by the Deficit
Reduction Act of 1984.
(2) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a Beneficiary of
such Employee.
(3) Such designation was in writing, was signed by the Employee or
the Beneficiary, and was made before January 1, 1984.
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(4) The Employee had accrued a benefit under the Plan as of December
31, 1983.
(5) The method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution will
commence, the period over which distributions will be made, and
in the case of any distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of priority.
(B) A distribution upon death will not be covered by this Transitional
Rule unless the information in the designation contains the required
information described above with respect to the distribution to be
made upon the death of the Employee.
(C) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee or the Beneficiary, to
whom such distribution is being made, will be presumed to have
designated the method of distribution under which the distribution is
being made if the method of distribution was specified in writing and
the distribution satisfies the requirements in Subsections (A) (1) and
(A) (5).
(D) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Internal Revenue Code section 401(a)(9) as
amended. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or
addition of another Beneficiary (one not named in the designation)
under the designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the
designation, directly or indirectly (for example, by altering the
relevant measuring life).
6.10 ALTERNATE PAYEE SPECIAL DISTRIBUTION. Distributions pursuant to Section
16.8 may be made without regard to the age or employment status of the
Participant.
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ARTICLE VI-A
DIRECT ROLLOVERS
6A.1 Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Article, a Distributee
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover, except as otherwise provided by the Employer's
administrative procedures as permitted by regulations. In addition, a
Distributee's election of a Direct Rollover shall be subject to the
following requirements:
(A) If the Distributee elects to have only a portion of an Eligible
Rollover Distribution paid to an Eligible Retirement Plan in a Direct
Rollover, that portion must be equal to at least $500.
(B) If the entire amount of a Distributee's Eligible Rollover Distribution
is $500 or less, the distribution may not be divided. Instead, the
entire amount must either be paid to the Distributee or to an Eligible
Retirement Plan in a Direct Rollover.
(C) A Distributee may not elect a Direct Rollover if the Distributee's
Eligible Rollover Distributions during a year are reasonably expected
by the Plan Administrator to total less than $200 (or any lower
minimum amount specified by the Plan Administrator).
(D) A Distributee may not elect a Direct Rollover of an Offset Amount.
(E) A Distributee's election to make or not make a Direct Rollover with
respect to one payment in a series of periodic payments shall apply to
all subsequent payments in the series, except that a Distributee shall
be permitted at any time to change, with respect to subsequent
payments in the series of periodic payments, a previous election to
make or not make a Direct Rollover. A change of election shall be
accomplished by the Distributee notifying the Plan Administrator of
the change. Such notice must be in the form and manner prescribed by
the Plan Administrator.
6A.2 Definitions.
(A) Direct Rollover: A Direct Rollover is a payment by the plan to the
Eligible Retirement Plan specified by the Distributee.
(B) Distributee: A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's Surviving Spouse and
the Employee's or former Employee's Spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are Distributees with regard to the interest of
the Spouse or former Spouse.
(C) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the code,
an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover
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Distribution. However, in the case of an Eligible Rollover
Distribution to the Surviving Spouse, an Eligible Retirement Plan is
an individual retirement account or an individual retirement annuity.
(D) Eligible Rollover Distribution: An Eligible Rollover Distribution is
any distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint lives
(or joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(E) Offset Amount: An Offset Amount is the amount by which a
Participant's Account is reduced to repay a loan from the Plan
(including the enforcement of the Plan's security interest in the
Participant's Account).
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ARTICLE VII
RETIREMENT BENEFITS
7.1 NORMAL RETIREMENT. A Participant who attains his Normal Retirement Age
shall have a Vesting Percentage of 100%. If a Participant retires from the
active Service of the Employer on his Normal Retirement Date, he shall be
entitled to receive a distribution of the entire value of his Participant's
Account as of his Normal Retirement Date.
7.2 LATE RETIREMENT. A Participant may continue in the Service of the Employer
after his Normal Retirement Age, and in such event he shall retire on his
Late Retirement Date. Such Participant shall continue as a Participant
under this Plan until such Late Retirement Date. The Participant shall have
a Vesting Percentage of 100% and shall be entitled to receive a
distribution of the entire value of his Participant's Account as of his
Late Retirement Date.
7.3 DISABILITY RETIREMENT. A Participant who retires from the Service of the
Employer on account of Disability shall have a Vesting Percentage of 100%
and shall be entitled to receive a distribution of the entire value of his
Participant's Account as of his Disability Retirement Date.
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ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 GENERAL. The provisions of this Article shall take precedence over any
conflicting provision in this Plan.
The provisions of this Article shall apply to any Participant who is
credited with at least one Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 8.7.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety-day
period ending on the first day on which all events have occurred which
entitle the Participant to a benefit, a married Participant's Vested
Interest will be paid in the form of a Qualified Joint and Survivor
Annuity.
An unmarried Participant will be provided a single Life Annuity unless the
Participant elects another form of benefit during the applicable Election
Period.
8.3 PAYMENT OF QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional
form of benefit has been selected within the Election Period pursuant to a
Qualified Election, if a married Participant dies before his Annuity
Starting Date, then 50% of the Participant's Vested Interest, less the
amount of any unpaid loan balance outstanding under the terms of Article X-
A, shall be applied toward the purchase of an immediate Annuity for the
life of the Surviving Spouse. As an alternative to receiving the benefit in
this form of an Annuity, the Surviving Spouse may elect to receive a single
cash payment or any other form of payment provided for in the Plan within a
reasonable time after the Participant's death.
8.4 DEFINITIONS.
(A) Election Period: The period which begins on the first day of the Plan
Year in which the Participant attains age 35 and ends on the date of
the Participant's death. If a Participant separates from Service
prior to the first day of the Plan Year in which age 35 is attained,
with respect to the account balance as of the date of separation, the
Election Period shall begin on the date of separation.
A Participant who has not attained age 35 as of the end of a Plan
Year, may make a special Qualified Election to waive the Qualified
Preretirement Survivor Annuity for the period beginning on the date of
such election and ending on the first day of the Plan Year in which
the Participant will attain age 35. Such election shall not be valid
unless the Participant receives a written explanation of the Qualified
Preretirement Survivor Annuity in such terms as are comparable to the
explanation required under Section 8.6 (A). Qualified Preretirement
Survivor Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains age 35.
Any new waiver on or after such date shall be subject to the full
requirements of this Article.
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(B) Qualified Election: A waiver of a Qualified Joint and Survivor Annuity
or a Qualified Preretirement Survivor Annuity. Any waiver of a
Qualified Joint and Survivor Annuity or a Qualified Preretirement
Survivor Annuity shall not be effective unless: (a) the Participant's
Spouse consents in writing to the election; (b) the election
designates a specific Beneficiary, including any class of
Beneficiaries or any contingent Beneficiaries, which may not be
changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or
notary public. Additionally, a Participant's waiver of the Qualified
Joint and Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without
spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent). If it is
established to the satisfaction of a Plan representative that such
written consent cannot be obtained because:
(1) there is no Spouse;
(2) the Spouse cannot be located;
(3) the Participant is legally separated or has been abandoned within
the meaning of local law, and the Participant has a court order
to such effect;
(4) of other circumstances as the Secretary of the Treasury may by
regulations prescribe,
the Participant's election to waive coverage will be considered a
Qualified Election.
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall
be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse
at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received notice as
provided in Section 8.6 below.
(C) Qualified Joint and Survivor Annuity: An immediate Annuity for the
life of the Participant with a survivor Annuity for the life of the
Spouse which is not less than 50% and not more than 100% of the amount
of the Annuity which is payable during the joint lives of the
Participant and the Spouse and which is the amount of benefit which
can be purchased with the Participant's entire Vested Interest. If no
survivor Annuity percentage has been specified in an election, the
percentage payable to the Spouse will be 50%.
Notwithstanding the above paragraph, a Qualified Joint and Survivor
Annuity for an unmarried Participant shall mean an Annuity for the
life of the Participant.
(D) Qualified Preretirement Survivor Annuity: A survivor Annuity for the
life of the Spouse in the amount which can be purchased with 50% of
the Participant's Vested Interest. Such Annuity shall be provided
proportionately from both employer contributions and Employee
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Contributions.
(E) Spouse (Surviving Spouse): The Spouse or Surviving Spouse of the
Participant. A former Spouse may be treated as the Spouse or
Surviving Spouse to the extent provided under a Qualified Domestic
Relations Order as described in Internal Revenue Code section 414(p).
8.5 CONSENT REQUIREMENTS. Only the Participant need consent to the commencement
of a distribution in the form of a Qualified Joint and Survivor Annuity
while the account balance is immediately distributable. Neither the consent
of the Participant nor the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy section 401(a)(9) or
section 415 of the Code. An account balance is immediately distributable if
any part of the account balance could be distributed to the Participant (or
Surviving Spouse) before the Participant attains (or would have attained if
not deceased) the later of Normal Retirement Age or age 62.
8.6 NOTICE REQUIREMENTS.
(A) In the case of a Qualified Joint and Survivor Annuity as described in
Section 8.4 (C), the Plan Administrator shall, no less than 30 days
and no more than 90 days, provide each Participant prior to the
commencement of benefits a written explanation of: (i) the terms and
conditions of a Qualified Joint and Survivor Annuity; (ii) the
Participant's right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit; (iii) the rights
of a Participant's Spouse; (iv) the right to make, and the effect of,
a revocation of a previous election to waive the Qualified Joint and
Survivor Annuity; (v) a general description of the eligibility
conditions and other material features of the optional forms of
benefit; and (vi) sufficient additional information to explain the
relative values of the optional forms of benefit available to them
under this Plan.
(B) In the case of a Qualified Preretirement Survivor Annuity as described
in Section 8.4 (D), the Plan Administrator shall provide each
Participant within the period beginning on the first day of the Plan
Year in which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the Participant
attains age 35, a written explanation of the Qualified Preretirement
Survivor Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of
Section 8.6 (A) to a Qualified Joint and Survivor Annuity.
If a Participant enters the Plan after the first day of the Plan Year
in which the Participant attained age 32, the Plan Administrator shall
provide notice no later than the close of the second Plan Year
succeeding the entry of the Participant in the Plan.
If a Participant enters the Plan after he has attained age 35, the
Plan Administrator shall provide notice within a reasonable period of
time following the entry of the Participant in the Plan.
If a Participant's Termination of Employment occurs before the
Participant attains age 35, the Plan Administrator shall provide
notice within one year of such Termination of Employment.
8.7 TRANSITIONAL RULES.
(A) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
Sections of this Article must be given the
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opportunity to elect to have the prior Sections of this Article
relating to the Qualified Preretirement Survivor Annuity apply if such
Participant is credited with at least one Hour of Service under this
Plan or a predecessor plan in a Plan Year beginning on or after
January 1, 1976, and such Participant had at least 10 Years of Service
for vesting purposes when he separated from Service.
(B) Any living Participant not receiving benefits on August 23, 1984, who
was credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not
otherwise credited with any Service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his or
her benefits paid in accordance with Section 8.7 (D).
(C) The respective opportunities to elect (as described in Sections 8.7
(A) and 8.7 (B) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and
ending on the date benefits would otherwise commence to said
Participants.
(D) Any Participant who has elected pursuant to Section 8.7 (B) of this
Article and any Participant who does not elect under Section 8.7 (A)
or who meets the requirements of Section 8.7 (A) except that such
Participant does not have at least 10 Years of Service for vesting
purposes when he separates from Service, shall have his benefits
distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity:
(1) Automatic Joint and Survivor Annuity. If benefits in the form of
a life annuity become payable to a married Participant who:
(a) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(b) dies on or after Normal Retirement Age while still working
for the Employer; or
(c) begins to receive payments on or after the Qualified Early
Retirement Age; or
(d) separates from Service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement Age) and
after satisfying the eligibility requirements for the
payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this Plan in the
form of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the election
period. The election period must begin at least six months
before the Participant attains Qualified Early Retirement
Age and end not more than 90 days before the commencement of
benefits. Any election hereunder will be in writing and may
be changed by the Participant at any time.
(2) Election of Early Survivor Annuity: A Participant who is
employed after attaining the Qualified Early Retirement Age will
be given the opportunity to elect, during the election period, to
have a survivor annuity payable on death. If the Participant
elects the survivor annuity, payments under such Annuity must not
be less than the payments
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which would have been made to the Spouse under the Qualified
Joint and Survivor Annuity if the Participant had retired on the
day before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at any
time. The election period begins on the later of (1) the 90th day
before the Participant attains the Qualified Early Retirement
Age, or (2) the date on which participation begins, and ends on
the date the Participant terminates employment.
(3) For purposes of this Section 8.7 (D):
(a) Qualified Early Retirement Age is the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
or
(ii) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age; or
(iii) the date the Participant begins participation.
(b) Qualified Joint and Survivor Annuity is an Annuity for the
life of the Participant with a survivor annuity for the life
of the Spouse as described in Section 8.4 (C).
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ARTICLE IX
TERMINATION OF EMPLOYMENT
9.1 DISTRIBUTION. As of a Participant's Termination of Employment, he shall be
entitled to receive a distribution of his entire Vested Interest. Such
distribution shall be further subject to the terms and conditions of
Article VI.
If at the time of his Termination of Employment the Participant's Vesting
Percentage is not 100% and the Participant does not take a distribution
from the portion of his Vested Interest subject to the Vesting Percentage,
the non-vested portion of his Participant's Account will become a
Forfeiture upon the date the Participant incurs five consecutive One-Year
Breaks in Service.
If at the time of his Termination of Employment the Participant's Vesting
Percentage is not 100% and such Participant does take a distribution from
the portion of his Vested Interest subject to the Vesting Percentage, or if
the Participant's Vesting Percentage is 0%, the non-vested portion of his
Participant's Account will become a Forfeiture upon the date such
terminated Participant incurs a One-Year Break in Service.
If the Participant, whose non-vested portion of his Participant's Account
became a Forfeiture in accordance with the terms of the preceding
paragraph, is later rehired by the Employer and re-enrolls in the Plan,
Subsection (A), (B) or (C) below, as applicable, will apply:
(A) If the Participant was 0% vested at his Termination of Employment and
did not incur five consecutive One-Year Breaks in Service after such
date, the amount which became a Forfeiture, if any, shall be restored
by the Employer at the time such Participant re-enrolls in the Plan.
The Forfeiture, so restored, shall be included as part of that portion
of his Participant's Account subject to the Vesting Percentage.
(B) If the Participant's Vesting Percentage was not 100% at his
Termination of Employment and if the Participant did not incur five
consecutive One-Year Breaks in Service after such date, the
Participant shall be entitled to repay the portion of the distribution
made at his Termination of Employment derived from Employer
Contributions. The portion of the repayment that is attributable to
amounts that were subject to the Vesting Percentage will no longer be
considered a distribution for purposes of determining the
Participant's Vested Interest. The repayment of such portion must be
made before the Participant has incurred five consecutive One-Year
Breaks in Service following the date he received the distribution or
five years after the Participant is rehired by the Employer, whichever
is earlier.
If the Participant elects to make such repayment, the amount which
became a Forfeiture, if any, shall be restored by the Employer at the
same time such repayment is made. The Forfeiture, so restored, and the
repayment shall be included as part of that portion of his
Participant's Account subject to the Vesting Percentage. However, if
the Participant does not elect to repay the distribution made in
accordance with this Article within the period of time specified
above, that Forfeiture shall remain a Forfeiture.
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(C) If the Participant had incurred five consecutive One-Year Breaks in
Service after his Termination of Employment, the amount which became a
Forfeiture shall remain a Forfeiture and such Participant shall be
prohibited from repaying a distribution made at his Termination of
Employment.
9.2 NO FURTHER RIGHTS OR INTEREST. A Participant shall have no further interest
in or any rights to any portion of his Participant's Account that becomes a
Forfeiture due to his Termination of Employment once the Participant incurs
five consecutive One-Year Breaks in Service in accordance with Article II.
9.3 APPLICATION OF FORFEITURES. Any Forfeiture arising in accordance with the
provisions of Section 9.1 shall be used by the Employer to reduce and in
lieu of the contributions made by the Employer next due under Article IV,
or to pay Plan expenses, at the earliest opportunity after such Forfeiture
becomes available.
The provisions of the preceding sentence notwithstanding, in the event that
a former Participant is rehired by the Employer and the Employer is
required by the provisions of Section 9.1 of this Plan to restore the
amount of a separate account that had been created upon such Participant's
prior Termination of Employment and later forfeited, Forfeitures, if any,
will first be used to restore such separate account to its value as of such
Participant's prior Termination of Employment date. In the event that the
available Forfeitures are not sufficient to make such restoration, the
Employer will make an additional contribution sufficient to make such
restoration.
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ARTICLE X
WITHDRAWALS
10.1 WITHDRAWAL AFTER AGE 59-1/2. A Participant who has attained age 59-1/2,
may elect to withdraw from his Participant's Account, at any time, an
amount which is equal to any whole percentage (not exceeding 100%) of his
Vested Interest in his Participant's Account attributable to:
. Elective Deferral Contributions, including earnings.
10.2 WITHDRAWAL FOR SERIOUS FINANCIAL HARDSHIP OF ELECTIVE DEFERRAL
CONTRIBUTIONS. Distributions of Elective Deferral Contributions may be
made to a Participant in the event of a hardship. For purposes of this
section, a distribution is made on account of hardship only if the
distribution is made both on account of an immediate and heavy financial
need of the Employee and is necessary to satisfy the financial need. In
addition, for Plan Years beginning after December 31, 1988 any
distribution on account of hardship shall be limited to the distributable
amount described in paragraph (C) of this section.
(A) The following are the only financial needs considered immediate and
heavy for purposes of this section:
(1) Expenses for medical care described in section 213(d) of the
Code previously incurred by the Employee, the Employee's Spouse,
or any dependents of the Employee (as defined in section 152 of
the Code) or necessary for these persons to obtain medical care
described in section 213(d) of the Code;
(2) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Employee, his Spouse,
children, or dependents (as defined in section 152 of the Code);
(3) Costs directly related to the purchase of a principal residence
for the Employee (excluding mortgage payments); or
(4) Payments necessary to prevent the eviction of the Employee from
the Employee's principal residence or foreclosure on the
mortgage on that residence.
(B) The Participant shall specify on the application for a hardship
withdrawal whether the Participant elects the provision of (1) or (2)
below to be used in determining the necessity of the hardship.
(1) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if all
of the following requirements are satisfied:
(a) The hardship distribution is not in excess of the amount of
the immediate and heavy financial need of the Employee. The
amount of an immediate and heavy financial need may include
the amounts necessary to apply any federal, state, or
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local income taxes or penalties reasonably anticipated to
result from the distribution.
(b) The Employee had obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of
the loan) loans currently available under all plans
maintained by the Employer.
(c) The Employee is suspended from making Elective Deferral
Contributions and Employee Contributions to the Plan for at
least 12 months after receipt of the hardship distribution
In addition, the Employee must be prohibited under the
terms of the plan or an otherwise enforceable agreement
from making Elective Deferral Contributions and Employee
Contributions to all other plans maintained by the Employer
for at least 12 months after receipt of the hardship
distribution.
For this purpose, the phrase "all other plans of the
Employer" means all qualified and nonqualified plans of
deferred compensation maintained by the Employer. The
phrase includes a stock option, stock purchase, or similar
plan, or a cash or deferred arrangement that is part of a
cafeteria plan within the meaning of section 125 of the
Code. However, it does not include the mandatory employee
contribution part of a defined benefit plan. It also does
not include a health or welfare benefit plan, including one
that is part of a cafeteria plan within the meaning of
section 125 of the Code.
(d) The Employee may not make Elective Deferral Contributions
to the Plan for the Employee's taxable year immediately
following the taxable year of the hardship distribution in
excess of the applicable limit under section 402(g) of the
Code for such taxable year less the amount of such
Employee's Elective Deferral Contributions for the taxable
year of the hardship distribution. In addition, all other
plans maintained by the Employer must limit the Employee's
Elective Deferral Contributions for the next taxable year
to the applicable limit under section 402(g) of the Code
for that year minus the Employee's Elective Deferral
Contributions for the year of the hardship distribution.
(2) A distribution will be treated as necessary to satisfy a
financial need if the Employer relies upon the Employee's
written representation, unless the Employer has actual knowledge
to the contrary, that the need cannot reasonably be relieved:
(a) Through reimbursement or compensation by insurance or
otherwise;
(b) By liquidation of the Employee's assets;
(c) By cessation of Elective Deferral Contributions or Employee
Contributions under the Plan; or
(d) By other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Employer or by any
other employer, or by borrowing from commercial sources on
reasonable commercial terms in an amount sufficient to
satisfy the need.
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A need cannot reasonably be relieved by one of the actions
listed above if the effect would be to increase the amount of
the need.
The amount of an immediate and heavy financial need may include
any amounts necessary to pay any federal, state, or local income
taxes or penalties reasonably anticipated to result from the
distribution.
(C) The distributable amount is equal to the Employee's total Elective
Deferral Contribution as of the date of distribution, reduced by the
amount of previous distributions of Elective Deferral Contributions
on account of hardship. The Employee's total Elective Deferral
Contributions shall be increased by income allocable to Elective
Deferral Contributions. In the case of income allocable to Elective
Deferral Contributions, the distributable amount may only include
amounts that were credited to the Employee's Account as of December
31, 1988.
10.3 WITHDRAWAL OF EMPLOYEE CONTRIBUTIONS. A Participant may elect to
withdraw from his Participant's Account, once every 12-consecutive months,
an amount equal to any whole percentage (not exceeding 100%) of his Vested
Interest in his Participant's Account attributable to the value of his
Employee Contributions, including earnings.
10.4 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. Once during a Plan Year a
Participant may elect to withdraw from his Participant's Account an amount
up to 100% of the value of that portion of his account attributable to his
Rollover Contributions as defined in Article IV. Such an election shall
become effective in accordance with the Notification Section below.
10.5 NOTIFICATION. The Participant shall notify the Administrator in writing of
his election to make a withdrawal under the preceding provisions of this
Article X. Any such election shall be effective as of the date specified
in such notice, which date must be at least 15 days after such notice is
filed. Payment of the withdrawal shall be subject to the terms and
conditions of Article VI.
10.6 NON-REPAYMENT. Withdrawals made in accordance with this Article X may not
be repaid.
10.7 SPOUSAL CONSENT TO WITHDRAWAL. Prior to obtaining a withdrawal in
accordance with this Article X, a married Participant must obtain spousal
consent in accordance with the provisions of Article VIII.
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ARTICLE X-A
LOANS
10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan
to a Participant, in an amount which, when added to the outstanding
balance of all other loans to the Participant from all qualified plans of
the Employer, does not exceed the lesser of $50,000 reduced by the excess
of the Participant's highest outstanding loan balance during the 12 months
preceding the date on which the loan is made over the outstanding loan
balance on the date the new loan is made, or 50% of the Participant's
Vested Interest in his Participant's Account.
The loan shall be made under such terms, security interest, and conditions
as the Plan Administrator deems appropriate, provided, however, that all
loans granted hereunder:
(A) are available to all Participants and Beneficiaries, who are parties-
in-interest pursuant to section 3(14) of ERISA, on a reasonably
equivalent basis;
(B) are not made available to Highly Compensated Employees on a basis
greater than the basis made available to other Employees;
(C) bear a reasonable rate of interest;
(D) are adequately secured;
(E) are made only after a Participant obtains the consent of his Spouse,
if any, to use his Participant's Account as security for the loan.
Spousal consent shall be obtained no earlier than the beginning of
the 90-day period that ends on the date on which the loan is to be so
secured. The consent must be in writing, must acknowledge the effect
of the loan, and must be witnessed by a plan representative or notary
public. Such consent shall thereafter be binding with respect to the
consenting Spouse or any subsequent Spouse with respect to that loan.
A new consent shall be required if the Participant's Account is used
for renegotiation, extension, renewal or other revision of the loan.
(F) are made in accordance with and subject to all of the provisions of
this Article.
10A.2 LOAN PROCEDURES. The Plan Administrator shall establish a written set of
procedures, set forth in the summary plan description, by which all loans
will be administered. Such rules, which are incorporated herein by
reference, will include, but not be limited to, the following:
(A) the person or persons authorized to administer the loan program,
identified by name or position;
(B) the loan application procedure;
(C) the basis for approving or denying loans;
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(D) any limits on the types of loans permitted;
(E) the procedure for determining a "reasonable" interest rate;
(F) acceptable collateral;
(G) default conditions; and
(H) steps which will be taken to preserve Plan assets in the event of
default.
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ARTICLE XI
FIDUCIARY DUTIES AND RESPONSIBILITIES
11.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each Fiduciary of 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 Participants and their Beneficiaries and defraying reasonable expenses
of administering the Plan. Each Fiduciary shall act with the care, skill,
prudence, and diligence under the circumstances that a prudent man acting
in a like capacity and familiar with such matters would use in conducting
an enterprise of like character and with like aims, in accordance with the
documents and instruments governing this Plan, insofar as such documents
and instruments are consistent with this standard.
11.2 SERVICE IN MULTIPLE CAPACITIES. Any Person or group of persons may serve in
more than one fiduciary capacity with respect to this Plan.
11.3 LIMITATIONS ON FIDUCIARY LIABILITY. Nothing in this Plan shall be construed
to prevent any Fiduciary from receiving any benefit to which he may be
entitled as a Participant or Beneficiary in this Plan, so long as the
benefit is computed and paid on a basis which is consistent with the terms
of this Plan as applied to all other Participants and Beneficiaries. Nor
shall this Plan be interpreted to prevent any Fiduciary from receiving any
reasonable compensation for services rendered, or for the reimbursement of
expenses properly and actually incurred in the performance of his duties
with the Plan; except that no Person so serving who already receives full-
time pay from an Employer shall receive compensation from this Plan, except
for reimbursement of expenses properly and actually incurred.
11.4 INVESTMENT MANAGER. When an Investment Manager has been appointed he, is
required to acknowledge in writing that he has undertaken a Fiduciary
responsibility with respect to the Plan.
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ARTICLE XII
THE ADMINISTRATOR
12.1 DESIGNATION AND ACCEPTANCE. The Employer shall designate a person or
persons to serve as Administrator under the Plan and such person, by
joining in the execution of this Plan and Trust Agreement accepts such
appointment and agrees to act in accordance with the terms of the Plan.
12.2 DUTIES AND AUTHORITY. The Administrator shall administer the Plan in a
nondiscriminatory manner for the exclusive benefit of Participants and
their Beneficiaries.
The Administrator shall perform all such duties as are necessary to
operate, administer, and manage the Plan in accordance with the terms
thereof, including but not limited to the following:
(A) To determine all questions relating to a Participant's coverage under
the Plan;
(B) To maintain all necessary records for the administration of the Plan;
(C) To compute and authorize the payment of retirement income and other
benefit payments to eligible Participants and Beneficiaries;
(D) To interpret and construe the provisions of the Plan and to make
regulations which are not inconsistent with the terms thereof; and
(E) To advise or assist Participants regarding any rights, benefits, or
elections available under the Plan.
The Administrator shall take all such actions as are necessary to operate,
administer, and manage the Plan as a retirement program which is at all
times in full compliance with any law or regulation affecting this Plan.
The Administrator may allocate certain specified duties of plan
administration to an individual or group of individuals who, with respect
to such duties, shall have all reasonable powers necessary or appropriate
to accomplish them.
12.3 EXPENSES AND COMPENSATION. All expenses of administration may be paid out
of the Trust fund unless paid by the Employer. Such expenses shall include
any expenses incident to the functioning of the Administrator, including,
but not limited to, fees of accountants, counsel, and other specialists and
their agents, and other costs of administering the Plan. Until paid, the
expenses shall constitute a liability of the Trust fund. However, the
Employer may reimburse the Trust fund for any administration expense
incurred. Any administration expense paid to the Trust fund as a
reimbursement shall not be considered an Employer Contribution. Nothing
shall prevent the Administrator from receiving reasonable compensation for
services rendered in administering this Plan, unless the Administrator
already receives full-time pay from any Employer adopting the Plan.
12.4 INFORMATION FROM EMPLOYER. To enable the Administrator to perform his
functions, the
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Employer shall supply full and timely information to the Administrator on
all matters relating to this Plan as the Administrator may require.
12.5 ADMINISTRATIVE COMMITTEE; MULTIPLE SIGNATURES. In the event that more than
one person has been duly nominated to serve on the Administrative Committee
and has signified in writing the acceptance of such designation, the
signature(s) of one or more persons may be accepted by an interested party
as conclusive evidence that the Administrative Committee has duly
authorized the action therein set forth and as representing the will of and
binding upon the whole Administrative Committee. 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 Plan and Trust. The Administrative Committee shall act by a
majority of its members at the time in office and such action may be taken
either by a vote at a meeting or in writing without a meeting.
12.6 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. The Administrator, or
any member of the Administrative Committee, may resign at any time by
delivering to the Employer a written notice of resignation, to take effect
at a date specified therein, which shall not be less than 30 days after the
delivery thereof, unless such notice shall be waived.
The Administrator may be removed with or without cause by the Employer by
delivery of written notice of removal, to take effect at a date specified
therein, which shall be not less than 30 days after delivery thereof,
unless such notice shall be waived.
The Employer, upon receipt of or giving notice of the resignation or
removal of the Administrator, shall promptly designate a successor
Administrator who must signify acceptance of this position in writing. In
the event no successor is appointed, the Board of Directors of the Employer
will function as the Administrative Committee until a new Administrator has
been appointed and has accepted such appointment.
12.7 INVESTMENT MANAGER. The Administrator may appoint, in writing, an
Investment Manager or Managers to whom is delegated the authority to
manage, acquire, invest, or dispose of all or any part of the Trust assets.
With regard to the assets entrusted to his care, the Investment Manager
shall provide written instructions and directions to the Trustee, who shall
in turn be entitled to rely upon such written direction. This appointment
and delegation shall be evidenced by a signed written agreement.
12.8 DELEGATION OF DUTIES. The Administrator shall have the power, to the extent
permitted by law, to delegate the performance of such Fiduciary and non-
Fiduciary duties, responsibilities, and functions as the Administrator
shall deem advisable for the proper management and administration of the
Plan in the best interests of the Participants and their Beneficiaries.
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ARTICLE XIII
PARTICIPANTS' RIGHTS
13.1 GENERAL RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Plan is established
and the Trust assets are held for the exclusive purpose of providing
benefits for such Employees and their Beneficiaries as have qualified to
participate under the terms of the Plan.
13.2 FILING A CLAIM FOR BENEFITS. A Participant or Beneficiary or the Employer
acting in his behalf, shall notify the Administrator of a claim of
benefits under the Plan. Such request shall be in writing 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
Participant or Beneficiary may be entitled under the terms of the Plan.
A decision by the Administrator shall be made promptly and not later than
90 days after the Administrator's receipt of the claim of benefits under
the Plan, unless special circumstances require an extension of the time
for processing, in which case a decision shall be rendered as soon as
possible, but not later than 180 days after the initial receipt of the
claim of benefits.
13.3 DENIAL OF CLAIM. Whenever a claim for benefits by any Participant or
Beneficiary has been denied by a Plan Administrator, a written notice,
prepared in a manner calculated to be understood by the Participant, must
be provided, setting forth (1) the specific reasons for the denial; (2)
the specific reference to pertinent Plan provisions on which the denial is
based; (3) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and (4) an explanation of the
Plan's claim review procedure.
13.4 REMEDIES AVAILABLE TO PARTICIPANTS. A Participant or Beneficiary may (1)
request a review by a Named Fiduciary, other than the Administrator, upon
written application to the Plan; (2) review pertinent Plan documents; and
(3) submit issues and comments in writing to a Named Fiduciary. A
Participant or Beneficiary shall have 60 days after receipt by the
claimant of written notification of a denial of a claim to request a
review of a denied claim.
A decision by a Named Fiduciary shall be made promptly and not later than
60 days after the Named Fiduciary's receipt of a request for review,
unless special circumstances require an extension of the time for
processing, in which case a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of a request for
review. The decision on review by a Named Fiduciary shall be in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to
the pertinent Plan provisions on which the decision is based.
A Participant or Beneficiary shall be entitled, either in his own name or
in conjunction with any other interested parties, to bring such actions in
law or equity or to undertake such administrative actions or to seek such
relief as may be necessary or appropriate to compel the disclosure of any
required information, to enforce or protect his rights, to recover present
benefits due to him, or to clarify his rights to future benefits under the
Plan.
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13.5 REINSTATEMENT OF BENEFIT. In the event any portion of a distribution
which is payable to a Participant or a Beneficiary shall remain unpaid on
account of the inability of the Plan Administrator, after diligent effort,
to locate such Participant or Beneficiary, the amount so distributable
shall be treated as a Forfeiture under the Plan. If a claim is made by
the Participant or Beneficiary for any benefit forfeited under this
section, such benefit shall be reinstated.
13.6 LIMITATION OF RIGHTS. Participation hereunder shall not grant any
Participant the right to be retained in the Service of the Employer or any
other rights or interest in the Plan or Trust fund other than those
specifically herein set forth.
13.7 PARTICIPANT CONTRIBUTIONS. Each Participant, regardless of his length of
Service with the Employer, shall be fully vested (100%) at all times in
any portion of his Participant's Account attributable to the following:
. Employee Contributions
. Rollover Contributions.
13.8 MERGERS OR TRANSFERS. In the case of any merger or consolidation with or
transfer of assets or liabilities to any other qualified plan after
September 2, 1974, the following conditions must be met:
(A) The sum of the account balances in each plan shall equal the fair
market value (determined as of the date of the merger or transfer as
if the plans had then terminated) of the entire plan assets.
(B) The assets of each plan shall be combined to form the assets of the
plan as merged (or transferred).
(C) Immediately after the merger (or transfer), each Participant in the
plan merged (or transferred) shall have an account balance equal to
the sum of the account balances the Participant had in the plans
immediately prior to the merger (or transfer).
(D) Immediately after the merger (or transfer) each Participant in the
plan merged (or transferred) shall be entitled to the same optional
benefit forms as he was entitled to immediately prior to the merger
(or transfer).
In the case of any merger or consolidation with or transfer of assets or
liabilities to any defined benefit plan after September 2, 1974, one of
the plans before such merger, consolidation, or transfer shall be
converted into the other type of plan and either the rules described
above, applicable to the merger of two defined contribution plans, or the
rules applicable to the merger of two defined benefit plans, as
appropriate, shall be applied.
13.9 PARTICIPANT'S ACCOUNT AND VALUATION. A Participant's Account shall be
maintained on behalf of each Participant until such account is distributed
in accordance with the terms of this Plan. At least once per year, as of
the last day of the Plan Year, each Participant's Account shall be
adjusted for any earnings, gains, losses, contributions, withdrawals,
loans, and expenses, attributable to such Plan Year, in order to obtain a
new valuation of the Participant's Account.
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13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant and/or Beneficiary shall
have the exclusive authority to direct the investment of contributions
made to his Participant's Account. In accordance with the procedures
established by the Plan Administrator, the Participant and/or Beneficiary
shall elect to have a specified percentage invested in one or more
investment funds, as long as the designated percentage for each fund is a
whole number, and the sum of the percentages allocated is equal to 100%.
In addition, the Participant and/or Beneficiary may change such election
at any time. All investment changes are subject to the rules of the
investment fund(s) in which the Participant's Account is or is to be
invested.
13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant and/or Beneficiary may
designate amounts invested pursuant to the section above to be transferred
between the investment funds once every 30 days in accordance with the
procedures established by the Plan Administrator.
Notwithstanding the above, the transfer of amounts between investment
funds shall be subject to the rules of the investment funds in which the
Participant's Account is invested or is to be invested.
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ARTICLE XIV
AMENDMENT OR TERMINATION OF THE PLAN
14.1 AMENDMENT OF PLAN. The Employer shall have the right from time to time to
modify or amend, in whole or in part, any or all provisions of the Plan,
provided that a Board of Directors' resolution pursuant to such
modification or amendment shall first be adopted and provided further that
the modification or amendment is signed by the Employer, the Administrator
and the Trustee. Upon any such modification or amendment the Administrator
and the Trustee shall be furnished a copy thereof. No amendment shall
deprive any Participant or Beneficiary of any Vested Interest hereunder.
Any Participant having not less than three Years of Service shall be
permitted to elect, in writing, to have his Vesting Percentage computed
under the Plan without regard to such amendment.
The period during which the election must be made by the Participant shall
begin no later than the date the Plan Amendment is adopted and end no later
than after the latest of the following dates:
(A) The date which is 60 days after the day the amendment is adopted; or
(B) The date which is 60 days after the day the amendment becomes
effective; or
(C) The date which is 60 days after the day the Participant is issued
written notice of the amendment by the Employer or Administrator.
Such written election by a Participant shall be made to the Administrator.
No amendment to the Plan shall decrease a Participant's Account balance or
eliminate an optional form of distribution. Notwithstanding the preceding
sentence, a Participant's Account balance may be reduced to the extent
permitted under Internal Revenue Code section 412(c)(8). Furthermore, no
amendment to the Plan shall have the effect of decreasing a Participant's
Vested Interest determined without regard to such amendment as of the later
of the date such amendment is adopted or the date it becomes effective.
14.2 CONDITIONS OF AMENDMENT. The Employer shall not make any amendment which
would cause the Plan to lose its status as a qualified plan within the
meaning of section 401(a) of the Code.
14.3 TERMINATION OF THE PLAN. The Employer intends to continue the Plan
indefinitely for the benefit of its Employees, but reserves the right to
terminate the Plan at any time by resolution of its Board of Directors.
Upon such termination, the liability of the Employer to make contributions
hereunder shall terminate.
14.4 FULL VESTING. Upon the termination or partial termination of the Plan, or
upon complete discontinuance of Employer contributions, the rights of all
affected Participants in and to the amounts credited to each such
Participant's Account shall be 100% vested and nonforfeitable.
14.5 DISTRIBUTIONS UPON PLAN TERMINATION. If this Plan is terminated and the
Employer does not maintain or establish another defined contribution plan,
pursuant to Code section 401(k)(10)(A)(i),
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each Participant shall receive a total distribution, in the form of a lump-
sum distribution as defined in Code section 401(k)(10)(B)(ii), of his
Participant's Account in accordance with the terms and conditions of
Article VI.
However, if this Plan is terminated and the Employer does maintain or
establish another defined contribution plan as discussed in the above
paragraph, or if the Plan is only partially terminated, each Participant
shall receive a total distribution of his Participant's Account, excluding
any amounts attributable to Elective Deferral Contributions and
contributions made by the Employer designated as 401(k) contributions in
accordance with the terms and conditions of Article VI. In such a
situation, any amounts in a Participant's Account attributable to Elective
Deferral Contributions and contributions made by the Employer designated as
401(k) contributions may be distributed only upon the occurrence of an
event described in Article VI.
No Participant and/or spousal consent will be required for a distribution
where no successor plan exists. However, if the Employer does maintain a
successor plan, Participant and/or spousal consent is required for a
distribution exceeding $3,500. The Participant's Account will be
transferred to such successor plan if the required consents are not
received.
14.6 APPLICATION OF FORFEITURES. Upon the termination of the Plan, any
Forfeitures which have not been applied as of such termination to reduce
the contribution made by the Employer shall be credited on a pro rata basis
to the Participant's Account of the then Active Participants in the same
manner as the last contribution made by the Employer under the Plan.
14.7 APPROVAL BY THE INTERNAL REVENUE SERVICE. Notwithstanding any other
provisions of this Plan, the Employer's adoption of this Plan is subject to
the condition precedent that the Employer's Plan shall be approved and
qualified by the Internal Revenue Service as meeting the requirements of
section 401(a) of the Internal Revenue Code and that the Trust established
hereunder shall be entitled to exemption under the provisions of section
501(a). In the event the Plan initially fails to qualify and the Internal
Revenue Service issues a final ruling that the Employer's Plan or Trust
fails to so qualify as of the Effective Date, all liability of the Employer
to make further contributions hereunder shall cease. The Plan
Administrator, Trustee and any other Named Fiduciary shall be notified
immediately by the Employer, in writing, of such failure to qualify. Upon
such notification, the value of the Participants' Accounts shall be
distributed in cash to the Employer, subject to the terms and conditions of
Article VI.
That portion of such distribution which is attributable to Participant
Contributions as specified in Section 13.7, if any, shall be paid to the
Participant, and the balance of such distribution shall be paid to the
Employer.
14.8 SUBSEQUENT UNFAVORABLE DETERMINATION. If the Employer is notified
subsequent to initial favorable qualification that the Plan is no longer
qualified within the meaning of section 401(a) of the Internal Revenue
Code, or that the Trust is no longer entitled to exemption under the
provisions of section 501(a), and if the Employer shall fail within a
reasonable time to make any necessary changes in order that the Plan and/or
Trust shall so qualify, the Participants' Accounts shall be fully vested
and nonforfeitable and shall be disposed of as if the Plan had terminated,
in the manner set forth in this Article XIV.
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ARTICLE XV
SUBSTITUTION OF PLANS
15.1 SUBSTITUTION OF PLANS. Subject to the provisions of Section 13.8 the
Employer may substitute an individually designed plan or a master or
prototype plan for this Plan without terminating this Plan as embodied
herein and this shall be deemed to constitute an amendment and restatement
in its entirety of this Plan as heretofore adopted by the Employer;
provided, however, that the Employer shall have certified to the Trustee
that this Plan is being continued on a restated basis which meets the
requirements of section 401(a) of the Internal Revenue Code and ERISA.
15.2 TRANSFER OF ASSETS. Upon 90 days' written notification from he the Employer
and the Trustee that a different plan meeting the requirements set forth in
Section 15.1 above has been executed and entered into by the Administrator
and the Employer, and after the Trustee has been furnished the Employer's
certification in writing that the Employer intends to continue the Plan as
a qualified Plan under section 401(a) of the Internal Revenue Code and
ERISA, assets which represent the value of all Participant's Accounts may
be transferred in accordance with the instructions received from or on
behalf of the Employer. The Trustee may rely fully on the representations
or directions of the Employer with respect to any such transfer and shall
be fully protected and discharged with respect to any such transfer made in
accordance with such representations, instructions, or directions.
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ARTICLE XVI
MISCELLANEOUS
16.1 NON-REVERSION. This Plan has been established by the Employer for the
exclusive benefit of the Participants and their Beneficiaries. Except as
otherwise provided in Sections 14.7, 16.7, and 16.8, under no circumstances
shall any funds contributed hereunder, at any time, revert to or be used by
the Employer, nor shall any such funds or assets of any kind be used other
than for the benefit of the Participants or their Beneficiaries.
16.2 GENDER AND NUMBER. When necessary to the meaning hereof, and except when
otherwise indicated by the context, either the masculine or the neuter
pronoun shall be deemed to include the masculine, the feminine, and the
neuter, and the singular shall be deemed to include the plural.
16.3 REFERENCE TO THE CODE AND ERISA. Any reference to any section of the
Internal Revenue Code, ERISA, or to any other statute or law shall be
deemed to include any successor law of similar import.
16.4 GOVERNING LAW. The Plan and Trust shall be governed and construed in
accordance with the laws of the state where the Trustee has its principal
office if the Trustee is a corporation or an association, otherwise under
the laws of the state where the Employer has its principal office.
16.5 COMPLIANCE WITH THE CODE AND ERISA. This Plan is intended to comply with
all requirements for qualification under the Internal Revenue Code and
ERISA, and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one
construction, such ambiguity shall be resolved in favor of that
interpretation or construction which is consistent with the Plan being so
qualified. If any provision of the Plan is held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions,
and this Plan shall be construed and enforced as if such provision had not
been included.
16.6 NON-ALIENATION. It is a condition of the Plan, and all rights of each
Participant shall be subject thereto, that no right or interest of any
Participant in the Plan shall be assignable or transferable in whole or in
part, either directly or by operation of law or otherwise, including, but
without limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner, and no right or interest of any
Participant in the Plan shall be liable for or subject to any obligation or
liability of such Participant. The preceding sentence shall not preclude
the enforcement of a federal tax levy made pursuant to section 6331 of the
Code or the collection by the United States on a judgement resulting from
an unpaid tax assessment.
16.7 CONTRIBUTION RECAPTURE. Notwithstanding any other provisions of this Plan,
(1) in the case of a contribution which is made by an Employer by a mistake
of fact, Section 16.1 shall not prohibit the return of such contribution to
the Employer within one year after the payment of the contribution, and (2)
if a contribution is conditioned upon the deductibility of the contribution
under section 404 of the Code, then, to the extent the deduction is
disallowed, Section 16.1 shall not prohibit the return to the Employer of
such contribution (to the extent disallowed) within one year after the
disallowance of the deduction. The amount which may be returned to the
Employer is the excess of (1) the amount
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contributed over (2) the amount that would have been contributed had there
not occurred a mistake of fact or a mistake in determining the deduction.
Earnings attributable to the excess contribution may not be returned to the
Employer, but losses attributable thereto must reduce the amount to be so
returned. Furthermore, if the withdrawal of the amount attributable to the
mistaken contribution would cause the balance of the individual account of
any Participant to be reduced to less than the balance which would have
been in the account had the mistaken amount not been contributed, then the
amount to be returned to the Employer would have to be limited so as to
avoid such reduction.
16.8 QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any other provisions
of this Plan, the Participant's Account may be segregated and distributed
pursuant to a Qualified Domestic Relations Order within the meaning of
Internal Revenue Code section 414(p). The Plan Administrator shall
establish procedures for determining if a Domestic Relations Order is
qualified within the meaning of section 414(p).
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ARTICLE XVI-A
TOP-HEAVY PROVISIONS
16A.1 DEFINITIONS. The following definitions are atypical terms used only in
this Article XVI-A.
(A) Compensation. The term Compensation, whenever used in this Article
XVI-A, means Compensation as defined in Article V of the Plan, but
includes the amount of any elective contributions made by the
Employer on the Employee's behalf to a cafeteria plan established in
accordance with the provisions of Code section 125, a qualified cash
or deferred arrangement in accordance with the provisions of Code
section 402(e)(3), a simplified employee pension plan in accordance
with the provisions of Code section 402(h), or a tax sheltered
annuity plan maintained in accordance with the provisions of Code
section 403(b).
(B) Key Employee. The term Key Employee means any Employee or former
Employee (including deceased Employees) of the Employer who at any
time during the Plan Year or the four preceding Plan Years was:
(1) An officer of the Employer, but in no event if there are more
than 500 Employees, shall more than 50 Employees be considered
Key Employees. If there are less than 500 Employees, in no
event shall the greater of three Employees or 10% of all
Employees, be taken into account under this Subsection as Key
Employees. If the number of officers is limited by the terms of
the preceding sentence, the Employees with the highest
Compensation will be considered to be officers.
In no event shall an officer whose annual Compensation is less
than 50% of the dollar limitation in effect under Code section
415(b)(1)(A) as adjusted from time to time, be a Key Employee
for any such Plan Year.
In making a determination under this Subsection, Employees who
have not completed six months of Service by the end of the
applicable Plan Year, Employees who normally work less than
17-1/2 hours per week, Employees who normally work less than six
months during a year, Employees who have not attained 21, and
nonresident aliens who receive no earned income from U.S.
sources, shall be excluded.
Also excluded under the above paragraph are Employees who are
covered by an agreement which the Secretary of Labor finds to be
a collective bargaining agreement. Such Employees will be
excluded only if retirement benefits were the subject of good
faith bargaining, 90% of the Employees of the Employer are
covered by the agreement, and the Plan covers only Employees who
are not covered by the agreement.
(2) One of the 10 Employees who has annual Compensation greater than
the amount in effect under Internal Revenue Code section
415(c)(1)(A) and who owns (or is considered to own within the
meaning of Internal Revenue Code section 318, as modified by
section 416(i)(1)(B)(iii)) both more than 1/2% interest and the
largest
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interest in the Employer. If two or more Employees own equal
interests in the Employer, the ranking of ownership share will
be in descending order of such Employees' Compensation. If the
Employer is other than a corporation, the term "interest" as
used herein shall refer to capital or profits interest.
(3) An Employee who owns (or is considered to own within the meaning
of Internal Revenue Code section 318, as modified by section
416(i)(1)(B)(iii)) more than 5% of the outstanding stock of the
Employer or stock possessing more than 5% of the total combined
voting power of all stock of the Employer. If the Employer is
other than a corporation, an Employee who owns, or is considered
to own, more than 5% of the capital or profits interest in the
Employer. The determination of 5% ownership shall be made
separately for each member of a controlled group of corporations
(as defined in Code section 414(b)), or of a group of trades or
businesses (whether or not incorporated) that are under common
control (as defined in Code section 414(c)), or of an affiliated
service group (as defined in Code section 414(m)).
(4) An Employee who owns (or is considered to own within the meaning
of Internal Revenue Code section 318, as modified by section
416(i)(1)(B)(iii)) more than 1% of the outstanding stock of the
Employer or stock possessing more than 1% of the total combined
voting power of all stock of the Employer, and whose annual
Compensation is more than $150,000. If the Employer is other
than a corporation, an Employee who owns, or is considered to
own, more than 1% of the capital or profits interest in the
Employer, and whose annual Compensation is more than $150,000.
For the purposes of paragraphs (2), (3) and (4) above, if an
Employee's ownership interest changes during a given Plan Year, his
ownership interest for that Plan Year is the largest interest owned
at any time during the Plan Year.
The Beneficiary of any deceased Employee who was a Key Employee shall
be considered a Key Employee for the same period as the deceased
Employee would have been so considered.
(C) Non-Key Employee. The term Non-Key Employee means any Employee or
former Employee of the Employer who is not a Key Employee. The
Beneficiary of any deceased Employee who is a Non-Key Employee shall
be considered a Non-Key Employee for the same period as the deceased
Employee would have been so considered.
(D) Determination Date. The term Determination Date means, with respect
to a Plan Year, the last day of the preceding Plan Year, or, in the
case of the first Plan Year of a plan, the last day of the first Plan
Year.
(E) Valuation Date. The term Valuation Date means, with respect to a
Plan Year, the last day of the preceding Plan Year and is the date on
which Account Balances are valued for the purpose of determining the
Plan's Top-Heavy status.
(F) Account Balance. The term Account Balance means the value of the
Participant's Account standing to the credit of a Participant, a
former Participant, or the Beneficiary of a former Participant, as
the case may be, as of the Valuation Date. Such Account Balance
shall include any contributions due as of the Determination Date and
all distributions made to the Participant (or former Participant or
Beneficiary, as the case may be) during the Plan Year or
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the preceding four Plan Years, except for distributions of Related
Rollovers. However, the Account Balance shall not include any
deductible Employee Contributions made pursuant to Internal Revenue
Code section 219 or Unrelated Rollovers made to the Plan after
December 31, 1983.
A Related Rollover is a Rollover Contribution or Transfer that either
was not initiated by the Employee or was made to a plan maintained by
the same Employer.
An Unrelated Rollover is a Rollover Contribution or Transfer that was
initiated by the Employee and was made from a plan maintained by one
employer to a plan maintained by another employer.
For purposes of this Subsection (F), the term Employer shall include
all employers that are required to be aggregated in accordance with
Internal Revenue Code sections 414(b), (c) or (m).
(G) Required Aggregation Group. The term Required Aggregation Group
means all of the plans of the Employer which cover a Key Employee,
including any such plan maintained by the Employer pursuant to the
terms of a collective bargaining agreement, and each other plan of
the Employer which enables any plan in which a Key Employee
participates to satisfy the requirements of Internal Revenue Code
sections 401(a)(4) or 410.
(H) Permissive Aggregation Group. The term Permissive Aggregation Group
means all of the plans of the Employer which are included in the
Required Aggregation Group plus any plans of the Employer which
provide comparable benefits to the benefits provided by the plans in
the Required Aggregation Group and are not included in the Required
Aggregation Group, but which satisfy the requirements of Internal
Revenue Code sections 401(a)(4) and 410 when considered together with
the Required Aggregation Group, including any plan maintained by the
Employer pursuant to a collective bargaining agreement which does not
include a Key Employee.
(I) Top-Heavy Plan. The Plan is Top-Heavy if it meets the requirements
of Section 16A.2.
(J) Super Top-Heavy Plan. The Plan is Super Top-Heavy if it meets the
requirements of Section 16A.3.
(K) Terminated Plan. A plan shall be considered to be a Terminated Plan
if it:
(1) has been formally terminated;
(2) has ceased crediting service for benefit accruals and vesting;
or
(3) has been or is distributing all plan assets to Participants (or
Beneficiaries) as soon as administratively possible.
With the exception of the Minimum Employer Contribution Requirements
and the Minimum Vesting Requirements, the Top-Heavy provisions of
this Article XVI-A will apply to any Terminated Plan which was
maintained at any time during the five years ending on the
Determination Date.
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(L) Frozen Plan. A plan shall be considered to be a Frozen Plan if all
benefit accruals have ceased but all assets have not been distributed
to Participants or Beneficiaries. The Top-Heavy provisions of this
Article XVI-A will apply to any such Frozen Plan.
16A.2 TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Top-Heavy if,
as of the Determination Date, the aggregate of the Account Balances of Key
Employees exceeds 60% of the aggregate of the Account Balances of all
Employees covered by the Plan. The determination of whether the Plan is
Top-Heavy shall be made after aggregating all plans in the Required
Aggregation Group, and after aggregating any other plans which are in the
Permissive Aggregation Group, if such permissive aggregation thereby
eliminates the Top-Heavy status of any plan within such Required
Aggregation Group.
In determining whether this Plan is Top-Heavy, the Account Balance of a
former Key Employee who is now a Non-Key Employee will be disregarded.
Likewise, for Plan Years beginning after December 31, 1984, the Account
Balance of any Employee who has not performed an Hour of Service during
the five-year period ending on the Determination Date will be excluded.
16A.3 SUPER TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Super
Top-Heavy if, as of the Determination Date, the Plan would meet the test
specified in Section 16A.2 above, if 90% were substituted for 60% in each
place where it appears. The Plan may be permissively aggregated in order
to avoid being Super Top-Heavy.
16A.4 TOP-HEAVY REQUIREMENTS. Notwithstanding anything in the Plan to the
contrary, if the Plan is Top-Heavy with respect to any Plan Year beginning
after December 31, 1983, then the Plan shall meet the following
requirements for such Plan Year:
(A) Compensation Limit. The annual Compensation of each Participant
taken into account under the Plan shall not exceed $200,000; however,
such dollar limitation shall be adjusted to take into account any
adjustments made by the Secretary of the Treasury or his delegate
pursuant to Internal Revenue Code section 416(d)(2).
(B) Minimum Employer Contribution Requirements. A Minimum Employer
Contribution of 3% of each Eligible Employee's Compensation will be
made on behalf of each Eligible Employee in the Plan.
If the actual Employer Contribution made or required to be made for
Key Employees is less than 3%, the Minimum Employer Contribution
required hereunder shall not exceed the percentage contribution made
for the Key Employee for whom the percentage of Employer
Contributions and Forfeitures relative to the first $200,000 of
Compensation is the highest for the Plan Year after taking into
account contributions or benefits under other qualified plans in the
Plan's Required Aggregation Group.
However, if a Participant in this Plan is also a participant in a
defined benefit plan maintained by the Employer, such Participant
shall receive the Top-Heavy minimum benefit under the defined benefit
plan in lieu of the Minimum Employer Contribution described herein.
Such minimum benefit will be equal to the Participant's average
yearly Compensation during his five highest-paid consecutive years,
multiplied by the lesser of 2% per Year of Service or 20%.
Compensation periods and Years of Service to be taken into account in
the calculation
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of this benefit shall be subject to any limitations set forth in the
defined benefit plan.
For any Limitation Year in which this Plan is Top-Heavy but not Super
Top-Heavy, the Minimum Employer Contribution shall be increased to 4%
of each Eligible Employee's Compensation in order to preserve the use
of the factor 1.25 in the denominators of the fractions described in
Section 5.4 (B) (1) and Section 5.4 (D) (1). A Participant who
receives the Top-Heavy minimum benefit in lieu of the Minimum
Employer Contribution shall receive an increased minimum benefit
equal to the Participant's average yearly Compensation during his
five highest-paid consecutive years, multiplied by the lesser of 3%
per Year of Service or 20% plus one percentage point (to a maximum of
10 percentage points) for each year that this Plan is maintained.
Compensation periods and Years of Service to be taken into account in
the calculation of this increased minimum benefit shall be subject to
any limitations set forth in the defined benefit plan.
For any Limitation Year in which this Plan is Super Top-Heavy, the
factor of 1.25 in the denominators of the fractions described in
Sections 5.4 (B) (1) and 5.4 (D) (1) shall be reduced to 1.0. The
Minimum Employer Contribution payable in such years shall be 3% of
each Eligible Employee's Compensation and the defined benefit Top-
Heavy minimum benefit shall be average Compensation multiplied by the
lesser of 2% per Year of Service or 20%.
Eligible Employees are all Non-Key Employees who are Participants in
the Plan as of the last day of the Plan Year regardless of whether
they had completed 1,000 Hours of Service during the Plan Year. Also
included are Non-Key Employees who would have been Participants as of
the last day of the Plan Year except:
. The Employee's Compensation was below a required minimum level;
or
. The Employee chose not to make Elective Deferral Contributions
when he was eligible to do so.
Elective Deferral Contributions and Matching Contributions made to
Key Employees shall be taken into account as Employer Contributions
allocated to such Key Employees when determining whether a lower
Minimum Employer Contribution is permissible for purposes of this
section. However, Elective Deferral Contributions made by Non-Key
Employees shall not be used towards satisfying the Minimum Employer
Contribution required to be allocated to Non-Key Employees pursuant
to this section.
Matching Contributions made on behalf of Non-Key Employees may, at
the option of the Employer, be used to satisfy the Minimum Employer
Contribution requirement. However, for Plan Years beginning after
December 31, 1988, to the extent that Matching Contributions are
used for this purpose, they shall not be used to satisfy the Actual
Contribution Percentage Test.
(C) Minimum Vesting Requirements. The vesting provisions set forth in
the definition of Vesting Percentage in Article I shall continue to
apply whether or not the Plan is a Top-Heavy Plan. Such vesting
provisions satisfy the requirements of section 416(b) of the Internal
Revenue Code, as applicable to Top Heavy-Plans.
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ARTICLE XVII
TRUST AGREEMENT
17.1 CREATION AND ACCEPTANCE OF TRUST. The Trustee, by joining in the execution
of the Plan and trust agreement, accepts the Trust hereby created and
agrees to act in accordance with the express terms and conditions herein
stated.
17.2 TRUSTEE CAPACITY; CO-TRUSTEES. The Trustee may be a bank, trust company or
other corporation possessing trust powers under applicable state or federal
law or one or more individuals or any combination thereof.
When two or more persons serve as Trustee, they are specifically
authorized, by a written agreement between themselves, to allocate specific
responsibilities, obligations or duties among themselves. An original copy
of such written agreement is to be delivered to the Administrator.
17.3 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE. Any Trustee may
resign at any time by delivering to the Administrator a written notice of
resignation, to take effect at a date specified therein, which shall not be
less than 30 days after the delivery thereof, unless such notice shall be
waived.
The Trustee may be removed with or without cause by the Board of Directors
by delivery of a written notice of removal, to take effect at a date
specified therein, which shall not be less than 30 days after delivery
thereof, unless such notice shall be waived.
In the case of the resignation or removal of a Trustee, the Trustee shall
have the right to a settlement of its account, which may be made, at the
option of the Trustee, either (1) by judicial settlement in an action
instituted by the Trustee in a court of competent jurisdiction, or (2) by
written agreement of settlement between the Trustee and the Administrator.
Upon such settlement, all right, title and interest of such Trustee in the
assets of the Trust and all rights and privileges under this Agreement
theretofore vested in such Trustee shall vest in the successor Trustee, and
thereupon all future liability of such Trustee shall terminate; provided,
however, that the Trustee shall execute, acknowledge and deliver all
documents and written instruments which are necessary to transfer and
convey the right, title and interest in the Trust assets, and all rights
and privileges to the successor Trustee.
The Board of Directors, upon receipt of notice of the resignation or
removal of the Trustee, shall promptly designate a successor Trustee, whose
appointment is subject to acceptance of this Trust in writing and shall
notify in writing the insurance company of such successor Trustee.
17.4 TAXES, EXPENSES AND COMPENSATION OF TRUSTEE. The Trustee shall deduct from
and charge against the Trust fund any taxes paid by it which may be imposed
upon the Trust fund or the income thereof or which the Trustee is required
to pay with respect to the interest of any person therein.
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The Trustee shall be paid such reasonable compensation as shall from time
to time be agreed upon in writing by the Employer and the Trustee. An
individual serving as Trustee who already receives full-time pay from the
Employer shall not receive compensation from the Plan. In addition, the
Trustee shall be reimbursed for any reasonable expenses, including
reasonable counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid from the Trust fund unless paid or advanced by the
Employer.
17.5 TRUSTEE ENTITLED TO CONSULTATION. The Trustee shall be entitled to advice
of counsel, which may be counsel for the Plan or the Employer, in any case
in which the Trustee shall deem such advice necessary. With the exception
of those powers and duties specifically allocated to the Trustee by the
express terms of this Plan, it shall not be the responsibility of the
Trustee to interpret the terms of the Plan or Trust and the Trustee may
request, and is entitled to receive guidance and written direction from the
Administrator on any point requiring construction or interpretation of the
Plan documents.
17.6 RIGHTS, POWERS AND DUTIES OF TRUSTEE. The Trustee shall have the following
rights, powers, and duties:
(A) The Trustee shall be responsible for the safekeeping and administering
of the assets of this Plan and Trust in accordance with the provisions
of this Agreement and any amendments thereto. The duties of the
Trustee under this Agreement shall be determined solely by the express
provisions of this Agreement and no further duties or responsibility
shall be implied. Subject to the terms of this Plan and Trust, the
Trustee shall be fully protected and shall incur no liability in
acting in reliance upon the written instructions or directions of the
Administrator or a duly designated Investment Manager or any other
Named Fiduciary.
(B) The Trustee shall have all powers necessary or convenient for the
orderly and efficient performance of its duties hereunder, including
but not limited to those specified in this section. The Trustee may
appoint one or more administrative agents or contract for the
performance of such administrative and service functions as it may
deem necessary for the effective installation and operation of the
Plan and Trust.
(C) The Trustee shall have the power to collect and receive any and all
monies and other property due hereunder and to give full discharge and
acquittance therefor; to settle, compromise or submit to arbitration
any claims, debits or damages due or owing to or from the Trust; to
commence or defend suits or legal proceedings wherever, in its
judgment, any interest of the Trust requires it; and to represent the
Trust in all suits or legal proceedings in any court of law or equity
or before any other body or tribunal. It shall have the power
generally to do all acts, whether or not expressly authorized, which
the Trustee in the exercise of its Fiduciary responsibility may deem
necessary or desirable for the protection of the Trust and the assets
thereof.
(D) The Trustee may temporarily hold cash balances and shall be entitled
to deposit any such funds received in a bank account or bank accounts
in the name of the Trust in any bank or banks selected by the Trustee,
including the banking department of the Trustee, pending disposition
of such funds in accordance with the Trust. Any such deposit may be
made with or without interest.
(E) The Trustee shall deal with any assets of this Trust held or received
under this Plan only in accordance with the written directions from
the Administrator. The Trustee shall be under no
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duty to determine any facts or the propriety of any action taken or
omitted by it in good faith pursuant to instructions from the
Administrator.
(F) If the whole or any part of the Trust shall become liable for the
payment of any estate, inheritance, income or other tax which the
Trustee shall be required to pay, the Trustee shall have full power
and authority to pay such tax out of any monies or other property in
its hands for the account of the person whose interest hereunder is so
liable. Prior to making any payment, the Trustee may require such
releases or other documents from any lawful taxing authority as it
shall deem necessary. The Trustee shall not be liable for any
nonpayment of tax when it distributes an interest hereunder on
instructions from the Administrator.
(G) The Trustee shall keep a full, accurate and detailed record of all
transactions of the Trust which the Administrator shall have the right
to examine at any time during the Trustee's regular business hours.
Following the close of the fiscal year of the Trust, or as soon as
practical thereafter, the Trustee shall furnish the Administrator with
a statement of account. This account shall set forth all receipts,
disbursements and other transactions effected by the Trustee during
said year.
The Administrator shall promptly notify the Trustee in writing of its
approval or disapproval of the account. The Administrator's failure
to disapprove the account within 60 days after receipt shall be
considered an approval. The approval by the Administrator shall be
binding as to all matters embraced in any statement to the same extent
as if the account of the Trustee had been settled by judgment or
decree of a court of competent jurisdiction under which the Trustee,
Administrator, Employer and all persons having or claiming any
interest in the Trust were parties; provided, however, that the
Trustee may have its account judicially settled if it so desires.
(H) 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 its satisfaction or until it has received
written direction from the Administrator.
(I) Anything in this instrument to the contrary notwithstanding, it shall
be understood that the Trustee shall have no duty or responsibility
with respect to the determination of matters pertaining to the
eligibility of any Employee to become or remain a Participant
hereunder, the amount of benefit to which any Participant or
Beneficiary shall be entitled hereunder, all such responsibilities
being vested in the Administrator. The Trustee shall have no duty to
collect any contribution from the Employer and shall not be concerned
with the amount of any contribution nor the application of the
contribution formula.
17.7 EVIDENCE OF TRUSTEE ACTION. In the event that the Trustee is comprised of
two or more Trustees, then those Trustees may designate one such Trustee to
transmit all decisions of the Trustee and to sign all necessary notices and
other reports on behalf of the Trustee. All notices and other reports
bearing the signature of the individual Trustee so designated shall be
deemed to bear the signatures of all the individual Trustees and all
parties dealing with the Trustee are entitled to rely on any such notices
and other reports as authentic and as representing the action of the
Trustee.
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17.8 INVESTMENT POLICY. This Plan has been established for the sole purpose
of providing benefits to the Participants and their Beneficiaries. In
determining its investments hereunder, the Trustee shall take account of
the advice provided by the Administrator as to funding policy and the short
and long range needs of the Plan based on the evident and probable
requirements of the Plan as to the time benefits shall be payable and the
requirements therefore.
17.9 PERIOD OF TRUST. If it shall be determined that the applicable state law
requires a limitation on the period during which the Employer's Trust shall
continue, then such Trust shall not continue for a period longer than 21
years following the death of the last of those Participants including
future Participants who are living at the effective date hereof. At least
180 days prior to the end of the twenty-first year as described in the
first sentence of this Section, the Employer, the Administrator and the
Trustee shall provide for the establishment of a successor trust and
transfer of Plan assets to the successor trustee. If the applicable state
law requires no such limitation, then this Section shall not be operative.
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AMENDMENT TO
ATGI 401(k) PLAN
WHEREAS, Alpha Technologies Group, Inc. (hereinafter referred to as the
"Employer") established the ATGI, Inc. 401(k) Plan (hereinafter referred to as
the "Plan") effective November 1, 1977 for the benefit of its eligible Employees
and their Beneficiaries; and
WHEREAS, the Employer reserved the right to amend the Plan under the terms
thereof; and
WHEREAS, the Employer desires to amend the Plan by changing the Entry Dates
NOW THEREFORE, effective February 4, 1998, Section 1.27 shall be deleted in its
entirety and replaced with the following:
"1.27 ENTRY DATE. The term Entry Date means either the Effective Date or
the January 1, April 1, July 1 or October 1 thereafter when an Employee who
has fulfilled the eligibility requirements commences participation in the
Plan.
Any Employee who has satisfied the maximum eligibility requirements
permissible under ERISA, shall be eligible to commence participation in
this Plan no later than the earlier of (A) or (B) below, as applicable,
provided that the Employee has not separated from the Service of the
Employer:
(A) The first day of the first Plan Year beginning after the date on which
the Employee satisfied such requirements; or
(B) The date six months after the date on which the Employee satisfied
such requirements.
If an Employee is not in the active Service of the Employer as of his
initial Entry Date, his subsequent Entry Date shall be the date he returns
to the active Service of the Employer, provided he still meets the
eligibility requirements. If an Employee does not enroll as a Participant
as of his initial Entry Date, his subsequent Entry Date shall be the
applicable Entry Date as specified above when the Employee actually enrolls
as a Participant."
IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have
hereunto affixed their signatures.
Executed at Houston, Texas on March 10, 1998
ALPHA TECHNOLOGIES GROUP, INC.
/s/ Patricia Faller Grimes By /s/ Steve E. Chupik
---------------------------- --------------------------
Witness
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Title Vice President, Administration
----------------------------------
Accepted this 10th day of March, 1998
/s/ Patricia Faller Grimes By /s/ Trish Teed
- --------------------------- ----------------
Witness Administrator
Accepted this 10th day of March, 1998
/s/ Patricia Faller Grimes By /s/ Steve E. Chupik
- ---------------------------- ---------------------
Witness Trustee
IMPORTANT NOTE
Neither Connecticut General Life Insurance Company nor any of its employees can
provide you with legal advice in connection with the execution of this document.
Prior to execution of this document, you should consult your attorney on whether
this document is appropriate for you.
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AMENDMENT TO
ATGI 401(k) PLAN
WHEREAS, Alpha Technologies Group, Inc. (hereinafter referred to as the
"Employer) established the ATGI, Inc. 401(k) Plan (hereinafter referred to as
the "Plan") effective November 1, 1977 for the benefit of its eligible Employees
and their Beneficiaries; and
WHEREAS, the Employer reserved the right to amend the Plan under the terms
thereof; and
WHEREAS, the Employer desires to amend the Plan by changing the Plan Year.
NOW THEREFORE, effective January 1, 1998, Section 1.54 shall be deleted in its
entirety and replaced with the following:
"1.54 PLAN YEAR. The term Plan Year means the 12-month period commencing on
January 1 and ending on December 31."
IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have
hereunto affixed their signatures.
Executed at Houston, Texas on February 25, 1998
ALPHA TECHNOLOGIES GROUP, INC.
/s/Trish Teed By /s/ Steve E. Chupik
----------------- -------------------
Witness
Title Vice President, Administration
------------------------------
Accepted this 25th day of February, 1998
/s/ Johnny J. Blanchard By /s/ Trish Teed
- -------------------------- ---------------------------
Witness Administrator
Accepted this 25th day of February, 1998
/s/ Trish Teed By /s/ Steve E. Chupik
- --------------------------- --------------------------
Witness Trustee
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IMPORTANT NOTE
Neither Connecticut General Life Insurance Company nor any of its employees can
provide you with legal advice in connection with the execution of this document.
Prior to execution of this document, you should consult your attorney on whether
this document is appropriate for you.
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AMENDMENT TO
ATGI 401(k) PLAN
WHEREAS, Lockhart Industries, Inc. (hereinafter referred to as the "Prior
Employer") established the Employees' 401(k) Plan and Health/Disability Plan of
Lockhart Industries, Inc. (hereinafter referred to as the "Prior Plan") for the
benefit of its eligible Employees and Beneficiaries; and
WHEREAS, Alpha Technologies Group, Inc. (hereinafter referred to as the
"Employer") established the ATGI, Inc. 401(k) Plan (hereinafter referred to as
the "Plan") effective November 1, 1977 for the benefit of its eligible Employees
and their Beneficiaries; and
WHEREAS, the Prior Employer reserved the right to amend the Prior Plan under the
terms thereof; and
WHEREAS, the Employer and the Prior Employer now desire to merge the Prior Plan
into the ATGI 401(k) Plan; and
NOW THEREFORE, effective January 1, 1997, the Plan is amended as follows:
1. The terms of the Prior Plan as heretofore set forth shall no longer apply
with respect to Participants under the Plan who have not terminated
employment (including on account of retirement, death or disability) and
the terms of the Prior Plan with respect to such Participants shall
henceforth be as set forth in the ATGI 401(k) Plan.
2. The ATGI 401(k) Plan shall represent a continuation of the Prior Plan as
heretofore set forth and shall not abridge or curtail any rights or
privileges accorded to Participants under the Prior Plan.
3. The Employer hereby transfers the assets of the Prior Plan attributable to
Participants in the Prior Plan to Group Annuity GA 32557-001.
4. The Prior Employer does hereby adopt the Plan and agree to be bound by all
of its terms, conditions and amendments.
5. Effective January 1, 1997, Section 6.1 is amended to add cash installments
as a form of distribution.
6. Effective January 1, 1997, Section 10.1 is amended to provide that former
Employees of Lockhart Industries, Inc. may withdraw after age 59-1/2 from
their Vested Interest, including earnings, attributable to their account
balance transferred from the Prior Plan.
7. Effective January 1, 1997, Section 1.27 is amended to provide that former
Employees of Lockhart Industries, Inc. who were eligible to participate in
the Prior Plan and elected to participate as of January 1, 1997, shall be
allowed to participate in the Plan on January 1, 1997.
8. Effective January 1, 1997, Participants shall be allowed to defer
distributions up to age 70-1/2.
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9. The Plan as amended and restated, shall represent a continuation of the
Plan and Prior Plan as heretofore set forth and shall not abridge or
curtail any rights accorded to Participants under said prior instrument or
the Prior Plan.
IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have
hereunto affixed their signatures.
Executed at Houston, Texas on January 6, 1997
ALPHA TECHNOLOGIES GROUP, INC.
/s/ Tricia Teed By /s/ Steve E. Chupik
--------------- -------------------
Witness
Title V. P. Administration
--------------------
Accepted this 6th day of January, 1997
/s/ Steve E. Chupik By /s/ Tricia Teed
------------------- ---------------
Witness Administrator
Accepted this 6th day of January, 1997
/s/ Tricia Teed By /s/ Steve E. Chupik
--------------- -------------------
Witness Trustee
IMPORTANT NOTE
Neither Connecticut General Life Insurance Company nor any of its employees can
provide you with legal advice in connection with the execution of this document.
Prior to execution of this document, you should consult your attorney on whether
this document is appropriate for you.
88
<PAGE>
Exhibit 10.27
CUMMINGS PROPERTIES MANAGEMENT, INC.
STANDARD FORM
COMMERICAL LEASE 498233-SMF-A
In consideration of the covenants herein contained, Cummings Properties
Management, Inc., hereinafter called LESSOR, does hereby lease to Wakefield
Engineering, Inc., 60 Audubon Road, Wakefield, MA 01880 hereinafter called
LESSEE, the following described premises, hereinafter called the leased
premises: approximately 19,349 square feet (including 15,4% common area) at 100
Cummings Center, Suite 157H, Beverly, MA 01915 TO HAVE AND HOLD the leased
premises for a term of eight (8) years and six (6) months commencing at noon on
July 1, 1998 and ending at noon on December 31, 2006 unless sooner terminated as
herein provided. LESSOR and LESSEE now covenant and agree that the following
terms and conditions shall govern this lease during the term hereof and for such
further time as LESSEE shall hold the leased premises.
1. RENT. LESSEE shall pay to LESSOR base rent at the rate of two
hundred twenty nine thousand forty two (229,042.00) U.S. dollars per year,
drawn an a U.S. bank, payable in advance in monthly installments of $19,086.83
on the first day in each calendar month in advance, the first monthly payment to
be made upon LESSEE's execution of this lease, including payment in advance of
appropriate fractions of a monthly payment for any portion of a month at the
commencement or end of said lease term. All payments shall be made to LESSOR or
agent at 200 West Cummings Park, Woburn, Massachusetts 01801, or at such other
place as LESSOR shall from time to time in writing designate. If the "Cost of
Living" has increased as shown by the Consumer Price Index (Boston,
Massachusetts, all items, all urban consumers), U.S. Bureau of Labor Statistics,
the amount of base rent due during each calendar year of this lease and any
extensions thereof shall be annually adjusted in proportion to any increase in
the Index. All such adjustments shall take place with the rent due on January 1
of each year during the lease term. The base month from which to determine the
amount of each increase in the Index shall be January 1998, which figure shall
be compared with the figure for November 1998, and each November thereafter to
determine the percentage increase (if any) in the base rent to be paid during
the following calendar year. In the event that the Consumer Price Index as
presently computed is discontinued as a measure of "Cost of Living" changes, any
adjustment shall then be made on the basis of a comparable index then in general
use.
2. SECURITY DEPOSIT. LESSEE shall pay to LESSOR a security deposit
in the amount of nineteen thousand eighty-six and 83/100 ($19,086.83) U.S.
dollars upon the execution of this lease by LESSEE, which shall be held as
security for LESSEE's performance as herein provided and refunded to LESSEE
without interest at the end of this lease, subject to LESSEE's satisfactory
compliance with the conditions hereof. LESSEE may not apply the security
deposit to payment of the last month's rent. In the event of any default or
breach of this lease by LESSEE, LESSOR may immediately apply the security
deposit first to any unamortized improvements completed for LESSEE's occupancy,
then to offset any outstanding invoice or other payment due to LESSOR, with the
balance applied to outstanding rent. If all or any portion of the security
deposit is applied to cure a default or breach during the term of the lease,
LESSEE shall be responsible for restoring said deposit forthwith, and failure to
do so shall be considered a substantial default under the lease. LESSEE's
failure to remit the full security deposit or any portion thereof when due shall
also constitute a substantial lease default. Until such time as LESSEE pays the
security deposit and first month's rent, LESSOR may declare this lease null and
void for failure of consideration.
3. USE OF PREMISES. LESSEE shall use the leased premises only for
the purpose of general and administrative offices and prototype research and
development and manufacturing.
<PAGE>
4. ADDITIONAL RENT. LESSEE shall pay to LESSOR as additional rent a
proportionate share (based on square footage leased by LESSEE as compared with
the total leaseable square footage of the building of which the leased premises
are a part) of any increase in the real estate taxes levied against the land and
building of which the leased premises are a part (hereinafter called the
building), whether such increase is caused by an increase in the tax rate, or
the assessment on the property, or a change in the method of determining real
estate taxes. LESSEE shall make payment within thirty (30) days of written
notice from LESSOR that such increased taxes are payable, and any additional
rent shall be prorated should the lease terminate before the end of any tax
year. The base from which to determine the amount of any increase in taxes
shall be the rate and the assessment in effect as of July 1, 1998.
5. UTILITIES. LESSOR shall provide equipment per LESSOR's building
standard specifications to heat the leased premises in season and to cool all
areas between May 1 and November 1. LESSEE shall pay all charges for utilities
used on the leased premises, including electricity, gas, oil, water and sewer.
LESSEE shall pay the utility provider or LESSOR, as applicable, for all such
utility charges as determined by separate meters serving the leased premises
and/or as a proportionate share of the utility charges for the building if not
separately metered. LESSEE shall also pay LESSOR a proportionate share of any
other fees and charges relating in any way to utility use at the building. No
plumbing, construction or electrical work of any type shall be done without
LESSOR's prior written approval and LESSEE obtaining the appropriate municipal
permit, which shall not be unreasonably withheld or delayed.
6. COMPLIANCE WITH LAWS. LESSEE acknowledges that no trade,
occupation, activity or work shall be conducted in the leased premises or use
made thereof which may be unlawful, improper, noisy, offensive, or contrary to
any applicable statute, regulation, ordinance or bylaw. LESSEE shall keep all
employees working in the leased premises covered by Worker's Compensation
Insurance and shall obtain any licenses and permits necessary for LESSEE's
occupancy. LESSEE shall be responsible for causing the leased premises and any
alterations by LESSEE which are allowed hereunder to be in full compliance with
any applicable statute, regulation, ordinance or bylaw.
7. FIRE, CASUALTY, EMINENT DOMAIN. Should a substantial portion of
the leased premises, or of the property of which they are a part, be
substantially damaged by fire or other casualty, or be taken by eminent domain,
LESSOR may elect to terminate this lease. When such fire, casualty, or taking
renders the leased premises substantially unsuitable for their intended use, a
just and proportionate abatement of rent shall be made, and LESSEE may elect to
terminate this lease if: (a) LESSOR fails to give written notice within thirty
(30) days of intention to restore the leased premises, or (b) LESSOR fails to
restore the leased premises to a condition substantially suitable for their
intended use within ninety (90) days of said fire, casualty or taking. LESSOR
reserves all rights for damages or injury to the leased premises for any taking
by eminent domain, except for damage to LESSEE's property or equipment.
8. FIRE INSURANCE. LESSEE shall not permit any use of the leased
premises which will adversely affect or make voidable any insurance on the
property of which the leased premises are a part, or on the contents of said
property, or which shall be contrary to any law or regulation from time to time
established by the Insurance Services Office (or successor), local Fire
Department, LESSOR's insurer, or any similar body. LESSEE shall on demand
reimburse LESSOR, and all other tenants, all extra insurance premiums caused by
LESSEE's use of the leased premises. LESSEE shall not vacate the leased
premises or permit same to be unoccupied other than during LESSEE's customary
non-business days or hours.
9. MAINTENANCE OF PREMISES. LESSOR will be responsible for all
structural maintenance of the leased premises and for the normal daytime
maintenance of all space heating and cooling equipment, sprinklers, doors,
locks, plumbing, and electrical wiring, but specifically excluding damage caused
by the careless, malicious, willful, or negligent acts of LESSEE or others,
chemical, water or corrosion damage from any source, and maintenance of any non
"building standard" leasehold improvements. LESSEE agrees to maintain at its
expense all other aspects of the leased premises in the same condition as they
are at the commencement of the term or as they may be put in during the term of
this lease, normal wear and tear and damage by fire or other casualty only
excepted, and whenever necessary, to replace light bulbs, plate glass and other
glass therein, acknowledging that the leased premises are now in good order
<PAGE>
and the light bulbs and glass whole. LESSEE will properly control or vent all
solvents, degreasers, smoke, odors, etc. and shall not cause the area
surrounding the leased premises to be in anything other than a neat and clean
condition, depositing all waste in appropriate receptacles. LESSEE shall be
solely responsible for any damage to plumbing equipment, sanitary lines, or any
other portion of the building which results from the discharge or use of any
acid or corrosive substance by LESSEE. LESSEE shall not permit the leased
premises to be overloaded, damaged, stripped or defaced, nor suffer any waste,
and will not keep animal within the leased premises. If the leased premises
include any wooden mezzanine type space, the floor capacity of such space is
suitable only for office use, light storage or assembly work. LESSEE will
protect any carpet with plastic or masonite chair pads under any roiling chairs.
Unless heat is provided at LESSOR's expense, LESSEE shall maintain sufficient
heat to prevent freezing of pipes or other damage. Any increase in air
conditioning equipment or electrical capacity or any installation or maintenance
of equipment which is necessitated by some specific aspect of LESSEE's use of
the leased premises shall be LESSEE's sole responsibility, at LESSEE's expense
and subject to LESSOR's prior written consent. All maintenance provided by
LESSOR shall be during LESSOR's normal business hours.
10. ALTERATIONS. LESSEE shall not make structural alterations or
additions of any kind to the leased premises, but may make nonstructural
alterations provided LESSOR consents thereto in writing. All such allowed
alterations shall be at LESSEE's expense and shall conform with LESSOR's
construction specifications. If LESSOR or LESSOR's agent provides any services
or maintenance for LESSEE in connection with such alterations or otherwise under
this lease, any just invoice will be promptly paid. LESSSEE shall not permit
any mechanics' liens, or similar liens, to remain upon the leased premises in
connection with work of any character performed or claimed to have been
performed at the direction of LESSEE and shall cause any such lien to be
released or removed forthwith without cost to LESSOR. Any alterations or
additions shall become part of the leased premises and the property of LESSOR.
Any alterations completed by LESSOR or LESSEE shall be LESSOR's "building
standard" unless noted otherwise. LESSOR shall have the right at any time to
change the arrangement of parking areas, stairs, walkways or other common areas
of the building.
11. ASSIGNMENT OR SUBLEASING. LESSEE shall not assign this lease
or sublet or allow any other firm or individual to occupy the whole or any part
of the leased premises without LESSOR's prior written consent. Notwithstanding
such assignment or subleasing, LESSEE and GUARANTOR shall remain liable to
LESSOR for the payment of all rent and for the full performance of the covenants
and conditions of this lease. LESSEE shall pay LESSOR promptly for legal and
administrative expenses incurred by LESSOR in connection with any consent
requested hereunder by LESSEE.
12. SUBORDINATION. This lease shall be subject and subordinate to
any and all mortgages and other instruments in the nature of a mortgage, now or
at any time hereafter, and LESSEE shall, when requested, promptly execute and
deliver such written instruments as shall be necessary to show the subordination
of this lease to said mortgages or other such instruments in the nature of a
mortgage.
13. LESSOR'S ACCESS. LESSOR or agents of LESSOR may at any
reasonable time enter to view the leased premises, to make repairs and
alterations as LESSOR should elect to do for the leased premises, the common
areas or any other portions of the building, to make repairs which LESSEE is
required but has failed to do, and to show the leased premises to others.
14. SNOW REMOVAL. The plowing of snow from all roadways and
unobstructed parking areas shall be at the sole expense of LESSOR. The control
of snow and ice on all walkways, steps and loading areas serving the leased
premises and all other areas not readily accessible to plows shall be the sole
responsibility of LESSEE. Notwithstanding the foregoing, however, LESSEE shall
hold LESSOR and OWNER harmless from any and all claims by LESSEE's agents,
representatives, employees, callers or invitees for damage or personal injury
resulting in any way from snow or ice on any area serving the leased premises.
<PAGE>
15. ACCESS AND PARKING. LESSEE shall have the right without
additional charge to use parking facilities provided for the leased premises in
common with others entitled to the use thereof. Said parking areas plus any
stairs, corridors, walkways, elevators or other common areas (hereinafter
collectively called the common areas) shall in all cases be considered a part of
the leased premises when they are used by LESSEE or LESSEE's employees, agents,
callers or invitees. LESSEE will not obstruct in any manner any portion of the
building or the walkways or approaches to the building, and will conform to all
rules and regulations now or hereafter made by LESSOR for parking, and for the
care, use, or alteration of the building, its facilities and approaches. LESSEE
further warrants that LESSEE will not permit any employee or visitor to violate
this or any other covenant or obligation of LESSEE. No unattended parking will
be permitted between 7:00 PM and 7:00 AM without LESSOR's prior written
approval, and from December 1 through March 31 annually, such parking shall be
permitted only in those areas specifically designated for assigned overnight
parking. Unregistered or disabled vehicles, or storage trailers of any type,
may not be parked at any time. LESSOR may tow, at LESSEE's sole risk and
expense, any misparked vehicle belonging to LESSEE or LESSEE's agents,
employees, invitees or callers, at any time. LESSOR shall not be responsible
for providing any security services for the leased premises.
16. LIABILITY. LESSEE shall be solely responsible as between LESSOR
and LESSEE for deaths or personal injuries to all persons whomsoever occurring
in or on the leased premises (including any common areas that are considered
part of the leased premises hereunder) from whatever cause arising, and damage
to property to whomsoever belonging arising out of the use, control, condition
or occupation of the leased premises by LESSEE; and LESSEE agrees to indemnify
and save harmless LESSOR and OWNER from any and all liability, including but not
limited to costs, expenses, damages, causes of action, claims, judgments and
attorney's fees caused by or in any way growing out of any matters aforesaid,
except for death, personal injuries or property damage directly resulting from
the willful misconduct, recklessness or gross negligence of LESSOR, or its
employees.
17. INSURANCE. LESSEE will secure and carry at its own expense a
commercial general liability policy insuring LESSEE, LESSOR, and OWNER against
any claims based on bodily injury (including death) or property damage arising
out of the condition of the leased premises (including any common areas that are
considered part of the leased premises hereunder) or their use by LESSEE, such
policy to insure LESSEE, LESSOR and OWNER against any claim up to One Million
($1,000,000.00) Dollars in the case of any one accident involving bodily injury
(including death), and up to One Million ($1,000,000.00) Dollars against any
claim for damage to property. LESSOR and OWNER shall be included in each such
policy as additional insureds using ISO Form CG 20 26 11 85 or some other form
approved by LESSOR. LESSEE will file with LESSOR prior to occupancy
certificates and any applicable riders or endorsements showing that such
insurance is in force, and thereafter will file renewal certificates prior to
the expiration of any such policies. All such insurance certificates shall
provide that such policies shall not be cancelled without at least ten (10) days
prior written notice to each insured. In the event LESSEE shall fail to
provide or maintain such insurance at any time during the term of this lease,
then LESSOR may elect to contract for such insurance at LESSEE's expense.
18. SIGNS. LESSOR authorizes, and LESSEE at LESSEE's expense agrees
to erect promptly upon commencement of this lease, signage for the leased
premises in accordance with LESSOR's building standards for style, size,
location, etc. LESSEE shall obtain the prior written consent of LESSOR before
erecting any sign on the leased premises, which consent shall include approval
as to size, wording, design and location. LESSOR may remove and dispose of any
sign not approved, erected or displayed in conformance with this lease.
19. BROKERAGE. LESSEE warrants and represents to LESSOR that
LESSEE has dealt with no broker or third person with respect to this lease, and
LESSEE agrees to indemnify LESSOR against any brokerage claims arising by virtue
of this lease. LESSOR warrants and represents to LESSEE that LESSOR has
employed no exclusive broker or agent in connection with the letting of the
leased premises.
<PAGE>
20. DEFAULT AND ACCELERATION OF RENT. In the event that: (a) any
assignment for the benefit of creditors, trust mortgage, receivership or other
insolvency proceeding shall be made or instituted with respect to LESSEE or
LESSEE's property; (b) LESSEE shall default in the observance or performance of
any of LESSEE's covenants, agreements, or obligations hereunder, other than
substantial monetary payments as provided below, and such default shall not be
corrected within ten (10) days after written notice thereof; or (c) LESSEE
vacates the leased premises, then LESSOR shall have the right thereafter, while
such default continues and without demand or further notice, to re-enter and
take possession of the leased premises, to declare the term of this lease ended,
and to remove LESSEE's effects, without being guilty of any manner of trespass,
and without prejudice to any remedies which might be otherwise used for arrears
of rent or other default or breach of the lease. If LESSEE shall default in the
payment of the security deposit, rent, taxes, substantial invoice from LESSOR or
LESSOR's agent for goods and/or services or other sum herein specified, and such
default shall continue for ten (10) days after written notice thereof, and ,
because both parties agree that nonpayment of said sums when due is a
substantial breach of the lease, and because the payment of rent in monthly
installments is for the sole benefit and convenience of LESSEE, then in addition
to the foregoing remedies the entire balance of rent which is due hereunder
shall become immediately due and payable as liquidated damages. LESSOR, without
being under any obligation to do so and without thereby waiving any default, may
remedy same for the account and at the expense of LESSEE. If LESSOR pays or
incurs any obligations for the payment of money in connection therewith, such
sums paid or obligations incurred plus interest and costs, shall be paid to
LESSOR by LESSEE as additional rent. Any sums received by LESSOR from or on
behalf of LESSEE at any time shall be applied first to any unamortized
improvements completed for LESSEE's occupancy, then to offset any outstanding
invoice or other payment due to LESSOR, with the balance applied to outstanding
rent. LESSEE agrees to pay reasonable attorney's fees and/or administrative
costs incurred by LESSOR in enforcing any or all obligations of LESSEE under
this lease at any time LESSEE shall pay LESSOR interest at the rate of fifteen
(15) percent per annum on any payment from LESSEE to LESSOR which is past due.
21. NOTICE. Any notice from LESSOR to LESSEE relating to the leased
premises or to the occupancy thereof shall be deemed duly served when left at
the leased premises addressed to LESSEE, or served by constable, or sent to the
leased premises by certified mail, return receipt requested, postage prepaid,
addressed to LESSEE, Attn: President. Any notice from LESSEE to LESSOR
relating to the leased premises or to the occupancy thereof shall be deemed duly
served when served by constable, or delivered to LESSOR by certified mail,
return receipt requested, postage prepaid, addressed to LESSOR at 200 West
Cummings Park, Woburn, MA 01801 or at LESSOR's last designated address. No oral
notice or representation shall have any force or effect. Time is of the essence
in the service of any notice.
22. OCCUPANCY. In the event that LESSEE takes possession of said
leased premises prior to the start of the lease term, LESSEE will perform and
observe all of LESSEE's covenants from the date upon which LESSEE takes
possession except the obligation for the payment of extra rent for any period of
less than one month. LESSEE shall not remove LESSEE's goods or property from
the leased premises other than in the ordinary and usual course of business,
without having first paid and satisfied LESSOR for all rent which may become due
during the entire term of this lease. LESSOR may require LESSEE to relocate to
another similar ground floor (or other if acceptable to LESSEE) facility at
Cummings Center no more than one time during the term of the lease upon prior
written notice to LESSEE and on terms comparable to those herein. In the event
that LESSEE continues to occupy or control all or any part of the leased
premises after the agreed termination of this lease without the written
permission of LESSOR, then LESSEE shall be liable to LESSOR for any and all
loss, damages or expenses incurred by LESSOR, and all other terms of this lease
shall continue to apply except that rent shall be due in full monthly
installments at a rate of one hundred fifty (150) percent of that which would
otherwise be due under this lease, it being understood between the parties that
such extended occupancy is as a tenant at sufferance and is solely for the
benefit and convenience of LESSEE and as such has greater rental value.
LESSEE's control or occupancy of all or any part of the leased
premises beyond noon on the last day of any monthly rental period shall
constitute LESSEE's occupancy for an entire month, and increased rent as
provided in this section shall be due and payable immediately in advance.
<PAGE>
LESSOR's acceptance of any payments from LESSEE during such extended occupancy
shall not alter LESSEE's status as a tenant at sufferance.
23. FIRE PREVENTION. LESSEE agrees to use every reasonable precaution
against fire and agrees to provide and maintain approved, labeled fire
extinguishers, emergency lighting equipment, and exit signs and complete any
other modifications within the leased premises as required or recommended by the
Insurance Services Office (or successor organization), OSHA, the local Fire
Department, or any similar body.
24. OUTSIDE AREA. Any goods, equipment, or things of any type or
description held or stored in any common area without LESSOR's prior written
consent shall be deemed abandoned and may be removed by LESSOR at LESSEE's
expense without notice. LESSEE shall maintain a building standard size dumpster
in a location approved by LESSOR, which dumpster shall be provided and serviced
at LESSEE's expense by whichever disposal firm may from time to time be
designated by LESSOR. Alternately, if a shared dumpster or compactor is provided
by LESSOR, LESSEE shall pay its proportionate share of any costs associated
therewith.
25. ENVIRONMENT. LESSEE will so conduct and operate the leased
premises as not to interfere in any way with the use and enjoyment of other
portions of the same or neighboring buildings by others by reason of odors,
smoke, exhaust, smells, noise, pets, accumulation of garbage or trash, vermin or
other pests, or otherwise, and will at its expense employ a professional pest
control service if necessary. LESSEE agrees to maintain efficient and effective
devices for preventing damage to hearing equipment from solvents, degreasers,
cutting oils, propellants, etc. which may be present at the leased premises. No
hazardous materials or wastes shall be stored, disposed of, or allowed to remain
at the leased premises at any time, and LESSEE shall be solely responsible for
any and all corrosion or other damage associated with the use, storage and/or
disposal of same by LESSEE.
26. RESPONSIBILITY. Neither LESSOR nor OWNER shall be held liable
to anyone for loss or damage caused in any way by the use, leakage, seepage or
escape of water from any source, or for the cessation of any service rendered
customarily to said premises or buildings, or agreed to by the terms of this
lease, due to any accident, the making of repairs, alterations or improvements,
labor difficulties, weather conditions, mechanical breakdowns, trouble or
scarcity in obtaining fuel, electricity, service or supplies from the sources
from which they are usually obtained for said building, or any cause beyond
LESSOR's immediate control.
27. SURRENDER. LESSEE shall at the termination of this lease
remove all of LESSEE's goods and effects from the leased premises. LESSEE shall
deliver to LESSOR the leased premises and all keys and locks thereto, all
fixtures and equipment connected therewith, and all alterations, additions and
improvements made to or upon the leased premises, whether completed by LESSEE,
LESSOR or others, including but not limited any offices, partitions, window
blinds, floor coverings (including computer floors), plumbing and plumbing
fixtures, air conditioning equipment and ductwork of any type, exhaust fans or
heaters, water coolers, burglar alarms, telephone wiring, air or gas
distribution piping, compressors, overhead cranes, hoists, trolleys or
conveyors, counters, shelving or signs attached to walls or floors, all
electrical work, including but not limited to lighting fixtures of any type,
wiring conduit, EMT, transformers, distribution panels, bus ducts, raceways,
outlets and disconnects, and furnishings or equipment which have been bolted,
welded, nailed, screwed, glued or otherwise attached to any wall, floor ceiling,
roof, pavement or ground, or which have been directly wired to any portion of
the electrical system or which have been plumbed to the water supply, drainage
or venting systems serving the lease premises. LESSEE shall deliver the leased
premises sanitized from any chemicals or other contaminants, and broom clean and
in the same condition as they were at the commencement of this lease or any
prior lease between the parties for the leased premises, or as they were
modified during said term with LESSOR's written consent, reasonable wear and
tear and damage by fire or other casualty only excepted. In the event of
LESSEE's failure to remove any of LESSEE's property from the leased premises
upon termination of the lease, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and
store any such property at LESSEE's expense, or to retain same under LESSOR's
control, or to sell at public or private sale (without
<PAGE>
notice), any or all of the property not so removed and to apply the net proceeds
of such sale to the payment of any sum due hereunder, or to destroy such
abandoned property. In no case shall the leased premises by deemed surrendered
to LESSOR until the termination date provided herein or such other date as may
be specified in a written agreement between the parties, notwithstanding the
delivery of any keys to LESSOR.
28. GENERAL. (a) The invalidity or unenforceablilty of any
provision of this lease shall not affect or render invalid or unenforceable any
other provision hereof. (b) The obligations of this lease shall run with the
land, and this lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that LESSOR
and OWNER shall be liable only for obligations occurring while lessor, owner, or
master lessee of the premises. (c) Any action or proceeding arising out of the
subject matter of this lease shall be brought by LESSEE within one year after
the cause of action has occurred and only in a court of the Commonwealth of
Massachusetts. (d) If LESSOR is acting under or as agent for any trust or
corporation the obligations of LESSOR shall be binding upon the trust or
corporation, but not upon any trustee, officer, director, shareholder, or
beneficiary of the trust or corporation individually. (e) If LESSOR is not the
owner (OWNER) of the leased premises, LESSOR represents that said OWNER has
agreed to be bound by the terms of this lease unless LESSEE is in default
hereof. (f) This lease is made and delivered in the Commonwealth of
Massachusetts, and shall be interpreted, construed, and enforced in accordance
with the laws thereof. (g) This lease was the result of negotiations between
parties of equal bargaining strength, and when executed by both parties shall
constitute the entire agreement between the parties, superseding all prior oral
and written agreements, representations, statements and negotiations relating in
any way to the subject matter herein. This lease may not be extended or amended
except by written agreement signed by both parties or as otherwise provided
herein, and no other subsequent oral or written representation shall have any
effect hereon. (h) Notwithstanding any other statements herein, LESSOR makes no
warranty, express or implied, concerning the suitability of the leased premises
for LESSEE's intended use. (i) LESSEE agrees that if LESSOR does not deliver
possession of the leased premises as herein provided for any reason, LESSOR
shall not be liable for any damages to LESSEE for such failure, but LESSOR
agrees to use reasonable efforts to deliver possession to LESSEE at the earliest
possible date. A proportionate abatement of rent, excluding the cost of any
amortized improvements to the leased premises, for such time as LESSEE may be
deprived of possession of the leased premises, except where a delay in delivery
is caused in any way by LESSEE, shall be LESSEE's sole remedy. (j) Neither the
submission of this lease form, not the prospective acceptance of the security
deposit and/or rent shall constitute a reservation of or option for the leased
premises, or an offer to lease, it being expressly understood and agreed that
this lease shall not bind either party in any manner whatsoever until it has
been executed by both parties. (k) LESSEE shall not be entitled to exercise any
option contained herein if LESSEE is at that time in default of any terms or
conditions hereof. (l) Except as otherwise provided herein, LESSOR, OWNER, and
LESSEE shall not be liable for any special incidental, indirect or consequential
damages, including but not limited to lost profits or loss of business, arising
out of or in any manner connected with performance or nonperformance under this
lease, even if any party has knowledge of the possibility of such damages. (m)
The headings in this lease are for convenience only and shall not be considered
part of the terms hereof. (n) No endorsement by LESSEE on any check shall bind
LESSOR in any way. (o) LESSOR and LESSEE hereby waive any and all rights to a
jury trial in any proceedings in any way arising out of this lease.
29. SECURITY AGREEMENT. (THIS PARAGRAPH DOES NOT APPLY)
30. WAIVERS, ETC. No consent or waiver, express or implied, by
LESSOR, to or of any breach of any covenant, condition or duty of LESSEE shall
be construed as a consent or waiver to or of any breach of the same or any other
covenant, condition or duty. If LESSEE is several persons, several corporations
or a partnership, LESSEE's obligations are joint or partnership and also
several. Unless repugnant to the context, "LESSOR" and "LESSEE" mean the person
or persons, natural or corporate, named above as LESSOR and as LESSEE
respectively, and their respective heirs, executors, administrators, successors
and assigns.
<PAGE>
31. AUTOMATIC FIVE-YEAR EXTENSIONS. This lease, including all
terms, conditions, escalations, etc. shall be automatically extended for
additional successive periods of five (5) years each unless LESSOR or LESSEE
shall serve written notice, either party to the other, of either party's desire
not to so extend the lease. The time for serving such written notice shall be
not more than twelve (12) months or less than six (6) months prior to the
expiration of the then current lease period. Time is of the essence.
32. ADDITIONAL PROVISIONS. (Continued on attached rider(s) if
necessary.)
- See attached Rider
IN WITNESS WHEREOF, LESSOR and LESSEE have hereunto set their hands and common
seals and intend to be legally bound hereby this 30 day of April , 1998.
LESSOR: CUMMINGS PROPERTIES MANAGEMENT, INC. LESSEE: WAKEFIELD ENGINEERING,
INC.
By: By: /s/ Michael Hoffmann
------------------------------------ -----------------------------
President
GUARANTY
IN CONSIDERATION of the making of the above lease by Cummings Properties
Management, Inc. with Wakefield Engineering, Inc. at the request of the
undersigned and in reliance on this guaranty, the undersigned (GUARANTOR) hereby
personally guarantees the prompt payment of rent by LESSEE and the performance
by LESSEE of all terms, conditions, covenants and agreements of the lease, any
amendments thereto and any extensions or assignments thereof, and the
undersigned promises to pay all expenses, including reasonable attorney's fees,
incurred by LESSOR in enforcing all obligations of LESSEE under the lease or
incurred by LESSOR in enforcing this guaranty. LESSOR'S consent to any
assignments, subleases, amendments and extensions by LESSEE or to any compromise
or release of LESSEE'S liability hereunder, with or without notice to the
undersigned, or LESSOR'S failure to notify the undersigned of any default and/or
reinstatement of the lease by LESSEE, shall not relieve the undersigned from
liability as GUARANTOR.
IN WITNESS WHEREOF, the undersigned GUARANTOR has hereunto set his/her/its hand
and common seal intending to be legally bound hereby as of this day of
, .
<PAGE>
CUMMINGS PROPERTIES MANAGEMENT, INC.
STANDARD FORM 498233-SMF-6
RIDER TO LEASE
The following additional provisions are incorporated into and made a part of the
attached lease:
A. UTILITY CHARGES. In connection with LESSEE's charges for heat and
electricity pursuant to Section 5 above, if the premises have a separate
electric meter, LESSEE shall pay both charges that are separately metered at
the leased premises and a proportionate share of any charges that are not
separately metered, such as charges for operating the central boiler, chiller
and corridor lighting serving the building.
B. SOUTH ESSEX SEWERAGE DISTRICT. LESSEE shall fully comply with all
regulations of the South Essex Sewerage District (SESD) now or hereafter in
effect, including prompt filing with LESSOR any documents required by SESD
regulations, and LESSEE agrees to indemnify and hold harmless LESSOR and OWNER
from any and all liability arising out of any noncompliance by LESSEE with such
regulations.
C. SNOW REMOVAL. Notwithstanding any statement hereinabove to the contrary,
LESSOR and not LESSEE shall arrange and pay for snow removal services on all
common walkways serving the leased premises.
D. ELECTRIC SERVICE. LESSEE agrees that in the event its average electricity
use at the leased premises is expected to exceed 200 kW per month during the
term of this lease, it will not self-generate, co-generate, or use a supplier of
electrical distribution service other than Massachusetts Electric Company at the
leased premises during the term of this lease or any extension(s) hereof.
E. ADDITIONAL RENT. Notwithstanding the provisions of Section 4 above,
LESSEE's proportionate share of any increase in real estate taxes shall be based
on square footage leased by LESSEE as compared with the total leasable square
footage of the entire property of which the leased premises are a part, known as
Cummings Center ("the Property"), and not merely of the building. Any such
increase shall otherwise be paid in full accordance with the terms of the
Section 4.
F. ACTIVITY AND USE RESTRICTION. Except as provided below, the following
activities and uses are expressly prohibited at the Property: residential uses
(except for facilities for adult congregate care/assisted living, senior
housing, nursing home uses and other adult residential facilities in certain
designated areas of the Property); child care, day care or public or private
elementary or secondary schools; a public park, playground or playing field, or
other activities involving more than casual contact with the ground; cultivation
of out-of-doors fruits and vegetables destined for human consumption; and
fishing or swimming in the ponds and other waterways on or adjacent to the
Property. In addition, implementation of a health and safety plan is required
for construction, utilities maintenance and other intrusive activities which are
likely to involve extensive exposure to or contact with subsurface soils at the
Property. A Notice of Activity and Use Limitation providing further information
has been recorded at the Essex South Registry of Deeds, as well as amendments
authorizing child care and a public elementary school in specific locations.
G. PROPERTY SURVEILLANCE. LESSEE acknowledges that LESSOR may at any time
be conducting ongoing surveillance of the Property by means of surveillance
staff and remote television monitoring cameras in order to deter vandalism
and/or other damage to the Property. Notwithstanding this surveillance, LESSEE
acknowledges and agrees that, as provided in Section 15 above, LESSOR is not
thereby or in any other way providing any security service for LESSEE or its
employees, agents, invitees, contractors and representatives.
<PAGE>
H. *LESSOR, at LESSOR's cost, shall construct standard office space according
to a mutually agreed upon plan attached hereto before or about the time LESSEE
takes possession of the leased premises. Said space shall be air conditioned,
carpeted and completed with painted drywall partitions, acoustical tile
ceilings, recessed lighting, chrome pendent fire protection sprinklers, and 110V
convenience electrical wall outlets at regular intervals.
I. *LESSOR, if requested to do so by LESSEE and at LESSEE's sole expense,
shall make alterations necessitated by LESSEE's use of the leased premises
according to a plan to be mutually agreed upon by both parties. These
alterations shall be considered "nonbuilding standard" for maintenance purposes
pursuant to Section 9 of the lease. At LESSEE's request, the charges for
certain alterations agreed to in advance and completed by LESSOR or LESSOR's
agents may be incorporated into the lease by separate amendment to be attached
hereto, amortized and then paid for by Lessee in the same manner as base rent
which shall otherwise be due.
J. *The parties acknowledge and agree that, as of the execution of this
lease, the leased premises have not been demised. Accordingly, upon completion
of the modifications provided for herein, LESSOR shall measure the leased
premises, and if the size does not equal the total number of square feet set
forth in the initial paragraph of this lease, the parties shall execute an
amendment to this lease that adjusts the size and rent accordingly.
K. LESSOR represents and warrants to LESSEE that it is the exclusive managing
agent of the owner of the real property located at 60 Audubon Road, Wakefield,
Massachusetts and is the assignee of the landlord's interest under the lease
between The Equitable Life Assurance Society of the United States and LESSEE
dated October 29, 1993. Such lease shall terminate as of June 30, 1998 and
LESSEE shall vacate said earlier facility on or prior to that date provide
LESSOR has completed LESSOR's work and made the leased premises ready for
occupancy by June 15, 1998. Any extended occupancy of said earlier facility
beyond the commencement date of this lease shall be governed by Sections 10.9
and 10.13 of the prior lease. Time is of the essence.
____________LESSOR
___/S/ M.H.___LESSEE
<PAGE>
RIDER TO LEASE
(CONTINUED)
L. At any one time during the initial term of this lease, LESSEE may request
larger similar space of approximately 30,000 square feet. LESSEE shall give
LESSOR written notice of such requirement for larger space, and shall then
execute LESSOR's then current standard form lease, with modifications
substantially similar to those herein, for such larger space in the same or
other buildings of LESSOR at LESSOR's then current published rates within three
business of LESSOR's written notice to LESSEE that said larger space will be
available. If LESSOR does not offer such larger similar space within six months
after receipt of written notice from LESSEE, then LESSEE shall have the option
within 30 days thereafter to terminate the unexpired portion of this lease,
without penalty and without any further obligation, either party to the other,
by serving LESSOR with 30 days written notice to that effect. Cancellation of
the lease shall be LESSEE's exclusive remedy for any failure by LESSOR to offer
such larger similar space or any breach by LESSOR of the provisions of this
paragraph. Time is of the essence.
M. *LESSEE'S agreement to subordinate this lease to any and all mortgages
and/or other instruments in the nature of a mortgage, now or at any time in the
future, is conditional upon the mortgagee's agreement that LESSEE's possession
will not be disturbed so long as LESSEE is not in default in the payment of rent
or other covenants or obligations hereof.
N. *LESSOR hereby represents that, to the best of its knowledge and belief,
the use of the leased premises for the purposes set forth in Section 3 is
permitted under the Massachusetts General Laws and the City of Beverly Zoning
Ordinance. In the event, however, that the City of Beverly issues a citation to
LESSEE prohibiting the use of the leased premises for said purposes and said
citation is adjudged valid after LESSEE has exhausted all applicable appeals,
then LESSEE may cancel this lease by serving LESSOR with 30 days prior written
notice to that effect, and neither party shall have any further obligation to
the other. Cancellation of the lease shall be LESSEE's exclusive remedy for any
breach by LESSOR of this representation or otherwise in connection with such
municipal action.
O. *The parties acknowledge and agree that, as of the execution of this
lease, the leased premises have not been demised. Accordingly, upon completion
of the modifications provided for herein, LESSOR shall measure the leased
premises, and if the size does not equal the total number of square feet set
forth in the initial paragraph of this lease, the parties shall execute an
amendment to this lease that adjusts the size and rent accordingly.
P. If LESSOR exercises its right to relocate LESSEE pursuant to Section 22,
LESSOR or LESSOR's designated moving company shall, at LESSOR's expense, more
LESSEE's furniture, furnishings and equipment (including the reinstallation of
any computer or telecommunications wiring) from the leased premises to the new
similar facility designated by LESSOR. LESSEE shall, at LESSEE's sole cost and
expense, properly disconnect, box , pack and otherwise prepare all items to be
moved.
Q. Notwithstanding the provisions of Section 27 to the contrary , prior to
the termination date of this lease, LESSEE may remove manufacturing equipment,
computer equipment, telephone equipment and furniture supplied and installed by
LESSEE if LESSEE has satisfactorily complied with all other conditions of this
lease and if LESSEE repairs any and all damage resulting from such removal and
restores the leased premises to their condition prior to the installation of
said equipment, all on a timely basis prior to the end of the lease term. Time
is of the essence.
R. *Whenever LESSOR's or LESSEE's consent, agreement or approval is required
under this lease, said consent, agreement or approval shall not be unreasonably
withheld or delayed.
S. *LESSOR agrees to erect signage designating two parking spaces in front of
the leased premises for short term visitor parking. LESSOR shall have no
responsibility for enforcing said parking restriction.
<PAGE>
T. *Notwithstanding monthly rent as provided in Section 1 above, LESSEE may
discount each monthly rental payment due from July 1, 1998 through June 30, 1999
(only) according to the below schedule, provided that funds are wired to
LESSOR's bank account on or before the first business day of each month,
excluding Saturdays, Sundays, and holidays, and Lessee is not otherwise in
default of the lease or in arrears of any rent or invoice payments. LESSEE
shall complete any documentation requested by LESSOR to implement these wire
transfers. Time is of the essence. Said documents shall be as follows:
July 1, 1998 to July 30, 1998 discount of $19,086.83
August 1, 1998 to June 30, 1999 discount of $1,612.41 per month
LESSOR: CUMMINGS PROPERTIES MANAGEMENT, INC. LESSEE: WAKEFIELD ENGINEERING,INC.
By: By: /s/ Michael Hoffmann
---------------------------- ---------------------------
President
Date:
-------------------------
<PAGE>
WAKEFIELD
ENGINEERING
APRIL 30, 1998
Cummings Properties
200 West Cummings Park
Woburn, MA 01801
Stephen Frohn
Steve,
Per our inspection of 60 Audubon Road on April 30th, please add the following
addendum to the Rider to Lease in paragraph K:
Lessee shall have complied with said Section 10.9 of the current lease dated
October 29, 1993 by removing and/or restoring the following:
. Damaged cement walls and floor
. Clean up of oil stains
. Waste treatment line
. Damaged wood walls
Cummings Property Management Inc. Wakefield Engineering, Inc.
By: /s/ Stephen M. Frohn V.P. By: /s/ Michael Hoffmann
--------------------------- ------------------------
<PAGE>
WAKEFIELD
ENGINEERING
April 30, 1998
Cummings Properties
200 West Cummings Park
Woburn, MA 01801
Stephen Frohn
Steve,
Per our earlier conversation, we have agreed that the following items will be
included in our annual rent of $229,042.00:
. 48" tail board loading facilities
. Side lite office windows
. 1 additional skylight
. Incandescent lighting within the prototype area only
. Sound board between prototype/engineering area and office space
Also, the final layout will be supplied to Cummings Properties no later than
Tuesday, May 5th.
Cummings Property Management Inc. Wakefield Engineering, Inc.
By: /s/ Stephen M. Frohn V.P. By: /s/ Michael Hoffmann
------------------------------ -----------------------
<PAGE>
EXHIBIT 11.1
ALPHA TECHNOLOGIES GROUP, INC., AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
FOR THE QUARTERS AND SIX MONTHS ENDED APRIL 27, 1997 AND APRIL 26, 1998
(Unaudited)
(In Thousands, Except per Share Date)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------------------------ -----------------------
April 27, April 26, April 27, April 26,
1997 1998 1997 1998
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares:
Weighted average common shares outstanding 6,677 6,695 6,676 6,694
Net common shares issuable on exercise of
stock options -- 214 -- 165
---------- --------- --------- ----------
Weighted average common and common equivalent
shares outstanding 6,677 6,909 6,676 6,859
========== ========= ========= ==========
Income before income from discontinued operation (502) $ 509 ($2,181) $ 906
Income from discontinued operation 57 - 84 --
---------- --------- --------- ----------
Net income ($445) $ 509 ($2,097) $ 906
========== ========= ========= ==========
Basic net income per common and common equivalent
share:
Income before income from discontinued operation ($0.08) $ 0.08 ($0.32) $ 0.14
Income from discontinued operation 0.01 - 0.01 --
---------- --------- --------- ----------
Basic net income ($0.07) $ 0.08 ($0.31) $ 0.14
---------- ========= ========= ----------
Fully Diluted net income per common and common
equivalent share:
Income before income from discontinued operation ($0.08) $ 0.07 ($0.32) $ 0.13
Income from discontinued operation 0.01 - 0.01 --
---------- --------- --------- ----------
Fully Diluted net income ($0.07) $ 0.07 ($0.31) $ 0.13
========== ========= ========= ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET APRIL 26, 1998 AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
SIX MONTHS ENDED APRIL 26, 1998 AND APRIL 27, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> OCT-25-1998 OCT-26-1997
<PERIOD-START> OCT-27-1997 OCT-28-1996
<PERIOD-END> APR-26-1998 APR-27-1997
<CASH> 2,076 0
<SECURITIES> 0 0
<RECEIVABLES> 12,514 0
<ALLOWANCES> 0 0
<INVENTORY> 11,550 0
<CURRENT-ASSETS> 27,349 0
<PP&E> 19,701 0
<DEPRECIATION> 6,921 0
<TOTAL-ASSETS> 45,306 0
<CURRENT-LIABILITIES> 14,851 0
<BONDS> 0 0
0 0
0 0
<COMMON> 231 0
<OTHER-SE> 19,527 0
<TOTAL-LIABILITY-AND-EQUITY> 45,306 0
<SALES> 42,695 36,713
<TOTAL-REVENUES> 42,695 36,713
<CGS> 33,713 31,052
<TOTAL-COSTS> 33,713 31,052
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 291 502
<INCOME-PRETAX> 906 (2,181)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 906 (2,181)
<DISCONTINUED> 0 84
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 906 (2,097)
<EPS-PRIMARY> .14 (.31)
<EPS-DILUTED> .13 (.31)
</TABLE>
